Will The Supreme Court RERA Jurisdiction Verdict Empower The Regulatory Authority?

RERA’s constitutional validity and scope have been clarified in the supreme court judgement. The apex court’s decision may set a precedent for RERA in other states, but it is difficult to determine if it has made builders more compliant.

Supreme court invalidated RERA in new tech Promoters & Developers vs State of UP & others on November 11, 2021, in a landmark case on the constitutional validity of RERA. In the wake of the landmark verdict on November 11, several homebuyers who attended their respective cases wondered if anything would change dramatically for them.

A landmark judgment from the supreme court in the case of new tech Promoters & Developers against the State of Uttar Pradesh and others has constitutionally validated RERA provisions. In its judgment on appeals originating from UP RERA, the supreme court has settled a fundamental principle of law.

The retired army veteran asked if the builder can no longer challenge the RERA order that was passed in his favour. An additional young couple who was waiting for a RERA recovery certificate wondered whether the supreme court judgment also touched upon some grey areas.

There are many consumer grievances in the real estate market of Uttar Pradesh and Noida-Greater Noida, including delayed delivery, default, unmet promises, and builders’ highhandedness. Approximately 40% of homebuyer complaints in India are related to this market alone, a report says. Therefore, it should not be surprising that even the builders oppose the proposals of the Real Estate Regulatory Authority that aim at cleaning up the market.

There has still been an enormous amount of work to be done on RERA in India. Several builders have challenged the order and the legal jurisdiction of RERA in Noida-Greater Noida. The settled legal principle under RERA that should be uncontested ideally is continually challenged, resulting in increased litigation.

There is no reason why builders would not be aware of the established principles of the law under the RERA Act before challenging it in a higher court. Rather than pressing for justice, their strategy has been to delay it as long as possible. The government is aware that ten out of a thousand buyers have approached RERA and secured judgments in their favour, honouring such judgments would bring hundreds more buyers to RERA. Therefore, they continue to question RERA’s jurisdiction and purview to prolong the legal process in high courts as well as harass home buyers.

However, no more!

Following Are Some Highlights Of The Supreme Court Judgment

1. Supreme court confirms the constitutionality of RERA
2. A project is considered ongoing if a certificate of completion has not been obtained before May 1, 2017
3. RERA retroactively takes effect
4. A retroactive application will be made to pre-existing agreements so that the provisions of the Act and Rules thereunder will prevail. Consequently, the rate of interest will be the same as the RERA rate.
5. Those responsible for refunds and interest thereon, as well as interest associated with delayed possession, are the Authority
6. Authority, which decides the amount of compensation
7. The decision to delegate the power to resolve complaints under Sections 12, 14, 18 and 19 to one individual upheld
8. The Appellate Tribunal will accept an application for admission of appeal when a pre-deposit of 100% of the amount payable to allottees is made
9. The Right to Issue Recovery Certificates is upheld

The legal adviser to UP RERA, Venkat Rao, believes that the supreme court ruling finally ends the debate over certain contentious issues. His point of view is that the builders were constantly challenging three grey areas. To begin with, RERA applies to projects that fall under its purview. It has been categorically decided by the apex court that the RERA will cover all the projects that do not possess a completion certificate (even if they have an occupancy certificate) as of May 1, 2017.

The second key issue decided by the apex court relates to the amount a developer must deposit with the Appellate Tribunal before its appeal against a RERA order is admitted. A deposit of 100% of the amount payable is required under section 43(5) of RERA.

Furthermore, the apex court ruled that pre-existing contracts (i.e., contracts in existence before RERA was adopted) would be construed according to RERA, which means that legislative action can make Acts retroactive. Therefore, RERA does not violate the Constitution of India, explains Rao.

There are, however, numerous questions raised by the ruling. Concerning the legal jurisdiction and scope of RERA, the law has always been very clear. As a result of the apex court’s order, the problem has only been clarified further. Homebuyers who have been harassed have been faced with the larger issue of builders’ intent to challenge the decision and prolong the legal battle.

Fortunately, the Supreme Court has put a stop to any further such activity by bypassing the below-mentioned judgments:

1. There has been no challenge to the constitutionality of the Real Estate Regulatory Authority
2. As for continuing projects, only those that have not received a certificate of completion by the 1st of May 2017 will be considered. 
3. Retroactively, the RERA Act of 2026 applies.
4. The retroactive application will be considered for existing agreements correlated with RERA. Therefore, all provisions of the Act and the RERA rule will be applicable. Therefore, the interest rate will be imposed on the outstanding judgments
5. The Authority will be responsible for the refund of the buyer, as well as the interest on the refund as well as the interest associated with delayed possession.
6. It is the Authority’s sole and exclusive discretion to determine the appropriate compensation.
7. Sections 12, 14, 18, and 19 of the RERA delegates powers for deciding RERA complaints to a member

Who is in the position to issue project recovery certificates? 

Venkat Rao, the legal adviser for UP RERA, believes this supreme court judgment has limited the scope of such issues in one go. The RERA rules have some grey areas, and real estate in Jodhpur have been challenging them continually for their own benefit, according to Venkat Rao. 

Though, even after the judgment, there are still many questions unanswered. The law makes it clear that nothing new will be added to this order when it comes to legal jurisdiction. The major issue was the builders’ intention to prolong the legal battle by challenging the principles. 

People have set their hopes on receiving a verdict on the unanswered questions including

1. Will this judgment actually put an end to the long-drawn-out litigation? 
2. Is RERA just a back door of litigation and can’t be seen as a doorstep to justice for homebuyers?
3. What options are available for homebuyers if the project builder keeps on challenging the RERA orders in the supreme court?
4. When RERA doesn’t possess the power to act as a fast-track court, for what purpose was it formed?  
5. RERA’s constitutional validity and scope are defined only by the landmark judgment passed by the supreme court. A number of questions remain unanswered.