RERA Inapplicable to Completed Projects Prior to Enactment

Introduction

The Real Estate (Regulation and Development) Act, 2016[1] (RERA), was enacted to establish the Real Estate Regulatory Authority with the purpose of regulating and promoting the real estate sector, ensuring the sale of plots, apartments, or buildings, and real estate projects in an efficient and transparent manner, while safeguarding consumer interests within the sector. Furthermore, under Section 43 of RERA,[2] it mandates the creation of an Appellate Tribunal to adjudicate appeals arising from decisions, directives, or orders issued by the Real Estate Regulatory Authority and its adjudicating officer, as well as to address related and incidental matters.

The term ‘retroactivity’ frequently used by legal practitioners, lacks a precise definition and encompasses two distinct concepts: true retroactivity, which involves applying a new legal rule to actions or transactions completed prior to its promulgation, and quasi-retroactivity, which involves applying a new legal rule to ongoing processes. The current inquiry concerns the retroactive applicability of RERA, 2016. The Assam Real Estate Appellate Tribunal in the case of Sri Shantanu Baruah Versus M/s. Dona Builders Pvt. Ltd. & Anr.[3] has concluded that RERA does not have retroactive applicability to projects completed before its enactment. Consequently, the Tribunal dismissed the appellant’s appeal regarding a project that had obtained an Occupancy Certificate on May 7, 2014.

Facts of the Case

This appeal challenges the order dated 25.01.2024, by the Real Estate Regulatory Authority, Assam (RERA). Appellant Shantanu Baruah, a co-owner of land in Darandha village, Beltola Mouza, Dispur P.S., Guwahati, Kamrup District, filed the complaint against the respondent builder/promoter who constructed an RCC (G+7 Floor) building with apartments and shops. A Development Agreement and General Power of Attorney, both dated 23.11.2005, authorized the respondent to develop the “Dona Presidency” project.

The GMC issued a No-Objection Certificate on July 5, 2007. Landowners were to receive 25% of the built-up area, but the actual area provided was deficient. After Sankar Baruah’s death in September 2014, the respondent resumed construction and advertised shops for sale without resolving the deficiency issue or obtaining a new Power of Attorney. The appellant alleged violations of the RERA, due to non-compliance with the sanctioned plan and project specifications. The complaint, filed on 11.07.2022, sought rupees three crores in compensation or allotment of proportionate commercial space.

Ratio of the Judgment

The Tribunal observed that the real estate project in question had received an Occupancy Certificate on 7.05.2014, prior to the enactment of the RERA. Consequently, it held that RERA’s provisions could not be applied retroactively to projects completed before the Act’s enactment. In reaching this determination, the Tribunal referenced paragraph 54 of the Supreme Court judgment in M/s Newtech Promoters and Developers Pvt. Ltd. v. State of U.P.,[4] which articulates:

“54. From the scheme of the Act 2016, its application is retroactive in character, and it can safely be observed that the projects already completed or to which the completion certificate has been granted are not under its fold and therefore, vested or accrued rights, if any, in no manner are affected. At the same time, it will apply after getting the ongoing projects and future projects registered under Section 3 to prospectively follow the mandate of the Act 2016.”

Thus, the Tribunal concluded that, since the construction of the G+7 Floor RCC building was completed and the Occupancy Certificate was obtained prior to RERA’s enactment, the appeal before the Tribunal is not maintainable.

Conclusion

The Assam Real Estate Appellate Tribunal concluded that RERA’s provisions do not retroactively apply to projects completed before the Act’s enactment. Since the project in question received its Occupancy Certificate in 2014, before RERA was enacted, the Tribunal held that the Act does not apply. Consequently, the Tribunal dismissed the appeal, affirming that RERA does not affect vested rights from projects completed prior to its implementation.

[1] Real Estate (Regulation and Development) Act, 2016, Act No. 16 of 2016.

[2] Section 43, Real Estate (Regulation and Development) Act, 2016.

[3] REAT/ASSAM/APPEAL No. 04 of 2024.

[4] 2021 (11) ADJ 280.