Retrospective Application of the RERA 2016

Introduction

The Real Estate (Regulation and Development) Act, 2016 (hereby referred to as RERA) currently regulates the real estate sector in India. The objectives of encouraging expansion through standardization and effective project management, increasing both foreign and domestic real estate investment along with wider scope of accountability and openness in real estate transactions, the Act has given leeway for the legislatures to set up Real Estate Governing Authorities in each state. A core feature of RERA, which is to be explored in the present newsletter, is the retrospective application of the Act – having significant implications on both the future and ongoing projects.

Retrospective application of laws is purported to be an essential characteristic of law, granting it the scope of applicability and allowing it to contemplate events which have begun existing in the past, i.e. before the Act has come into effect. The scope of RERA as to which real estate project it may/ may not be applied to, will be explored through the recent case of Sri Shantanu Baruah v. M/S Dona Builders Pvt. Ltd. which was decided by the Assam REAT on the 6th of May, 2024.

Facts

The respondent (builder) constructed an RCC (G+7 Floor) comprising residential units and shops. The appellant shares co-ownership of this land. In this scenario, the builder’s permission to develop the project known as “Dona Presidency”, situated at Darandha, Mouza Beltola, P.S. Dispur, Guwahati, District Kamrup is vide a Development Agreement and a General Power of Attorney, dated the 23rd of November, 2005. The Guwahati Municipal Corporation issued a No-Objection Certificate for construction of the project known as “Dona Presidency”. Although the appellant alleges that the actual acreage granted was inadequate, whereas in reference to the Development Agreement, the landowner has a share of 25 % in the Project.

There was no Power of Attorney executed by co-owners in favour of contractor or settle the shortfall issue before starting work again after Sankar Baruah passed away in September 2014. They also advertised and promoted the sale of business apartments. In a complaint filed with the Assam Real Estate Regulatory Authority, the appellant claimed that the RERA had been violated and that the approved plan and allotment commitments had not been followed. The appellant requested compensation or proportionate space in the commercial units to satisfy the original allotment commitments. In its order dated the 25th of January 2024, the Authority held that the project in question is outside of its purview and mentioned that the appellant filed the suit over eight years after the project was completed rather than approaching any forum beforehand. The appellant filed an appeal with the Tribunal after becoming enraged by the Authority’s decision.

Issues

Two primary issues are observed to have been addressed in the present case as under:

• Is the aspect of who constitutes as an aggrieved person and whether the present Appellant could be regarded.

• Whether the real estate project “Dona Presidency” was within the purview of the RERA 2016 based on the admitted facts of the case and the law established in M/s Newtech Promoters and Developers Pvt. Ltd. V. the State of U. P.? If so, could the complaint filed before the RERA be sustained?

Judgment & Analysis

The interpretation of law in M/s Newtech Promoters and Developers Pvt. Ltd. V. the State of U. P., delivered by a three-judge bench consisting of Justices U. U. Lalit, Ajay Rastogi and Aniruddha Bose, of the Supreme Court states that “From the scheme of the Act of 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.”

After noting that the real estate project in question had received an occupancy certificate on May 7, 2014, which was a long time before the RERA framework was put into place, the Tribunal held that projects finished before the Real Estate (Regulation and Development) Act, 2016 could not have its provisions applied retroactively.

Although what constitutes an “ongoing project” is not expressly defined in the RERA, its definition is clear from the first proviso to sub-section (1) of section 3 of the Act, which states that it refers to real estate projects that were in progress or ongoing on the date the Act was enacted and for which the project’s completion certificate had not yet been granted. Under those circumstances, the real estate project promoter was mandated to have applied for registration of the aforementioned ongoing project to the relevant Real Estate Regulatory Authority within three months of the Act’s effective date.

Further, Section 2(q) of the Act, reproduced above, defines a “completion certificate” as any certificate, under whatever name known, issued by the competent authority attesting to the fact that the real estate project has been developed in compliance with the approved plan, layout plan, and specifications as approved by the competent authority in accordance with local laws. Thus, it is evident through the inference that Dona Presidency does not amount to an ongoing project according to law.

In summary, the Tribunal determined that the appeal submitted to it was unmaintainable, citing the completion of the G+7 RCC building’s construction and the Occupancy Certificate received prior to the RERA’s passage.

Conclusion

The present judgment delivered by the Assam REAT reiterates a clear understanding of what constitutes as an ongoing project and distinguishes the projects to which a retroactive application of RERA is acceptable. This has further increased and enhanced the objectives stated before, with RERA acting as a milestone in the legal aspect of real estate and its regulation and development in India.