This article is written by Anushka Merchant, pursuing a Certificate Course in Real Estate Laws from LawSikho.
Table of Contents
History & background
Over the years, the real estate sector has contributed greatly to the growth and development of the Indian economy. It is responsible for generating employment, investment, revenue and for boosting ancillary industries like housing construction and infrastructure.
Prior to 2016, the sector was unorganized and unregulated and developers dominated the sector. Homebuyers were exploited and they suffered on account of the lack of transparency, false and misleading representations, delayed possession and project cancellations. Although the homebuyers had recourse against the developers under the consumer protection laws in force in India, a need was felt to pass a multifaceted and more comprehensive legislation to safeguard their interests.[1]
On 27th April 2016, the central government notified 59 out of the 92 sections of the Real Estate (Regulation and Development) Act 2016 (“RERA”).[2] RERA came into force on 1st May 2016, with an aim to regulate the real estate and housing sector, to increase the accountability of promoters and to provide a dispute redressal mechanism to homebuyers. RERA provides for the mandatory registration of real estate projects and agents, for the constitution of a regulator and tribunals and for penalties and punishments.
Division of responsibilities between the Central and State Governments
RERA was enacted by the central government under Entry 6 (dealing with transfer of property) and Entry 7 (dealing with contracts) of Schedule VII of the concurrent list of the Constitution of India. The legislative intent was that the provisions of RERA would apply uniformly to all the states and union territories but the appropriate government of each state and union territory would be enjoined to constitute its own authority/regulator and to notify its own rules.[3]
The power to make rules was conferred upon the appropriate governments under Section 84 of RERA. It called upon the appropriate governments to make rules for carrying out the provisions of RERA and to notify them within a period of six months from the date of its commencement. In accordance with Section 84, the central government formulated rules for the union territories without a legislature, the state governments formulated their respective rules and the union territory governments/the Central Ministry of Urban Development, as the case may be, formulated the rules for the union territories with a legislature. The draft rules were published in the official gazette for inviting suggestions and objections and ultimately, the rules were notified. As on date, thirty four states and union territories have notified their rules under RERA. Nagaland and West Bengal are the only states that are yet to notify their rules under RERA.
West Bengal Housing Industry Regulation Act 2017
In West Bengal, the government enacted the ‘West Bengal Housing Industry Regulation Act 2017′ (”HIRA”) for the purpose of regulating its real estate sector, which came into effect on 1st June 2018. Despite repeated requests from the Ministry of Housing and Urban Affairs, to notify RERA and rules thereunder, West Bengal went on to notify its own act and rules.[4]
On 17th January 2019, an activist group known as the “Forum for People’s Collective Efforts” filed a public interest litigation against the State of West Bengal, challenging the constitutional validity of HIRA and seeking a direction for the replacement of HIRA by RERA in West Bengal.[5] The Ministry also went on to file an affidavit seeking to have HIRA annulled. The case is currently pending adjudication before the Hon’ble Supreme Court of India.[6]
Quarterly compliances under RERA
In order to infuse a greater amount of transparency into the industry, RERA requires certain information to be updated every quarter, on the website of the concerned RERA authority. This system allows stakeholders to easily access information relating to a registered project online. Quarterly compliances under RERA can be broadly divided into the following three categories.
Quarterly compliances under the Act
Chapter III of RERA deals with the functions and duties of a promoter and lays down the quarterly compliances under the act. Sub-section (1) of Section 11 states that promoters must upload, on its web page, on the website of the authority, a quarterly up-to-date list of:
- the numbers and types of apartments, plots and garages booked;
- the approvals obtained and the approvals pending (subsequent to the commencement certificate);
- the status of the project; and
- such other information and documents as may be specified in the regulations made by the authority.
Quarterly compliances under the Rules
In addition to the particulars mentioned above, the rules of certain states and union territories require promoters to update additional information on the website of the authority every quarter. The following table discusses the additional quarterly compliances provided for under the rules of each state and union territory.
|
Sr. No. |
State/ Union Territory |
Additional Quarterly Compliances under the RERA Rules |
|
1. 
|
Andhra Pradesh |
● The promoter must provide the status of construction of each floor, each building, the internal infrastructure and common areas, with photographs. ● The promoter must provide information as regards the (i) expected date of receipt of the approvals applied for; (ii) approvals to be applied and the date planned for application; and (iii) modifications, amendments or revisions, if any, issued by the competent authority with regard to any license, permit, approval.[7]
|
|
2. |
Assam |
|
|
3. |
Chhattisgarh |
|
|
4. |
Gujarat |
|
|
5. |
Karnataka |
|
|
6. |
Mizoram |
|
|
7. |
Tamil Nadu |
|
|
8. |
Uttar Pradesh |
|
|
9. |
Bihar |
● Same as serial nos. (1) – (8). ● The promoter must also provide information relating to modifications, amendments or revisions, if any, issued by the competent authority with regard to any sanctioned plans, layout plans and specifications.[8] |
|
10. |
Jharkhand |
|
|
11. |
Orissa |
|
|
12. |
Rajasthan |
|
|
13. |
Telangana |
|
|
14. |
Tripura |
|
|
15. |
Uttarakhand |
|
|
16. |
Andaman and Nicobar Islands |
|
|
17. |
Delhi |
|
|
18. |
Chandigarh |
|
|
19. |
Daman and Diu |
|
|
20. |
Lakshadweep |
|
|
21. |
Dadra and Nagar Haveli |
|
|
22. |
Puducherry |
|
|
23. |
Haryana |
● Same as serial nos. (1) – (8). ● However, the promoter is not required to provide the status of construction of each floor.[9]
|
|
24. |
Kerala |
● Same as serial nos. (1) – (8). ● The promoter must also provide details of the application for occupancy certificate or completion certificate submitted to the competent authority including the date of submission and expected date of clearance.[10]
|
|
25. |
Madhya Pradesh |
● Same as serial nos. (9) – (22). ● The rules state that the promoter must provide the status of all approvals, which shall not be limited to the consent to commence work, environmental clearance, fire NOC, permission from the Water and Sewerage Department and height clearance from the Airport Authority of India.[11]
|
|
26. |
Maharashtra |
● The rules merely state that the authority shall ensure that the information provided by the promoters under the provisions of RERA shall be updated at the interval of every quarter. ● The rules do not specifically require a promoter to provide quarterly updates, in addition to those stipulated under RERA, in respect of the status of the project, construction and approvals.[12]
|
|
27. |
Punjab |
● Same as serial nos. (9) – (22). ● These rules specifically require the promoter to only provide information as regards the number and type of garages/covered car parking spaces that are for sale and that have been booked, in the stilt and basement.[13]
|
|
28. |
Goa |
● No provisions in respect of quarterly compliances have been incorporated under the rules.[14] |
|
29. |
Himachal Pradesh |
|
|
❖ Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Ladakh and Jammu and Kashmir have notified their rules under RERA recently. However, the rules have not yet been published in the public domain.[15] ❖ HIRA provides for the same quarterly compliances, as have been mentioned for the states and union territories at serial nos. (1) – (8).[16] |
||
Quarterly Progress Reports (“QPR”) under the Regulations/Formats
At the time of registration of a project, RERA requires the promoter to set certain targets in respect of construction and finance. The construction target is based on the timelines set by the promoter for stage-wise construction and completion of every floor, wing or building, as the case may be; and the financial target is based on the amount of money planned to be deposited by the promoter in the dedicated bank account opened for the real estate project, at stated intervals. On one hand, some states and union territories have notified regulations or provided formats that require the promoter to submit a project progress report at the end of every financial quarter. On the other hand, some states and union territories have not made provisions in respect of QPRs. QPRs contain more detailed information relating to the project than the quarterly updates required to be given under RERA and the rules notified thereunder. Most of the states and union territories that have notified such regulations or have provided such formats, have a separate webpage for filing the QPRs. QPRs enables the RERA authority to monitor the progress of the project and enables investors, financial institutions and homebuyers to make a more informed decision before investing in a project.
The following table briefly discusses the quintessential contents of QPRs:[17]
|
Sr. No. |
Particulars |
Content |
|
1. |
Construction |
● Details of the physical completion of construction, infrastructure development and inventories. ● Details of sanctions and specifications of the residential buildings, commercial buildings, flats, apartments, units, shops, plots, garages (covered and open). ● The extent of development carried out and the extent of development pending (with a photographic site update). ● Disclosure of the original time-lines for completion of the project, the delay, if any, and the time period within which the pending construction is to be completed. This information shall be certified by an engineer, architect and chartered accountant in practice. |
|
2. |
Finance |
● Financial Progress, which shall include the opening balance at the beginning of the quarter and the closing balance at the end of the quarter; details of funds received through bookings, debt finance, equity finance and other means; costs and expenditure incurred; and the balance available. ● Proposed plans for sourcing funds to finance the project. ● Details of the financial transactions conducted in respect of the separate bank account created for the project including the total amount of money used and the balance amount. ● Summary of the sales report. ● Valuation of the booked and unsold inventory. ● Government dues and payments details. |
|
3. |
Certificates |
● Architect’s Certificate, which shall certify the percentage of work done, the internal and external development works done and the overall percentage of work completed in respect of the project. ● Engineer’s Certificate, which shall certify the details relating to the apartments and buildings constructed (excluding the cost of land), the internal and external development (excluding the cost of land) and the overall estimated costs and expenses incurred. ● Chartered Accountant’s Certificate, which shall certify the withdrawal of monies from the RERA project account. ● Quality Assurance Certificate, which shall certify the quality of materials and workmanship used in the project. |
|
4. |
Miscellaneous |
● Booking details along with a list of allottees. ● List of channel partners and registered agents engaged. ● List of litigation affecting the project, land and property. |
Penalties
Most of the states and union territories require the quarterly lists and QPRs to be updated within seven or fifteen days of every financial quarter until the completion of the project and grant of the occupation certificate. In case of delay, the RERA authority may, in accordance with the act and rules, impose a penalty on the promoter, which may extend up to five per cent of the estimated cost of the real estate project, as may be determined by the authority based on the facts and circumstances of the given case.[18] Such a delay may also result in the revocation of registration under RERA.[19]
Conclusion
Thus, it is clear that RERA aims to make promoters answerable and liable for their actions at every stage of the project. The quarterly compliances provided for under RERA, the rules and the regulations are just one of the many mechanisms used for attaining this goal.
As discussed above, RERA confers on the appropriate governments, the power to frame its own rules and regulations. Therefore, each state and union territory is free to determine the amount and extent of accountability that it wishes to impose on a promoter, over and above the requirements of Section 11 of RERA. As a result of this division of responsibility, some states and union territories have come down harder upon the promoters than others. While all the states and union territories except Nagaland and West Bengal have framed rules under RERA, many of them have not yet framed regulations that provide for QPRs. This goes to show that there has been an uneven operation of RERA in matters including but not limited to quarterly compliances across India. Thus, it can be concluded that although RERA has proven to be a beneficial legislation, the system as whole is burdened with legislative lacunae.
References
[1] Ministry of Housing and Urban Poverty Alleviation, ‘Thirtieth Report – The Real Estate (Regulation and Development) Bill, 2013’ (February 2014) <https://www.prsindia.org/uploads/media/Real%20Estate/SCR-Real%20Estate%20Bill.pdf> accessed on 3 November 2020.
[2] Ministry of Housing and Urban Affairs, ‘Background – Real Estate (Regulation and Development) Act-2016’ <http://mohua.gov.in/cms/real-estate-regulation-and-development-act-2016.php> accessed on 3 November 2020.
[3] Committee on Subordinate Legislation 2016-17, ‘Twenty-First Report – Rules/ Regulations Framed under the Real Estate (Regulation and Development) Act, 2016’ (August 2017) <http://164.100.47.193/lsscommittee/Subordinate%20Legislation/16_Subordinate_Legislation_21.pdf> accessed on 5 November 2020.
[4] Vandana Ramnani, ‘SC directs West Bengal govt to respond to homebuyers’ petition challenging constitutional validity of WBHIRA‘ MoneyControl (19 July 2019) < https://www.moneycontrol.com/news/business/real-estate/sc-directs-west-bengal-govt-to-respond-to-homebuyers-petition-challenging-constitutional-validity-of-wbhira-4224761.html> accessed on 4 November 2020.
[5] Writ Petition (C) No. 000116 of 2019.
[6] Ministry of Housing and Urban Affairs, ‘RERA Status Tracker – Implementation Progress Report as on 7 November 2020’, <http://mohua.gov.in/upload/uploadfiles/files/RERA_Status_Tracker%20(14-11-2020).pdf> accessed on 10 November 2020 (Implementation Progress Report).
[7]Andhra Pradesh Real Estate (Regulation and Development) Rules 2017, r 15(1)(d); Assam Real Estate (Regulation and Development) Rules 2017, r 16(1)(d); Chhattisgarh Real Estate (Regulation and Development) Rules 2017, r 16(1)(d); Gujarat Real Estate (Regulation and Development) (Matters Relating to the Real Estate Regulatory Authority) Rules 2016, r 10(1)(d); Karnataka Real Estate (Regulation and Development) Rules 2017, r 15(1)(D); Mizoram Real Estate (Regulation and Development) Rules 2019, r 16(1)(d); Tamil Nadu Real Estate (Regulation and Development) Rules 2017, r 17(1)(d); and Uttar Pradesh Real Estate (Regulation and Development) Rules 2016, r 14(1)(d).
[8] Bihar Real Estate (Regulation and Development) Rules 2017, r 16(1)(d); Jharkhand Real Estate (Regulation and Development) Rules 2017, r 16.1.4; Odisha Real Estate (Regulation and Development) Rules 2017, r 15(1)(d); Rajasthan Real Estate (Regulation and Development) Rules 2017, r 16(1)(D); Telangana State Real Estate (Regulation and Development) Rules 2017, r 14(1)(c); Tripura Real Estate (Regulation and Development) (General) Rules 2017, r 14(1)(d); Uttarakhand Real Estate (Regulation and Development) (General) Rules 2017, r 14(d); National Capital Territory of Delhi Real Estate (Regulation and Development) (General) Rules 2016, r 14(1)(d); Chandigarh Real Estate (Regulation and Development) (General) Rules 2016, r 14(1)(d); Daman and Diu Real Estate (Regulation and Development) (General) Rules 2016, r 14(1)(d); Lakshadweep Real Estate (Regulation and Development) (General) Rules 2016, r 14(1)(d); Dadra and Nagar Haveli Real Estate (Regulation and Development) (General) Rules 2016, r 14(1)(d); and The Puducherry Real Estate (Regulation and Development) (General) Rules 2017, r 14(1)(d).
[9] Haryana Real Estate (Regulation and Development) Rules 2017, r 14(1)(d).
[10] Kerala Real Estate (Regulation and Development) Rules 2018, r 17(1)(d).
[11] Madhya Pradesh Real Estate (Regulation and Development) Rules 2017, r 16(1)(d).
[12] Maharashtra Real Estate (Regulation and Development) (Registration of real estate projects, Registration of real estate agents, rates of interest and disclosures on website) Rules 2017, r 20.
[13] Punjab State Real Estate (Regulation and Development) Rules 2017, r 15(1)(D).
[14] The Goa Real Estate (Regulation and Development) (Registration of Real Estate Projects, Registration of Real Estate agents, Rates of Interest and Disclosures on Website) Rules 2017; and Himachal Pradesh Real Estate (Regulation and Development) Rules 2017.
[15] Implementation Progress Report (n 6).
[16] The West Bengal Housing Industry Regulation Rules 2018, r 17(1)(d).
[17] Chhattisgarh Real Estate Regulatory Authority (General) Regulations 2020; Himachal Pradesh Real Estate Regulatory Authority (Periodical Progress Reports) Regulation No. 2 of 2020; Maharashtra Beal Estate Regulatory Authority (General) (Amendment) Regulations 2019; The Haryana Real Estate Regulatory Authority, Panchkula (Registration of Projects) Regulations 2018; The Haryana Real Estate Regulatory Authority, Gurugram (Quarterly Progress Report) Regulations 2018; and Bihar RERA, ‘Project Quaterly Progress Formats’ <https://rera.bihar.gov.in/images/Progressreproject28102018.pdf> accessed on 12 November 2020.
[18] RERA, s 61.
[19] RERA, s 7.
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