This article is written by Advocate Chakradhar N who has just completed the Certificate Course in Real Estate Laws from Lawsikho.com. Here he discusses offences under RERA.
About RERA
RERA stands for Real Estate Regulation and Development Act, 2016. It intends to protect the interests of home buyers and enhance transparency in the real estate sector. This Act came into force on 1st May 2016 with 59 of 92 sections were notified on May 1, 2016, and the remaining provisions came into force from May 1, 2017. Under the Act, the central and state governments, are required to notify their own rules under the Act, six months, on the basis of the model rules framed under the central Act. The aims of the Act are-
- To regulate the real estate sector of India.
- To safeguard the home buyers from fraudulent builders.
- To encourage real estate sector by boosting the investments.
- Impose penalties on offending builders or promoters.
- To bring transparency and accountability in the real estate industry.
- To control housing prices which lead to boost the sector and leads to more housing projects.
Non-compliance with the Act: RERA 2016 by Promoter, Real Estate Agent & Allottee recommends imprisonment for a term which may extend up to three years, or fine which may extend up to 10% of the estimated cost of the real estate project or both.
However, most states have added a clause of compounding of offence to avoid imprisonment.
Following are the Offences by Promoter, Real Estate Agent, Allottee and corresponding penalties for compounding those offences are-
Offences by promoter
Promoter offences like non-registration and providing false or contravenes while registration of real estate project. Also, for violating Appellate Tribunal orders would attract penalty and imprisonment.
Below are the few Offences and Penalties described in the Act
Punishment for non-registration under section 3 is defined in Sec 59 of the Act
Provisions under Section 59
(1) Any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to 10% of the estimated cost of the real estate project as determined by the Authority.
(2) Any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term which may extend up to 3 years or with fine which may extend up to a further ten per cent. of the estimated cost of the real estate project, or with both.
Punishments for violating the orders of Appellate Tribunal by the promoter is defined in Section 64
Provision under Section 64
If any promoter, who fails to follow or breaches any of the orders, verdicts or instructions of the Appellate Tribunal, he shall be punishable with an imprisonment for a term which may extend up to 3 years or with fine for every day during which such default continues, which may cumulatively extend up to 10% of the estimated cost of the real estate project, or with both.
Offences by the Real Estate Agent
Offences like failure to comply with orders of Appellate Tribunal will be punishable with a penalty and even imprisonment.
Following is the Offences and punishments described in the Act for Real Estate Agents
Punishment for failure to comply with orders of Appellate Tribunal by a Real Estate Agent is defined under Section 66
If any real estate agent fails to comply with or contravenes the orders or directions of the Appellate Authority, then he shall be punishable with imprisonment up to 1 year or fine for every day during which default continues, which may cumulatively extend up to 10% of estimated cost of the property as determined by the authority, or with both.
Offences by Allottees
Penalty and imprisonment will be levied upon allottees for contravention of any order by the tribunal.
Punishment for contravention of the orders or direction of the Appellate Tribunal is defined under Section 68
Any allottee who disobeys the verdict or instructions of the Appellate Tribunal will be Imprisoned up to 1 year with or without fine for every day during which such defaults continue, which may cumulatively extend up to 5% of the apartments or building cost.
Penalty for the period during which defaults continues which may cumulatively extend up to 5% of the apartment or building cost is defined in Sec 67
Compounding of offence
Any person who is punishable under the act can seek compounding of the offence by the court, it can be either before or after the proceedings. The act permits the compounding depends upon terms and conditions and payment of fee is mentioned in the rules framed. Also, the amount to be charged on compounding should not exceed the maximum amount for that offence.
Compounding of offences under RERA Act, 2016
As per section 70 of the Act, any person who is punishable with imprisonment can be compounded subject to the terms and conditions which is defined by the appropriate Government. Also, the fine payable for imprisonment needs to be specified by the said rules, that should not be more than the maximum fine payable for the offence.
A list of compoundable offences is provided below
Offences and amount of fee payable for compounding
(1) The below table shows the offences and the corresponding amount of fine payable at the court for compounding of offence
|
Offence |
Penalty for Compounding the Offence |
|
Imprisonment under subsection (2) of section 59 |
10% of the estimated cost of the real estate project |
|
Imprisonment under section 64 |
10% of the estimated cost of the real estate project |
|
Imprisonment under section 66 |
10% of the estimated cost of the plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated |
|
Imprisonment under section 68 |
10% of the estimated cost of the plot, apartment or building, as the case may be |
The above-specified rates are applicable if the appropriate Government might have notified in the official gazette.
(2) Once the payment was done as mentioned in the above table, then any person in custody for that offence should be set at liberty and no further proceedings continued against such person in any court.
(3) After acceptance of the amount for compounding of offence as mentioned in the table, then the Court shall be deemed to amount to an acquittal within the meaning of section 300 of the Code of Criminal Procedure, 1973.
(4) Any person (promoter, allottee or real estate agent) who compounded the offence should follow with the orders of the regulatory authority or the Appellate Tribunal within the period specified by the court, i.e. not more than 30 days from the date of compounding of the offence.
The rules framed by Delhi, Tamil Nadu and Karnataka provide for compounding of various offences punishable with imprisonment for an amount specified therein.
In Case of Promoter
An offence punishable with imprisonment can be compounded by paying 10% of the estimated cost of the real estate project;
In Case of an Agent
An offence punishable with imprisonment can be compounded by paying 10% of the estimated cost of the plot, apartment, or building as the case may be of the real estate project for which the sale or purchase has been facilitated;
In Case of an Allottee
An offence punishable with imprisonment can be compounded by paying 10% of the estimated cost of the plot, apartment, or building as the case may be.
However, the rules framed by Maharashtra, Haryana, Gujarat and Uttar Pradesh differ from the rules framed by the above States in relation to the compounding of offences, which are as follows:
Maharashtra and Haryana
In Case of Promoter
An offence punishable with imprisonment can be compounded by paying 5% (in case of violation of the order of the Authority) and 5% (in case of violation of an order of the Appellate Tribunal) of the estimated cost of the real estate project, which may extend up to 10%.
In Case of an Agent
An offence punishable with imprisonment can be compounded by paying 5% of the estimated cost of the plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated, which may extend up to 10%.
In case of an Allottee
An offence punishable with imprisonment can be compounded by paying 5% of the estimated cost of the plot, apartment or building, as the case may be, which may extend up to 10%.
Gujarat
In Case of Promoter
An offence punishable with imprisonment can be compounded by paying 5% in case of violation of the order of the Authority and in case of violation of an order of the Appellate Tribunal.
In Case of an Agent
An offence punishable with imprisonment can be compounded by paying 5% of the estimated cost of the plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated.
In Case of Allottee
An offence punishable with imprisonment can be compounded by paying 5% of the estimated cost of the plot, apartment or building, as the case may be.
Uttar Pradesh
In Case of Promoter
An offence punishable with imprisonment can be compounded by paying money proportionate to the term of imprisonment subject to a maximum of 10% of the estimated cost of the real estate project for three years.
In Case of an Agent
An offence punishable with imprisonment can be compounded by paying money proportionate to the term of imprisonment subject to a maximum of 10% of the estimated cost of the plot, apartment or building for one year.
In Case of Allottee
An offence punishable with imprisonment can be compounded by paying money proportionate to the term of imprisonment subject to a maximum of 10% of the estimated cost of the plot, apartment or building for one year.
Whoever seeks the compounding should comply with the orders of the Authority or Appellate Tribunal within 30 days from the date of compounding of the offence.
On payment of the sum of the specified money and after compliance of the orders of the Authority or the Appellate Tribunal, any person in custody in connection with that offence shall be set liberty and no proceedings shall be instituted or continued against such person in any court for that offence.
The acceptance of the sum of the money for compounding an offence by the court shall be deemed to be an acquittal within the meaning of section 300 of the Code of Criminal Procedure, 1973.
Penalty Fund Account
If the authority is established by the central government, then penalties recovered under the Act are to be deposited in the Consolidated Fund of India. If the authority is established by the state, it must be deposited in the state account. Although, grants received by the authority will be credited to the Real Estate Regulatory Fund.
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