Unit III - Urban Development and Real Estate laws

Question - : What were significant reasons and challenges that gave rise to land acquisition
act? Discuss?

Answer- Need for the Land Acquisition Act

There are a number of significant challenges and reasons why a new land acquisition statute was
necessary. The following are a few of the primary factors and concerns:

• The need for urbanisation and land has grown as a result of industry expansion,
globalisation, Special Economic Zones, etc. On the other hand, reasonable compensation,
relocation, and restoration plans must be offered to landowners whose property must be
acquired by the government. The land is therefore necessary for industrialisation and
economic progress, but the affected populations must not suffer as a result of the acquisition.

• The term “public purpose” has produced significant issues. The Supreme Court has
expanded the definition of “public purpose” in decisions like Yamuna Expressway, Smt.
Somavanti & ors. case (1962), and several such cases. In certain situations, the court has
ruled that it is legal to acquire property and give it to a private firm for projects that do not
truly use it for public purposes. As a result, one of the primary justifications for the
acquisition of new property is the wide interpretation and absence of precise criteria.

• In the instance of eminent domain acquisition by the state or acquisition for a private
enterprise for a project connected to a public purpose, the prior laws provided no provisions
for relocation and rehabilitation. Despite receiving compensation, the impacted individuals
still face significant difficulties.

• Previously, the collector had the ability to decide on compensation. The quantum of the
compensation was to be determined using the worth of the local market. However, there was
no detailed process for calculating compensation or any other rules. In certain instances, the
landowner was deceived.

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 • The previous law lacked a provision requiring permission from the owner of the property the
government intended to acquire. Instances like Nandigram, where the government chose to
acquire the land of the farmers and gave them short notice so that a Special Economic Zone
could be established, occurred as a result of the lack of such laws.

• Section 17 of the 1894 legislation, which discusses the urgency clause, was a significant
flaw. The government and private businesses have abused this urgency clause a great deal.

Land Acquisition, Rehabilitation and resettlement Act, 2013

Land acquisition in India refers to the procedure by which the Union or a state government in India
acquires private land for industrialisation, the advancement of infrastructural facilities, or the
urbanisation of privately owned land, and offers compensation to the impacted landowners as well
as their rehabilitation and resettlement.The right to fair compensation and transparency in Land
Acquisition, Rehabilitation, and resettlement Act, 2013 (LARR), which went into effect on January
1, 2014, governs land acquisition in India. The Land Acquisition Act of 1894 controlled land
acquisition in India up until 2013.

An ordinance with the formal mandate to “meet the dual objectives of farmer welfare; coupled with
speedily satisfying the strategic and developmental demands of the country” was issued by the
President of India on December 31, 2013. The Land Acquisition Act of 1894 helped institutionalise
involuntary acquisition during the course of its 120-year existence, with little respect for the rights
of individuals who were evicted from their lands and left without a means of subsistence, security,
or community. Under this colonial statute, there was no effective consultation procedure, which was
indicative of the larger premise supporting the whole law on land acquisition at the time, which was
founded on the idea of eminent domain. The legislation’s tone assumed that the needs of the State
for the common good would always take precedence over the interests of landowners and
characterised them as tragic “victims of growth.”

The Statement of Objects and Reasons of the Land Acquisition (Amendment) Act, 1984, which
discussed the “sacrifices” of the affected people who were “unavoidably” being deprived of their

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property rights for the greater interests of the society, seemed to indicate this. By seeking to make
the land acquisition process more facilitating and collaborative, the Land Acquisition Act of 2013
seeks to rectify this imbalanced paradigm of development.

The Indian Government approved the Right of Fair Compensation and Transparency in Land
Acquisition, Rehabilitation, and Resettlement Act, 2013. It was passed in order to provide
transparent rehabilitation and resettlement processes and equitable compensation in the event of
land acquisition. The former 1894 land acquisition Act has been repealed in favour of this one. Due
to the gaps and openings in the previous land acquisition Act of 1894, this Act was passed. Its
foundation was laid in 2007 when the UPA administration proposed the Rehabilitation and
Resettlement Bill of 2007. The Rehabilitation and Resettlement Bill of 2009 and the Land
Acquisition Act of 2009 were then introduced in Parliament. Both Bills in Parliament have expired.
After carefully examining the circumstances and problems surrounding the land acquisition, the
National Advisory Council recommended the “National Development, Land Acquisition,
Resettlement, and Rehabilitation Act.” as opposed to the two separate pieces of legislation, the Land
Acquisition (Amendment) Bill 2009 (LAA 2009) and the Resettlement and Rehabilitation Bill,
2009. (R&R 2009). The LARR Bill, which was proposed in 2011 and then passed by the Parliament
in 2013 to promote the cause, became law as a result.

This is a law that governs land acquisition and lays out guidelines for providing compensation,
rehabilitation, and resettlement to those impacted in India is the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013. The Act includes
measures for equitable compensation for landowners who lose their property, more openness in the
land acquisition process for industries, buildings, and infrastructure projects, and guarantees the
rehabilitation of individuals who are impacted.

Q. What were the main objectives of Land Acquisition Act, 2013?

Answer.- Objectives of the Land Acquisition Act, 2013
The “Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and
Resettlement Act, 2013” and the national draft LARR Bill from 2011 both outline the Act’s

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objectives. Inferring from the Act and the national draft LARR Bill of 2011, the following primary
objective:

• The Act’s first goal is to define and direct a land acquisition process that involves
consultation with local self-government and the Gram Sabha and is transparent, educational,
and participatory. This land acquisition process’s goal is the development of vital
infrastructure and urbanisation, both of which are required for public purposes.

• The second objective is to guarantee that the landowners whose property is being acquired
receive equitable and fair compensation while taking into account all the economic and
social factors. likewise to guarantee appropriate procedures and rules for the same.

• Aside from the landowners, other families that depend on the property either directly or
indirectly also suffer when it is bought. The rehabilitation and resettlement of the affected
landowners and their families is the third primary objective, which was not included in the
previous Land Acquisition Act.

Applicability of the Land Acquisition Act, 2013

The government acquires property for its own use, possession, and control, including public sector
enterprises. The land is acquired by the government with the ultimate goal of transferring it to
private corporations for a specific public purpose. Projects involving public-private partnerships are
included in LARR 2013, but those involving property acquired for state or national highway
projects are not. The land is acquired by the government for declared and immediate use by private
businesses for public purposes. Acquisitions made under 16 current laws, such as the Special
Economic Zones Act of 2005, the Atomic Energy Act of 1962, the Railways Act of 1989, etc., are
exempt from the terms of the Act.

Important provisions of the Land Acquisition Act, 2013

Public purposes

The following are examples of public purposes for land acquisition in India as defined by Section
2(1) of the Act:

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• For any work essential to the national security, defence, or safety of the people, or for
strategic reasons pertaining to the navy, military, air force, and armed forces of the State,
including central paramilitary forces; or

• For infrastructure projects, such as those listed below, specifically:

1. All actions or things mentioned in the notice issued by the Government of India’s
Department of Economic Affairs (Infrastructure Section) number 13/6/2009-INF, dated
March 27, 2012, with the exception of private hospitals, private schools, and private
lodging;

2. Projects which involve agro-processing, the provision of agricultural inputs, warehousing,

cold storage facilities, and marketing infrastructures for agriculture and related industries
like dairy, fisheries, and meat processing, established or owned by the relevant government,
a farmers’ cooperative, or an institution established by statute;

3. A plan for mining operations or industrial corridors, as well as national investment and
manufacturing zones, as specified in the National Manufacturing Policy;

4. A project to provide sanitary facilities and water harvesting buildings;

5. A project for institutions or programmes for education and research that are run or supported
by the government;

6. A project for sports, healthcare, tourism, and space programme transportation;

7. Any infrastructural facility that the Central Government may notify in this respect after
notifying Parliament of the notification;
• An initiative for families who were impacted by the project;

• Housing projects or any income groups that the relevant government may from time to time
specify;

• The supply of land for residential uses for the weaker sections in rural and urban regions, or
a planned development project, or the development of village areas or any place in urban
areas;

• Project for residential purposes to the poor or landless or to those living in disaster-prone
regions, or to people who have been displaced or otherwise impacted by the execution of

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 any project conducted by the Government, any local authority, or a company owned or
managed by the State.
The cooperation of the landowner is not necessary when the government announces a public
purpose and immediately controls the land. However, before using its authority under the Act to
acquire the remaining land for the public good, the government must first obtain the consent of at
least 80% of the project’s affected families through an informed process. In the case of a public-
private project, at least 70% of the affected families must also consent to the acquisition process.

Compensation under the Act

According to Section 23, the collector must investigate the objections that any interested party has
raised in response to a notice given under Section 21 and the respective interests of the people
requesting compensation, rehabilitation, and resettlement, and he must then issue an award under
his signature of-

1. The actual land area;

2. The compensation calculated in accordance with Section 27 and the Rehabilitation and
Resettlement Award calculated in accordance with Section 31 and which in his opinion
should be allowed for the land; and

3. The distribution of the compensation among all parties, whether or not they have
individually appeared before him, who are known to have an interest in the land or of whose
claims he is aware.

Period for award

According to Section 25, the collector must provide an award within a year of the date the
declaration was published. If no award is issued within that time frame, the whole land acquisition
process would be abandoned. With the proviso that the appropriate government may decide to
prolong the 12-month term if, in its opinion, circumstances exist that warrant the same;
nevertheless, such a decision must be documented in writing, informed, and put on the website of
the authority involved.

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Market value determination

The claimant shall be entitled to compensation based on the market value of the land as of the date
of the preliminary notice. The more expensive of the following shall constitute the market value of
the proposed land under Section 26 to be acquired:

1. The minimum land value required under the Indian Stamp Act of 1899 for the registration of
sale documents in the region where the land is located, if any; or

2. The top fifty percent of the sale deeds filed over the previous three years in the closest
village or area to the property being acquired, which gives the average selling price for
similar types of land being acquired; or

3. The accepted amount in the event that the site is acquired for private businesses or initiatives
involving public-private partnerships.
For land acquired in rural regions, the market value would be multiplied by a factor of at least one
to two times, while for land acquired in urban areas, the market value would be multiplied by at
least one.

4. The harm incurred by the interested party when the collector took possession of the property
as a result of the acquisition negatively impacting his other property, whether movable or
immovable, in any other way, or his earnings;

5. The interested party must relocate or change his place of business as a result of the
collector’s acquisition of the land, and shall bear all reasonable moving-related costs;

6. The genuine harm brought on by the reduction in the land’s revenues between the time the
declaration under Section 19 was published and when the collector took control of the
property; and

7. Any other basis that would be beneficial to the affected families and in the interests of
equality and justice.
Value of attached items

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The services of a qualified engineer or any other specialist in the relevant field, as may be
considered necessary by him, will be used by the collector to determine the market value of the
building and other immovable property or assets attached to the land or building that are to be
acquired under Section 29 that:

1. The collector may use the assistance of experts in the fields of agriculture, forestry,
horticulture, sericulture, or any other subject he may see as essential in order to assess the
worth of the trees and plants related to the property acquired.

2. The services of experienced individuals in the agricultural sector may be used by the
collector, as he may deem them essential for determining the worth of the standing crops
destroyed during the land acquisition procedure.

In addition to the compensation due to everyone whose land has been acquired, this solatium sum
must be paid. According to the First Schedule of the Land Acquisition Act, the collector must issue
specific awards that include information on the compensation that is due as well as how it will be
paid. In addition to the market value of the land specified in Section 26, the collector must also
award a sum calculated at a rate of 12% annually on that market value for the period beginning on
the date that the social impact assessment study was published until the date of the award by the
collector or the date that the land was actually taken into possession, whichever comes first.

Determination of the social impact of public purpose

Land may only be acquired for public purposes. The Act defines public purpose to include, among
other things, defence and national security; government- and government-built roads, railways,
highways, and ports; land for project-affected people; planned development and improvement of the
village or urban sites; residential purposes for the poor and landless; etc. This is almost similar to
the 1894 Act’s provisions. In some circumstances, getting the approval of 80% of the project’s
affected individuals is necessary. These include buying land for the government to use for reasons
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other than those listed above, for public-private partnerships to utilise, and for private corporations
to use.

Section 5

The appropriate government shall ensure that a public hearing is held in the affected area whenever
a social impact assessment is required to be prepared pursuant to Section 4, after providing adequate
publicity regarding the date, time, and venue for the public hearing, in order to ascertain the
opinions of the affected families to be recorded and included in the social impact assessment report.

Preliminary notification

The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and
Resettlement Act of 2013 states that the acquisition process starts with the issue of preliminary
notification. A preliminary notification under Section 11 in rural or urban areas shall be issued if it
seems to the appropriate government that land in any area is necessary or likely to be required for
any public purpose.

Publication of notification

The preliminary notification must be published in the manner described below:

1. Published in the Official Gazette;

2. In two daily newspapers published in the specified area, one of which must be in the local
dialect;

3. In the language spoken locally in the offices of the District Collector, Sub Divisional
Magistrate, and Tehsil, as well as in the Panchayat, Municipality, or Municipal Corporation;

4. Displayed on the appropriate Government’s website;

In every case of land acquisition, the concerned Gram Sabha or municipality must be notified of the
details of the notification issued at a meeting specifically scheduled for this purpose as soon as it is
issued.
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The notification that will be sent out must include information about the land that will be acquired,
a description of the public purpose that will be served, the reasoning for the need to relocate the
affected parties, a summary of the Social Impact Assessment Report, and information about the
administrator who will be in charge of rehabilitation and resettlement.

Restraint on transaction

From the date of publication of the preliminary notice until the conclusion of the acquisition
procedures, no one may transact on or cause to be transacted on any of the lands indicated in the
notification. According to the proviso the Collector may, upon the owner of the land so notified in
the application, exempt such owner from the application of this limitation under unusual
circumstances that are documented in writing. However, the Collector shall not be liable for any
damage or harm incurred by any person as a result of his willful breach of this article.

Survey of land

Section 12 outlines the preliminary survey of land and gives officers the authority to do it. It should
be legal for any officer, either generally or expressly authorised by such Government in this regard,
and for his servants and labourers, in order to enable the appropriate Government to decide the area
of land to be acquired.

1. to access any land in such area and survey and level it;

2. to drill or dig into the soil;

3. to carry out any additional actions required to determine whether the land is suitable for
such a purpose;

4. to outline the boundaries of the land that is being considered for acquisition and the
anticipated path of any proposed activity (if any); and

5. to mark such levels, borders, and lines by planting markers and digging trenches; and, in
cases where the survey cannot be finished, levels taken, boundaries indicated, or clear away
any part of a standing crop, fence, or jungle away.
Restriction
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No action under sections (a) to (e) relating to land may be taken without the owner of the land or
without a person authorised in writing by the owner being present. If the owner has been given a
reasonable chance to be present during the survey and has been given at least sixty days’ notice, the
survey may be conducted without the owner’s presence.

Compensation for damages

According to Section 13, the officer is required to cover any damage at the time of entry pursuant to
Section 12. It is compensation for the intended harm. Damage is any harm done to land while
surveying it or performing other tasks required to determine if it may be used for a public purpose.

If there is a disagreement over whether the sum paid is sufficient, the officer must immediately
report the matter to the Collector or another district chief revenue officer, whose judgment is
binding.

The fundamental rule that no man’s property may be acquired without providing him with a fair
opportunity to be heard is upheld by Section 15. The major goal of sending out a preliminary
notification is to solicit any objections, if any, from the owners or other parties with an interest in
the property, giving them a chance to voice their grievances with the government’s plan to acquire
their holdings. According to Section 15(1), any party with an interest in land that has been informed
that it is necessary or likely to be required for a public purpose may object to the notice within 60
days of the preliminary notification’s publication date.

1. the size and appropriateness of the land that is intended to be acquired;

2. provided justification for a public purpose;

3. the Social Impact Assessment report’s conclusions.

Report on the remarks

Every objection must be submitted in writing to the collector. The Collector shall provide the
objector with an opportunity to be heard in person or by any person authorised by him or by an

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Advocate, and shall submit a report to the appropriate Government containing his recommendations
on the objections, along with the record of the proceedings held by him, as well as a separate report
providing therein the approximation of the cost of land acquisition, details regarding the number of
affected families likely to be relocated, for the decision to be made.

If concerns are raised, the collector will take them into account and, in his report to the government,
propose a course of action. The collector is required to provide a report if no objections are raised.
The government is then given the green light to continue. According to Section 15(3), the
competent government’s decision regarding the objections is binding.

Scheme for rehabilitation and resettlement

The Administrator must prepare the Rehabilitation and Resettlement Scheme in accordance
with Section 16. The Administrator for Rehabilitation and Resettlement is responsible for
conducting a survey and doing a census of the affected families following the issuance of the
preliminary notification by the Collector.

• details on the lands and other immovable property each impacted household is buying;

• livelihoods lost for those who are landless and who depend heavily on the lands being
acquired;

• a list of public utilities, government structures, amenities, and infrastructure that are
impacted or are anticipated to be impacted, where relocation of impacted families is
concerned;

• information on any resources that are obtained as common property.

Drafting the scheme

The Administrator must create a draft Rehabilitation and Resettlement Scheme based on the prior
survey and census, which must include the following:

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 • The specifics on each landowner’s and landless person’s rehabilitation and resettlement
rights when impacted households are being relocated and their livelihoods are substantially
based on the acquired lands;

• The draft must specify a deadline for the Rehabilitation and Resettlement Scheme’s
implementation.
Specifics about the government structures, amenities for the general public, and infrastructure
facilities that must be supplied in the resettlement area must be made known locally by holding a
public hearing in the impacted region before being considered in the relevant Gram Sabhas or
Municipalities.

After the public hearing is over, the administrator must give the collector the draft of the
Rehabilitation and Resettlement Scheme, along with a detailed report on the claims and objections
made during the hearing.

In accordance with Section 17, the Collector must consult the Rehabilitation and Resettlement
Committee established under Section 45 at the project level on the draft scheme that the
Administrator has provided. The proposed Rehabilitation and Resettlement Scheme will be
submitted by the Collector along with his recommendations to the Commissioner of Rehabilitation
and Resettlement for approval.

If the plan is approved, the Commissioner is required by Section 18 to make the Rehabilitation and
Resettlement Scheme publicly available in the following ways:

• In the local language to the Tehsil, the District Collector, the Sub-divisional Magistrate, and
the offices of the Panchayat, Municipality, or Municipal Corporation, as applicable;

• In the areas impacted;

• Posted on the appropriate government’s website.

Declaration

A final statement dismissing the claims will be made by the appropriate authorities following
consideration of any objections that have been raised. According to Section 19 of the new Act, the
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authority must publish the final declaration within 12 months of the date the preliminary
notification under Section 11 of the Act was issued.

When the appropriate government determines that a certain piece of property is required for a
public purpose, it must be declared as such, together with a designated area known as the
“resettlement area” for the purposes of rehabilitation and resettlement of the affected families, under
the hand and seal of the Secretary to the government or of any other officer duly authorised to
certify its orders, and different declarations may be made from time to time in respect of different
parcels of any land covered by the same preliminary notification.

Publication of the declaration

Every declaration must be published in the manner described below:

1. Published in the Official Gazette;

2. In two daily newspapers published in the area, one of which must be published in the local
language;

3. At the Panchayat, Municipality, or Municipal Corporation, as appropriate, as well as at the

District Collector, Sub-divisional Magistrate, and Tehsil offices;

4. Posted on the appropriate Government’s website.

Summary of rehabilitation and resettlement scheme

A summary of the Rehabilitation and Resettlement Scheme and a statement must be published by
the Collector. But unless the summary of the Rehabilitation and Resettlement Scheme is published
alongside it, no disclosure under this shall be made.

Additionally, the “requiring body” is required to provide a deposit equal to or greater than the cost
of acquiring the land, as determined by the respective authority.

According to Section 3(zb), a “requiring body” is any company, body corporate, institution, or other
organisation for which land is to be acquired by the appropriate government. This definition also
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includes the appropriate government if the land is being acquired for the government’s own use or
for later transfer to a company, body corporate, institution, or other organisation for a public
purpose.

The Court ruled in Habib Ahmed v. State of UP that the acquisition of the property was not
necessary for a public purpose, and hence neither the notification nor the declaration could be
revoked. The state government must be the exclusive authority to determine whether the land is
needed for a public purpose or not.

Lapse of notification

If a declaration is not submitted within 12 months after the preliminary notification date, the notice
will be presumed to be revoked. According to the proviso, any time during which the land
acquisition procedures were stalled due to a stay or injunction by a court order will be disregarded
for calculating the 12-month timeframe. If the appropriate government determines that there are
reasons to justify doing so, it may decide to extend the 12-month period. In this case, the decision
must be made in writing, notified, and published on the authority’s website. After making the
declaration, the appropriate government may acquire the land in the manner described by this Act.
The declaration shall be conclusive proof that the land is necessary for a public purpose.

Notice to interested persons

“Person interested” is defined in Section 3(x) as:

• All parties claiming a stake in compensation to be paid in connection with the acquisition of
land;

• The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights)
Act of 2006 recognised some forest rights for certain groups, although such rights have
since been lost by these groups;

• A party with an interest in a land-related easement;

• Those with tenancy rights under pertinent State legislation, such as sharecroppers; and
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 • Someone whose main source of income is expected to be negatively impacted;
Public notice

In accordance with Section 21, the Collector is required to post a public notice stating that the
government intends to take possession of the land and that claims for compensation, rehabilitation,
and resettlement for all interests in such land may be requested by him on his mail and at
convenient locations on or near the land to be taken.

The public notice must outline the specifics of the needed property and demand that all parties
interested in the land come before the collector at the time and location specified in the notice to
make their claims for compensation, rehabilitation, and resettlement, as well as any written
objections.

The time frame shouldn’t be less than 30 days or longer than 6 months from the day the notification
was published.

If any interested party lives elsewhere and does not have an agent, the collector will see to it that the
notice is published in at least two national daily newspapers, forwarded to him by mail at his last
known addresses of home and business, and made available on his website.

In State of Madras v. B.V. Subramania Iyer (1961), the Court decided that any dispute over a single
claimant’s title is included in the term “dispute.” Public funds must be used to pay compensation to
the rightful owner of the property, not just to any claimant who wishes to show up on the scene,
when the government uses its power of eminent domain to acquire it. In this regard, the government
has a specific duty and cannot afterwards hide behind the justification that the compensation was
given to the claimant who showed up while others did not.

Statement to collector

According to Section 22, the collector may also require any interested party to make or deliver to
him a statement within 30 days that includes the name of every other person who has an interest in
the land or any part of it as a co-proprietor, sub proprietor, mortgagee, tenant, or in any other

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capacity, as well as information about the type of interest they have, as well as any rents and profits
they have received or are due for the three years immediately prior to the date of the statement.

According to Sections 175 (omission to produce a document to a public servant by a person legally
bound to produce it) and 176 (omission to give notice or information to a public servant by a person
legally bound to give it) of the Indian Penal Code, 1860, everyone who is required to make or
deliver a statement to the Collector shall be deemed to be legally bound to do so.

According to the 2013 Act, the minimum payment must be a multiple of the assessed market value
of the property, the value of any attached assets, and a settlement equivalent to 100% of the
assessed market value of the property, including the value of any attached assets.

Compensation under the Act

According to Section 23, the collector must investigate the objections that any interested party has
raised in response to a notice given under Section 21 and the respective interests of the people
requesting compensation, rehabilitation, and resettlement, and he must then issue an award under
his signature of-

1. The actual land area;

2. The compensation calculated in accordance with Section 27 and the Rehabilitation and
Resettlement Award calculated in accordance with Section 31 and which in his opinion
should be allowed for the land; and

3. The distribution of the compensation among all parties, whether or not they have
individually appeared before him, who are known to have an interest in the land or of whose
claims he is aware.
Period for award

According to Section 25, the collector must provide an award within a year of the date the
declaration was published. If no award is issued within that time frame, the whole land acquisition
process would be abandoned. With the proviso that the appropriate government may decide to

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prolong the 12-month term if, in its opinion, circumstances exist that warrant the same;
nevertheless, such a decision must be documented in writing, informed, and put on the website of
the authority involved.

Market value determination

The claimant shall be entitled to compensation based on the market value of the land as of the date
of the preliminary notice. The more expensive of the following shall constitute the market value of
the proposed land under Section 26 to be acquired:

1. The minimum land value required under the Indian Stamp Act of 1899 for the registration of
sale documents in the region where the land is located, if any; or

2. The top fifty percent of the sale deeds filed over the previous three years in the closest
village or area to the property being acquired, which gives the average selling price for
similar types of land being acquired; or

3. The accepted amount in the event that the site is acquired for private businesses or initiatives
involving public-private partnerships.
For land acquired in rural regions, the market value would be multiplied by a factor of at least one
to two times, while for land acquired in urban areas, the market value would be multiplied by at
least one.

Determination of compensation

The collector will compute the entire amount of compensation to be given to the landowner whose
land has been acquired by adding all assets connected to the land under Section 27 after determining
the market value of the land to be acquired. The collector is required by Section 28 to take the
following factors into account when assessing the amount of compensation to be given for land
acquired under this Act:

1. The award amount is determined in accordance with the First and Second Schedules and the
market value as assessed in accordance with Section 26;

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 2. The harm incurred by the interested party as a result of the removal of any standing crops
and trees that may have been on the property at the time the Collector obtained control of it;

3. The damage incurred by the interested party upon the collector’s taking control of the
property as a result of disconnecting it from his other property;

4. The harm incurred by the interested party when the collector took possession of the property
as a result of the acquisition negatively impacting his other property, whether movable or
immovable, in any other way, or his earnings;

5. The interested party must relocate or change his place of business as a result of the
collector’s acquisition of the land, and shall bear all reasonable moving-related costs;

6. The genuine harm brought on by the reduction in the land’s revenues between the time the
declaration under Section 19 was published and when the collector took control of the
property; and

7. Any other basis that would be beneficial to the affected families and in the interests of
equality and justice.

Value of attached items

The services of a qualified engineer or any other specialist in the relevant field, as may be
considered necessary by him, will be used by the collector to determine the market value of the
building and other immovable property or assets attached to the land or building that are to be
acquired under Section 29 that:

1. The collector may use the assistance of experts in the fields of agriculture, forestry,
horticulture, sericulture, or any other subject he may see as essential in order to assess the
worth of the trees and plants related to the property acquired.

2. The services of experienced individuals in the agricultural sector may be used by the
collector, as he may deem them essential for determining the worth of the standing crops
destroyed during the land acquisition procedure.

Award of solatium
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The collector must impose a “solatium” equal to 100% of the compensation amount after
determining the total compensation to be paid in order to determine the final award under Section
30.

In addition to the compensation due to everyone whose land has been acquired, this solatium sum
must be paid. According to the First Schedule of the Land Acquisition Act, the collector must issue
specific awards that include information on the compensation that is due as well as how it will be
paid. In addition to the market value of the land specified in Section 26, the collector must also
award a sum calculated at a rate of 12% annually on that market value for the period beginning on
the date that the social impact assessment study was published until the date of the award by the
collector or the date that the land was actually taken into possession, whichever comes first.

Contravening provisions and problematic issues of the Land Acquisition Act

The Act being discussed is essentially opposed to land acquisition for public purposes. The word
“public purpose” now encompasses a wider range of activities. (Sec. 2(l)) This expanded scope
includes a wide range of tasks. As a result, the likelihood of exploitation has grown as the definition
of “public purpose” has been expanded. The likelihood of abuse will undermine the fundamental
goal of industrialisation-based economic development.

Acquisition by private enterprises is the main change. There are several provisions under the new
legislation that must be met in the event of an acquisition by a private corporation. The new statute
demands 80% permission in the case of a private company and 70% consent in the case of a public
company with impacted families. It has provided an SIA evaluation method for this.

However, the legislation lacks clarity on important aspects of SIA evaluation, such as how it will be
done and by which authority or agency. As a result, private corporations might use various improper
tactics to get approval. However, the legislation does not need the approval of affected people if the

20
property is acquired by the government under specific circumstances, as specified in Section 2(l)
public purpose clause. Now, the provided clause contradicts the purpose, which calls for
participatory, informational, and transparent land acquisition.

The “Rehabilitation and Resettlement” clause is one of the major provisions included in the new
land acquisition laws. On the one hand, the legislation provides rehabilitation and relocation
measures for impacted persons, which include not just landowners but also other affected families.
Section 69 states that the “rehabilitation and resettlement cost” shall be calculated in line with
Sections 26 and 30. Section 26 discusses calculating the market value of land, while Section 30
discusses “solatium” based on the market value calculated in Section 26. A question might occur as
to “how can the cost of rehabilitation and resettlement be calculated using market value, and how
realistically does it depend on market value?” There is no answer to this question.

Section 40 also empowers the government to seize land in an emergency if the 30-day notice
provided in Section 30 expires, even if such awards are not made by the collector. This part runs
counter to the third goal.

Another contentious subject is the compensation requirements from Section 26 through Section 30.
Compensation is calculated on the basis of the market value, if any, stipulated in the Indian Stamp
Act of 1899 for the sale of land or the average sale price of land in that location and nearby.
Although the technique for calculating compensation is provided, it is still arbitrary because market
value does not account for the future worth of the land, and the amount indicated in the Act may be
undervalued. So the goal of providing reasonable and fair compensation is challenged, despite the
fact that compensation in rural areas is double the market value.

Furthermore, it establishes provisions for compensation and the method for determining it, as well
as incentives for the affected parties to litigate for the compensation provided to them. The
propensity to claim compensation will stay unchanged because the foundation for determining
compensation has not changed significantly, despite the fact that the amount of the award is twice as
much in rural areas. Although the new legislation replaces the ADJ court with the LARR Authority
in cases of compensation-related disputes, it only transfers the burden from the ADJ court to the

21
LARR Authority, which is not an appropriate solution to the problem of litigation and the
accompanying wastage of resources.

The Act takes economic loss into account, but it does not take other losses into consideration. When
families are separated, they suffer not just economic loss but also social, psychological, and status
loss. Because it is not required that the compensation and arrangements created for them provide
them with the same status and wealth as the land may provide.

Furthermore, Section 105 exempts land acquired by specific acts from the scope of this Act. The
new statute, although including certain modifications, fails to address key issues and contains
loopholes.

The Role of Lucknow Development Authority in Real Estate Development

Are you someone from Lucknow, or planning to invest in Lucknow’s real estate? If your answer is
yes, you are at the right place. Here, we will give you all the details about Lucknow development
authority and real estate to navigate you smoothly through the process.

It’s common knowledge that every city has one regulatory body that sets the proper procedure at all
stages of real estate development and exchange. Buying and selling homes is a crucial activity
undertaken by members of society, therefore it requires proper regulations to be followed.
Regulations not only security of the property exchange but also develops a sense of trust among the
members of society in their government. In the case of Lucknow, that regulatory body is LDA or
Lucknow Development Authority, which controls all the important allocations, permits, and
regulations required in real estate development. Before we move deeper into the various schemes
rolled out by LDA, let us understand Lucknow and its real estate sector.

Lucknow is a city in uttar pradesh, which has been known for its rich legacy of regality. For
centuries the city has garnered appreciation as the city of Nawabs, but lately, the identity of the city
can be seen to have developed as that of a fast-track smart city. The effects of this rapid growth can
be seen in other sectors of the city as well. For instance, the industry that is gaining the most
through this development is the real estate sector. Lucknow, until recent years, was known for its
royal architecture and traditional homes but with the inception of modern inspiration in the
infrastructure of the city, the city is gaining an extravagant skyline. This level of development
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necessitates the significance of a government regulatory body, i.e., Lucknow Development
Authority.

LDA was created in 1974 by the UP Urban Planning and Development Act, of 1973. The Lucknow
Development Authority (LDA) is the main body entrusted with the planning, development, and
execution of Lucknow’s urban development.

The process through which the body undertakes its functioning includes plot control and
acquisition, ambiance structures, and physical and socio-progression of infrastructure in the urban
areas. LDA not only ensures the urbanization of Lucknow city but also the development of proper
facilities. Lucknow Development Authority plans to achieve is to transform the city into an eco-
friendly place to live, through its various stand-alone and center-backed schemes such as
the Lucknow Development Authority housing scheme 2023 and LDA Sulab Awas Yojana, under
PMAY, or Pradhan Mantri Awas Yojana.

LDA or Lucknow Development Authority other than regulating the real estate of Lucknow also rolls
out periodic schemes to provide proper housing to people in need. The very recent scheme rolled
out by LDA was a housing scheme offering 4500 flats at subsidized rates in Sharda Nagar and
Vasant Kunj localities of the society. This scheme gained so much momentum that it was subsumed
under the Pradhan Mantri Aawas Yojana (PMAY), the Central Government’s ambitious ‘Housing
for All’ project. This was a massive success for the LDA. other than this, LDA has been much more
active in providing various schemes in the past few years, some of the schemes put forth

Eligibility for LDA housing scheme:

• Anyone above the age of 18 and with an annual income of Rs. 3 lakh is eligible.

• The candidate must be an Indian national. NRIs may apply.

• The applicant should not have more than one residential property in Uttar Pradesh and no
more than one residential property in Lucknow that has been allocated to them by the LDA
or any other authority.

• Planning on applying for LDA Housing scheme? Here's everything you need to know
to apply online for Lucknow Development Authority Housing Scheme 2023?
• Log in to the Lucknow Development Authority's official website.
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 • Click on the "New Residential Plan" section on the homepage.

• Now, complete the required information, including the father's name, the name of any
coapplicants or nominee, the payment method, and the area pin code, among others.
• Next, enter the information requested (PAN card number, Aadhaar number, yearly income,
bank account information, and registration fee) and check the acknowledgment box.
• Complete the form and upload the necessary documents.
• When the application number is generated, keep it carefully saved for future use.
Now, let us take a look at the features of the Lucknow Development Authority or LDA Sulab Awas
Yojana. This scheme is under the Pradhan Mantri Awas Yojana (PM-AY). Some of the features of
the scheme are as follows:

• The central government in a 60:40 partnership with the state government of Lucknow
constructed 1 Lakh PMAY houses. This will not only reduce the fiscal burden on the central
government but also ensure a cooperative process leading to better development of the
dwellings.

• The scheme includes plans like creditlinked subsidy schemes and beneficiary-led
construction. Under PMAY CLSS or Credit linked subsidy scheme, the home buyers will get
interest concessions based on their annual income levels. The beneficiary-led construction
includes assistance to individuals or families to either construct a new house or repair the
existing one.

• Under the scheme, the government also planned to incorporate insitu slum rehabilitation and
affordable housing partnerships, to ensure a parity of welfare being through the scheme.

• Houses constructed with ecofriendly and sustainable technologies to ensure future ready real
estate of Lucknow. Currently, Lucknow is one of the fastest growing smart city and schemes
like this have a major contribution in it.

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 • Ground floor accommodation is primarily for senior citizens and physically disabled
persons. This feature of the sulab awas yojana flats is one of the prime features, which is
often overlooked by other schemes or builders.

The real estate sector is an important component of the economy and plays a catalytic role in
meeting the country’s housing and infrastructure needs and demands. While this sector has grown
significantly in recent years, it has been largely under-regulated with the absence of standardisation
and lack of adequate buyer protection. Though the Consumer Protection Act of 2019 provides a
forum for real estate buyers to address their concerns, the option is only curative and does not
adequately address all the problems of buyers and promoters in that sector. The absence of
uniformity has been a constraint to the healthy and orderly growth of the industry. Therefore, the
need for regulating the sector has been accentuated in various forums.

History of the Real Estate (Regulation and Development) Act, 2016

The real estate sector was struggling as there were no rigid laws governing the same. The need of
the hour was to appoint a comprehensive regulatory body to govern the same. The 2009 conference
of National Housing Development and Municipal Administration Ministers discussed affordable
housing for all including land-use policies, financial strengthening of local public bodies and a road
map for hovel free cities. To address the issues of land valuation system and urban development
regulation, the discussion also included the creation of a draft Real Estate bill by the Ministry of
Housing and Urban Poverty Alleviation. In July 2011, the Ministry of Law and Justice suggested
that the legislation is part of the concurrent list of the Indian Constitution. Later, on 14 August 2013,
the Real Estate (Regulation and Development) Bill was introduced in Rajya Sabha. The Union
Cabinet approved twenty substantial Amendments to the bill in December 2015, based on Rajya
Sabha Committee recommendations. The law was then passed by the Rajya Sabha on March 10,
2016, and the Lok Sabha on March 15, 2016. The Parliament enacted the Real Estate (Regulation
and Development) Act, 2016, herein referred to as the RERA Act, which aims to protect the rights
and interests of consumers by minimising the malpractices done by the developers and promoting
uniformity business practices and transactions in the real estate sector. The RERA Act came into
25
effect on and from 1 May, 2016. At the time of passing of the Act, only 69 out of 90 Sections were
notified and all other provisions were effective on and from 1 May 2017. On 31st October 2016, the
centre, through the Housing & Urban Poverty Alleviation Ministry, released the general rules of the
Real Estate (Regulation and Development) Act, 2016. The Act was legislated under entry
6 and entry 7 of the concurrent list of the Indian Constitution.

Scope and applicability of the Real Estate (Regulation and Development) Act, 2016

The Real Estate (Regulation and Development) Act 2016, hereinbelow referred to as the ‘Act’
applies to the whole of India except Jammu and Kashmir. Provisions of the RERA Act apply to
residential apartments, buildings and plots whether residential or commercial. The Real Estate
Project defined in the Act includes the development of buildings consisting of apartments,
converting existing buildings into apartments and developing land into plots for the sale of all or
some of the said apartments to carry out the purpose of this Act. Under RERA Act, it is mandatory
to register all projects of more than five hundred square metres. The main aspects covered by the
RERA Act include all project-related information, contract documents for buying and selling
properties, carpet area stipulation, limitation of an advance fee to ten per cent of the apartment a
deposit of seventy per cent of the money collected from the buyers in the escrow account, timely
completion of the project and penal provisions. Hence, it is imperative to note that the RERA Act is
one such comprehensive Act which covers all the projects mentioned above irrespective of whether
it is commercial or residential.

Need for the Real Estate (Regulation and Development) Act, 2016

1. To control and regulate the real estate sectors by shutting out malpractices;

2. To keep consumers out of perils such as delayed delivery, transfer of title of the property, the
quality of amenities provided and necessary changes to be made etc., before purchase;

3. To appoint authorities to manage the real estate sector and to establish an Appellate Tribunal
for each State. To enable home buyers to file complaints in case of any wrongdoing
committed by the builders or developers;

4. To contribute a good percentage to India’s GDP;

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 5. To create accountability and responsibility for the authorities so appointed;

6. To tighten the security on the use of investments done by the home buyers or investors;

7. To have a supreme authorisation on the registration for the projects required to be registered;
and

8. To maintain quality in delivering the project to the buyers as per their interest and give scope
for complaints to the authorities in case of any structural defects.
Importance of the Real Estate (Regulation and Development) Act, 2016

Real estate’s working was previously unregulated. The enforcement of RERA intends to protect the
buyers or investors and in turn boost their confidence. It requires transparency and authority to keep
track of its functioning approach. In reality, it now serves as a spotless ground for buyers as well as
reducing the risk of those buyers or investors who bought or invested in the real estate before the
implementation of the Act. The Act clarifies the relationship between property buyers and
developers. It lays down the process of establishing trust between suppliers and purchasers. It has
even created a state agency to oversee real estate and business transactions. The RERA Act is now
assisting home buyers in receiving their real estate projects on schedule which is a huge comfort for
Indian homebuyers.

Salient features of the Real Estate (Regulation and Development) Act, 2016

1. To regulate and promote the real estate sector by establishing the Real Estate Regulatory
Authority.

2. To carry out the sale of plots, buildings or apartments as the case may be, or the sale of all
the real estate projects transparently and efficiently.

3. To protect the interests of the consumers and buyers and ensure the prevention of
malpractices against them.

4. To establish adequate and speedy dispute redressal systems and also establish Appellate
Tribunals to hear and adjudge appeals from the orders, directions or decisions of the Real
Estate Regulatory Authority.

5. Establishes state-level regulatory authorities called RERA.

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 6. To work on residential real estate projects and register all the projects that are to be
undertaken without which the promoters cannot promote or sell.

7. To cast duties on the promoters to upload details of the project on the website including
layout and site plans.

8. To ensure that two-thirds of the allottees give their written consent in addition to RERA’s
written approval when a promoter has to transfer or assign a majority of the rights and
responsibilities in a real estate project to a third party.

9. To ensure that the buyer or promoter, as the case may be, pays an equal sum in the event of
any default.

10. Where the promoter causes the buyer any loss as a result of other people claiming property
(defective title of property) that has been built or is being built, the promoter shall be liable
to pay compensation to the buyer.

11. To ensure that the money collected from project buyers must be kept in a separate bank
account and utilised solely for the construction of the project. This sum is subject to change
by the State Government.

12. The Act provides the right to legal representation on behalf of the client by a CA, CS or
CMA or legal practitioners

13. It imposes a stringent penalty on promoters, and real estate agents and also prescribes
imprisonment.

An overview of the Real Estate (Regulation and Development) Act, 2016

1. State-level regulatory authorities (Section 20) – Real Estate Regulatory Authority

(RERA): The Real Estate Regulatory Authority (RERA) is established at the state level. The
Act allows state governments to create multiple regulatory authorities, each with the
following mandate:

◦ Register and maintain a database of real estate developments and make it available
for public inspection on the company’s website;

◦ Protection of interests of promoters, real estate agents, and buyers;

28
 ◦ A housing development that is both sustainable and affordable; and

◦ Provide advice to the government and ensure adherence to the Act and its
regulations.
2. Real Estate Appellate Tribunal (Section 43) – The decision of the Real Estate Regulatory
Authorities can be appealed to the tribunals established for each state under the Act
including its composition, application for settlement of the dispute, qualifications for
chairperson and members, powers of tribunal and vacancies of the Appellate Tribunal.

3. Mandatory Registration (Section 3) – Regulatory Authorities require all projects with a

plot size of at least 500 square metres or eight flats to be registered.

4. Deposits – Placing 70% of the monies accumulated from the buyer shall be deposited in a
separate escrow account dedicated solely for the construction of that project.

5. Penal interest on default (Section 61) – Both the promoter and the buyer are responsible to
pay an equal rate of interest in the event of either party’s default.

6. Ceiling on advance payments (Section 13) – Without initially entering into a sale
agreement, a promoter cannot receive more than 10% of the cost of the plot, apartment, or
building as an advance payment or an application fee from a person.

7. Punishment (Section 66) – For violations of orders of Appellate Tribunals and Regulatory
Authorities, developers can face up to three years in prison while agents and buyers can face
up to one year in prison or a fine for every day during which the default continues, which
may extend cumulatively extend up to ten per cent of the estimated cost of the plot,
apartment or building of the real estate project.
Important definitions under (Section 2)

1. Appropriate Government [Section 2(g)] – “Appropriate government” means in respect of

matters relating to,—

◦ the Union territory without Legislature, the Central Government,

◦ the Union Territory of Puducherry, the Union territory Government,

◦ the Union Territory of Delhi, the Central Ministry of Urban Development, and

29
 ◦ the State, the State Government.
2. Appellate Tribunal [Section 2(f)] – “Appellate Tribunal ” means the Real Estate Appellate
Tribunal established under Section 43.

3. Person [Section 2(zg)] – “Person” includes,—

◦ an individual,

◦ a Hindu undivided family,

◦ a company,

◦ a firm under The Indian Partnership Act, 1932 or The Limited Liability Partnership
Act, 2008, as the case may be,

◦ a competent authority,

◦ an association of persons or a body of individuals whether incorporated or not,

◦ a co-operative society registered under any law relating to co-operative societies,

and

◦ any such other entity as the appropriate Government may, by notification, specify on
this behalf.
4. Planning area [Section 2(zh)] – “Planning area” means a planning area or a development
area or a local planning area or a regional development plan area, by whatever name called,
or any other area specified as such by the appropriate government or any competent
authority and includes any area designated by the appropriate government or the competent
authority to be a planning area for future the planned development, under the law relating to
town and country planning for the time being in force and as revised from time to time.

5. 5. Promoter [Section 2(zk)] – “promoter” means,—

◦ a person who constructs or causes to be constructed an independent building or a

building consisting of apartments, or converts an existing building or a part thereof
into apartments, for the purpose of selling all or some of the apartments to other
persons and includes his assignees, or

30
 ◦ a person who develops land into a project, whether or not the person also constructs
structures on any of the plots, to sell to other persons all or some of the plots in the
said project, whether with or without structures thereon, or

◦ any development authority or any other public body in respect of allottees of—
1. buildings or apartments, as the case may be, constructed by such authority or
body on lands owned by them or placed at their disposal by the government,
or

2. plots owned by such authority or body or placed at their disposal by the

government, for the purpose of selling all or some of the apartments or plots,
or

3. an apex state level co-operative housing finance society and a primary co-
operative housing society which constructs apartments or buildings for its
members or in respect of the allottees of such apartments or buildings, or

4. any other person who acts as a builder, coloniser, contractor, developer, estate
developer or by any other name or claims to be acting as the holder of a
power of attorney from the owner of the land on which the building or
apartment is constructed or plot is developed for sale, or

5. such other person who constructs any building or apartment for sale to the
general public.
6. Real Estate Agent [Section 2(zm)] – “real estate agent” means any person, who negotiates
or acts on behalf of one person in a transaction of transfer of his plot, apartment or building,
as the case may be, in a real estate project, by way of sale, with another person or transfer of
a plot, apartment or building, as the case may be, of any other person to him and receives
remuneration or fees or any other charges for his services whether as a commission or
otherwise and includes a person who introduces, through any medium, prospective buyers
and sellers to each other for negotiation for sale or purchase of plot, apartment or building,
as the case may be, and includes property dealers, brokers, middlemen by whatever name
called.
Responsibilities of the appropriate Government

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 1. Notify the rules for the implementation of this Act, within six months of commencement of
this Act

2. Establish the Real Estate Regulatory Authority, within one year of commencement of this
Act, ie., latest by 30th April 2017.

3. Shall depute an officer, preferably, a housing secretary as an interim regulatory Authority

4. Establish the Appellate Tribunals within one year from its commencement, ie. , maximum
by 30th April 2017.

5. Identify an existing Appellate Tribunal for the time being established under any other law in
force, as the Appellate Tribunal until a full-time Appellate Tribunal is established.

6. Appoint members of the Appellate Tribunal and the Chairperson and members of the
Regulatory Authority based on the suggestions and recommendations of the Selection
Committee.

7. Appoint employees and other officers of the Regulatory Authority and the Appellate
Tribunal.

8. Identify and establish office space and other infrastructure for its functioning.

9. To constitute the Real Estate Regulatory Fund, 2017.

10. The Central Government is required to establish the Central Advisory Council.
Projects exempt from the ambit of the Real Estate (Regulation and Development) Act, 2016

The following projects do not require to be registered under the Act when:

1. the area of land does not exceed 500 sq. metres;

2. the number of apartments does not exceed eight.

3. In the case of renovation or repair or re-development:

4. where the area of land proposed to be developed does not exceed 500 square metres or the
number of apartments proposed to be developed does not exceed eight, inclusive of all
phases;

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 5. where the promoter has received a completion certificate for a real estate project before
commencement of this Act;

6. For renovation or repair or re-development which does not involve marketing, advertising,
selling or new allotment of any apartment, plot or building, as the case may be, under the
real estate project.
Application for registration of real estate projects (Section 4)

Every promoter must submit an application to the Authority for registration of the real estate project
in the form, manner, and time stipulated by the regulation of the Authority along with the fee
specified by the Authority.

Step 1: An application has to be filed along with the fee and other documents in the prescribed form
for registration with RERA by the applicants.

Step 2: The approval or rejection of the application for registration shall be done within thirty days
from the date of receiving the application by the Authority.

Step 3: The promoter of the project shall be provided with a registration number, user ID for login
and password for the applicant on successful registration.

Granting of registration by the authority (Section 5)

1. The authority, shall within thirty days from the date of receipt of the application –

2. Grant registration of the real estate project subject to the provisions of the Act and issue the
applicant a registration number, as well as a Login Id and password, to enable him to access
the website of the Authority and create his web page to fill in the details of the proposed
project; or

3. Reject the registration by rejecting the application if it does not conform to the provisions of
the Act and record reasons in writing.
Provided applications cannot be rejected without giving an opportunity of being heard to the
applicant.

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 4. As per sub-section (1), if the authority does not register the project within thirty days, then
the project is deemed to be registered and the promoter shall be given the user ID for login
and password for accessing the RERA website and to create his website for uploading the
details of the proposed project.

5. The registration so granted under this section is valid for the time specified by the promoter
in section 4 under sub-clause (c) for the completion of the project.
Extension of registration (Section 6)

1. There has been a major delay in handing over the project to the buyers by the developers.
The Act was promulgated to avoid such delays. Hence, the developer, at the time of
registration should specify a timeline during which the project will be handed over to the
buyer.

2. The specification of the timeline is very important because if the project is not handed over
within the said time, it may be usurped by the regulator and be revoked.

3. Under this Section, the discretion solely lies with the regulator to grant an extension of
registration.

4. The regulatory authority may take into account the force majeure conditions or any
reasonable circumstance to merit the extension.

5. The promoter shall make an application detailing the force majeure or the reasonable
circumstances which resulted in the delay in such form and by paying the prescribed fee as
the regulatory Authority may specify from time to time.
Revocation of registration (Section 7)

The Authority may revoke the registration granted under Section 5 after being satisfied that –

• the promoter fails to do anything required by or under this Act or the rules or regulations
made thereunder,

• the promoter violates any of the terms or conditions of the competent authority’s approval,

• the promoter is involved in any unfair practices or irregularities.

The authority, upon the revocation of the registration –
34
Debar the promoter and his access to the website with regard to the project he undertook and put his
name under the list of defaulters and display his photograph on the website. He shall also inform the
other Real Estate Authorities in other States and Union Territories about the revocation so made.

Lapse on the revocation of registration (Section 8)

When a registration expires or is revoked under this Act, the Authority may consult with the
appropriate government to take whatever action it deems appropriate, including completing the
remaining development works by a competent authority or an association of allottees, as determined
by the Authority. As per the provisions of the Act, the orders, decisions or directions given by the
Authority shall not take effect until the period of appeal expires. Where the project is revoked under
this Act, the association of allottees will have a preferential right of refusal for proceeding with the
remaining development works.

Registration of real estate agents (Section 9)

Real estate broking is one of the easiest businesses in India as there are no specific qualifications or
experience requirements. Before the onset of RERA, there was no code of practice that set
accountability, transparency and professional benchmarks. As we see, in many parts of the country,
many non-professional agents or brokers operate without a sense of accountability. Thus, the
RERA Act also covers agents who have to mandatorily register under Section 9, without which a
real estate agent or broker cannot facilitate the sale or purchase of any building, plot, or apartment
as part of a registered real estate project sold by the promoter in any of the planning areas. Every
real estate agent willing to act as one shall apply to the Authority within a prescribed time and in
such form and such fee as to be prescribed. The Authority, once satisfied that the provisions of the
Act in relation to the agent’s registration shall –

1. provide the real estate agent with a single registration number,

2. reject the application in case it does not conform with the provisions of the Act or the rules
thereunder with reasons recorded in writing.

35
Provided that no application shall be denied until the applicant has been allowed to be heard on the
issue. The applicant shall be given a reasonable opportunity of being heard in the matter, without
which the application cannot be rejected.

Promoter (Section 12)

No deposit or advance is to be taken by the promoter without first entering into the agreement
for sale (Section 13) – A promoter may not accept an advance payment or application fee from a
person over ten per cent of the cost of the apartment, plot, or building without first entering into an
agreement for sale and registering it.

Structural defect – In case of any structural defect, workmanship defect, quality of delivery, or any
provision related to service, or any duty of the promoter, as the case may be, under the agreement
for the sale relating to such development, must be brought to the notice of the promoter within five
years of the date of handing over possession by the allottee. The promoter is required to rectify such
deficiencies without charge within thirty days and in the event of the promoter failing to do so
within that period, the aggrieved allottees are entitled to receive suitable compensation in the
manner stipulated under the Act.

Obligations of the promoter in case of transfer of a real estate project to a third party (Section
15) – The promoter may not transfer or assign his majority rights and liabilities in a real estate
project to a third party without the prior written consent of two-thirds of allottees, excluding the
promoter, and without the Authority’s prior written approval: Provided that such transfer or
assignment shall not affect the erstwhile promoter’s allotment or sale of apartments, plots, or
buildings in the real estate project.

Obligations of promoter regarding the insurance of real estate project (Section 16) – The
promoter shall secure all insurances that may be required by the competent government, including
but not limited to insurance in respect of –

• Title to the land and buildings that are part of the real estate project; and

• Real estate project construction.

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Transfer of title (Section 17) – In a real estate project, the promoter shall execute a registered
conveyance deed in favour of the allottee and hand over the physical possession of the plot,
apartment, or building, as the case may be, to the allottees, as well as the undivided proportionate
title in the common areas to the association of the allottees or the competent authority, as the case
may be and hand over the common areas to the association of the allottees or the competent
authority. The promoter is bound to comply with the direction of the competent authority, as the
case may be, under this provision within three months from the date of issuance of the occupation
certificate.

After obtaining the said occupation certificate and transferring physical possession to the allottees,
the promoter is entrusted with the duty to hand over the necessary plans and documents including
common areas to the allottees’ association or the competent authority as applicable in accordance
with the local laws. Where there are no local laws in place, the promoter shall, within thirty days of
receiving the completion certificate, hand over all essential documentation and plans including
common areas, to the allottees’ association or the appropriate government, as the case may be.

Return of amount and compensation (Section 18)

If the promoter fails to complete or is unable to give possession of an apartment, plot, or building:

1. In accordance with the terms of the agreement for sale or by the date specified therein; and

2. Due to discontinuance of his business as a developer due to suspension or revocation of the

registration under this Act or for any other reason, he shall be liable on demand to the
allottees, in case the allottee wishes to withdraw.
He shall be liable to the allottees on-demand, without prejudice to any other remedy available, to
refund the amount received by him in respect of that plot, apartment, building or structure, as the
case may be, with interest at such rates and compensation as may be prescribed under this Act.

Establishment and incorporation of Real Estate Regulatory Authority (Section 20)

37
Within one year of the date of enactment of this Act, the competent government shall, by
notification, create a body to be known as the Real Estate Regulatory Authority to exercise the
authorities conferred on it and perform the responsibilities assigned to it under this Act.

Provided that the appropriate government of two or more states or union territories may, if it so
chooses, establish a single authority, provided the relevant government may, if it so desires,
establish multiple authorities in a state or union territory:

Provided that until a regulatory authority is established under this Section, the competent
government may by order nominate any regulatory authority or any officers, preferably the
Secretary of the department dealing with housing as the regulatory authority to discharge the
functions under the Act.

Term of office of the Chairperson and members (Section 23)

The Chairperson and Members shall serve for a term of five years from the date of their
appointment or until they reach the age of sixty-five years, whichever is earlier and shall not be
eligible for re-appointment. Before selecting anybody as a Chairperson or member, the competent
government must be satisfied that the person has no financial or other interests that might jeopardise
his or her duties as a member.

Removal of the Chairperson and members from office in certain circumstances (Section 26)

1. In accordance with the notified procedure under this Act, the appropriate government shall
remove the Chairperson or other members from office if either of them –

1. has been declared adjudged insolvent,

2. has been convicted of an offence involving moral turpitude, or

3. has become incapable, either physically or mentally to act as a member, or

4. has got any financial or other interest which may prejudice exercising his power as
Chairman or other members.
38
 2. The Chairperson or member shall not be removed from office for the reasons specified in
clauses (d) or (e) of sub-section (1) unless the appropriate government orders it following an
inquiry conducted by a High Court Judge in which the Chairperson or member has been
informed of the charges against him and has been given a reasonable opportunity to be heard
on those charges.
Powers of the Regulatory Authority

1. Power to issue interim orders – Section 36 of the Act says when the Authority is satisfied
that an act in violation of this Act or the rules and regulations thereunder has been, is being,
or is about to be committed, the Authority may, by order, restrain any promoter, allottee, or
real estate agent from carrying on such act until the conclusion of the inquiry or until further
orders, without giving such party notice, if the Authority deems it necessary.

2. Power to issue directions – Section 37 of the Act says the Authority may provide such
instructions to the promoters, allottees, or real estate agents, as the case may be, as it deems
necessary to carry out its powers under the provisions of this Act or rules or regulations
adopted thereunder and such directions shall be binding on all parties concerned.

3. Power to rectify the orders – Section 39 of the Act says the Authority may alter any order
passed by it at any time within two years of the date of making of the under this Act, in
order to correct any mistake obvious from the record and shall make such amendment if the
mistake is brought to his notice by the parties. Provided, no such alteration shall be made in
respect of any order to which an appeal under this Act has been filed. Furthermore, the
Authority shall not change any substantive portion of its order issued under the provisions of
this Act while correcting any mistakes obvious from the record. ‘

Responsibilities of the Regulatory Authority

1. To facilitate registering the real estate project and real estate agents.

2. To extend the registration of the real estate or project and its revocation.

3. To renew or revoke, as the case may be, the registration of the real estate agent.

4. To maintain a website of records for public reviewing.

39
 5. To appoint more than one adjudicating officer for addressing the issues relating to real estate
matters.

6. To notify rules and regulations.

7. To recommend for any growth and promotion of healthy and transparent functioning of the
project.

Establishment of Central Advisory Council (Section 41)

The Central Government may establish a Council to be called as the Central Advisory Council by
notification, with effect from the date specified in the notification. The ex-officio Chairperson of the
Central Advisory Council shall be the Minister of Government of India in charge of the Ministry of
the Central Government dealing with housing. It shall consist of representatives from the Ministry
of Finance, Ministry of Industry and Commerce, Ministry of Urban Development, Ministry of
Consumer Affairs, Ministry of Corporate Affairs, Ministry of Law and Justice, Niti Aayog, National
Housing Bank, Housing and Urban Development Corporation, five representatives from State
Governments to be selected by rotation and five representatives from Real Estate Regulatory
Authorities to be selected by rotation.

Functions of Central Advisory Council (Section 42)

The Central Advisory Council is purely an advisory organisation with no administrative duties. It
has no duty or power to recommend how the Act has to be implemented. As a result, the council’s
main objectives are as follows:

• All matters relating to the implementation of this Act.

• The policy of the government to be followed for encouraging the Act.

• How can this Act advance consumer interests and how can the Act help support real estate
expansion and other things that have been entrusted to the Central Government.

• To examine its proposals and create rules to implement them.

Analysis of the effectiveness of the council

40
The Central Advisory Council is in charge of predicting and improving the RERA’s implementation
efficiency. More importantly, the council must endeavour to improve the real estate sector as it is a
significant contributor to the country’s GDP. While the goal has been stated, the following areas
must be thoroughly investigated for this council to make a significant change.

Keeping up the federal spirit – To maximise the efficacy of this Council, it is necessary to have
representation from all of the states to avoid leaving any area unrepresented. Currently, the Council
is made up of five states that are chosen on a rotational basis. This denies the rest of the states the
ability to express their views. The representation should include not just those states that are now
doing well in the real estate business, but also those that are not doing so well but have the potential
to do so. As a result, state representations should be increased to at least ten to fifteen states.

Representation of environmental concerns – Consumer interests are not restricted to money in

real estate, thus environmental issues should be strongly represented on the CAC. Consumers are
also interested in environmentally sustainable models, which should be adopted by real estate
developers. The CAC may assist in promoting excellent practices in real estate developments,
which will motivate promoters to go green and adopt green alternatives while executing such
projects. As a result, both the promoters and the consumers will profit from it.

Regularise interactions – The RERA meetings must be held on a more regular basis to avoid the
RERA becoming a “paper tiger.” This will also keep the RERA from becoming more diluted. The
most recent meeting took place on May 18, 2018. As a result, laws must be enacted to make the
meetings mandatory at least once a year. Regular interaction is required for representations to work.

The Real Estate Appellate Tribunal

Real Estate Appellate Tribunal is formed by the Appropriate Government under Chapter VII of the
Real Estate (Regulation and Development) Act, 2016 to ensure faster resolution of disputes. Parties
aggrieved by the RERA order can appeal before the Real Estate Appellate Tribunal and it has to
adjudicate such cases within sixty days. Civil Courts have been prevented from exercising
jurisdiction on such matters. If any of the parties is not satisfied with the Real Estate Appellate

41
Tribunal order they can file an appeal against the order of the Real Estate Appellate Tribunal order
to the High Court within sixty days.

Establishment of Real Estate Appellate Tribunal (Section 43)

The appropriate government, shall within one year of commencement of this Act, by notification,
establish a Real Estate Appellate Tribunal. There shall be one or more benches of the Appellate
Tribunal, for various jurisdictions in the state or union territories, if the appropriate government
deems necessary. Every bench of the Appellate Tribunal shall consist of at least one Judicial
Member and one Administrative or Technical Member.

The Act also allows for the establishment of a single appellate tribunal for two or more states or
union territories. The designated tribunal may hear cases until such a tribunal is constituted and
once the tribunal is constituted, all the existing cases will be transferred to the newly established
common Tribunal. If the appropriate government of two or more states or union territories deems it
necessary, may establish a single Appellate Tribunal.

It may be noted that when a promoter files an appeal with the Appellate Tribunal, it shall not be
entertained, without the promoter first having deposited with the Appellate Tribunal at least thirty
per cent of the penalty or such higher percentage as may be determined by the Appellate Tribunal or
the total amount to be paid to the allottee including interest and compensation imposed on him or
with both, as the case may be before the said appeal is heard.

Application for settlement of disputes and appeals to Appellate Tribunal (Section 44)

Section 44 of the Act deals with applications for settlement of disputes and appeals to the Appellate
Tribunal. It provides that:

1. The appropriate government or competent authority or any individual aggrieved by the

Authority’s or adjudicating officer’s direction, order, or judgement, may appeal to the
Appellate Tribunal.

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 2. Every appeal under sub-section (1) must be filed within sixty days from the date on which
the appropriate government, the competent authority, or the aggrieved person receives a
copy of the Authority’s or the adjudicating officer’s direction, order or decision and it must
be filed in such form and with such fee as may be prescribed.
Provided that the Appellate Tribunal may hear any appeal after sixty days term has expired if it is
satisfied that there was a sufficient reason for not filing it earlier.

3. The Appellate Tribunal may pass such orders, including temporary orders as it may deem fit
after receiving an appeal under subsection (1) and after providing the parties with an
opportunity to be heard.

4. The Appellate Tribunal must submit a copy of every order it makes to the parties as well as
the Authority or adjudicating officer.

5. It shall deal with the appeal preferred under sub-section (1) expeditiously and dispose of the
appeal within sixty days of the date of receipt of the appeal.
Provided that if any such appeal is not resolved within sixty days the Appellate Tribunal shall
record its reasons in writing for not disposing of the appeal within that period.

Qualifications for appointment of the Chairperson and members (Section 46)

1. No person shall be qualified to be appointed as a Chairperson or member unless he –

1. Has been or is a Judge of High Court;

2. In case if he is a judicial member, he has served in the judicial office within the
territory of India for at least fifteen years or has been a member of Legal Services of
India and has held the post of Additional Secretary of that service or any equivalent
post, or has been an advocate having at least twenty-years experience with
advocating real estate matters; and

3. In the case of a Technical or Administrative Member, he is a person who is well-

versed in the areas of law, planning, commerce, accountancy, real estate,
development, economics, infrastructure, public affairs, industry management or

43
 administration or a state government equivalent to the post of Additional Secretary to
the Government of India or an equivalent post in the Central Government;
2. The appropriate government shall appoint the Chairman of the Tribunal after consulting
with the Chief Justice of the High Court or his nominee;

3. The Appropriate Government shall nominate the judicial members and technical or
administrative members of the Appellate Tribunal on the suggestions and recommendations
of the Selection Committee which consists of the Chief Justice of the High Court or his
nominee, the secretary of the housing department and the secretary of law as prescribed.
Term of office of the Chairperson and members (Section 47)

The Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal shall serve for a
term of not more than five years from the date of his appointment, but shall not be eligible for
reappointment. Provided that if a person who is or has been a High Court Judge is appointed as
Chairperson of the Tribunal, he shall not hold office after he has attained the age of 67 years:
Furthermore, no Judicial member, technical member or administrative member shall hold office
once he has reached the age of sixty-five. Before choosing anybody as Chairperson or Member, the
competent government must ensure that the person does not have any criminal convictions or
financial or other interests that may prejudicially affect his functions.

Powers of the Appellate Tribunal (Section 53)

The Tribunal is not bound by the Code of Civil Procedure of 1908 or the Indian Evidence Act of
1872, which impose strict procedures. It shall be guided by the principle of natural justice and also
has the authority to regulate its own procedures. However, the Chairperson has administrative
powers under the Act as he has been provided with powers of general superintendence and direction
during the time of their conduct in the affairs of the tribunal and all the orders passed by the tribunal
are to be executed as a decree of a Civil Court. The powers of the civil court are entrusted to the
Tribunal which includes the following –

1. Summoning and enforcing the attendance of any person and examining him on oath;

2. Requiring the discovery and production of documents;

44
 3. Receiving evidence on affidavit;

4. Issuing commissions for the examination of witnesses or documents;

5. Reviewing its decisions;

6. Dismissing an application for default or deciding it ex-parte, setting aside any order of
dismissal of any application for default or any order passed by it ex-parte; and

7. Any other matters as the Authority may specify by regulations.

Role of High Courts (Section 58)

All appeals from the Appellate Tribunal are heard by the High Court of the respective states. This
must be done within sixty days from the date of decision or order on any of the grounds set out
in Section 10 of the Code of Civil Procedure, 1908. In such instances, there is no right of appeal if
the decision has been reached with the parties’ consent.

Power to make regulations (Section 85)

1. The Authority shall, by notification, enact regulations consistent with this Act to carry out
the purposes of this Act within three months of its establishment, by notification.

2. Without prejudicing the generality of the foregoing power, such regulations may provide for
all or any of the following:
1. The form and manner of making an application and the fee payable therewith
under Section 4(1);

2. The form of application and the fees for extension of registration;

3. Documents required under Section 11(1)(f) of the Act;

4. Exhibition of layout plans and sanctioned plans along with specifications, approved
by the competent authority under Section 11(3)(a) of the Act;

5. Preparation and maintenance of other such details under Section 11(6);

6. Time, places, and procedure for transaction of business in the meetings of the
Authority under Section 29(1);

45
 7. The form and manner along with the fee payable for filing a complaint under Section
31(2) of the Act;

8. Standard fee to be levied on the promoter, the allottees or the real estate agent
under Section 34(e); and

9. Such other matters which are required to be specified by regulation.

Analysis of the Real Estate (Regulation and Development) Act, 2016

Advantages of RERA for the buyers

The customers are usually the ones who suffer the most if there is a problem, so the RERA was
implemented having them in mind. The RERA Act has the following advantages:

• Risk of delay is avoided: In recent years, builders have been known for delaying the
completion of projects. If there is any delay, the RERA act stipulates that a penalty must be
paid.

• No excess charges: This Act contains all the information on the pricing per area. The RERA
statute defines a built-up area, super built-up area and carpet area, making it impossible for
builders to charge excessively. Payment for the super built-up area is forbidden. A customer
will only be charged for the carpet area specified in the Act.

• Transparency: One of the most significant benefits provided to consumers is transparency.

On the RERA website, the builders are expected to provide details about everything. This
will assist customers in learning the finer points of the buildings and projects.

• Liability: Quality has always been a concern, particularly when it comes to a place where
we must reside. If there is a quality issue, the consumer should notify the builder, who
should address the issue within 30 days.

• Quick redressal: Regulatory organisations and appellate tribunals will be established in

each state under RERA to resolve builder-buyer issues. A person who has been aggrieved by
any direction can expect a response from the appellate court within 120 days. If the buyer is

46
 not pleased with the decision of the Appellate Authority, he may further appeal to them.
However, the appeal will only be heard after payment of
1. Thirty per cent of the penalty,

2. or a higher percentage as decided by the Appellate Tribunal,

3. or the whole sum due to the allottee, including interest and compensation, if any.
Advantages of RERA for builders

The following are the few advantages given to the builders:

1. Adequate financial inflow: The start of a project is a big stumbling block for the property
business. Financial changes such as the formation of the GST and as a result, the
liberalisation of FDI have aided RERA in making business easier. Lenders are more
prepared to provide income to builders now that the RERA Act has restored trust and
openness. The transparency of monetary transactions has improved since demonetization.
Many international and domestic investors are being encouraged to invest in Indian projects.
As a result, there are more structured financial inflows, making property developments
easier to implement.

2. Increased competition: There are further chances of reviving the real estate market up to
the mark which will surely interest home buyers to invest and buy property without any fear
of fraud. Due to such progressive rules, it will most likely generate competition among the
developers as the buyers will be interested in investing their money into the upcoming
projects without much fear.

3. Better functioning: In the past, there were no suitable regulations or norms governing the
real estate industry. There were also a lot of unresolved issues. The RERA act made it easier
for the real estate industry to work efficiently and consistently.

4. Imposition of penalty: If a customer does not pay his dues on time, the legislation contains
a clause requiring the consumer to pay a penalty for the late payment.

5. Transparency: Both the buyer and the seller benefit from transparency being the core
aspect of the Act. Transparency also aids in the development of a positive relationship
between the builder and the customers.
47
Disadvantages of RERA

As much as there are real benefits of enforcing RERA, there are also some disadvantages. The
builders are the ones who have suffered the most, as a result of the RERA statute, and have had to
shoulder a lot of costs. This Act has had a significant impact on business. The following are some of
the drawbacks of RERA:

1. The RERA rules and regulations do not apply to projects that were initiated before the
adoption of RERA.

2. Compulsory registration may be a drawback because the government can take a long time to
approve a plot.

3. There is also internal politics in this industry. Sometimes the government requests additional
funds or requires them to bribe the government to obtain approval, resulting in financial
difficulties.

4. There are no specific requirements for buildings less than 5000 square metres. This will
allow them to charge excessive fees resulting in a conflict.

5. A project may take longer to complete than expected. It is tedious to begin a new endeavour
without completing the previous one as a builder cannot sell a building until it is completed
and it becomes difficult for them to start a new project.

6. It takes around two years for the promoter to acquire clearance, and thus the sector’s
expansion will be hampered.

7. There are no provisions for rentals in RERA.

8. There is a cash flow problem due to the seventy per cent deposit of payment in the escrow
account.

9. The punishments are severe. In case of contravention of the provisions of this Act or failure
to comply with the provisions of the Act, the punishment is either five per cent of the cost of
the project.
Impact of the Real Estate (Regulation and Development) Act, 2016 on the industry

48
The implementation of RERA has caused significant disruption in the business. The real estate
business has contributed significantly to the country’s economy but this measure has harmed the
industry and all builders are currently in financial distress as the Act has a direct impact on the
prices of homes and home loan interest rates. The sector is beset by financial difficulties and has
been hampered by numerous obstacles. The implementation of RERA has caused significant
disruption in the business. The real estate business has contributed significantly to the country’s
economy but this measure has harmed the industry and all builders are currently in financial
distress. The sector is beset by financial difficulties and has been hampered by numerous obstacles.
RERA has had a massive impact on the corporate world. The execution of demonetisation was
already a problem but then the simultaneous enforcement of RERA produced a mass outrage.
Property sectors of many states are becoming more transparent and credible as a result of existing
regulations. Benefits are anticipated to accrue over time to all or any buyer. The scope and spirit of
the Act can be upgraded by technologically enabled platforms that can handle greater data sets that
are not yet recognised by many countries. The predicted advantages of the Act are likely to grow as
a result of the increased focus on its implementation.

The economic impact of RERA on the industry

In India, three main policies were recently brought in by the Union Government. They were
demonetisation, Goods and Services Tax and Real Estate (Regulation and Development) Act which
impacted the economy to a large extent. RERA was enforced after six months of demonetisation
which detrimentally affected the real estate market and impeded its development. RERA affected
the small-scale developers and contractors, especially in the metropolitan areas as many of their
planned real estate projects were either abandoned or delayed until they were registered under
RERA Act and as a result job prospects for the workers were scarce. There were also changes in
liability and increased responsibility of the builders in terms of the delivery of the property.
Furthermore, it led to a situation where sellers could not possibly sell the property at lower prices
due to limited incentives and buyers were not willing to buy property due to their income hit by
demonetisation or the reduced liquidity of the property. The real estate market was completely
sluggish causing economic impacts and imbalance.

Lacunas in the RERA Act

49
1. The RERA Act categorically describes what is a carpet area but in terms of describing a net
functional area, it did not include the area sold to the allottees for their individual use, such
as the living room, bedroom, kitchen area and the lavatory, which should have been
included.

2. Every potential project is to be registered under the Act under Section 3 of the Act. RERA
also bars pre-launches in cases where authorisation is absent by the agency concerned. It is
challenging when there are several phases in constriction of a real estate project and
approval is required for each project. As there is no single-window clearance, the project’s
progress will face hindrances and be delayed. Whereas Section 32 of the Act says that it is
the duty of the Real Estate Authority to make a recommendation on the development of a
single-window system to the appropriate government of the competent authority to check if
the projects are completed in due time.

3. In many states, the implementation of the Act began only in May 2017 although the Act was
effective from May 2016 and as of 2019 many states and union territories did not have the
Real Estate Authority’s website launched. As per the status of RERA implementation in
India, the National Capital Territory of Delhi, Assam, Manipur, Nagaland, Arunachal
Pradesh, Sikkim, Jammu and Kashmir and Ladakh have not launched the Real Estate
Authority’s Website.

4. As there are insufficient recovery powers with RERA, there is a big lacuna as there is a
failure to comply with all the orders issued in favour of homebuyers by the RERA
Authorities in the respective states

5. The Real Estate (Regulation and Development) Act, 2016 does not mention that it is
available only for registered projects.

6. The Act provides for certain categories of projects that are not required to be registered;
these are within the scope of this Act. Although the projects mentioned in Section 3(2) have
been pulled out of registration requirements, it has not been done so in the purview of other
provisions of the Act.

7. The provisions for registration and obligations to be carried out at the time of the
registration are applicable only for the registered projects and not all projects.

50
 8. There is a lack of cash caused by a variety of extrinsic and intrinsic issues in the sector.
Builders are forced to seek alternative sources of funding, resulting in a spike in home
prices. This fluctuation has an impact on the demand and supply situation in this industry.

9. Cash flow issues will arise as there is seventy per cent investment in the escrow account,
causing project delays. This step is however taken to keep the developer’s mind from
wandering to new projects and to finish the current project.

10. If a builder fails to comply with any provisions of the Act, he is punished with up to three
years imprisonment or a fine of ten per cent of the total cost of the project. This issue put the
buyers at risk and forced them to leave their homes until the problem was resolved.

11. RERA does not include any rental agreements, so it is entirely up to the buyer to save the
rental agreement, which clearly states the agreed and disagreed portions, to save the
property and make correct use of it.
Key challenges of the Real Estate (Regulation and Development) Act, 2016

RERA, 2016 aim to create symmetry of information between the promoter and the buyer,
transparency of contractual terms, basic accountability standards, and a fast-track dispute resolution
process. However, the system’s stumbling blocks are outlined below:

1. There is still a disparity in the timelines that states use to enact RERA Acts. Only 15 states
have issued final guidelines, while others are still working on them.

2. There is also a lot of misunderstanding among brokers and distributors about how to
advertise projects to customers. Prohibitions on the development of builder microsites,
restrictions on selling, KYC, and other issues are yet unclear.

3. There is also some confusion regarding the re-execution of agreements in cases when the
deed has already been signed. While some states demand that all such arrangements be re-
executed under the RERA, others exempt existing agreements. This mismatch between
states is causing a lot of misconceptions among property buyers.
Current issues in India in relation to the Real Estate (Regulation and Development) Act, 2016

51
The government intends to put tenanted or abandoned buildings, as well as their renters, under the
Real Estate (Regulation & Development) Act of 2016, giving the consumers the same protection as
other homebuyers for the first time. Many cities, particularly Mumbai, have tenanted or
decommissioned buildings that contain people who have been living there for decades at low and
artificially discounted costs. According to Magic Bricks, over seventy-four per cent of homebuyers
in India are uninformed of the online process for checking the status of the project under the Real
Estate Regulatory Act and also unclear about whether the projects are registered on a website or not.
They majorly lack the relevant information such as carpet area, payment methods and the builder’s
registration number. Many projects were supposed to register on websites and distribute fliers with
the builders’ specific details.

Analysis of the establishment of the tribunals

When it comes to the establishment of Appellate Tribunals and related tasks, there have been some
aspects that require attention. The following are some of them:

1. Real Estate Appellate Tribunals have not been formed in all Indian states and union
territories. Appellate Tribunals have been formed in 22 states, with 13 permanent and 9
interim tribunals. The states must establish permanent authorities and Appellate Tribunals to
better execute the Act and reduce the burden on the district courts.

2. There was a petition raised in the Gujarat High Court to ensure that the tribunals are
constituted as per the Act. Because the Appellate Tribunal lacked technical members, it was
called “Coram non-judice.” Technical members must be recruited since the real estate
business necessitates specialised knowledge that judicial members may lack. Real estate is a
vital national asset. The goal of the Act will be defeated if the Tribunal becomes
bureaucratized. Other difficulties were noted as well, such as the Appellate Tribunal’s failure
to give information on the number of appeals filed, pending appeals, and so on. To avoid
further dilution of the RERA, it is necessary to guarantee that the institutions involved are
given sufficient autonomy to function efficiently and that additional bureaucratisation is
avoided. Important factors such as vacancies not being filled or appointments not being
made impede institutions and contribute may defeat the objectives of the Act.

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Benami Transaction Act, 1988
Q. What was the purpose of Benami Transaction Act, 1988?
Answer. The Benami Transaction (Prohibition) Act, 1988, was enacted for the purpose of
preventing and restricting Benami transactions and right to recovery of Benami property and
otherwise any transaction incidental thereto. The widespread transactions dealing in Benami
property in the country with the view of tax evasion on the ground that real owner is prohibited for
enforcing his right, interest, claim or action in the impugned property in the court unless he
produced documents mentioning income of that property for want of income tax or had given prior
notice of claim to the property to concerned income tax authorities.

The Act postulates provision on restriction upon right of recovery of property held benami under the
Act by way of enforcing or taking defence of such right, claim or interest against person in whose
name property is held or any other person claiming it be the real owner of the property as provided
under Section 4 of the Act. Therefore this section constructs a vital role in handling Benami
transactions in relation with property held Benami.

Statements of objects & reasons

The benami transactions were recognized under British Rule in 1778 by Mr. Justice Hyde’s. Later in
the year 1854, a committee formed for review of the case in Gopeekrist Gosain v. Gungapersuad,
the committee observed that benami transactions are the custom of the country and must be
recognised till the legislature makes the law under such head. On such a suggestion, the Indian
Trusts Act under section 81 and 82 gave legal approval for the practice of Benami transactions and
the court is bound to enforce it.

The Parliament introduced Section 281A of the Income Tax Act, 1961 for prohibiting Benami
transactions and their implications by barring any institution of suit for Benami transactions. The
framework for Benami transaction took its shape by formulation of Law Commission in its 57th

53
report, The Law Commission has submitted its 130th Report titled “Benami Transactions – a
Continuum” on following provisions:

1. All agreements in consonance with benami transactions after the commencement of new law
will be an offence.

2. The benami property must be subject to acquisition by such authority in the same manner
and procedure as may be prescribed under rules of legislature. Provided that no amount shall
be payable for the acquisition of property.

3. Section 81 and 94 of the Indian Trust Act,1882 shall be repealed.

President promulgates the Benami Transaction (Prohibition of the right to recover property),
Ordinance on 19 May 1988. The Ordinance barred instituting any claim, action or suits as against
Benami transaction for enforcing recovery of any rights in Benami property or defence on rights in
Bemani property cannot be permitted except the right to institute suit regarding HUF members and
fiduciary relationship. It repealed Section 82 of the Indian Trusts Act, 1882, Section 66 of the Code
of Civil Procedure and Section 281A of the Income-tax Act, 1961.

Key Terms under the Act

‘Benami’ is a Persian word that means analogous or without a name. In such transactions, persons
vested with no benefit other than transfer and legally recorded name in the property are called
benamidar. The person paying consideration to such as the benami property fit of interest either at
present or future time like tax evasion, avoiding payment to creditors, utilizing black money and
therefore is called the beneficiary owner. The following transactions falls under the definition of
Benami transactions:

• Property held in benami transactions is carried out under a fictitious name.

• The real owner of the property has no knowledge or denies having any knowledge of the
ownership of such property.

• Where the person providing the consideration is untraceable or fictitious i.e. beneficiary
owner identity is unknown.

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The benami transactions are the transaction which involves the transfer of property for the
consideration paid by another. The apex court observed in the case Bhim Singh v. Kan
Singh, benami transactions deals with person’s who are capable of purchasing property with his
consideration but in the name of another person with the intention of benefitting such another
person. In such transactions, the transferee holds the possession of the property for the benefit of the
person who contributed to such property and he is the real owner. For example, the director of the
company knows about fluctuations in the prices of shares. However, he is not entitled to purchasing
or selling the shares but if he entered into an agreement with third parties by providing
consideration for the purpose of purchasing shares in his name then in such instance, these
transactions would amount to Benami transactions.

The property is defined under Section 2(c) of the Act means property of any kind whether movable
or immovable, tangible, or intangible, including any right or document proving title or interest in
such property.

Benami transaction differs from sham transaction

In Benami transactions, there must exist transaction or agreement for sale or purchase of property
along with transfer of right, possession and title to the transferee but on other hand, in sham
transaction, transaction happens to be executed on papers but actual owner vest with all rights,
claim, possession and title to the property; in other words no transaction take place but shown to be
done on papers. The act excluded sham transaction under Section 2(a) and court in various cases
debar sham transactions from the provisions of Benami Transactions (Prohibition) Act, 1988.

In the case of Sree Meenakshi Mills Ltd. v.. CIT, the court observed that the word Benami consists
of two classes of transaction which differ in their legal grounds and real character. In one sense, it
states a real transaction in which a person purchasing or selling property is no same to a person
paying consideration like A purchase the property in the name of B with payment of money out of
his known source of income. These transactions are called Benami transactions. However,
sometimes sham transactions are also termed as Benami Transactions.

The exceptions of the benami transaction

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The benami transactions exclude the following transactions under the head of benami transactions,
as given under Section 4(3) and Section 3 (2) of the Act:

1. Property possessed by the member of HUF or coparcener for the benefit of coparceners in
the family, consideration of which is paid from known sources of income.

2. Property is held under a fiduciary relationship in which a person holding property is a

trustee or another person for the benefit of all persons for whom he is the trustee as
responsible for standing in his capacity.

3. Property is held in the name of spouse or unmarried daughter in which consideration is paid
from known sources of income unless proven contrary that such property had been
purchased for the benefit of the spouse of the unmarried daughter.
Penalty

The penalty under the Act shall be punishable with imprisonment which may extend to three years
or fine or both as prescribed under Section 3(3) of the Act. it also entails confiscation and
acquisition of all properties in relation with benami transactions by such authority in such manner
and procedure as may be prescribed. The offences punishable for prohibition of benami transactions
shall be non-cognizance and bailable.

Implication under the Income Tax Act, 1961

In the enforcement of the Income Tax Act 1961, it was found that benami transactions acted as a
mechanism to defraud and evade tax by indulging in such illegal agreement and thereby digressing
from real and legal transactions. To give effect to such transactions, Parliament introduced Section
281A of the Income Tax Act which states that- ‘Effect of failure to furnish information in respect of
property held benami,’ in the sense that property held benami can be challenged in any suit before
any court of law to enforce any right whether against whose name property is registered or any
other person claiming it to be real owner unless notice containing particulars has been given by
claimant within one year from the date of acquisition to Chief Commissioner or Commissioner.
Since section 281A of IT Act did not impact such an effect of prohibition, Parliament enacted
Benami Transaction (Prohibition) Act, 1988. The act repealed section 281A of IT Act i.e. totally
debar suit of any kind including exception under Section 7 of the Act along with other provisions.
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Recently, Rashtriya Janata Dal chief Lalu Prasad and his family members were booked for benami
transactions through cooperative banks investing in some benami property which led to arrest of
Lalu Prasad, his son, wife and daughter under Benami Transactions Act,1988 for transactions worth
1000 crore. The IT department confiscated 12 plots, farmhouses, lands and buildings in Delhi and
Patna. Such instances diminishes the economical growth and development of the country by way of
converting black money in cash form into investment in benami property in order to distribute the
allocation of money and thereby save consideration in any kind.

The benamidar before the enactment of the Benami Transactions (Prohibition) Act, 1988 could not
have any right, title and interest in the property, which the benamidar could convey. By the principle
of fictional relation back as propounded by the Supreme Court in Mithilesh Kumari (supra), the
benamidar should be deemed to have title to the property on the date he executed the deed or
release.

Every party has the right to enter into agreement for the purpose of sale or purchase of movable or
immovable, tangible or intangible property as guaranteed under Article 19(g) prescribing the right
to trade and carry on any business within the limit of reasonable restriction. However, any illegal
transaction unnamed or named under another person having no flow of consideration but otherwise
held the property for the benefit of another person stands illegal because it falls short of the
principle that property must be transferred in favour of a person at whose favour the transaction was
executed.

The Act empowers the Central Government to carry out rules for the purpose of the Act for
authorising authority to acquire property held benami, manner and procedure while undergoing
acquisition of the property. This Act was amended in 2016 to provide a comprehensive regulation
for authority, transaction and other relevant matters in order to build a strong framework of law
governing benami transactions.

The growth of benami transactions while existence and enforcement of the Act show that strict
regulation and comprehensive awareness regarding the prohibition of benami transactions is the
need of the hour. The imposition of harsh punishment to the offenders of benami transactions for the
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purpose of reducing what tenders to lower economic development of the country at the cost of
people dealing in legal and valid transactions.Since the person holding benami property took the
right of another person to hold that property in legal terms and conditions.

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