RERA ACT 2016

APPLICABILITY, RIGHTS OF ALLOTTEES,

RERA OR SARFAESI WHO WILL PREVAIL?
-Ragini Agarwal, Anuja Ma’am
 APPLICABILTY

RERA covers all residential and commercial projects, including shops, offices and buildings.

• Ongoing projects, projects which were started before the act and for which Completion Certificate has
not been given are included in RERA. (As per section 3(1) first proviso, the promoters of all ongoing
projects will need to register their projects with the Regulatory Authority, within 3 months of its
commencement, i.e. 1st May 2017.

• SECTION 31

A complaint can be filed by the aggrieved person in the case of PERPETUALLY DELAYED PROJECTS which are not
registered under RERA, but still customer can file with the authority appointed.

 SECTION 11 (4)(h)

If proved that the mortgage given to the party was fraudulently given and even if such action was done before
RERA act, RERA is applicable, to protect the interest of the allottees.
 NOT INCLUDED
 SECTION 3 OF THE ACT

No registration of the real estate project shall be required—

(a) where the area of land proposed to be developed does not exceed five hundred square meters or the number of
apartments proposed to be developed does not exceed eight inclusive of all phases: Provided that, if the
appropriate Government considers it necessary, it may, reduce the threshold below five hundred square meters or
eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act;

(b) where the promoter has received completion certificate for a real estate project prior to commencement of this Act;

(c) for the purpose of 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.

( JUSTICE UDAY, JUSTICE AJAY AND JUSTICE ANIRUDDHA HELD- RERA not applicable to the projects already completed
or to which the CC has been granted before commencement of act.
 RIGHTS OF ALLOTTEES
SECTION 19
• It includes right and duties of the allottees, The section reads that the allottee shall be
informed relating to the sanction and layout plans
• The person who is the allottee shall also be informed with time schedule, time plan of the completion of the
project, it shall also include all the facilities like water supply, electricity, sanitation and other services agreed
between the two parties. It shall include all the terms and conditions of the agreement for sale.
• The allottee is entitled for the compensation, compensation with interest or refund of amount paid with
interest rate as given in the act, such compensation shall be received by the allottee from promoter,
• The promoter shall give the allottee all the necessary documents and plans, including that of common areas,
after handing over the physical possession of the apartment or plot or building.
 AS PER SUPREME
COURT
M/s. Newtech Promoters and Developers Pvt. Ltd. Vs. State of UP & Ors. 2021 SCC Online SC 1044.
• The judgement included that the RERA act is retroactive in nature and is not retrospective, it includes the
rights and duties of the allottees and promotors and affects the rights of the parties included. The intent of
the act was to bring ongoing projects, the projects which started before RERA Act, and for which the
completion certificate has not been given are included under the ambit of this act.
• Under section 81 of the act the power to delegate is included even if such is exercised by the single bench
of the authority, such delegation is not illegal and comes under the ambit of law. However, such power of
delegation under section 81 shall exclude the regulation making mentioned under section 85 of the act.
(Saurashtra Kutch Stock Exchange Ltd. Vs. Securities and Exchange Board of India and Another,
2021(13) SCC 501.)
• promotors and allottees are different and they are mentioned under different section of categories in the act
 RERA or SARFAESI
Bikram Chatterji and ors v. UOI and ORS 2021
• It was the duty of the Authorities to take affirmative action for effective management of Lease
deeds grants in favour of Amrapali Group,

• Authorities were bound to ensure that builders act per the objective behind the acquisition of
land and conditions on which allotment had been made,

• The authorities were very negligent in their conduct and did not take any corrective step against
Amrapali Group. The authorities not only failed to observe the terms of Lease Deeds and keep track
of projects but also permitted the Amrapali Group to execute sub-lease of projects, thereby allowing
Amrapali group to earn a huge amount,

• The authorities have colluded with Banks and Amrapali Group for diversion of funds of
homebuyers. The banks were negligent in their conduct and decided to sanction loans to Amrapali
Group without verifying the conditions of the NOC’s being issued by the Authorities,

• The provisions of RERA Act have been violated by Amrapali Group.

 Impact on Banks/ Financial Institutions

1. Firstly, the Banks/Financial Institution will now come under the Jurisdiction of RERA. This
implies that Financial Institutions will have to abide by the notice received by the RERA
Authority and will have to represent themselves in case a complaint has been filed by the
allotees. Not only this since banks can now be termed as 'promoters' they will have to
comply with the liabilities and responsibilities of a promoter stated in the RERA Act.

2. Secondly, the process of enforcement of security interest by the Financial Institutions under
the Section 13(4) of the SARFEASI Act will not be a smooth flowing process due to
possibility of several complaints being filed by the allotees. Earlier, Financial Institutions
could initiate proceeding under Section 13(4) of the SARFAESI Act without the intervention
of the Courts or Tribunals. However, with this Judgement coming into play, the proceedings
might be delayed due to intervention of RERA Authority in case the promoter defaults in
payment of dues.
 Union Bank of India vs. Rajasthan Real Estate Regulatory Authority & Ors.
(“Union Bank of India Case”), 14 December, 2021

Before RERA the bank raised several contentions including that RERA has no jurisdiction to
entertain any complaint against the bank and that in view of the proceedings which are pending
before the DRT and DRAT, the complaints should not in any case be entertained.

These objections of the bank were turned down by RERA. Referring to the definition of
promoter contained in Section 2 (zk) of RERA Act, the authority was of the opinion that
bank being an assignee of the promoter, would fall within the definition of promoter.
Regarding the effect of the SARFAESI Act to the present proceedings, the authority relied on
the decision of Supreme Court in case of Bikram Chatterji and Ors. Vs. Union of India and
Ors. reported in 2019 19 SCC 161.
 • (“RERA Act”) has the jurisdiction to entertain a complaint filed by an
aggrieved person against the bank as a secured creditor in the event the
bank takes recourse to any of the provisions contained in Section 13(4) of
the Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (“SARFAESI Act”) provided that the
proceedings filed before the RERA Authority have been initiated by the
homer buyers to protect their rights.
• banks would be considered as promoters for the purposes of the RERA Act
and that the moment a bank takes recourse to any of the measures under
Section 13(4) of the SARFAESI Act, it triggers statutory assignment of
right of the borrower in the secured creditor and in such cases, RERA
authority would have jurisdiction to entertain complaint(s) filed by an
aggrieved person.
 case of Allahabad Bank v. Canara Bank and Anr. after following an
earlier judgments of this Court held:
Alternatively, the Companies Act, 1956 and the RDB Act can both be
treated as special laws, and the principle that when there are two special
laws, the latter will normally prevail over the former if there is a provision
in the later special Act giving it overriding effect, can also be applied.
THEREFORE, RERA IS SUPREME.
Pioneer Urban Land and Infrastructure Ltd and Others v/s Union of India & Ors. 2019

• wherein it was inter-alia held that remedies given to allottees under the Consumer
Protection Act, 1986, RERA Act and the Insolvency and Bankruptcy Code, 2016 (“IB
Code”) are concurrent remedies and RERA Act is to be harmoniously read with IB Code
and that only in the event of conflict between the two, the provisions of IB Code shall
prevail over RERA Act.
• In light of the aforesaid judgments, a bank or a financial institution taking recourse
under the Section 13(4) of the SARFAESI Act pursuant to default in payments by a
developer would put such bank or financial institution in the shoes of a promoter in
relation to the secured asset for the purposes of RERA Act thereby giving allottee(s) the
right to file complaint(s) against such bank or financial institution under RERA
Act.
• It is also pertinent to note that there is no moratorium prescribed under the provisions of
SARFAESI Act as opposed to that provided under IB Code. Therefore, home buyers
shall be entitled to file complaints before RERA Authorities in respect of their claims
immediately upon enforcement action undertaken by any bank or financial institution
under Section 13(4) of SARFAESI Act.
THANK YOU