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A guide to buyers’ rights when Rera rejects project registration application

Buyer complaints: What happens when state Rera rejects application for project registration of an ongoing project?

punjab Updated: Feb 10, 2018 16:40 IST
Munieshwer A Sagar
Munieshwer A Sagar
Hindustan Times, Chandigarh
Rera,buyers’ rights,Punjab Real Estate Regulatory Authority
All ongoing projects that haven’t received the completion certificate are covered under Act. They have to submit additional information to the authority for project registration.(HT Photo)

The Punjab Real Estate Regulatory Authority (PRera) recently rejected the registration application for a project of a builder based in New Chandigarh (Mullanpur) for want of requisite approvals and licences from the authorities.

On the rejection of the application, one of the nearly 500 plot allottees in the project, Ram Krishan Goel, based in Sirsa, said, “I had bought a plot in the project in 2011. I was promised possession by the end of 2013. But the builder hasn’t delivered yet. This is the case with most allottees. We were hoping we would approach the state Rera against the builder for failing to deliver the project on time. But now the application of the builder for registration of the project has been rejected so we cannot complain against him. We are clueless on what happens to the plot we bought and whether we can get justice when the project is not registered with the state Rera.”

No complaint if project not registered with PRera

In a landmark order in the Bikramjit Singh versus M/s HP Singh case, the PRera held that complaints against promoters in relation to the projects that are not registered with the authority will not be maintainable before it. In the same order, the authority also cleared the ambiguity regarding the maintainability of any complaint where the alleged builder violations took place prior to the commencement of the Real Estate (Regulation and Development) Act (Rera Act). It laid down three conditions that must be fulfilled for such complaints to be considered by it. Firstly, the alleged violations, though commencing before the enforcement of the Rera Act, must be continuing till date; secondly, the alleged violations must also constitute a contravention of the Rera Act and the rules and regulations made thereunder; and thirdly, the issue should not have been decided or be pending in any forum/court before approaching this authority. This is necessary to avoid multiplicity of litigation. The order reads, “Only if all the three conditions are fulfilled, and the onus would on the complainant to prove these, would any alleged violations that took place before the coming into force of this Act (Rera Act) be considered by this authority”.

Mandatory project registration

Under Section 3 of the real estate (regulation and development) Act, no promoter can advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the real estate regulatory authority. All ongoing projects on the date of commencement of the Act and for which the completion certificate has not been issued, the promoter has to make an application to the authority for registration of the project.

If the authority thinks necessary, in the interest of allottees, for projects that are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such projects to register with the authority, and the provisions of this Act or the rules and regulations made thereunder, shall apply to such projects from that stage of registration, stipulate the Section 3 of the Act.

Section 59 of the Rera Act lays down the punishment, if a promoter contravenes the provisions of Section 3. If proven, a promoter can face a penalty which may extend up to 10% of the estimated cost of the real estate project as the authority determines. Repeated violations are punishable with imprisonment up to three years or with fine which may extend up to a further 10% of the estimated cost of the real estate project, or with both.

Information for ongoing project registration

All ongoing projects that haven’t received the completion certificate are covered under Act. They have to submit additional information to the authority for project registration.

Original sanctions: The builder must submit the original sanctioned plan, layout plan and specifications and the subsequent modifications carried out, if any, including the existing sanctioned plan, layout plan and specifications with the authority.

Money collected: For protecting the buyer’s money already invested in the project, the builder must share and submit with the authority the total amount of money collected from the allottees. In addition to it, he must give details of the total amount of money used for developing the project, including the total amount of balance with him.

Possession schedule: Possession delays have become endemic to the housing sector. In case of an incomplete project, the builder must update the authority regarding the stage of development at the site. He must submit the status of the project (the extent of development carried out till date and the extent of development pending). He must also mention the original time period disclosed to the allottee for the completion of the project at the time of sale. The delay and the time period within which he undertakes to complete the pending project should also be mentioned. All this information shall be certified by an engineer, an architect and a chartered accountant.

Carpet area: The builder must also disclose the size of the apartment based on the carpet area even if earlier sold on any other basis such as super area, super built-up area, built-up area etc. that shall not affect the validity of the agreement entered into between the promoter and the allottee to that extent. In case of plotted development, the builder must disclose the area of the plot being sold to the allottees as per the layout plan.

Separate account: For the projects that are ongoing and have not received a completion certificate, the builder must, within three months of the application for registration of the project with the authority, “deposit in the separate bank account, 70% of the amounts already realised from the allottees, which have not been used for construction of the project or the land cost for the project”.

In case the builder fails to provide such information, his application is liable to be rejected by the state authority.

When registration for a project is rejected

“The rejection of application for project registration or cancellation or revocation or suspension of the project registration lead to the same situation. The same sections of the Act come into play,” says Himanshu Raj, a Chandigarh-based advocate.

The buyer has limited options in terms of action he can seek against the defaulting builder. He can seek damages against the builder. “If the registration of the developer under Rera is rejected or cancelled or revoked then it is advisable that the buyer should ask for the complete refund of his entire amount, including the damages and the compensation, under Sections 18(1)(b) and 19 (4) of Rera,” says Raj.

Section 18 (1) (b) stipulates, “If the promoter fails to complete or is unable to give possession of an apartment, plot or building due to discontinuance of his business as a developer on account of 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 from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act.”

As per the Section 19 (4) of the Act, “The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder.”

But if the buyer does not wish to get the refund of the amount then, “The buyer must rely on the decision of the authority for carrying out the remaining development of the property under Section 8 of Rera and keep receiving interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed under section 18(1)(b) of the Rera,” says Raj.

First Published: Feb 10, 2018 16:40 IST