Real Estate Bill Provides for a Speedy and Specialized Adjudication Mechanism to Settle Disputes

The Real Estate (Regulation and Development) Bill, 2013, introduced in the Rajya Sabha on14^th August 2013 provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.

The Bill provides for adjudication of disputes by an adjudicating officer, to be appointed by the Authority not below the rank of Joint Secretary to the State Government, to adjudge the compensation to be paid under sections 12 (Obligations of promoter regarding veracity of advertisement or prospectus), 14 (Adherence to approved plans and project specifications by promoter) and 16 (Return of amount and compensation) of the Bill.

Also the Bill provides that in case any person whose complaint in respect of matters covered under sections 12, 14 and section 16 is pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission, established under section 9 of the Consumer Protection Act, 1986, on or before the commencement of this Act, he may, with the permission of such Forum or Commission, withdraw the complaint pending before it and file an application before the adjudicating officer under this Bill.

The adjudicating officer while adjudging the quantum of compensation or interest is required to have due regard to

(a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;

(b) the amount of loss caused as a result of the default;

(c) the repetitive nature of the default.

For disputes under any other provision of the Bill, the matter is to be referred to the Regulatory Authority for determination, which has powers to impose penalty or interest for contraventions.

The Bill specifies the penalties to be paid, for contravention of the provisions of the Act and the penalties to be paid for non-compliance of the directions of Regulatory Authority or the Appellate Tribunal, by the promoter or the real estate agent or the allottee as the case may be.

The Specific Provisions are as follows:

Contravention by the Promoter:

Punishment for non-registration under section 3:

Sec 51. (1) If any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to ten percent of the estimated cost of the real estate project
as determined by the Authority.

(2) If any promoter does not comply with the orders, decisions or directions issued under sub-section (1) or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend to a further ten percent of the estimated cost of the real estate project, or with both.

Penalty for contravention of section 4:

Sec 52. If any promoter knowingly provides false information or contravenes the provisions of section 4, he shall be liable to a penalty which may extend up to five percent of the estimated cost of the real estate project, as determined by the Authority.

Penalty for contravention of other provisions of this Act:

Sec 53. If any promoter contravenes any other provisions of this Act, other than that provided under section 3 or section 4, or the rules or the regulations made thereunder, he shall be liable to a penalty which may extend up to five percent of the estimated cost of the real estate project as determined by the Authority.

Penalty for willful failure to comply with orders of Authority by promoter:

Sec 55. If any promoter, who willfully fails to comply with, or contravenes any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to five percent of the estimated cost of the real estate project as determined by the Authority.

Penalty for willful failure to comply with orders of Appellate Tribunal by promoter:

Sec 56. If any promoter, who willfully fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to ten percent of the estimated cost of the real estate project as determined by the Appellate Tribunal.

Contravention by the Real Estate Agent:

Penalty for non-registration and contravention under sections 9 and 10:

Sec 54. If any real estate agent willfully fails to comply with or contravenes the provisions
of section 9 or section 10, he shall be liable to a penalty of ten thousand rupees for every day during which such default continues, which may cumulatively extend up to five percent of the cost of plot, apartment or building, as the case may be, of the real estate project, for which the sale or purchase has been facilitated as determined by the Authority.

Contravention by the Allottee:

Penalty for willful failure to comply with orders of Authority by allottee:

Sec 57. If any allottee, who willfully fails to comply with, or contravenes any of the orders, decisions or directions of the Authority he shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to five percent of the plot, apartment or building cost, as the case may be, as determined by the Authority.

Penalty for willful failure to comply with orders of Appellate Tribunal by allottee:

Sec 58. If any allottee, who willfully fails to comply with, or contravenes any of the orders or directions of the Appellate Tribunal, as the case may be, he shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to ten percent of the plot, apartment or building cost, as the case may be, as determined by the Appellate Tribunal.

Source: Press Information Bureau.