On May 1, 2017, all 92 provisions of the Real Estate (Regulation & Development) Act, 2016 (Act) were brought into force. The Act has introduced new obligations on real estate developers and, in case of default, prescribes penal liabilities. Significantly, the Act applies not only to future projects but also to ongoing projects, where construction began prior to May 1, 2017. Therefore, the issue is whether this retrospective application of the Act stand the test of constitutionality. The Act applies to all such projects, where completion certificates have not been obtained, irrespective of whether construction began prior to May 1, 2017. For instance, Section 3(1) of the Act restrains a developer from advertising and selling any space in a project without registering the project with the Real Estate Regulatory Authority (Authority). For ongoing projects for which completion certificates have not been issued, this registration is to be obtained mandatorily within three months from May 1, 2017. Any violation of Section 3 could result in a penalty of up to 10% of the estimated cost of the project. In cases of continuing defaults, imprisonment is also prescribed. The Act also provides for penal consequences in cases of breaches of obligations committed during registration.
It cannot be denied that where developers commenced construction prior to May 1, 2017, they had no knowledge of the provisions of the Act, much less the penalties thereunder. Therefore, bringing these projects now within the purview of the Act may amount to punishing the developers for delays or other irregularities which occurred during a period when the law was not in force.
via RERA erodes accrued rights, is unfair to developers; here’s how – The Financial Express
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