The Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as “the Act”) provides for a Regulatory Authority (hereinafter referred to as “RERA”) under that is established by virtue of section 20(1) of the Act. The RERA is a body corporate with a common seal,   perpetual succession and the power to acquire, hold and dispose of movable and immovable property. It can enter into contract, sue and be sued under its own name.[1] The Act also provides for a Real Estate Appellate Tribunal to be established under section 43.These bodies have been given quasi-judicial powers, which means that its purpose is to adjudicate disputes related to specific matters that have been enlisted in the statute that confers jurisdiction upon them. Tribunals have been formed in virtually all nations because they are less expensive (cost-effective), more accessible, and free from technicalities, swift and proceed as quickly and effectively as manned by experts. It helps overcome the crisis of delay and backlogs.

The suo motu powers of the RERA have been enlisted under section 7, 35 and 38 of the Act. The RERA can take action on its own accord in matters pertaining to revocation of registration, calls for information or conducting investigation. They can also suo motu refer matters that has effect of market power of monopoly to the Competition Commission of India. However, the Appellate Tribunal has not been conferred with any suo motu powers.

Suo motu powers of the RERA under section 7 of the Act

Section 7 of the Act authorises the Authority to cancel the registration granted under Section 5 in three conditions: first, in response to a complaint, second, in response to a Competent Authority recommendation, and third, even Suo Moto. It merely needs to record its satisfaction that the Promoter failed to perform anything needed by or under the Act or the Rules or Regulations issued thereunder, or that the Promoter breached the terms and conditions of permission granted by the Competent Authority.

In the case of  PSA Impex Pvt. Ltd v. Real Estate Appellate Tribunal[2], the court while deciding whether the sub-delegation of the power of the RERA under section 7 of the Act held thatthe words of Section 7 of the Act, as well as the procedure that the Authority must follow when making a judgement under Section 7, do not compel the Authority to act judicially. The Act only requires that if the Authority is satisfied that the conditions for exercising the Authority’s power of revocation of the Promoter’s or Real Estate Agent’s registration exist, namely that the Promoter/ Real Estate Agent is engaging in corrupt practises, the Authority may issue an order revoking the registration and the consequences specified in the Section.[3] The Authority may issue a show-cause notice and evaluate any response received within thirty days of the notice’s issuance. Section 7 gives you administrative authority. As a result, the Authority correctly utilised its jurisdiction under Section 81 of the Act to delegate the actual drafting of the order outlining comprehensive grounds for utilising its power under Section 7 of the Act against the promoter, the appellant herein.[4]

Suo motu powers of the RERA under Section 35 of the Act

This section deals with the power of the RERA to call for information and conduct investigations into allegations against a promoter, allottee or agent. The RERA has been conferred with the powers of a civil court as vested by the Code of Civil Procedure, 1908 with respect to the discovery and production of the books of accounts, summoning and enforcing the attendance of persons and examining them under oath and issuing commissions for the examination of witnesses.[5]

Books of accounts are beneficial in order to ascertain if the developer is using the finances provided to him fairly. Since he is duty bound by law to use the money contributed by homebuyers towards a specific project to be used exclusively for the project towards which it was contributed, an examination of these books of accounts can reveal any financial irregularity in the developer’s accounts for which he can be held liable. If they do not comply with the orders to produce these documents, the RERA can appoint a commissioner to search for such books.

Examination of witnesses under oath is crucial to ensure that the documents exchanged between the developers and homebuyers are real and verifiable. The RERA can also choose to conduct an oral examination of a witness and may administer oath for the same. Section 35(2)(iii) of RERA authorises the Regulator to issue commissions for the examination of witnesses or documents, much like a civil court. This would allow the Regulator to investigate all aspects of a developer’s complaint.

Suo motu powers of the RERA under Section 38 of the Act

 In the even that any of the acts of the promoters or allottees may potentially have the effect of a monopoly in the real estate market, then the RERA has the power to suo motu refer such matters to the Competition Commission of India.

The Real Estate Appellate Tribunal- does it have suo motu powers?

The Real Estate Appellate Tribunal (REAT) was established to hear appeals against Real Estate Regulatory Authority rulings. Section 43 of the Real Estate Regulation Act, 2016, stipulates that the REAT can assess the constitutionality of RERA orders and decide whether to sustain or overturn them. REAT orders can be appealed to the High Court.

Though the Karnataka RERA has come close to acquiring judicial powers, all the state RERA’s are quasi-judicial bodies. Currently, none of the Real Estate Appellate Tribunals have suo motu powers to initiate proceedings of any kind. The Delhi High Court in Praveen Chhabra v. Real Estate Appellate Tribunal [6]has held that the Appellate tribunal is a body whose origin and form exists because of the provisions of the Act. Its adjudicatory authority comes from a special statute and this body is not a part of the hierarchy traditional judicial institutions of India[7].

The Supreme Court, in the case of M/s.Technimont Pvt. Ltd. v. State of Punjab has held that the the Appellate Authority cannot waive the limitation or precondition prescribed by the statute for filing an appeal own its own. The inherent incidental or implied powers vested in the Appellate Authority cannot be invoked to render a statutory provision nugatory or meaningless.[8]

Suo motu powers of the Central Advisory Council

The Act provides for a Central Advisory Council that is required to advise the Central Government on matters regarding policies concerning the Act as well as how to promote the growth of the real estate sector.[9] Recently, during the COVID-19 global pandemic, the Ministry issued the necessary advisory to all States/Union Territories and their Regulatory Authorities on 13th May, 2020, to address the concerns of homebuyers who have invested their lifetime savings and to ensure the completion of projects, based on the recommendations of the Central Advisory Council (CAC). The Authorities of various States/Union Territories were permitted to invoke the force majeure clause and suo motu extend the date for the completion of various projects.

Potential for misuse of suo motu powers

It is not that builders are unaware of the established principles of the law under the RERA Act before filing a challenge in higher courts. Their strategy has been to postpone justice in order to reject justice. They are aware that if ten customers contacted RERA and obtained favourable judgements, honouring that ruling would bring hundreds of other buyers to RERA’s doorstep. As a result, they continue to contest RERA’s authority and scope in high courts, extending the litigation time and harassing homebuyers. Though the Supreme Court has upheld the constitutional validity of the RERA and its powers, these extensive powers given to the RERA could result in unnecessary windows for litigation to be opened. Consequentially, the RERA which was set up for speedy redressal of disputes in the real estate sector may end up having multiple windows for litigation. Moreoever, the Central Consumer Protection Authority is also vested with the powers to look into matters relating to violations of consumer rights or unfair trade practices suo motu by virtue of Section 18(2) of the Consumer Protection Act, 2019.

During the course of the investigation, the State Regulatory Authorities may also issue an interim order prohibiting any promoter, allottee, or real estate agent from acting in violation of this Act or the rules and regulations promulgated thereunder.

To give the Authority’s orders sanctity, RERA Section 63 states that any promoter who fails to comply with or contravenes any of the Authority’s orders or directions shall be liable for a penalty of up to 5% of the estimated cost of the real estate project as determined by the Authority, for each day that such default continues.

The establishment of the State Regulators has provided consumers with a significant sense of comfort since it offers them with an effective and exclusive grievance redressal mechanism, saving them time, money, and energy.

However, in order to bring justice to consumers, many State RERA’s have recently advocated for a broader range of enforcement powers, including the ability to issue arrest warrants, similar to what consumer forums in our country have, which can take up the powers of a first-class judicial magistrate for the trial of offences.

These powers coupled with their suo motu powers to initiate proceedings increase the chances of the RERA’s to either initiate proceedings unnecessarily or on the basis of false allegations. What the country needs is a framework to check the reasons recorded for initiating such proceedings and dispose cases that are frivolous and vexatious. This will not only speed up the process of grievance redressal but also cut down litigation costs for both parties.

[1]Real Estate (Regulation and Development) Act, 2016, § 20(2) , No.16, Acts of Parliament, 2016 (India)

[2] PSA Impex Pvt. Ltd v. Real Estate Appellate Tribunal , 2021 SCC OnLine All 215

[3] PSA Impex Pvt. Ltd v. Real Estate Appellate Tribunal , 2021 SCC OnLine All 215

[4] PSA Impex Pvt. Ltd v. Real Estate Appellate Tribunal , 2021 SCC OnLine All 215

[5] Real Estate (Regulation and Development) Act, 2016, § 35(2) , No.16, Acts of Parliament, 2016 (India)

[6] Praveen Chhabra v. Real Estate Appellate Tribunal 2022 SCC OnLine Del 1568

[7] Praveen Chhabra v. Real Estate Appellate Tribunal 2022 SCC OnLine Del 1568

[8]M/s.Technimont Pvt. Ltd. v. State of Punjab, C.A. No. 7358 of 2019

[9] Real Estate (Regulation and Development) Act, 2016, § 41 , No.16, Acts of Parliament, 2016 (India)

Author: Alvina Godwin

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