-Hitendra V.Hiremath

The Real Estate (Regulation and Development) Act, 2016 (“Act”) was passed by Rajya Sabha on 10th of March, 2016 which received the assent of the President of India on 25th of March, 2016 and was published in gazette on 26th of March, 2016. Out of total 92 sections, Section 2, Section 20 to 39, Section 41 to 58, Section 71 to 78 and Section 81 to 92 came into force on 01st of May, 2016 and Section 3 to 19, Section 40, Section 59 to 70 and Section 79 to 80 came into force on 01st of May, 2017.
The objective with which the Act passed was to promote and regulate the real estate sector by creating the Real Estate Regulatory Authority and protect the interest of consumers by creating an Appellate Tribunal. This article underlines in brief the essential information pertaining to the penalties levied for the violation of the provisions under the Act by the Developers/Promoter.
Chapter VIII of Act specifically deals with Offences, Penalties and Adjudication. Following are the penalties that may be levied for violation of the Provisions under Act.

  1. For Non-Registration of the Project and advertising, marketing, booking, selling or offering to sell without registration of the Project: a) If the developer/promoter fails to register their real estate project and thereby also advertises, markets, books, sells or offers to sell the plot, apartment/building thereby violating Section.3 of the Act, then as per Section.59(1) of Act, the developer/promoter shall be liable for penalty which may extend upto 10% (ten percent) of estimated cost of the real estate project. b) Further, in case if the Developer/Promoter continues to violate the provisions of Section.3 of the Act, the Developer/Promoter shall be punishable with imprisonment as per Section 59(2) of the Act, for a term which may extend upto 3 years or with fine which may extend upto a further 10% (ten percent) of cost of the real estate project or with both.
  2. Providing false information while registering the Project: If any Promoter/Developer provides false information while registering the Project or contravenes Section.4 of the Act, then as per Section.60 of the Act, the Promoter/Developer shall be liable to a penalty which may extend upto 5% (five percent) of the estimated cost of real estate project as determined by the Authority.
  3. Violation of any other provisions of Act: If the Promoter/Developer is in violation of any other sections of the Act, apart from Section.3 and 4, then as per Section.61 of the Act, the Promoter/Developer shall be liable to a penalty which may extend upto 5% (five percent) of the estimated cost of real estate project as determined by the Authority.
  4. Failure to Comply with orders of Authority by Promoter: Failure to comply or in contravention of the orders or directions of Authority, then as per Section.63 of Act, the Promoter/Developer shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to 5% (five percent), of the estimated cost of the real estate project as determined by the Authority.
  5. Failure to Comply with orders of Appellate Tribunal by Promoter: Failure to comply or contravention of any of the orders, decisions or directions of Appellate Tribunal, then as per Section.64 of Act, the Promoter/Developer shall be punishable with imprisonment which may extend upto 3 years or with fine liable to a penalty for every day during which such default continues, which may cumulatively extend up to 10% (ten percent), of the estimated cost of the real estate project or with both.
    Note that, the penalties as discussed above are exclusive of the provisions under which the authority can direct the Developer/Promoter to pay compensation along with the interest to the Allottees, in complaints filed regarding veracity of advertisement or prospectus, Non-adherence to the sanctioned plans, structural defect, delay in completion and defective title of the land.

DISCLAIMERS

  • The information as mentioned in this post is as per the provisions of the Real Estate (Regulation and Development) Act, 2016.
  • We recommend the Promoters to seek the assistance of the Professionals involved in the real estate practice in case of any queries, clarifications with respect to penalties under the provisions of Real Estate (Regulation and Development) Act, 2016.
    CONTACT
    For any other details, clarifications, assistance, advise and other services, please visit www.reraconsultants.in; or can get in touch with us at 080-2223 3003 or email to consult@reraconsultants.in
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