New Delhi: In the realm of real estate, the persistent issue of stalled or delayed projects has become a pervasive concern, causing significant financial losses for homebuyers and fostering an atmosphere of uncertainty. These issues often stem from a variety of factors, including regulatory hurdles, financial mismanagement, or unexpected disputes.
A prime example can be observed in regions like Noida and Greater Noida, which have witnessed a surge in real estate development due to their proximity to Delhi, rapid urbanisation, and the growth of IT and commercial sectors.
Project delays have also posed significant challenges in these areas as well.
The buyers invest their hard-earned savings into these projects, often relying on the phased development plans and pre-booking options offered by builders. These plans allow homebuyers to secure unit allotments and make payments as different project phases are completed.
These issues may arise due to funding shortages or unexpected events like the Covid-19 pandemic. Stalled projects are those that are no longer financially viable to continue, while delayed projects move forward at an exceptionally slow pace.
Homebuyers caught in such distressing situations do have legal remedies at their disposal.
“These include seeking reliefs by approaching the RERA under the Real Estate (Regulation and Development) Act, 2016, the Consumer Forum under the Consumer Protection Act (CPA), and the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016 or all three concurrently,” Advocate Vediccaa Ramdanee said.
In 2019, the Supreme Court in ‘Pioneer Urban Land & Infrastructure Ltd v. Union of India’ held that the remedies given to the allottee of flat/apartment are concurrent, and such allottees are in a position to avail remedies under CPA, RERA as well as trigger the provision of Insolvency and Bankruptcy Code.
Speaking to IANS, Ramdanee told that initially, only the provisions of Consumer Protection Act were available to the homebuyers. The time consuming, cumbersome and expensive process under this recourse gave way to the introduction of RERA.
“These legislations aim to ensure transparency and accountability in the real estate sector, safeguarding the interests of homebuyers and to recover their claims,” Advocate Kanika Kapoor said, adding that apart from the aforesaid civil remedies, buyers can also impose criminal charges such as cheating, fraud, misappropriation of funds against the other side under the Indian Penal Code, 1860.
The RERA has provided a homebuyer with the reliefs of seeking either interest on delayed possession or a complete refund of the money paid along with interest.
“In case of failure, the builder looks at severe penalties ranging from Imprisonment to cancellation of Registration of the Project,” she said, adding that any party unhappy with the decision of RERA can appeal to the Real Estate Appellate Tribunal within 60 days.
“To add to the legal remedies available to ameliorate the concerns of the homebuyers, since 2018, they can now also approach the NCLT as Financial Creditors and initiate insolvency proceedings against the defaulting builders,” Ramdanee said.
However, it is advisable in situations when there is a large group of homebuyers who are unable to get possession and financial circumstances of the developer are plummeting, she added.
Recently, a 14-member committee chaired by former NITI Aayog CEO and India’s G20 Sherpa Amitabh Kant was specially set by the union Housing and Urban Affairs Ministry to examine the stalled real estate projects and put forward their views and suggestions on three areas — where the work has not even commenced, where the projects are at a halt, and where builders have actually given the physical possession of the property without getting it registered.
“The intention behind these recommendations is to introduce corrective actions that can reinvigorate stagnant projects and will set wheels in motion and provide relief for homebuyers,” Kapoor said.
Though the remedies and recourses available had aimed at speedy resolution for the homebuyers, the same wasn’t achieved at the pace expected.
“These recommendations by the Committee may bring about a welcome change if adopted,” added Kapoor.
Ramdanee opined: “The recent recommendations by the Committee offer a positive step forward for both developers and homebuyers. While they might involve compromises from stakeholders like developers and financers, there implementation could reinvigorate the system and bring relief to both builders and homebuyers.”
Some recommendations made by the committee are — that certificates be granted to developers irrespective of the pending dues to the authorities, de-linking of the grant of registration or sub-lease by land authorities to the homebuyers from the recovery of dues from developers, Partial Surrender Policy per which developers can give back some of the unused land to the authority in exchange for a waiver on the dues, preparation of a detailed scheme by the Ministry of Housing and Urban Affairs for using the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund, among others.
The challenges posed by stalled or delayed real estate projects are considerable, often stemming from factors beyond the control of homebuyers.
The legal remedies and the recent recommendations by the Committee are aimed at mitigating these challenges and providing recourse for homebuyers in distress.
These measures, if adopted and implemented effectively, have the potential to bring about positive change in the real estate sector, benefiting both developers and homebuyers alike.
–IANS