Registration of Real Estate Project

One of the salient features of RERA is the requirement of registration of the real estate project by
the ‘Promoter’ with the Real Estate Regulatory Authority (“Authority”), which falls within the
planning areas. In the absence of such registration, the Promoter of a real estate project is not
permitted to advertise, market, book, sell or offer for sale, or invite persons to purchase in any
manner in any real estate project or part of it.
RERA defines promoter as (“Promoter”):
1. Builder;
2. Developer;
3. Development Authority;
4. Society; or
5. Holder of Power of Attorney from the owner of the land on which building / apartment is
constructed or plot is developed for sale.
A “real estate project” is defined as the development of a building, converting an existing
building or a part in apartments, development of land into apartments / plots for the purpose of
selling and includes common areas, development works, all improvements and structures thereon
and all easement, rights and appurtenances belonging to such building or land or structure.
The terms “apartment” and “building” as used in the aforesaid definition which is defined under
the Act not only covers residential projects but also commercial projects.
Who needs to register
The following persons are required to register the real estate project with authority:
i. Any person who constructs or who wants to build an independent building or a building
consisting of apartments or modification of existing structure into apartments to sell apartments
to the persons.
ii. Any person who develops the land into a project, to sell projects to other persons.
iii. Any development authority or another public body .
iv. Buildings or plots constructed by such authority or public body on who owns land or placed
at their disposal by the government.
v. Plots owned by development authority or which is placed at their disposal by the government
to sell the apartments.
vi. A State-level cooperative housing finance society and a primitive cooperative housing society
which constructs the apartments or buildings for its members or to the allottees.
vii. Any person who acts himself as a builder, colonizer, contractor, developer, estate developer
or by any different name or claims to be acting as the holder of a power of attorney from the
owner of the land on which the building or apartment is constructed or plot is developed for sale.
Note: The person who builds or converts a building into apartments or develops a plot for sale
and the persons who sell flats or plots are different persons, but both of them are deemed to be
promoters are liable to follow the rules and regulations specified under real estate Act.
In terms of Section 3 of RERA, the following real estate projects are not required to be
registered:
1. Where the area of the land does not exceed 500 square meters or number of apartments does
not exceed 8 (eight);
2. Where the Promoter has received completion certificate for a real estate project prior to
commencement of RERA; and
3. Where the work involved is limited only to renovation or repair or re-development and does
not involve marketing, advertising, selling or new allotment of any apartment, plot or building.
In addition to the registration of real estate projects, every Real Estate Agent is also required to
get itself registered before facilitating the sale / purchase of any real estate project or part of it,
by making an application along with requisite information / documents and fee.
Application for registration under RERA
In terms of Section 4 of RERA, an application required to be made by every Promoter along
with the prescribed fee for registration of its real estate project and shall be inter alia
accompanied with the prescribed documents including:
1. An authenticated copy of the approvals and commencement certificate obtained from the
competent authority;
2. Sanctioned plan, layout plan and specifications of the proposed real estate project as
sanctioned by the competent authority; and
3. A declaration by the Promoter supported by an affidavit inter alia stating:

1. that the Promoter has a legal title over the land on which development is proposed;
2. the details of all encumbrances on such land;
3. the time period within which the Promoter undertakes to complete the real estate project;
4. that the Promoter would deposit 70% of the amount realized for the real estate project from the
allottee(s) from time to time in a separate bank account.
Validity of registration under RERA
The registration granted shall be valid for a period declared by the Promoter for completion of
the real estate project or phase thereof as submitted in the affidavit along with the application for
registration.
The registration granted by the Authority may be extended by it upon receipt of application from
the Promoter in this regard in the following circumstances:
1. Force Majeure: war, flood, drought, fire, cyclone, earthquake or any other calamity caused by
nature affecting the regular development of the real estate project.
2. Other than force majeure: The Authority may extend the registration to a maximum period of
one year if it feels that the circumstances and reasons for extension of the case are reasonable.
Revocation of registration
RERA stipulates various compliances with respect to a real estate project. If the same are not
complied with, the registration of an already registered real estate project may get revoked.
The Authority may revoke a registration on the basis of a complaint received or suo motu by the
Authority by giving 30 days’ notice in writing to the Promoter of such real estate project stating
grounds of proposed revocation and instructing him to show cause as to why the registration
should not be revoked. On the basis of the Promoter’s reply to the show cause notice, the
Authority may allow the real estate project to be registered or alternatively, may cancel the
registration.
A show cause notice proposing the revocation may be issued on the following grounds:

1. If the Promoter defaults in doing anything required under RERA;

2. If the Promoter violates any terms and conditions of the approval granted by the Authority;
3. If the Promoter is involved in any kind of unfair practice or irregularities such as any
misrepresentation or false representation and / or publication of any advertisement / prospects of
services that are not intended to be offered; and / or
4. If the Promoter indulges in any fraudulent practices.
Consequences of non-registration
In case of non-registration of the real estate project, Section 59 stipulates a penalty of up to 10%
of the estimated project cost and in case of continued default, an additional fine up to 10% of the
estimated project cost or imprisonment up to 3 (Three) years or both.
In terms of the provisions of Section 31 of the RERA legislation, any aggrieved person may file
a complaint with the Authority against the Promoter for violation of the provisions.
 The Authority has been entrusted with very wide powers under RERA in relation to any non-
compliance on the part of the Promoter including levy of penalty as well as taking such other
remedial measures or safeguards as may be deemed fit by the Authority. The same may include
granting of interim order(s), refund of consideration amount received by the Promoter from
various allottee(s), change in the developer / Promoter, etc., on a case to case basis.
Lending by Financial Institutions/Banks
In the event, any bank / financial institution decides to lend money to retail buyers under the real
estate project, which is not registered or registration of the same has been cancelled, such
decision may be a conscious call on the part of such bank / financial institution since such
lending will involve high risk factors and uncertainties regarding the completion of the real
estate project or actions to be taken by the Authority in relation to such real estate project /
Promoter at a later stage, which may be detrimental to the interest of such bank / financial
institution or other stakeholders. Hence, the Banks / Financial Institutions have also been
insisting upon registration of real estate projects under RERA before sanction of the loan or
approval of the real estate project in order to protect their interest.

Registration of Real Estate Agents

One of the most important interfacing in the real estate sector is held by the brokers or real estate
agents today. They form a vital bridge between the real estate industry and the buyers of real
estate properties. It is a fact that flat buyers and brokers interact commercially. There are
innumerable cases where the consumers have, legally or not portrayed their dissatisfaction
towards the services of their agents. Hence RERA seeks to smoothen out these anomalies by
regulating the industry of real estate agents.
Chapter 2 of the RERA is partially dedicated to the registration of real estate agents with the
appropriate authorities.
Who is a Real Estate Agent.
Section 2(zm) of RERA defines real estate agents. According to the definition, a "real estate
agent" means any person, who negotiates or represents other persons for transfer of a real estate
property by way of sale to another person and receives remuneration or fees or any other charges
for his services whether as commission. A real estate agent is also a person who introduces,
through any medium, prospective buyers and sellers to each other for negotiation for sale or
purchase of real estate property, as the case may be, and includes property dealers, brokers,
middlemen etc.
Requirement of registration
To achieve the objective of regulating the real estate sector and to standardize this sector making
it more transparent, the Act and the Rules made thereunder require for the real estate agents to
obtain a registration certificate from the Real Estate Regulating Authority. RERA also says that
the real estate agents will also be liable for any flaws in the project and can be prosecuted for any
misconduct in the business.
It is Section 9 (1) of RERA that mandates the registration. Section 9 prohibits an agent to
operate his business without such registration.
Documents for registration
Name, registered address, type of enterprise (proprietorship, societies, partnership,
company etc.);
In case of a Real Estate Agency the particulars of incorporation including the bylaws,
Name, Address, contact details and photograph of the real estate agent or director or Partners
the authenticated copy of the PAN card of the real estate agent;
the authenticated copy of the address proof of the place of business.
Validity
The registration certificate is valid for 5 years from the date of receipt. It can be revoked before
the expiry of this period in case the agent breaches the RER Act or Rules.
Deemed registration
According to Section 9(4) of the Act read with Rule 9 of the Rules, if the Authority does not
grant or reject the registration certificate within 30 days, hereon the completion of the period
specified under sub-section (3), if the applicant does not receive any communication about the
deficiencies in his application or the rejection of his application, he shall be deemed to have been
registered.

Conditions for RC
The following conditions/ compliances are to be adhered to by the real estate agents after
attaining the registration certificate:
a) Not to facilitate sale of unregistered property;
b) Due maintenance of books of accounts records and documents as provided under rule 14;
c) Avoid use of any unfair trade practices as enumerated under the rules assistance to enable the
allottee and promoter to exercise their respective rights and fulfil their respective obligations at
the time of booking and sale of any plot, apartment or building, as the case may be; and
d) Generally adhere by the provisions of the Act and the Rules.
These conditions are also mentioned as conditions in the registration certificate as well as
Section 10 of RERA.

Functions & Duties of Promoter

The Act seeks to protect the interest of allottees by casting obligations on the promoter to ensure
fairness and transparency in their dealings with them, empowering the regulatory authority to
enforce observance of such obligations and providing deterrence by way of stringent penal
consequences for defaults. In general, the promoter has been made responsible for all
obligations, responsibilities and functions under the Act, the rules and the regulations and also as
per the agreement for sale. His responsibility under section 11(A)(a) is towards the allottees or
the association of allottees till the conveyance of all the apartments, plots or buildings to the
allottees and to their association. His responsibility towards allottees continues under section
14(3) even after conveyance in respect of structural defects brought to his notice within 5 years
from the date of handing over possession.
Under the provisions of sub-section (3) of Section 18, if the promoter fails to discharges any
obligation imposed on him under the Act or in accordance with agreement for sale, he shall be
liable to pay compensation to the allottee as per the provisions of the Act. The obligations cast on
the promoters and the responsibilities imposed are stated hereunder:
1. Duty to get the project registered with the regulatory authority [Sec. 3]
This is the basic starting point of regulatory framework under which any activity involving the
allottees and interface with them can commence only thereafter. The registration serves the basic
and most essential purpose of establishing the genuineness of the project and providing essential
details concerning the project, the promoter and all persons connected with the project by
bringing such information in public domain. For discussion about such obligation and matters
relating to it chapter V may be referred to.
2. Duty to create a webpage and display the project [Sec. 11(1)]
After the project is registered, a login ID and password is provided by the Regulatory Authority
to the promoter which enables him to have access to the authority’s website and create a
webpage for the project. The page is to display the prescribed information about the project, the
antecedents of promoter and past activities, layout plans, approvals, time of completion and other
details which a buyer would necessarily like to have. It also brings the disclosures on record and
avoid any dispute as to what was disclosed.
Any Advertisement or prospectus issued or published by the promoter has necessarily to mention
prominently the website address of the Authority wherein all details of the registered projects
have been entered and include the registration number obtained from the Authority as well as
matters incidental thereto. The promoter is also to upload the quarterly updates of booking of
apartments and garages, approvals obtained and pending and the status of the project.
3. Duty not to advertise or make offer for sale without registering the project [Sec 3(1)]
Section 3 of the Act prohibits a promoter from advertising, marketing, booking, selling or
offering for sale any plot, apartment or building in the project in the planning area without
registering the project unless, the project is such which does not require registration.
In case any invitation to purchase is made by way of advertisement, prospectus or by any other
means without getting the project registered, it is violation of the legal provision andmight
involve penal action in which case the amount of penalty can be up to the amount equal to 10%
of the cost of the project as estimated by the Authority. In case of non- compliance of the order
in this regard and continued defaults, the promoter may be made punishable with imprisonment
for a term up to three years or with fine which may be up to further 10% of the estimated cost or,
with imprisonment as well as fine.
4. Duty to make available certain documents at the time of booking and issue of allotment
letter [Sec.11(3)]
The promoter is required to make available the following information to the allottee at the time
of booking and issue of allotment letter:
i. sanctioned plans, layout plans along with specifications approved by the competent authority,
by display at the site or such other place as may be specified by the regulations made by the
Authority;
ii. the stage wise time schedule of completion of the project, including the provisions for civic
infrastructure like water, sanitation and electricity.

5. Duty to obtain the completion certificate or the occupancy certificate [Sec.11(4)(b)]

The responsibility to obtain the completion certificate or the occupancy certificate or both as per
laws of the relevant local authority or any other law in force in the concerned State/ Union
Territory, is on the promoter who should, after obtaining it, make it available to the
allottees individually or in case any association has been formed, to the association.
In the absence of completion/occupancy certificate it will be unlawful for the promoter to hand
over possession to the allottee. The failure to obtain such certificate will result in another default
under section 18 i.e., his failure to give possession in accordance with the terms of agreement
relating to the time of such handing over, leading to consequences laid down under that section.
6. Duty to obtain lease certificate [Sec.11(4)(c)]
Where the real estate project is developed on a leasehold land, the promoter is responsible for
obtaining the lease certificate from the relevant authorities specifying the period of lease
andcertifying that all dues and charges in regard thereto have been paid. The certificate needs to
be made available to the allottees.
7. Duty to ensure veracity of advertisement [Sec.12]
The advertisement, prospectus or any other document designed to canvass and invite the public
to purchase should have information which is not incorrect, false or misleading. A buyer taking
decision to buy on the basis of false, incorrect or misleading information contained in the
advertisement and making an advance or deposit on that basis is entitled to be compensated by
the promoter, if he sustains any loss or damage by reason of acting on such information.
The compensation is to be determined by the Adjudicating Officer appointed by the Authority
and appeal lies against such determination to the Real Estate Appellate Tribunal. What applies to
advertisement, equally applies to model apartment, plot or building which also generally move
the buyers in taking the decision.
Apart from compensation, the buyer has also the option to withdraw from the project in which
case he is entitled to refund of entire money paid with interest at the rate as may be prescribed by
the State Govt. in the rules to be framed and the compensation as may be determined by the
Adjudicating Authority.
8. Duty not to accept deposit or advance exceeding 10% of cost without executing
agreement to sell [Sec.13]
A promoter is prohibited from accepting any sum exceeding 10% of the cost of the apartment,
plot or building as advance payment or application fee unless, he executes an agreement for sale
with the allottee and gets it registered under the law relating to registration.
The agreement for sale is to be in the form as may be prescribed in the rules and shall specify the
particulars of development of the project along with specifications and internal development
works and external development work, the dates and the manner by which payment towards the
cost is to be made and the date on which possession of the apartment, plot or building is to be
handed over. It will also mention the rate of interest payable by the promoter to the allottees and
by the allottees to the promoter in case of their respective default which will be the same in both
the cases.
9. Duty to keep 70% of the amount received in separate bank account [Sec.4(l)(D)]
In order to ensure that the amount received by the promoter from the allottees of a particular real
estate project is used towards meeting the land cost and cost of construction of that very project
only, the law requires promoter to deposit 70% of the amount realized from time-to- time in
respect of a particular project, in a separate account with a scheduled bank. The amount so
deposited is to be used for the land cost as well as the cost of construction of that project only.
To ensure this, the law provides that only so much amount can be withdrawn from this account
as does not exceed the amount proportionate to the completion of the project as certified by an
engineer, an architect and a chartered accountant in practice.
The promoter is further obliged to get his accounts audited within 6 months after the end of
every financial year and produce statement of account certified by the chartered accountant in
practice to the effect that the amounts collected has been utilized for the very project and the
withdrawal from the bank account has been in accordance with the legal requirement i.e., in
proportion to the work completed.
The provision is likely to be instrumental in preventing the prevailing practice of shifting the
funds collected from one project to another project causing consequent delay in the completion
of the project for which the amount was realized. Many a times projects are launched even
before getting approvals and booking amount is realized which in the intervening period used for
completion of some other project. The requirement of parking the funds in a separate account
and withdrawing from it only for purpose of meeting the cost of that project will avoid the
possibility of siphoning of funds from one project to another.
The provision, howsoever laudable, is likely to create some problem in cases where land cost,
which forms the major component of total project cost, is met by the promoter out of his own
funds before the amount starts coming from the project. Since the entire cost of land is paid but
withdrawal is permitted only of proportionate amount based on the proportion of completion, the
promoter may not able to get the cost already incurred by him.

10. Duty to adhere to sanctioned plans and project specifications[Sec.14]

The webpage of the project contains details of sanctioned plan or layout plans and also
specifications approved by the authorities. These are also made part of agreement for sale. The
promoter is under the obligation to develop and complete the project in accordance with such
approved plans and specifications disclosed to the allottees and not to depart in any manner
including in the matter of fixtures, fittings, amenities and common areas in respect of any
apartment, plot or building. He is prohibited from making any addition or alteration in the plan,
specifications, fixtures, fittings and amenities unless he obtains the previous consent of the
person who bought it on the faith of such disclosure. He can only make such minor additions or
alterations as may be required by the allottee himself or such minor changes or alterations as may
be necessary due to architectural and structural reasons duly recommended and verified by an
authorized Architect or Engineer after proper declaration and intimation to the allottee. The
explanation to the provision explains the import of minor additions and alterations as under
“Explanation– For the purpose of this clause, “minor additions or alterations” excludes structural
change including an addition to the area or change in height, or the removal of part of a building,
or any change to the structure, such as the construction or removal or cutting
into of any wall or a part of a wall, partition, column, beam, joist, floor including a mezzanine
floor or other support, or a change to or closing of any required means of access ingress or egress
or a change to the fixtures or equipment, etc.”
The obligation to adhere to the sanctioned plan in respect of individual apartment, plot or
building as stated above is not affected by any stipulation contained in any law, contract or
agreement and holds good in spite of any contrary stipulation to this effect. The obligation is
absolute unaffected by anything contained in any law, contract or agreement.
There are situations where the promoter wants to construct floors in existing buildings or
additional buildings or wings not disclosed in original sanctioned layout plan to exploit the
available Floor Space Index. In some cases, he may seek to make alteration in common areas
within the project. The Act prohibits him from doing so unless he obtains the previous written
consent of at least two-thirds of the allottees (other than the promoter) who have agreed to take
apartments in the approved buildings. For counting the two-third number, the allottee who is
allotted more than one apartment in his own name or in the name of his family, is to be treated as
one allottee only. In case apartment etc. are booked by persons such as companies or firms or
association of individuals in their name and also in the name of their associated enterprises or
related enterprises all such allottees will be counted as one allottee only.
In the absence of any provision defining ‘associated enterprises’ and ‘related enterprises’, the
application of the provision may involve disputes leading to litigation.
The obligation to adhere to the development as per sanctioned plan of the building or the layout
takes care of a common grievance of the allottees in such matter. The necessity of obtaining
previous written consent of the specified number of allottees is likely to put the matter beyond
disputes.
11. Duty to refund the amount received in case of failure to give possession in time [Sec.
18(1)]
If the promoter fails to complete the project or is unable to give possession of the building,
apartment or plot in accordance with the terms of the agreement for sale or within the time
specified therein, the allottee has the option either to withdraw from the project or to continue
with it. In the former case, the promoter is under an obligation to return the amount received by
him with interest at the rate to be prescribed by the State Government in the rules and also to pay
compensation as may be determined by the Adjudicating Officer.
In case the allottee decides to continue with the transaction, the promoter will be liable for
interest for every month of delay computed till the date of handing over of the possession, at the
prescribed rate. The responsibility of the promoter to refund the amount along with interest and
compensation remains the same even when the failure to complete and give possession in time is
due to discontinuance of business as developer on account of suspension or revocation of the
registration or for any other reason. The allottees any other remedy under any other Act remains
unaffected by such refund of consideration and payment of interest and compensation.
12. Duty to compensate the allottee for loss due to defective title of the land [Sec. 18(2)]
In case the allottee sustains any loss due to defective title of the land on which the project is
being developed or has been developed, the promoter will be under an obligation to compensate
the allottee by the amount and in the manner as may be determined by the Adjudicating
Authority. The allottee’s claim arising from loss due to defective title of the promoter will not be
barred by limitation under the Limitation Act or any other Act in force.

13. Duty to enable formation of association or society of the allottees or a federation of the
same [Sec.11(4)(e)]
The Act being a regulatory Act to regulate the construction, sale, management and transfer, deals
with matters up to the stage construction is complete and possession is handed over to the
allottees except for the limited purpose of rectifying the defects brought to promoter’s notice
within 5 years of handing over of the possession. The apartments being only an identified part of
the building, the management of the building does not rest with individual allottees but with a
body representing all the allottees in the project. The law, therefore, envisages formation of a
collective body which can be a co- operative society with allottees as members or, a company
with allottees as shareholders or, any other association of allottees in accordance with the
applicable law of the State. Once such collective body is formed, the promoter is supposed to
hand over the management of the building, its common area, amenities and facilities to the
collective body and thereafter, the management is carried out in accordance with the law
applicable to such collective entity.
In case of layout plan, where the development of law consists of construction of several
buildings such societies or associations are formed for each building separately and for
management of area and facilities common to all the buildings, an Apex Body or Federation is
constituted with membership of individual societies.
The Act requires the promoter and allottees to form an association or society or co-operative
society or a federation of the same under the applicable law of the State. The time within which
such association or society is to be formed and the manner of constituting it will be governed by
the relevant law. In case, however, there is no law governing such association in any State, the
association of allottees, by whatever name called, shall be formed within a period of three
months of the majority of allottees having booked their plot or apartment or building, as the case
may be, in the project.
The provision as it exists, does not appear to cast responsibility on the promoter of formation of
such entity of allottees and to decide the nature of entity to be formed. The promoter under the
provision is to enable such formation which imply creating circumstances for such formation and
extending all co-operation in the process of formation of the entity decided to be formed by the
allottees. This might involve problem in practical working as the allottees are spread over,
unknown to each other and may find difficult to come together for taking a decision and acting
on it.

14. Duty to provide essential services till handing over to the association of allottees
[Sec.11(4)(d)]
As mentioned earlier the management of the land and building and the common area and
facilities eventually is to be taken over by the association of allottees. The Act provides that till it
is done and maintenance work is taken over by such association/ society, the promoter will have
the responsibility of providing and maintaining the essential services, on reasonable charges.
15. Duty to execute conveyance in favour of allottees and their association [Sec.11(4)(f)]
As mentioned, after the project is complete, occupation certificate is issued by the competent
authority and possession is handed over to the allottee, the legal title over the building or the
apartment or the plot is to be passed on to the allottee and the association of allottees by
executing a registered conveyance deed in their favour.
The Act requires the promoter to execute registered conveyance deed of the apartment, plot or
building in favour of the allottee and pass on to him all title document pertaining thereto within
the period prescribed under the local laws.
In case there is no local law providing for execution of conveyance deed and related matters, the
conveyance deed in favour of allottee should be executed and registered within a period of three
months from the date of issue of occupancy certificate.
While the conveyance deed of building, plot or apartment is to be executed in favour of the
allottee, the law requires conveyance of the undivided proportionate title of the allottee in the
common area, to be executed in favour of the association of allottees. This should also be done
within a period of three months from the issue of occupancy certificate, if there is no local law
prescribing such period.
‘Common area’ has been defined in Sec. 2(n) to include
i. the entire land for the real estate project or where the project is developed in phases and
registration under this Act is sought for a phase, the entire land for that phase;
ii. the stair cases, lifts, staircase and lift lobbies, fire escapes, and common entrances and exits of
buildings;
iii. the common basements, terraces, parks, play areas, open parking areas and common storage
spaces;
iv. the premises for the lodging of persons employed for the management of the property
including accommodation for watch and ward staffs or for the lodging of community service
personnel;

v. installations of central services such as electricity, gas, water and sanitation, air- conditioning
and incinerating, system for water conservation and renewable energy;
vi. the water tanks, sumps, motors, fans, compressors, ducts and all apparatus connected with
installations for common use;
vii. all community and commercial facilities as provided in the real estate project;
viii. all other portion of the project necessary or convenient for its
ix. maintenance, safety, etc., and in common use.
It is seen that common area, inter alia, includes the entire land and amenities built thereon for the
real estate project or its phase, if the project is developed in phases. The provision will, therefore,
require not only conveyance of land to a different entity viz., the association of allottees or
Competent Authority but also appropriation thereof belonging to individual allottees. Modalities
of such conveyance will have to be worked out and prescribed by the appropriate Government in
the rules to be framed.
The obligation to convey the land and building is contained in State legislations also but with a
difference.
16. Duty to pay all outgoings till transfer of physical possession [Sec.11(4)(g)]
The promoter is obliged to pay all outgoings including land cost, ground rent, municipal or other
taxes, charges for water or electricity, maintenance charges, mortgage loan and interest thereon
and all other liabilities payable to competent authorities, banks and financial institutions relating
to the project, out of money collected from the allottees till he hands over physical possession to
allottees or their association.
In case he fails to pay such outgoings which remain pending on the handing over of possession,
he continues to remain liable even after the property is transferred to the allottees or their
association and is also liable for the cost of any legal proceedings which may be taken against
him by the person or authority to which the amount was payable.

17. Duty not to create any charge after execution of agreement for sale [Sec.11(4)(h)]
The promoter is prohibited from creating any charge on the apartment, plot or building after the
agreement for sale is executed. If any charge is created in contravention of the provision, even if
there is any contrary provision in any other law, such charge will not affect the right and interest
of the allottee.
18. Duty to get the project insured [Sec.16]
The promoter is under an obligation to obtain all such insurances as the appropriate government
may notify which may include –
i. the title of the land and building, and
ii. construction of the real estate project
He is liable to pay all premiums in respect of insurances relating to the project till the project
along with the insurance is transferred to the association of allottees. The insurance shall be for
the benefit of the allottees or their association and shall stand transferred to their benefit when
the agreement for sale is entered with them. All documents relating thereto shall be handed over
to the association of allottees when such association is formed.
19. Duty not to assign his majority rights and liabilities to a Third Party [Sec.15]
Having got the project registered and having started the sale of building, apartment or plot, the
promoter cannot leave it midway by transferring his majority rights and liabilities to a third
party. Such assignments can be possible only with prior written consent of at least 2/3rd number
of allottees and approval of the Regulatory Authority.
In working out the number of allottees whose consent is required, the promoter himself will not
be taken as an allottee.
Further, in case the buildings, apartments or plots are booked in the name of family members, all
such family members together are to be taken as one allottee only.
Similarly if the buildings, apartments or plots are booked in the name of concerns viz.,
companies, firms or other associations and also in the name of their associated or related entities,
the concern and its associated/related entities together will be considered a single allottee.
In case the transfer takes place after obtaining the consent of at least 2/3rd allottees and approval
of the Authority, the transferee will step into the shoes of the transferor. This will mean that the
rights of the persons who became the allottee prior to such transfer will remain unaffected.
Further, the new promoter will now be required to independently comply with all the obligations
to which the outgoing promoter would have been subjected to had the transfer not taken place. In
case of any default in complying with such pending obligations, the incoming promoter will be
liable to all the consequences which the erstwhile promoter would have been subjected to had he
not transferred the rights and liabilities under the project.
The transfer so effected will not result in extension of time to the new promoter for completing
the real estate project and he will be bound by the time period for completion declared by the
erstwhile promoter in his declaration which is displayed on the website.
A- Rights of Allottees
The Real Estate (Regulation & Development) Act is a comprehensive legislation which regulates
the activities of all stakeholders namely, the promoters, the agents and the allottees.
The allottee being one of the parties to the transaction is bound by the terms and conditions of
the agreement of sale executed in terms of the Act. The Act in Chapter IV lays down the rights of
the allottee which he has against the promoter and which are to be enforced by the Regulatory
Authority which are as follows:
1. Rights of the Allottees to obtain information
The allottee has the right to obtain information relating to the project including information about
the sanctioned plan/ layout plan and the specifications as approved by the competent authority.
The information is required to be contained in the webpage of the Authority’s site and updated
regularly in terms of the provisions of sec. 11(1) of the Act. The right to obtain this information
is significant as Section 14 obligates the promoter to adhere to the sanctioned plan and project
specification, departure from which empowers the allottees to act against the promoter and stop
him from doing so. In case the promoter intends to make any additional construction beyond
what is sanctioned in the plan and disclosed to the allottees, he can do so only after obtaining
prior written consent of at least 2/3rd number of allottees. Besides, the allottee is also entitled to
all other information which are related to matters provided in the Act, rules or regulations made
thereunder or, in the agreement for sale.
2. Right to know stage-wise time schedule of completion
This is also the information required to be displayed on the website. Apart from the time
scheduled for the completion, the allottee is entitled to information regarding water, sanitation,
electricity and other amenities and services as agreed with the promoter in the agreement for
sale.
3. Right to claim possession
The allottee is entitled to claim possession of the building, apartment or plot as per the
declaration given by the promoter in his application for registration of the project. While
possession of the building apartment or plot is to be given to the allottee, that of common area is
to be handed over to the association of allottees.
4. Right to claim refund in the event of non-completion
The allottees is entitled to claim the refund of the amount paid along with interest at the
prescribed rates, and compensation as may be determined by the adjudicating authority in the
event of failure by the promoter to give possession in accordance with the terms of the agreement
for sale. Even if such failure is due to discontinuance of business as a developer on account of
suspension or revocation of registration, the allottee’s right to claim such refund and other
amount remains unaffected.
5. Right to obtain documents and plans
The allottee is entitled to have documents and plans including that of common area after the
possession is handed over by the promoter to him or the association of allottees.
B- Duties of Allottees
1. Duty to make payment
Every allottee, who has entered into an agreement to take an apartment, plot or building as the
case may be, shall be responsible to make necessary payments in the manner and within the time
as specified in the said agreement for sale and shall pay at the proper time and place, the share of
the registration charges, municipal taxes, water and electricity charges, maintenance charges,
ground rent, and other charges, as may be payable. The obligation to make payment within
specified time may be changed with mutual agreement.
2. Duty to pay interest at prescribed rate
The allottee is liable to pay interest at the rate to be prescribed for any delay in payment of any
amount which is due from him in respect of cost, maintenance, registration or under any other
head. The liability towards interest may be reduced by the mutual agreement between the
promoter and the allottee.
3. Duty to participate towards formation of society/association
Every allottee of the building apartment or plot is required to participate in the formation of an
association or society or co-operative society of the allottees or a federation of the same.
4. Duty to take physical possession
Allottee shall take physical possession of the building, apartment or plot within a period of two
months of the issue of occupancy certificate.
5. Duty to participate in registration of conveyance deed
Under section 17(1) the promoter is required to execute a registered conveyance deed of the
building, apartment or plot in favour of the allottee and of the undivided proportionate title in the
common areas in favour of their association. While the primary responsibility of conveying the
title is that of the promoter, the allottee is also responsible to participate in the process and
extend all co-operation in the matter.
Penal consequences in case of failure
The allottee, in case he fails to comply with or contravene any order decision or direction of the
RERA, is liable to a penalty computed per day for the period during which such default
continues. The penalty may cumulatively extend up to 5% of the cost of the building, apartment
or plot allotted to him as may be determined by the authority.
In case he fails to comply with or contravenes any order or direction of the Real Estate Appellate
Tribunal he can be punished with imprisonment for a term up to one year or with fine for
everyday during which such default continues which may extend up to 10% of the
 cost of the building, apartment or plot. He may also be punished by imprisonment as well as fine
in appropriate case.

Real Estate Regulatory Authority

Sec.20 of Real Estate(Regulation & Development), 2016 provides for the establishment and
incorporation of Real Estate Regulatory Authority.
Establishment
It is the responsibility of the appropriate Govt. to establish the Real Estate Regulatory Authority
within a period of one year from the date of coming into force of this Act, to exercise the powers
conferred on it and to perform the functions assigned to it under this Act:
The appropriate Government of two or more States or Union territories have the power to
establish one single Authority or the appropriate Govt. of a State has the power to establish more
than one Authority in a State or Union territory.
The real estate regulatory Authority is a body corporate by the name as mentioned above

having perpetual succession and a common seal, with the power, to acquire, hold and dispose of
property, both movable and immovable, and to contract, and can by the said name, sue or be
sued.
Composition of Authority
The Authority consists of a Chairperson and two whole time Members appointed by the
appropriate Government.
Qualifications of Chairperson and Members of Authority
The Chairperson and other Members of the Authority are appointed by the appropriate
Government on the recommendations of a Selection Committee consisting of the Chief Justice of
the High Court or his nominee, the Secretary of the Department dealing with Housing and the
Law Secretary, from amongst persons having adequate knowledge of and professional
experience of at-least twenty years in case of the Chairperson and fifteen years in the case of the
Members in urban development, housing, real estate development, infrastructure, economics,
technical experts from relevant fields, planning, law, commerce, accountancy, industry,
management, social service, public affairs or administration.
To be appointed as a Chairperson a person should have held the post of Additional Secretary to
the Central Government or any equivalent post in the Central Government or State Government.
A person who is, or has been, in the service of the State Government is not appointed as a
member unless such person has held the post of Secretary to the State Government or any
equivalent post in the State Government or Central Government.
Term of office of Chairperson and Members
The Chairperson and Members are to hold office for a term not exceeding five years from the
date on which they enter upon their office, or until they attain the age of sixty-five years,
whichever is earlier and are not eligible for re-appointment. Before appointing any person as a
Chairperson or Member, the appropriate Government should satisfy itself that the person does
not have any such financial or other interest as is likely to affect his functions prejudicially as
such Member.
Functions of Authority
The functions of the Authority shall include

a) to register and regulate real estate projects and real estate agents registered
b) to publish and maintain a website of records, for public viewing, of all real estate
projects for which registration has been given, including information provided in the
application for which registration has been granted;
c) to maintain a database, on its website, for public viewing, and enter the names and
photographs of promoters as defaulters including the project details, registration for which has
been revoked or have been penalised with reasons therefor, for access to the general public;
d) to maintain a database, on its website, for public viewing, and enter the names and
photographs of real estate agents who have applied and registered under this Act, including those
whose registration has been rejected or revoked;
e) to fix through regulations for each areas under its jurisdiction the standard fees to be levied on
the allottees or the promoter or the real estate agent;
f) to ensure compliance of the obligations cast upon the promoters, the allottees and the real
estate agents under this Act and the rules and regulations made thereunder;
g) to ensure compliance of its regulations or orders or directions made in exercise of its powers
under this Act;
h) to perform such other functions as may be entrusted to the Authority by the appropriate
Government as may be necessary to carry out the provisions of this Act.
Powers of Authority
Powers of Authority to call for information, conduct investigations
Section 35 of the Act empowers the Real Estate Regulatory Authority to make an inquiry and
investigate in relation to the promoter, allottee or the real estate agent. Section 35(1)of the Act
provides that the Real Estate Regulatory Authority can either suo moto or on a complain, initiate
any inquiry and investigation into allegations against the promoter, allottee or the real estate
agent. It is on the discretion of the Real Estate Regulatory Authority to appoint one or more
persons to make an inquiry in relation to the affairs of the promoter, allottee or the real estate
agent, as the case may be.
The Authority has the powers as are vested in a civil court under the Code of Civil Procedure
while trying a suit, in respect of the following matters, namely:

(i) the discovery and production of books of account and other documents, at such place and at
such time as may be specified by the Authority;
(ii) summoning and enforcing the attendance of persons and examining them on oath;
(iii)issuing commissions for the examination of witnesses or documents;
(iv)any other matter which may be prescribed.
Power to issue interim orders
The Authority has the power to restrain any promoter, allottee or real estate agent from carrying
on any act which is in contravention of this Act, or the rules and regulations made thereunder
until the conclusion of such inquiry or until further orders, without giving notice to such party.
Powers of Authority to issue directions
The Authority has the power to issue such directions, to the promoters or allottees or real estate
agents, as it may consider necessary for the purpose of discharging its functions under the
provisions of this Act or rules or regulations made thereunder, and such directions shall be
binding on all concerned.
Powers to impose penalty
The Authority has the powers to impose penalty or interest, in regard to any contravention of
obligations cast upon the promoters, the allottees and the real estate agents, under this Act or the
rules and the regulations made thereunder.
The Authority is guided by the principles of natural justice and also the power to regulate its own
procedure.
Power to make reference
The Authority, has the suo motu power to make reference to the Competition Commission of
India in any matter where an issue is raised relating to agreement, action, omission, practice or
procedure that:
(a) has an appreciable prevention, restriction or distortion of competition in connection with the
development of a real estate project; or
(b) has effect of market power of monopoly situation being abused for affecting interest of
allottees adversely

Power of rectification of orders

The Authority has the power to amend any order passed by it within a period of two years from
the date of the order made under the Act, with a view to rectifying any mistake apparent from the
record, and should make such amendment, if the mistake is brought to its notice by the parties.
Amendment should not be made in respect of any order against which an appeal has been
preferred under this Act.
While rectifying any mistake apparent from record, the Authority should not, amend any
substantive part of its order passed under the provisions of the Act. Power of recovery of interest
or penalty or compensation and enforcement of order, etc
If a promoter or an allottee or a real estate agent, fails to pay any interest or penalty or
compensation imposed on him, by any adjudicating officer or the Regulatory Authority or the
Appellate Authority, under this Act or the rules and regulations made thereunder the authority
has the power to recover the same from them, in such manner as may be prescribed as an arrears
of land revenue
If any adjudicating officer or the Regulatory Authority or the Appellate Tribunal, issues any
order or directs any person to do any act, or refrain from doing any act, then in case of failure by
any person to comply with such order or direction, the same shall be enforced, in such manner as
may be prescribed.

Real Estate Appellate Tribunal

Overview
Sec.43 provides for the establishment of Real Estate Appellate Tribunal within a period of one
year from the date of coming into force of Real Estate (Regulation and Development) Act, 2016.
Any person aggrieved by any direction or decision or order made by the Authority or by an
adjudicating officer under this Act may prefer an appeal before the Appellate Tribunal having
jurisdiction over the matter-Sec.43(5).
Constitution of the Appellate Tribunal
The appropriate government is empowered to establish one or more benches of the Appellate
Tribunal, for various jurisdictions, in the State or Union territory.
Every bench of the Appellate Tribunal consists of at least one Judicial Member and one
Administrative or Technical Member.
The appropriate Government of two or more States or Union territories can establish one single
Appellate Tribunal.
Composition of Appellate Tribunal
The Appellate Tribunal consists of a Chairperson and not less than two whole time Members

of which one is a Judicial member and other is a Technical or Administrative Member,

appointed by the appropriate Government.
Qualifications for appointment of Chairperson and Members
A person is not qualified for appointment as the Chairperson or a Member of the Appellate
Tribunal unless he:
a) in the case of Chairperson, is or has been a Judge of a High Court; and
b) in the case of a Judicial Member he has held a judicial office in the territory of India for at
least fifteen years or has been a member of the Indian Legal Service and has held the post of
Additional Secretary of that service or any equivalent post, or has been an advocate for at least
twenty years with experience in dealing with real estate matters; and

c) in the case of a Technical or Administrative Member, he is a person who is well- versed in the
field of urban development, housing, real estate development, infrastructure, economics,
planning, law, commerce, accountancy, industry, management, public affairs or administration
and possesses experience of at least
twenty years in the field or who has held the post in the Central Government or a State
Government equivalent to the post of Additional Secretary to the Government of India or an
equivalent post in the Central Government or an equivalent post in the State Government.
The Chairperson of the Appellate Tribunal is appointed by the appropriate Government in
consultation with the Chief Justice of High Court or his nominee.
The Judicial Members and Technical or Administrative Members of the Appellate Tribunal are
appointed by the appropriate Government on the recommendations of a Selection Committee
consisting of the Chief Justice of the High Court or his nominee, the Secretary of the Department
handling Housing and the Law Secretary.
Term of office
The Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal is to hold
office, for a term not exceeding five years from the date on which he enters upon his office, but
is not eligible for re-appointment:
In case a person, who is or has been a Judge of a High Court, has been appointed as Chairperson
of the Tribunal, he should not hold office after he has attained the age of sixty- seven years.

Judicial Member or Technical or Administrative Member should not hold office after he has
attained the age of sixty-five years.
Before appointing any person as Chairperson or Member, the appropriate Government should
satisfy itself that the person does not have any such financial or other interest, as is likely to
affect prejudicially his functions as such member.
Powers & Functions of the Appellate Tribunal
The Appellate Tribunal is not bound by the procedure laid down by the Code of Civil Procedure
but must be guided by the principles of natural justice. The Appellate Tribunal also has the
power to regulate its own procedure and also is not bound by the rules of evidence contained in
the Indian Evidence Act.
For the purpose of discharging its functions under this Act the Appellate Tribunal has the same
powers as are vested in a civil court under the Code of Civil Procedure, in respect of the
following matters, namely:—

a) summoning and enforcing the attendance of any person and examining him on oath;
b) requiring the discovery and production of documents; (c) receiving evidence on affidavits;
c) issuing commissions for the examinations of witnesses or documents;
d) reviewing its decisions;
e) dismissing an application for default or directing it ex parte; and
f) any other matter which may be prescribed.

Administrative powers
The Chairperson has the powers of general superintendence and direction in the conduct of the
affairs of Appellate Tribunal and to preside over the meetings of the Appellate Tribunal, exercise
and discharge such administrative powers and functions of the Appellate Tribunal as may be
prescribed.
Additional Powers of Appellate Tribunal

The Appellate Tribunal has the following additional powers to:

a) Require the promoter or allottee or real estate agent to furnish in writing such information or
explanation or produce such documents reasonable time, as it may deem necessary;
b) Requisitioning any public record or document or copy of such record or document from any
office.
The Appellate Tribunal may call upon such experts or consultants from the fields of economics,
commerce, accountancy, real estate, competition, construction, architecture, law or engineering
or from any other discipline as it deems necessary, to assist the Appellate Tribunal in the conduct
of any enquiry or proceedings before it.
Every order of the Appellate Tribunal under this Act is executable by the Appellate Tribunal as a
decree of the Civil Court.
The Appellate Tribunal may send any of its order to a Civil Court having local jurisdiction and
such Civil Court should execute the order as if it were a decree made by the court.

Offences and Penalties

The Act lays down obligations on the promoters, allottees and real estate agents and also
provides for consequences for defaults by way of penalty, fine and imprisonment for
contravening those provisions by them. Chapter VIII of the Act containing Sections 59 to 70
deals with the same.
A - Penal consequences of defaults by the promoters
(i) Contravention of Section-3 dealing with registration of the project (Sec. 59)
Section 3 requires the promoters of real estate projects to get their projects registered with the
RERA and prohibits them from advertising, marketing, booking, selling, offering for sale or
inviting people in any other manner for purchasing the buildings, apartments or plots in the
project without getting the project registered. In case the promoter contravenes the provision and
does any such publicity without registration, he can be made liable to pay penalty which can be
of an amount up to 10% of the estimated cost of the project.
In case the promoter continues to default even after the order imposing penalty mentioned above
is passed, he can be punished either with imprisonment up to three years or with fine up to 10%
of the estimated cost of the project or with imprisonment as well as fine. The amount of penalty
and the estimated cost of the project is to be determined by the RERA.
(ii) Contravention of Section-4 obligating the promoter to make application for registration and
furnish information (Sec. 60)
In order to get the project registered, the promoter is to make an application u/s. 4 to the RERA
within the prescribed time. The application is to be accompanied by the documents containing
information prescribed in sub-section (2) of section 4 and declarations to the effect mentioned in
(A) to (D) of Clause (l) to section 4(2).
If the promoter does not act as per the provision or submits information or, makes declaration
which is false, he can be made liable to penalty up to the maximum amount equal to 5% of the
estimated cost of the project as may be determined by the RERA.
(iii) Contravention of other provisions of the Act (Sec. 61)
Punishment for contravening any provision of the Act or rules or regulations thereunder, except
provisions of Sections 3 and 4 in respect of which consequences are provided separately in terms
of Section 61. Such contravention is made punishable with penalty which can be up to an amount
equal to 5% of the estimated cost of the project as determined by the RERA.
The provision takes within its ambit contravention of all the provisions (except Section 3 and 4)
without specifying individual defaults which can be made punishable. Going through the
provisions of the Act, the penal consequence provided in the section may, inter alia, be for
contravention of following provisions: –
i. failure to enter details on website [Sec.11(1)]
ii. failure to quote website address in advertisement for sale [Sec.11(2)]
iii. failure to make prescribed information available at the time of booking and issue of allotment
letter [Sec.11(3)]
iv. failure to obtain completion/occupancy certificate and make it available to allottee
[Sec.11(4)(b)]
v. failure to obtain lease certificate where the development is on leasehold land [Sec.11(4)(c)]
vi. failure to provide and maintain essential services [Sec.11(4)(d)]
vii. failure to enable formation of a society or any other association of buyers [Sec.11(4)(e)]
viii. failure to execute conveyance deed in favour of allottee and association of allottees
[Sec.11(4)(f) and Sec.17]
ix. failure to pay outgoings until transfer of possession [Sec.11(4)(g)]
x. Mortgaging or creating a charge on property after executing agreement for sale [Sec.11(4)(h)]
xi. failure to prepare and maintain details as may be specified by RERA [Sec.11(6)]
xii. Accepting more than 10% of the cost without executing and registering agreement for sale
[Sec.13]
xiii. Not adhering to sanctioned plan and project specifications [Sec.14(1)]
xiv. Not rectifying defects brought to notice within five years [Sec.14(3)]

xv. Transferring or assigning majority rights without obtaining prior consent of two- thirds
allottees [Sec.15]

xvi. failure to get notified insurances [Sec.16]

xvii. failure to complete the project in time and give possession as per agreed terms [Sec.18]
The penal provision is common for all these defaults and other contraventions/ defaults. A view
is possible that the amount of maximum penalty specified as up to five per cent of estimated cost
is for all the defaults taken together. This appears to be a contentious view. Considering that the
specified amount if applied to individual defaults might involve unintended harsh punishment
particularly in cases where one default necessarily follow the other, the RERA in such cases is
likely to take a reasonable view taking the nature of default into consideration.
(iv) Failure to comply with the orders of RERA (Sec. 63)
A promoter who fails to comply with or contravenes any of the orders or directions of the RERA
is made punishable by penalty calculated at the determined amount per day for the period during
which the default continues subject to the maximum imposable penalty of amount equal to 5% of
the estimated cost of the project as may be determined by the authority.
(v) Failure to comply with orders of the Real Estate Appellate Tribunal (Sec. 64)
Failure by the promoter to comply with the orders, decisions or directions of the Real Estate
Appellate Tribunal is made punishable with imprisonment for a term up to three years or with
fine for every day of default or, with both. The fine to be imposed can be of an amount up to
10% of the estimated cost of the real estate project.
B – Defaults committed by the allottees
(i) Failure to comply with the order of the RERA (Sec. 67)
The allottee contravening or failing to comply with any order, decision or direction of the
Regulatory Authority will be liable for penalty as may be determined by the Authority for the
period during which such default continues. The total penalty so imposable can be upto an
amount equal to 5% of the cost of building, apartment or plot as determined by the authority.
(ii) Failure to comply with the orders of the Real Estate Appellate Tribunal (Sec. 68)
If any allottee fails to comply with or contravenes any of the orders or directions of the Real
Estate Appellate Tribunal, he can be made punishable with imprisonment for a term up to one
year or with fine for every day during which such default continues or with both. The fine so
determined as payable can be up to an amount equal to 10% of the cost of building, apartment or
plot in respect of which the defaulter is an allottee.
C – Penal consequences for default by agents
(i) Failure to facilitate sale/ purchase without registration (Sec. 62)
Section 9(1) of the Act prohibits a real estate agent from facilitating the sale or purchase of a
building, apartment or plot in a registered real estate project or acting on behalf of any person for
such facilitation without obtaining registration as a real estate agent.
Any violation of the provision makes him liable to a penalty which will be Rs.10,000/- per day
of default. The total amount of penalty shall be subject to maximum amount equal to 5% of the
cost of building, apartment or plot, sale or purchase of which was facilitated by him.
(ii) Failure to perform the functions under the Act (Sec. 62)
Section 10 of the Act lays down the functions of the real estate agent which he is required to
perform under the Act. Failure to perform such functions in the way laid down in the Act can be
made punishable with penalty computed at 10,000/- for every day of the default which can
cumulatively go up to 5% of the cost of building apartment or plot of which he facilitated the
sale or purchase.
(iii) Failure to comply with orders of the RERA (Sec. 65)
If any real estate agent, fails to comply with, or contravenes any 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 per cent, of the estimated cost of plot, apartment or
building, for which the sale or purchase has been facilitated by him and as determined by the
Authority.
(iv) Failure to comply with orders of the Real Estate Appellate Tribunal (Sec. 66)

If any real estate agent, fails to comply with, or contravenes any of the orders, decisions
or directions of the Appellate Tribunal, he shall be punishable with imprisonment for a term
which may extend up to one year or with fine for every day during which such default continues,
which may cumulatively extend up to ten per cent of the estimated cost of plot, apartment or
building, for which the sale or purchase has been facilitated, or with both.
Nature of Prescribed Punishment
The Act gives the title “Offences, Penalties and Adjudication” to Chapter VIII which prescribes
the consequences for various defaults. For most of the defaults barring (i) continued default by
the promoters u/s. 3 and (ii) contravention of the orders, decisions or directions of Appellate
Tribunal by the promoter, the agent or the allottee, the punishment is by way of penalty which is
to be computed with reference to the estimated cost of the project or the cost of the building,
apartment or plot in question. The question arises as to whether the penalties prescribed are civil
penalties or penalties on conviction for an offence which is taken as illegal act or crime inviting
prosecution.
In case the defaults mentioned in Chapter VIII are considered as offences being acts which are
illegal, the consequences will involve prosecution to be dealt with in accordance with the
procedure laid down for such complaints.
The Act does not specify whether the penalties are civil penalties or penalties for contraventions
considered as offence. The title of the chapter mentions ‘offence’ as well as ‘penalties’ which
seem to indicate that while some of the punishments are for default considered as offence and
involve prosecution, the others are of the nature of civil penalties to be imposed by the RERA.
The distinction is material because of the different principles of jurisprudence applicable to them.
While a civil penalty mainly considers the fact of defaults simply, conviction requires
establishing the intention of the defaulter, his guilty mind, motive and other factors pointing to
the state of mind which play a decisive role.
Wherever penalty is provided, the maximum amount of penalty is to be determined with
reference to the estimated cost of the real estate project or of building, apartment or plot in
question as determined by the Authority. These penalties appear to be of the nature of civil
penalties and can be imposed by the Regulatory Authority on the establishment of default within
the maximum amount laid down under the Act without a decisive consideration of the motive or
mental state of the offender. These are the penalties prescribed under –
1. Section 59(1) – default u/s. 3
2. Section 60 – default u/s. 4
3. Section 61 – default by promoter under other section
4. Section 62 – default by agent u/s. 9(1)
5. Section 63 – contravention by promoter of the orders of RERA
6. Section 65 – contravention by the agent of the orders of RERA
7. Section 67 – Contravention by allottee of the orders of RERA
The proceeding in respect of these penalties will be initiated and carried out by the Regulatory
Authority.
Consequences provided under the following provisions prescribe punishment with
imprisonment or fine or both:-
1. Section 59 (2) – Continue default by the promoter u/s. 3
2. Section 64 – Contravention by promoter of the directions of REAT
3. Section 66 - Contravention by agent of the directions of REAT
4. Section 68 - Contravention by allottee of the directions of REAT
These are provisions in respect of default by the promoter and contravention of orders of the
Appellate Tribunal by the promoter, allottee and the real estate agent. These provisions prescribe
prosecution for defaults considered as offence which proceedings are not before the Regulatory
Authority. These are provisions for prosecution as is indicated by prescription of ‘fine’ and
‘imprisonment’ instead of penalty and the absence of expression ‘as determined by the
Authority’ used in other sections.
For offences described under 59(2), 64, 66, and 68, the penal action by way of prosecution will
be on a complaint by the Authority. Reference in the convention may be made to the provision
contained in Section 80 under which no court shall take cognizance of any offence punishable
under the Act or the rules or regulations made thereunder save on a complaint in writing made by
the Authority or by any officer of the Authority duly authorised by it for the purpose.

Offences by Companies
If the offence punishable under the Act is committed by a company, every person who, at the
time of the offence, was in charge of the conduct of the business of the company or was
responsible for its conduct as well as the Company will be deemed to be the person committing
the offence and shall be proceeded against in accordance with the provisions of the Act. This
will, however, not apply if the person in charge of or responsible for the conduct of business
proves that the offence was committed without his knowledge or that he exercised all due
diligence to prevent the commission of that offence.
It is not only the person in charge or responsible for the conduct of business who can be
punishable but also the director, manager, secretary or any other officer of the company who can
be charged for the offence if it can be proved that the offence was committed with his consent or
connivance or was attributable to any neglect on his part.
Compounding of offences
If any person is punishable for an offence under the Act, he can either before or after the
initiation of proceedings, seek compounding of the offences by the court and the Act permits
such compounding subject to the terms and conditions and on payment of fees as may be
prescribed in the rules to be framed. It is also provided that the amount to be charged on
compounding will not exceed the maximum amount if fine imposable under the Act for that
offence.