Introduction
Real Estate Sector plays a pivotal part in the Indian economy and is expected to reach US $ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the country’s GDP by 2025[1]. But before 2016, this sector was highly unorganized. There was no transparency whatsoever and promoters used to harass the buyers by making buyers sign arbitrary documents, delaying the possessions of their property or giving them possession of a property which was totally different from what was advertised and promised. To bring more efficiency and transparency in the real estate transactions and to protect the interest of buyers, central government introduced the Real Estate (Regulation and Development) Act, 2016 popularly known as RERA Act. RERA Act provides for many provisions to curb all these corrupt practices of the promoters. One such provision is Section 12 which talks about obligations of the promoter regarding the accuracy of advertisement or prospectus.
Obligations of the promoter under Section 12, RERA Act
Section 12 of RERA Act is a punitive provision which makes it obligatory for the promoter to give compensation or refund, as the case maybe, to the buyer in case the promoter takes an advance or deposit on the basis of a false or misleading advertisement. It has been noticed many a times that promoter makes false promises in the advertisement and the prospectus or lures the buyers by showing them a model apartment/plot. Getting convinced by the same, the buyer invests a huge amount in the property and only after the delivery of the unit the buyer realizes that he has been deceived by the promoter. In such a case buyer can take recourse of Section 12, whereby he is entitled to get the compensation if he sustains any loss or damage by reason of such incorrect and false statements made by the builder. The buyer is also entitled to get the refund of investment along with applicable interest if he wishes to withdraw from the project.
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has also allowed homebuyers to withdraw from the project where the builder made false representation and provided misleading information in the brochure at the time of booking the flat. The homebuyers booked a flat in a project named Ruparel Skygreens I’, located at Borivli. The MahaRERA disposed of the matter by directing the builder to refund the entire accepted amount, along with two per cent interest.[2]
Retroactive Nature of Section 12
Section 12 is retroactive in nature i.e. it will be applicable to all the projects that were ongoing and for which the completion certificate was not issued on the date of enactment of RERA Act, 2016 along with those projects, which started after the commencement of the act. This has been established multiple times by the courts.
In The Bombay Dyeing & Manufacturing Company Limited V/s Ashok Narang and Ors.[3], the Bombay High Court in its judgment dated 30th August 2021, held that Section 12 is quasi retroactive in nature and would apply to the agreements entered into prior to the coming into force of the act. The HC had upheld the RERA tribunal’s order against Bombay Dyeing, which constructed two “ultra-luxurious” tower in Wadala and directed it to refund the amount invested by buyers with interest. The buyers booked the flats in 2012-13 and as per specified in the brochure delivery of flats was to be given in 2017. It was held that under Section 12 of the RERA ACT, promoter will have the obligation regarding the information provided by it to the buyers prior to the registration of the project.
Conclusion
As mentioned above RERA Act was introduced with the intent of protecting the interest of buyers. Chapter III of the act imposes some Functions and Duties on the promoters and Section 12 is one such provision given under this chapter. Therefore, providing the correct information to the buyer about the project is an obligation of the promoter which he is duty bound to do. To make the provision more enforceable it is made punitive in nature so that it will act as a deterrent for the promoter to not engage itself in mischievous activity of providing false information to the buyer to lure it in the project. Therefore, section 12 is an indispensable part of the act and works together other provisions to meet the objectives off the act.
[1] https://www.ibef.org/industry/real-estate-india#:~:text=Real%20estate%20sector%20in%20India,infrastructure%20for%20India’s%20growing%20needs
[2] https://www.freepressjournal.in/mumbai/mumbai-maharera-allows-homebuyer-to-withdraw-from-project-over-false-representation-made-by-builder-in-brochures
[3] https://bombayhighcourt.nic.in/generatenewauth.php?bhcpar=cGF0aD0uL3dyaXRlcmVhZGRhdGEvZGF0YS9qdWRnZW1lbnRzLzIwMjEvJmZuYW1lPUYyMDA0MDAwNDk5NjIwMjBfMTAucGRmJnNtZmxhZz1OJnJqdWRkYXRlPSZ1cGxvYWRkdD0zMC8wOC8yMDIxJnNwYXNzcGhyYXNlPTE1MDkyMTEwNDQwNA==
