IREO Fiveriver Complaint before RERA Panchkula or NCLT?

IREO Case in RERA Panchkula
IREO Case in RERA Panchkula

What is the RERA (Real Estate Regulatory Act)?

The Real Estate (Regulation and Development) Act, 2016 (RERA) was framed to safeguard the welfares of home buyers and also toimprove the transparency in the real estate sector. The provisions under this act examinethe situation of stakeholders from home buyers, builders,and brokers.

Why RERA?

There were many complaints by the home buyers regarding real estate transactions which were heavily in thefavor of the developers. Now the RERA code is intended to make an equitable and reasonable transaction between the property seller and its buyer.

RERA makes the purchases under real estate much simpler through accountability and transparency. This Real Estate Act makes it compulsory for every state and union territory to create its own regulator and frame the rules toadminister the working of the regulators.

When and how to file a complaint under RERA?

Complaints can be filed under Section 31 of the Real Estate (Regulation and Development) Act, 2016, either with the Real Estate Regulatory Authority or with the adjudicating officer. The procedure and form, in which such applications can be madeare laid down in the rules.

A complaint under the RERA is required to be in the form prescribed under the respective rules of the state. The complaint can be filed within the prescribed time limit, with respect to a project registered under RERA, as per the provisions of the act or the rules or regulations framed under RERA.

 

What is NCLT (National Company Law Tribunal)?

However, NCLT was introduced in the Indian legal system in the year 2002 under the Companies Act, 1956.But due to the litigation with respect to its constitutional validity, it was notified in the year 2013 in Companies Act.

NCLT is a quasi-judicial body that isframed to deal with the corporate disputes of civil nature that arise under the Companies Act.

 

RERA or NCLT

The dispute regarding any new projectis heard by state regulators that are set up under the Real Estate (Regulations and Development) Act, called RERA instead of consumer courts.  The cases related to the defaulting builders should be first dealt by the regulators under the real estate law called RERA before bringing it in front of the NCLT for insolvency proceedings. 

The law was framed to make the real estate sector more transparent. It can easily eliminate false practices by the operators. At present, complaints against the defaulting builders are brought in front of the consumer courts and real estate regulatory authorities as well which was established under the RERA. This practice developed confusion among people.

 

Now the new projects will only be taken up under RERA. Other necessary changes inthe provisions of this law will also be brought so that the litigationprocess becomes easy for the builders. 

The cases will bereferred to RERA regulators initially for the resolution of the dispute before any insolvency proceeding is taken up. After the regulators under RERA fail to resolve the case, the dispute can be referred to the National Company Law Tribunal (NCLT) for further settlement. 

A recent case of  Ritu Rana v. M/S IREO Fiveriver Pvt. Ltd. deals with similar terms.

Facts of the Case:

  1. In August 2011, the complainant booked a 5 BHK apartment measuring 1800 sq. ft. in the IREO Fiveriver Project located at sector 3, 4 and 4A, PinjoreKalka urban complex.
  2. The booking amount was paid Rs. 6 lakhs.
  3. As per application dated August 07, 2011 it was agreed that the respondent shall make an offer of allotment within 9 months from the date of the making of application and in case of default the amount will be refunded along with 20 percent interest.
  4. However, an allotment letter was issued after a delay of more than 2 years and 8 months.
  5. 3 BHK apartment with a super area of 2046 sq. ft. was issued instead of 1800 sq. ft. as booked by the complainant.
  6. Several emails were sent by the complainant seeking the refund but no reply was received instead raised demand notices for the allotment of the bigger unit by the respondent.
  7. The respondent’s project is nowhere near the completion and the license of the project has not been renewed yet and also there was nostatutory approval to start constructing the project.
  8. Respondent doesn’t have the approval from environmental authority and the national board of wildlife.
  9. The notice was sent to the respondent which was refused to accept by them.
  10. Authority decides to proceed ex-parte against the respondent.
  11. There was a breach of contract and complainant seeks to have the refund of money along with the interest rate as per rule 15 of HRERA rules 2017.
  12. Another dispute arose against the respondent on December 13, 2018, according to the respondent company has to pay certain dues to the M/s Worxpace consultant Pvt. Ltd. the total amount to be paid was Rs. 7, 52, 400.
  13. An order of moratorium under section 14(1) of the insolvency and bankruptcy code, 2016 has been issued. It was presented by the representative of the respondent to the authority.
  14. As per the said provision, neither continuation of pending suit nor fresh suit proceedings is
  15. In this regard, section 79 and 89 are reproduced as under:

As per Section 79 of RERA, “No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.”

And section 89 of RERA reads as, “The provisions of this Act shall have an effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.”

  1. Therefore, as per the above provisions, proceedings before the RERA cannot be stopped.

 

Conclusion

If a person is a consumer, then RERA is the appropriate remedy. But in case a person is not the consumer then a regular suit can be filed. However, for compensation and other reliefs, one should approach RERA.

In case the project is on the verge of completion, RERA can be helpful if the homebuyer desires to get flat. Insolvency can be obtained as an alternative remedy if it seems that the financial position of the developer is worse. It will be helpful to get the refund.

This post is written by Damini Aggarwal of Punjab University (2020 batch). For more info, please dial 99888-17966.

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