The Supreme Court on Monday ordered that the Union Ministry of Housing shall scrutinise the state rules, notified in pursuance of the Centre’s Real (Regulation and Development) General Rules, 2016 and the Real Estate (Regulation and Development) Agreement for Sale Rules, 2016, and place a report on whether the former comply with the substratum of the Rules of 2016.

A bench of Justices D Y Chandrachud and Surya Kant gave three months to the Centre to examine if there are any deviations in the rules framed by the states to the rules framed by the Centre in 2016 and to place the report by first week of May, 2022.

The bench appointed Advocate Devashish Bharuka to assist the court as Amicus Curiae. “Mr Bharuka shall also assist in carrying out this exercise. ASG Aishwarya Bhati who has suggested this course of action states that all necessary facilities will be granted so that Mr Bharuka shall in coordinatnation with the Union Ministry of Housing place a statement before this court on the aspects which have been referred to above”,said the court.

The top court noted that the central government shared the draft ‘agreement for sale’ in 2016 after the enactment of RERA with all the states and Union Territories and currently West Bengal, Jammu and Kashmir and some noth-eastern states are yet to notify the rules.

At the present stage, it is necessary for the court to be apprised whether the rules which have been framed by the states contain the essential norms which have been adopted by the Union government under the rules of 2016 and whether there is any deviation, which would not sub serve the interest of buyers, the bench said.

It added, We direct that this exercise be carried out at central level by the Union Ministry of Housing and Urban Affairs which shall scrutinize the states’ rules and place a report before this court on whether they comply with the sub-stratum of the rules, which have been framed by the Union Government. We also request advocate Devashish Bharuka to assist this court as amicus curiae. Bharuka shall also assist in carrying out this exercise.

It said this exercise shall be completed by the first week of May this year.

On Monday, ASG Aishwarya Bhati told the bench, “The model builder-buyer agreement has already been circulated and adopted. We said so in the counter affidavit also. It was not correctly brought to Your Lordships’ notice. Under the RERA act, for all the union territories which do not have a legislatature, the onus was on the central government to prescribe the agreement. We have placed that on record now. The model agreement for sale starts at page 25. It is fairly comprehensive. The conditions include that the promoter has obtained final layout plan, sanction plan, specifications and approvals for the project- also for the apartment, plot or building, as the case maybe These are called Chandigarh Real Estate (Regulation and Development) Agreement for Sale Rules, 2016. On the same lines, there are rules for all the union territories without a legislature…we have placed the implementation status of these rules by the various states.”

Justice Surya Kant asked, “Have you broadly examined these rules that these are based on the model rules circulated by the central government? We found that Maharashtra is broadly on the same lines as the model rules though they had made inclusion of the slum development or redevelopment project. Haryana is also on the same lines. They have prescribed the ratio which the builder cannot exceed on the basis of the construction”

Senior Advocate Maneka Guruswamy, on the petitioners’ side, advanced, “Ms. Bhati has very skilfully reiterated the previous position of the union government. Every state government has its own set of rules. That is the very point of these petitions- this nature of fractured legislation which varies from state to state, both in terms of statutory protection as well as in terms of implementation, is actually the issue…Our quarrel is that there is no common minimum. he Union’s consistent position unfortunately has been that they don’t have the power. It is not true. Hence this litigation.”

Senior advocate Menaka Guruswamy, appearing for Upadhayay said that the concerns still remain despite Centre’s 2016 rules and that is why this writ petition was filed. She said that the Union of India says that it is the responsibility of state governments to frame rules and they ignore sections 41 and 42 of RERA which have been reproduced in the October 4, last year order of the court.

Justice Chandrachud remarked, “the other way of doing this is that you can really deliberate on some minimum norms which every agreement to sell must have and then leave it to the states”

On January 17, the top court had emphasised the need for a model builder-buyer agreement to safeguard the interest of middle-class home buyers and asked the Centre to consider framing uniform rules under the provisions of RERA.

The top court had said that it wants that instead of leaving it to the States, the Centre makes the model builder-buyer agreement and model agent-buyer agreement which shall be applicable for the whole of the country.

It had said that the whole purpose of the present PIL is that there should be a model builder-buyer agreement which will be formulated by the central advisory council so that there is some uniformity in the basic terms and conditions and the flat buyers are not exploited.

The Centre in its affidavit said, “There is a robust regulatory mechanism and a draft ‘agreement for sale’ has already been prescribed under the provisions of RERA (Real Estate Regulatory Authority), which seeks to balance the rights and interest of home buyers and promoters in an accountable and transparent manner”.

It has said that according to section 84 of RERA, the appropriate government that is the state government save in the instances involving its application in the territory of union territories has to notify rules for carrying out the provisions of this Act.

The affidavit has said that RERA mandates for registration of projects before advertising, marketing, booking, selling and the law ensures the timely delivery of real estate projects and the entire fund flow is also subject to strict monitoring by the regulator to avoid diversion of funds, which will also secure the interest of home buyers.

On October 4 last year, the top court had said it was important for the country to have a model builder-buyer agreement in the real estate sector for consumer protection because developers try to put numerous clauses in it, which common people may not be aware of.

Upadhyay had said that there should be a model agreement prepared by the Centre as some states have it and some don’t, and there is no uniformity in those agreements.

The PIL has sought direction to the Centre to frame model pacts for builders and agent buyers to protect customers and bring transparency in the realty sector in line with the RERA Act, 2016.

Justice Surya Kant also added, “Whenever you find there is a provision in the rule which is offending- say, it is in conflict or contrary to the interest of the allottee- you can point out . We may direct the state government to suitably modify. If, broadly, the rules are taking care of protecting the interest of the home buyers, then I think it is covered.”

We will do the exercise. Also, Your Lordships may appoint Mr Bharuka as amicus who may also conduct this exercise independently”, suggested the ASG.The bench then passed the aforesaid order to the Union Ministry of Housing and the amicus.

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