Execution of Orders Passed by RERA Authority: A Step-by-Step Guide for Homebuyers
Introduction:
Many times, it is observed that homebuyers file cases against builders under the Real Estate (Regulation and Development) Act, 2016 (commonly known as RERA or the RERA Act) and manage to obtain favourable orders from the authorities established under RERA (referred to as the RERA Authority). However, even after securing a decree (commonly known as an order or judgment), they are unable to get it executed by the builder. In layman’s terms, even after having a favourable order from the RERA Authority, the builder often fails to comply, either by not returning the money owed to the homebuyers or by withholding possession of their units, depending on the case. In such scenarios, homebuyers are often left unsure of the next steps to take in order to have the decree enforced and either recover their money or gain possession of their units. This article discusses in detail how a homebuyer can get their RERA order executed and outlines the steps one needs to follow in this regard.
Step 1: Filing the Execution Petition before RERA Authority
It is important to note that once an order is passed by the RERA Authority, the promoter is given some time to comply with the order voluntarily. For example, UP RERA provides 45 days for the builder to comply, whereas Haryana RERA allows 90 days. Once this period elapses, the homebuyer can approach the RERA Authority by filing an Execution Petition for the enforcement of its earlier orders. Authorities like UP RERA do not charge any additional fees for filing an execution petition, whereas Haryana RERA charges a nominal fee of Rs. 1000, along with miscellaneous small fees for processing the documents.
Section 40 of the RERA Act deals with the enforcement of orders passed by the RERA Authorities. It states that if a person fails to comply with an order passed by the RERA Authority, the same shall be enforced in a manner as may be prescribed. What does this mean? To understand this, one should first know that each state has its own RERA Authority. Although the RERA Act is a central Act, state governments have been empowered to make rules governing the functioning of their respective Authorities. Therefore, it can be concluded that Parliament did not specify a uniform mechanism for the execution of orders, leaving it to the state governments to establish rules for this purpose. As a result, each state’s RERA Authority has its own mechanism for executing orders. However, in practice, most states follow relatively similar mechanisms.
Powers of RERA Authority to Execute the Order:
As stated above, the mechanism is provided in the rules made by the respective state authorities. For example, Rule 24 of the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016, grants the following powers to the UP RERA Authority (Adjudicating Officer) for executing its orders:
- The Authority shall execute the order as if it were a decree or order made by the principal civil court in a suit. In layman’s terms, the Authority enjoys powers similar to those of a Civil Court for executing its orders.
- If the Authority is unable to execute the orders on its own, it can send the orders to a Civil Court for execution. The order may be sent to the civil court within whose jurisdiction the project lies or where the builder resides or works.
Similar powers are granted to Haryana RERA under Rule 27(1) of the Haryana Real Estate (Regulation and Development) Rules, 2017, and to Karnataka RERA under Rule 26 of the Karnataka Real Estate (Regulation and Development) Rules, 2017.
The powers of Civil Courts for executing orders are extensive, and RERA Authorities have similar powers. The relevant provisions regarding execution are found in Sections 36 to 75 and Sections 144, 146, and 148 of the Civil Procedure Code (CPC). Additionally, Order 21 of the Civil Procedure Code, which contains 106 rules, and Rules 205 to 285 in Chapter 16 of the Civil Rules of Practice, also deal with execution. These powers include the following, among others:
- Delivery of Property: Immovable property may be delivered to homebuyers if they have a possession order in their favour.
- Arrest and Detention of the Builder: The builder can be arrested and detained in civil custody for a period not exceeding three months. However, this method has several restrictions.
- Attachment and Sale of Properties: To recover any amount due to the homebuyer from the builder, the court can attach the builder’s movables, agricultural produce, debts, shares, salary, partitioned property, negotiable instruments, etc., including assets of the builder company and its directors.
- Appointment of a Receiver: The court can appoint a receiver to recover money from the builder or to execute any of the above measures.
Although these powers are vast, they have not been widely used by these Authorities. For example, although these powers were always available, some authorities, such as UP RERA, only recently decided to use them. In its 94th meeting held in June 2022, UP RERA opted to use the provisions of the Civil Procedure Code (CPC) to improve the execution process, nearly six years after the UP RERA Rules came into effect. Before this, officials at the authority were often unclear on how to execute possession decrees. In many cases, during execution proceedings, homebuyers with possession decrees were forced by UP RERA judges to file fresh complaints seeking refunds, as the authorities were hesitant to use their full powers.
It is also important to note that many authorities in various states still do not use these powers, and even those who have begun using them remain hesitant to fully exercise them. As a result, homebuyers are often forced to approach other slower forums, despite the existence of a dedicated forum. Due to these practices, the Hon’ble Supreme Court, while hearing an appeal against a Delhi High Court judgment, made the following remarks, “We do not want to speak about RERA. It has become a rehabilitation centre for former bureaucrats who have frustrated the entire scheme of the Act.”
Step 2: Issuance of Recovery Certificate by RERA Authority
As stated above, RERA Authorities enjoy vast powers similar to those of any Civil Court (vested in them via the Civil Procedure Code). However, for a long time, most of these authorities were not utilizing the powers provided to them. It should be understood that most cases before the Authority are filed by homebuyers seeking a refund of their money along with interest. If the builder fails to make the payment, even after the homebuyer has secured a decree in its favour, a separate mechanism is used by the RERA Authorities for recovery of money.
As per Section 40(1), the Authorities issue a Recovery Certificate against the builder, which is executed by the Collector (District Magistrate/DM or District Collector/DC, as applicable). In simpleton terms, after filing of the execution, the Authority issues a Recovery Certificate under section 40(1) of the RERA Act, in case, a promoter, allottee, or real estate agent fails to pay any interest, penalty, or compensation imposed by the Authority. The outstanding dues mentioned in the Recovery Certificate are recoverable as arrears of land revenue. The responsibility for recovering money as arrears of land revenue lies with the district administration (Collector) as per the revenue act/code applicable in the state. Therefore, secondly, after the Recovery Certificate is prepared by the RERA Authority, the same is sent to collector office as a formal request to collect such dues. Once the Recovery Certificate is sent to the Collector by the Authority, it becomes the duty of the Collector to recover the amount from the builder on behalf of the Authority. Upon receiving such orders from RERA, the Collector issues the recovery citation and has the authority to seize the bank accounts of the promoter and auction the builder’s properties by issuing a public notice.
However, this method works only for the recovery of money. If the buyer seeks possession of the house, plot, etc., the RERA Authority must use its inherent powers to execute the orders.
Drawbacks of the system:
One drawback of this method is that after issuing the Recovery Certificates (RCs), RERA Authorities often go into “sleep mode” and fail to coordinate with the Collector’s office to ensure the amount is recovered. Another significant drawback is that no fixed timeframe is given to the Collector to recover the amount once the RC is issued. In some cases, buyers have to wait for more than three years or are forced to approach higher courts to expedite the process, which costs them additional money and time, sometimes taking months or even years.
According to statistics presented at the 125th meeting of the Uttar Pradesh RERA Authority, held in Lucknow, nearly 8,800 Recovery Certificates (RCs), collectively valued at around Rs 2,400 crore, were issued across Uttar Pradesh between 2018 and 2023. Of this amount, approximately Rs 1,200 crore has been recovered from defaulters. Similarly, a report from the District Revenue Officer (DRO), Gurugram, revealed that during the same period, the Haryana Real Estate Regulatory Authority (HRERA), Gurugram, issued 240 Recovery Certificates against several defaulting builders, but only one could be realized.
Recognizing the issues with the recovery method involving the issuance of Recovery Certificates and delegation of tasks to the District Administration (i.e., Collectors), the State Government, via a notification dated 11.05.2024, vested the Adjudicating Officer of the RERA Authority with the powers of the Collector under the Haryana Land Revenue Act, 1887 (Punjab Act 17 of 1887) to execute the Recovery Certificates issued by the Haryana Real Estate Regulatory Authority at Gurugram and Panchkula within their respective jurisdictions.
However, in practice, instead of issuing Recovery Certificates, the Haryana RERA Authority, Gurugram, has begun utilizing their vast execution powers vested in them under Section 40(2) to enforce orders, thus bypassing the need for Recovery Certificates.
Also READ: Execution of Recovery Certificate issued by RERA Authority
Step 3: Execution of Recovery Certificates
As stated earlier, while the issuance of Recovery Certificates (RCs) falls under RERA’s purview, the realization of money and the recovery proceedings are the responsibility of the District Collector/District Magistrate/District Revenue Officer. This responsibility is often sub-delegated to the local Sub-Divisional Magistrate (SDM) or the Tehsildar.
The process involves several steps, including the issuance of a ‘writ of demand’ by the Tehsildar, summoning the defaulter to appear or pay the amount within the specified timeframe. If the defaulter fails to comply, revenue officials may resort to various measures such as the attachment and sale of movable or immovable property (including cars, bank accounts, or bank lockers) and, in some cases, arresting the defaulter for a brief period.
However, if the Tehsildar or revenue officer delays or fails to execute the Recovery Certificate, the aggrieved party can approach the Collector with a written representation requesting the execution of the Recovery Certificate. If, even after submitting written representations and regular reminders, no action is taken for the execution of the Recovery Certificate, the aggrieved party can seek intervention from the Hon’ble High Court by filing a writ of mandamus to expedite the process.
The Hon’ble High Court may issue a writ of mandamus directing RERA to ensure the execution of the Recovery Certificate by initiating execution proceedings as per Section 40(1) of the RERA Act and the RERA Rules. Alternatively, it may direct the Collector to enforce the recovery citation within a specified timeframe. It is crucial to promptly communicate the High Court’s orders to the Collector and Tehsildar to ensure timely action. Failure by the Collector to comply with the Hon’ble High Court’s orders can result in contempt proceedings initiated by the aggrieved party before the High Court.
Conclusion:
RERA Authorities have been granted extensive powers under the RERA Act to regulate the real estate sector and protect consumers’ interests through a speedy dispute resolution mechanism. However, these powers remain largely untapped in many states, leaving homebuyers at a disadvantage. For instance, a few benches of the Karnataka RERA Authority only take up five cases per day, despite a backlog of thousands, causing delays of 9 to 10 months just for case listings. This inefficiency of RERA forums forces homebuyers to seek recourse in other forums, despite having a dedicated real estate dispute platform. Additionally, many judges at these Authorities lack expertise in subject matter, often narrowing the scope of the Act and limiting the rights of allottees.
In the author’s perspective, RERA Authorities possess powers akin to those of a civil court for enforcing their orders, but these powers remain largely unutilized. To streamline Recovery Certificate (RC) execution and ensure timely realization of dues, RERA Authorities must leverage their full authority by imposing compliance deadlines on Collector offices. A commendable example is Delhi RERA’s approach of directly seeking compliance reports from the Sub-Divisional Magistrate (SDM) office after issuing RCs. Such proactive actions enhance accountability, expedite the process, and reduce unnecessary litigation costs. RERA Authorities across regions should adopt similar practices to maximize the effectiveness of their mandates for the benefit of stakeholders.
I got an order from UP-RERA, in which builder has to cancel old registered sub lease illegally, done by them, and make a fresh sub lease in my favour. Is UPRERA has sufficient power to cancel registered sub lease or i have to move for civil court for cancellation of sub lease.
You have to file an execution application before the UPRERA Authority, which will then take the necessary measures to implement its orders.
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