Gurgaon Housing Scam: Has RERA Failed Homebuyers?
Introduction: RERA and Its Objectives:
The Real Estate (Regulation and Development) Act, 2016 (commonly known as the RERA Act), was enacted to enhance the efficiency and transparency in the real estate sector while safeguarding the interests of homebuyers. To achieve these objectives, it provided for the establishment of a regulatory body, namely the Real Estate Regulatory Authority (referred to as the RERA Authority), to oversee and regulate the sector. Unfortunately, RERA has not been able to maintain checks and balances on the promoter, often raising the question: has RERA failed homebuyers?.
Mandatory Registration of Real Estate Projects:
To effectively discharge its duties, the RERA Authority was vested with wide-ranging powers, including the power to call for information and conduct investigations, similar to those conferred on civil courts under the Code of Civil Procedure, 1908. It was also mandated to register real estate projects within the state. The Act clearly stipulates that while registering a project, the builder/promoter must submit an authenticated copy of all approvals and certificates received from the competent authorities.
Misplaced Trust in “RERA-Approved” Projects and the Fallout of Illegal Approvals:
Once a project is registered, only then can the promoter or builder advertise it. Most real estate projects are heavily marketed on the claim of being “RERA-approved.” Innocent buyers often fall into the trap of believing that if the project is registered with the state’s regulatory authority, it must be safe and secure for investment.
However, this faith in the statutory body is often misplaced. In several cases, the RERA Authority has failed to conduct due diligence and has blindly registered projects, causing massive financial losses to homebuyers. A recent example from Gurugram highlights this issue, where the RERA Authority registered projects located in the Eco-Sensitive Zones (ESZs) around the Sultanpur Bird Sanctuary, despite these projects not having obtained the mandatory Wildlife No Objection Certificate (NOC) from the National Board for Wildlife (NBWL).
Without the mandatory wildlife NOC, the projects were nonetheless approved by the RERA Authority, and the promoter widely advertised the project as “RERA-approved” based on the license/registration granted by the Authority. One such project, Zara Roma, was launched under the Affordable Housing Policy and operated under the direct supervision of the Department of Town and Country Planning, Haryana (DTCP). However, due to the absence of the Wildlife NOC, the construction in the project never started, leaving nearly 600-700 homebuyers stuck in limbo.
Worse still, many other housing projects in the area have been completed, and possession has been handed over to buyers—despite these constructions being entirely illegal.
In fact, during the 83rd meeting of the Standing Committee of the NBWL, chaired by the Union Minister for Environment, Forest, and Climate Change, the Haryana government was called upon to take action in 78 cases of violation within the ESZ. The Committee also reviewed proposals for affordable housing projects licensed under DTCP’s Affordable Housing Scheme and rejected many of them. It observed that permitting such developments near sensitive wildlife zones would not only be ecologically damaging but would also set a dangerous precedent.
Impact on Homebuyers:
The fallout of this decision is being severely felt by thousands of middle-income homebuyers who had invested their savings in these projects, comforted by the fact that the schemes had received RERA registration. Now, with the NBWL rejecting these proposals, the construction of these homes is not legally possible, leaving buyers stranded.
Several homebuyers have voiced their anguish, stating that they have been betrayed not only by the developers, who collected vast sums under false assurances, but also by government bodies such as DTCP and RERA, which failed in their statutory duties to conduct proper scrutiny before granting approvals.
Statutory authorities like the RERA Authority are given extraordinary powers to make decisions for the development of the real estate sector and, more importantly, to protect homebuyers. However, in this case, the Authority failed to carry out even the bare minimum due diligence required under the statute. The situation has once again highlighted the urgent need for stricter oversight mechanisms, and inter-departmental coordination, to prevent such large-scale economic harm to common citizens.
What recourse do Homebuyers have now?
Now that these projects cannot legally be completed, buyers are not entitled to possession of their units. It is advisable for them to initiate legal proceedings to seek a refund of their money along with interest, delay penalties, and compensation. Such cases can be filed either before the Haryana RERA or the appropriate consumer forum, depending on the amount invested.
If multiple buyers come together and their combined claims exceed ₹2 crore, they can directly approach the National Consumer Disputes Redressal Commission (NCDRC). Furthermore, if there is documentary evidence suggesting that the builder acted with fraudulent intent from the outset, buyers may consider filing a criminal complaint and seeking registration of an FIR under relevant sections dealing with cheating and fraud.
