In a recent ruling by the Rajasthan Real Estate Regulatory Authority (RERA), a hefty penalty of Rs. 50 lakhs has been levied on a real estate developer. The fine was imposed due to the builder’s failure to register their project as per the guidelines of Section 3 of the Real Estate (Regulation and Development) Act, 2016 (RERA). The authority’s chairperson, Mrs. Veenu Gupta, headed the bench that passed this verdict.
Let’s delve into the details of how this situation evolved. On the 19th of October, 2024, the RERA took the initiative and issued a show cause notice to the builder. The builder was asked to clarify why they should not be penalized under Section 59(1) of RERA for failing to register their project.
Following this, on February 12th, 2021, the RERA issued an order directing the developer to register their project under Section 3 of RERA within 45 days. However, despite this directive, the builder failed to comply. In a subsequent order passed on May 9th, 2022, the RERA once again directed the builder to register their project, named ‘City Trade Center,’ either as a single project or as two separate phases within a period of 30 days. Yet again, the builder did not heed this order.
This led to the recent RERA verdict. The authority noted that the builder had not registered the project despite several directives and had failed to provide any explanation for their non-compliance. The authority then referred to Section 59 of the RERA, which provides for penalties for non-registration under Section 3.
As per Section 59, a promoter who violates the provisions of Section 3 can face a penalty of up to ten percent of the estimated cost of the real estate project. This cost is determined by the authority. If the promoter continues to violate the provisions or does not comply with the orders, they can face imprisonment for up to three years, a fine of up to an additional ten percent of the estimated cost, or both.
In this case, the total cost of the ‘City Trade Center’ project, including the estimated building cost and the cost of the land, was pegged at Rs. 11,00,28,5551. Given this, the RERA, in line with Section 59(1), imposed a fine of Rs. 50 lakhs on the builder.
The takeaway from this verdict is the importance of adhering to the regulatory provisions of the RERA. Non-compliance can lead to severe penalties, including hefty fines and potential imprisonment. It underlines the fact that regulatory bodies like the RERA are vigilant and proactive in ensuring that builders abide by the law, thereby safeguarding the interests of consumers.
