RERA In Karnataka: Protects Builder, Not Consumer

The Real Estate Regulatory Authority bill (RERA)  passed by Parliament unanimously on March 26th, 2016 was a response by Central Govt and Parliament to the long-standing problem of home buyers being exploited by rogue elements in the Real estate sector.

That problem is even more acute and evident in Karnataka where despite laws like the Karnataka Apartment Ownership Act etc., little or no effort has been made by the Siddaramaiah government to regulate and punish erring builders. That is why RERA is an important milestone in the struggle for Karnataka consumers' fight for rights.

But the current Siddaramaiah government, we believe, has again and again demonstrated a disdain for what bothers its citizens. For last several months it has avoided notifying the rules. We believe this is an attempt to block the effect of RERA on builders. The ostensible reason given is that the government is conducting 'extensive consultations'. To my mind, this is laughable! Surely, they mean the consultations were with their friendly builders.

After many protests and threat of legal action the government has finally notified the rules. Predictably, however, it tries to water down the law. Predictably, builders are happy and consumers angry. In a press statement, the Law Minister of Karnataka stated that the Cabinet has decided to exempt 'projects wherein 60% of the work has been completed and sale deeds have already been executed by the builder'.

Effectively, this keeps most builders and their ongoing projects, and the home buyers outside the bill - which was the main objective of the bill with respect to future projects and home buyers. So, in effect the lakhs of home buyers who are being taken for a ride by builders will continue to struggle without protection from this law.

Further the 60% cut-off has no logic and is clearly arbitrary or I believe, to favour some builders. No doubt this is also intended to start a cottage industry of Corruption in BBMP in terms of Inspection and verification and issuance sale deeds. This on a day when a senior town planning official of the BBMP was found guilty by High Court for falsifying documents.

This Government has had a consistently lukewarm attitude towards protecting consumers. I had written  to the Chief Minister a year ago, on July 01, 2016, but no action was taken. I followed it up with a reminder letter on July 04, 2017, urging him to notify the Rules in accordance with the letter and spirit of the Central Act by bringing all real estate projects, which are in progress, "ongoing", under the purview of the RERA Karnataka Rules without exceptions or exclusions and appoint the Principal Secretary to the Department of Housing, Government of Karnataka, as the interim Regulatory Authority and the Real Estate Appellate Tribunal.

The recent transfers of bureaucrats in the housing ministry and the fact that senior ministers  allegedly hold extensive real estate interests point to the motivation as such for these efforts at leaving consumers high and dry. So, one can only say that there isn't even a fig leaf of pretence by this Government about their intentions.

The Real Estate (Regulation and Development) Act, 2016 was passed by the Parliament and on March 25, 2016 with the intention of establishing consumer rights and builder obligations in law and also boosts the industry by creating a framework of competition, efficiency and investments for the sector- Sections 20 and 43 of the Act calls for the establishment of a Real Estate Regulatory Authority and the Real Estate Appellate Tribunal in each state within a period of one year from the date on which Act came into force i.e. within a period of one year from May 1, 2016.  RERA was enacted to curb malpractice in the real estate sector and to protect the interests of consumers and It took many years of effort and overcoming significant lobbying efforts by builders to pass the legislation and draft rules. I served in the Select committee of Parliament that finalised the bill and worked hard on ensuring good draft rules.

These rules by GoK  tries to defeat the purpose of the law passed by Parliament and efforts of last few years. As has been demonstrated repeatedly - the Siddaramaiah government consistently disregards the law. I have demonstrated that in multiple cases like BBMP election delays, Steel Flyover, Akrama Sakrama etc. It is clearly illegal to use subordinate legislation like Rules to dilute or contradict the main law which is what the GoK is attempting to do here in this case.

Just as Fundamental Rights defined in the Constitution cannot be diluted, consumer rights defined in RERA Act cannot be diluted either. This is a reality that will become evident to those behind these rules soon.

This article appeared in Deccan Chronicle on July 09, 2017

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