MPSC 2021 Prelims Paper-I · Question 47 of 100

Correct — option (4): all three printed statements are sound. Statement (a) is right. The Real Estate (Regulation and Development) Act is Act No. 16 of 2016; it was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016, and it received the President's assent on 25 March 2016. Its commencement was staged — 61 of its 92 sections were brought into force on 1 May 2016 and the remainder on 1 May 2017 — which is why the Act is sometimes spoken of as a 2017 law, but the year it was passed is unambiguously 2016. Statement (b) is right, and it is right in the Act's own words. The long title reads: 'An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector...'. The machinery behind that phrase is what makes the claim more than a preamble: a promoter must register a project with the state Real Estate Regulatory Authority before advertising or selling it, must deposit seventy per cent of the amounts realised from allottees in a separate scheduled-bank account usable only for the cost of construction and land, must sell by the statutory definition of carpet area rather than by any inflated measure, and must rectify without charge any structural or workmanship defect notified within five years of handing over possession. Statement (c) is right too, and it is right as the Act was enacted. Section 1(2) reads: 'It extends to the whole of India except the State of Jammu and Kashmir.' That exclusion followed from the constitutional position of the State at the time, under which Parliament's laws did not extend to it automatically. The exclusion has since gone: a notification of 30 October 2019, S.O. 3912(E), made the Act applicable to the Union territory of Jammu and Kashmir and to the Union territory of Ladakh, and the bare Act now carries that notification as a footnote to the very clause. The statement is written in the past tense — 'was not applicable' — which is exactly the tense the fact requires. Three sound statements leave only the row that accepts them all, which is option (4).

• (1)(a) and (b) only are correct. — This option accepts the year and the purpose and rejects the exclusion of Jammu and Kashmir, and the exclusion is written into the Act itself. Section 1(2), the extent clause, reads 'It extends to the whole of India except the State of Jammu and Kashmir', and that was not an oversight but the ordinary consequence of the State's constitutional position before 2019, under which Central legislation did not extend to it as a matter of course. A candidate rejects this statement for one of two reasons. Either the exclusion sounds implausible for a consumer-protection law of national scope, or the candidate is thinking of the position after the reorganisation of 2019, when a notification dated 30 October 2019 extended the Act to the Union territories of Jammu and Kashmir and of Ladakh. The second reason is the more interesting error, because it is a fact used at the wrong moment: the statement speaks of what was the case, and what was the case is what the enacted section says.
• (2)(b) and (c) only are correct. — This option accepts the purpose and the exclusion and rejects the year, and the year is the least disputable of the three facts. The Act carries the number 16 of 2016 in its own title, was passed by both Houses in March 2016 and received assent on 25 March 2016. The route to this error is the staged commencement: only 61 of the Act's 92 sections were notified into force on 1 May 2016, and the remaining sections followed on 1 May 2017, by which date the state authorities and the rules under the Act were coming into existence and the law began to be reported in the newspapers as though it were new. Passing, assent and commencement are three different events, and a statute is dated by the first two. Keeping them separate matters well beyond this question, because MPSC and other commissions regularly build items on the gap between the year an Act was passed and the year it started operating.
• (3)(a) and (c) only are correct. — This option accepts the year and the exclusion and rejects the purpose, which is the strangest of the three rejections because the purpose is stated in the Act's own long title: to ensure that sales are made 'in an efficient and transparent manner and to protect the interest of consumers in the real estate sector'. A candidate who reads 'aims at protecting interest of home buyers' as too narrow may reason that the Act also regulates promoters and agents, establishes authorities and an appellate tribunal, and was intended to bring investment into the sector as well as to protect buyers — all true, and none of it in conflict with the statement. Protection of the buyer is the object around which the rest is built: the compulsory registration of projects, the seventy per cent escrow of buyers' money, the statutory definition of carpet area, the promoter's five-year liability for defects and the buyer's right to interest or refund on delay all exist for the allottee's benefit.

Before 2016 the Indian housing buyer had almost no specific remedy. A flat was typically sold off plan on a builder's own printed agreement, money moved from one project to another at the promoter's convenience, the area sold was measured on a super-built-up basis the buyer could not verify, and delay of several years attracted no penalty beyond whatever a consumer forum might award years later. The Real Estate (Regulation and Development) Act, 2016 addressed each of those in turn. It requires a promoter to register a real estate project with the state Real Estate Regulatory Authority before advertising, marketing or selling any part of it — with an exemption where the land does not exceed five hundred square metres or the apartments do not exceed eight, and where a completion certificate was obtained before the Act commenced. It requires that seventy per cent of the amounts realised from allottees be kept in a separate scheduled-bank account, withdrawable only in proportion to project completion and only on the certificate of an engineer, an architect and a chartered accountant. It defines carpet area as the net usable floor area excluding external walls, service shafts, exclusive balcony or verandah and exclusive open terrace, so that a buyer is billed for a measurable thing. It makes the promoter liable to rectify structural or workmanship defects notified within five years of possession, without charge and within thirty days. It requires real estate agents to register as well. And it creates an adjudicating structure — a regulatory authority in each state and a Real Estate Appellate Tribunal to hear appeals from it. Real estate is a State subject in practice, so implementation runs through state authorities; Maharashtra's, MahaRERA, was among the earliest to be constituted and is among the most active.

MPSC likes recent Central legislation because it can be examined from several sides at once — the year, the object, the extent, an institution created by the Act, a threshold figure written into it. This item takes three of those sides and prints them as fragments continuing the stem, which is a shape worth recognising: statements (a) to (c) are not full sentences, they are clauses attached to 'Real Estate (Regulation and development) Act', and reading them as free-standing sentences is what makes them look odd. Statement (c) also contains a negation — 'was not applicable in the state of Jammu and Kashmir' — but that negation belongs to the statement and not to the question. The stem asks for the correct statements, with 'correct' printed in bold in the English column and 'योग्य' in the Marathi, and a candidate who lets the 'not' inside statement (c) infect the reading of the whole item will invert an answer that needs no inverting. Three other features of the printed page belong in a careful reading. The Act's name is printed with a lower-case 'development' inside its brackets; the Marathi column writes 'मधे' where standard Marathi writes 'मध्ये'; and the fourth option reads 'all of the above are correct.' in lower case. None of these changes anything, and none of them should be silently corrected in a card.

• The Real Estate (Regulation and Development) Act, 2016 is Act No. 16 of 2016 — passed by the Rajya Sabha on 10 March 2016 and the Lok Sabha on 15 March 2016, with assent on 25 March 2016; 61 of its 92 sections came into force on 1 May 2016 and the rest on 1 May 2017.
• Its long title states the object as ensuring sale 'in an efficient and transparent manner and to protect the interest of consumers in the real estate sector', alongside establishing the Real Estate Regulatory Authority and the Appellate Tribunal.
• Section 1(2) as enacted reads 'It extends to the whole of India except the State of Jammu and Kashmir'; a notification of 30 October 2019, S.O. 3912(E), later made the Act applicable to the Union territories of Jammu and Kashmir and of Ladakh.
• Seventy per cent of the amounts realised from allottees must be deposited in a separate scheduled-bank account for the cost of construction and land, withdrawable in proportion to completion and only on the certificate of an engineer, an architect and a chartered accountant.
• Registration with the state authority is compulsory before advertising or selling, except where the land does not exceed five hundred square metres or the apartments do not exceed eight; the Act defines carpet area as the net usable floor area, and makes the promoter liable to rectify defects notified within five years of possession.

• Dating a statute by the year its sections were brought into force rather than by the year it was passed — the commonest way this Act is misdated to 2017
• Rejecting the Jammu and Kashmir exclusion because it sounds implausible, when it is written into the extent clause of the Act itself
• Using the post-2019 position to judge a statement written in the past tense about the position as enacted
• Reading a negation inside a statement as though it were the question's own ask, and inverting an item that asks for the correct statements
• Treating a statement as too narrow to be correct when the Act's own long title says the same thing in more words

Recent Central legislation reaches MPSC papers in four shapes. The first asks for the year, and the trap is nearly always the gap between passage and commencement. The second asks for the object, usually by quoting or paraphrasing the long title. The third asks for a threshold or a figure written into the Act — the seventy per cent escrow, the five hundred square metres, the eight apartments, the five-year defect liability — and these are the details that separate a candidate who has read about the law from one who has read the law. The fourth asks about the institutions the Act creates and their appellate route. The extent clause is a fifth and less common shape, and it is asked almost exclusively about laws enacted before 2019, because the exclusion of Jammu and Kashmir from Central statutes is precisely the kind of fact that a reorganisation makes historical and therefore examinable.

No directly related past PYQ was found.

• practice — not a real PYQ

  Under the Real Estate (Regulation and Development) Act, 2016, what proportion of the amounts realised from allottees must a promoter deposit in a separate bank account for the cost of construction and land ?

  • (a)Fifty per cent
  • (b)Sixty per cent
  • (c)Seventy per cent
  • (d)One hundred per cent

  Answer(c) Seventy per cent — the Act requires that seventy per cent of the amounts realised from allottees be deposited in a separate account in a scheduled bank, to be used only for the cost of construction and the land, with withdrawals permitted in proportion to the percentage of completion and only after certification by an engineer, an architect and a chartered accountant in practice. The provision exists to stop a promoter from moving one project's receipts into another, which was among the commonest causes of stalled housing before the Act.

• practice — not a real PYQ

  Registration of a real estate project with the Real Estate Regulatory Authority is not required where the area of land proposed to be developed does not exceed which of the following ?

  • (a)Two hundred square metres
  • (b)Five hundred square metres
  • (c)One thousand square metres
  • (d)Two thousand square metres

  Answer(b) Five hundred square metres — the exemption applies where the land proposed to be developed does not exceed five hundred square metres or the number of apartments proposed does not exceed eight, inclusive of all phases, and the appropriate Government may reduce either threshold if it thinks it necessary. Registration is also not required where a completion certificate was obtained before the Act commenced, or for renovation, repair or redevelopment that involves no marketing, advertising, selling or new allotment.