Consider the following statements about Real Estate (Regulation and development) Act and select correct one.
(a) was passed in 2016.
(b) aims at protecting interest of home buyers.
(c) was not applica

Question

Consider the following statements about Real Estate (Regulation and development) Act and select correct one.
(a) was passed in 2016.
(b) aims at protecting interest of home buyers.
(c) was not applicable in the state of Jammu and Kashmir.

UnlockIAS · Accepted Answer

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).

Why the other options are wrong — (a) 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.  (b) 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.  (c) 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.

Concept: 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.

State PCS 2021 Q47 — Economy PYQ with Answer

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