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Supreme Court issues notice in plea seeking model builder-buyer agreement to protect buyers from delay and fraud by real estate promoters

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The Supreme Court has issued notice in a bunch of writ petitions, including a PIL, seeking directions to the Centre to frame the ‘Model Builder-Buyer Agreement’ and ‘Model Agent-Buyer Agreement’ to infuse transparency, ensure fair play, reduce fraud and deliberate delays, restrain promoters and agents from indulging into arbitrary unfair and restrictive trade practices and to protect the rights and interests of customers of real-estate.

A Supreme Court bench of Justice D.Y. Chandrachud and Justice B.V. Nagarathna observed that the promoters and agents of the real estate property are using lopsided agreement for misappropriation of buyers’ hard-earned money, violating their fundamental rights. 

It is further observed that the main cause of hardship is the one-sided agreements and the promoters are neither ready to compensate the buyers for inordinate delay, nor do they provide the amenities promised during booking.  

“It is very correct, there has to be protection of customers in RERA otherwise the builder would make any clause to cheat/ fraud the buyers.”

Senior Advocate Vikas Singh, appeared on behalf of the petitioner and advocate Ashwini Kumar Upadhyay, also sought directions to compensate buyers for losses incurred due to inordinate delays on part of promoters/ builders and recover their hard earned money, fraudulently misappropriated by builders under the garb of taxes, interests, penalties and other charges. 

Singh submitted that the States were required to notify and enforce RERA Act, but they failed to do so within the due date and subsequently the State failed again. Till date, not even one state has framed “Model Builder Buyer Agreement” and “Model Agent Buyer Agreement” which is against the spirit of aims and objectives of RERA act 2016 and Article 14, 15, 21 of the Constitution. 

He further stated that there is an enabling provision to frame model agreements which will serve the purpose, so that buyers of real estate are not cheated. As per section 41 of the RERA, the Central Government is required to establish the Central Advisory Council which has not been done yet.

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The petition focuses on the role of the Centre to issue a model or a fixed agreement so that each and every state adopts it and there is no conflict between buyers and promoters. It is stated that buyers lodge complaints but police don’t register FIRs, citing arbitrary clauses of the agreement. Builders issue revised delivery schedules again and again, and adopt arbitrary unfair restrictive trade practices. 

The petition covers the harsh reality stating that registration of a project with the regulatory authority has been mandatory before it is launched for sale and for registration the basic prerequisite is that promoter must have all the requisite approvals. Thus the buyer is protected as the project is ring-fenced from vagaries of non-approvals or delays in approvals which are one of the major causes of delay for the project. However, many developers across the country still follow fraudulent practice of pre-launching projects without requisite approvals from authorities and termed as ‘soft launch ‘ or ‘pre-launch ‘ thus violating RERA Act but no action has been taken against them till date.

Case Title: Ashwini Kumar Upadhyay vs. UOI and Ors.

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