RERA: A STEP TO COMBAT COVID-19

COVID-19[1], declared a ‘pandemic’ by the World Health Organization, has had a severe and profound impact on the global economy, including the real estate sector. India has been no exception to this phenomenon. The outbreak of COVID-19 resulted in imposition of lockdown, which stalled almost all major economic activity, including development and construction activity. The development and construction of on-going projects, across India, were impacted. The situation was further complicated as a result of (a) reverse migration of labourers to their native places, (b) operation of labourers (on site) as per strict operating procedures, and (c) break in supply chain of construction materials.

The Real Estate (Regulation and Development) Act, 2016 (“RERA”), which was promulgated to regulate and promote the real estate sector in India, inter alia stipulates (a) mandatory registration of a real estate project, and (b) strict adherence to the timeline for development and completion of the project, by the promoter[2].

Due to (a) occurrence of COVID-19, and (b) consequential measures like lockdown, the timeline for development and completion of real estate project by the promoter, as mandated under RERA, was under imminent threat of breach, by the promoters. This mandated action to protect the promoters from penal action under RERA. While Section 6 of RERA provides for extension of registration granted for development and completion of a project, on the basis of occurrence of a force majeure event[3], the said Section 6 requires the promoter to file an application before the Real Estate Regulatory Authority seeking such extension of time.

Considering the gravity of the prevailing situation and its widespread impact, the Ministry of Housing and Urban Affairs (Housing Section), Government of India issued a Memorandum (in the form of an advisory) dated May 13, 2020 to all the States, Union Territories, and their respective Real Estate Regulatory Authority to (a) treat COVID-19 as a force majeure event, and (b) extend registration of all real estate projects, registered under RERA, which were due on or after 25th March, 2020, by 6 (six) months. As such, the promoters are not required to make an application seeking such extension, as mandated under Section 6 of RERA. The Memorandum further empowers the States, Union Territories, and their respective Real Estate Regulatory Authority to extend the timeline for construction by a further period 3 (three) months, on the grounds of occurrence of a  force majeure event.

The issuance of the aforesaid Memorandum by the Government of India has provided much needed protection to promoters from the imminent breach of the terms of registration, under RERA. The action has not only provided protection to promoters from penal action, but has also resulted in (a) safeguarding the interest of the promoters by helping them in mitigating the implications of COVID-19, and developing the capability to complete the project within the extended time period, and (b) allaying the uncertainties of the consumers, and assuring them of getting delivery of their respective flats/homes, with a delay, but within a fixed time period (as per the extended timeline).

The views and opinions expressed in this article belong solely to the author and do not reflect the position of Tatva Legal, Hyderabad.

[1] COVID-19 is the infectious disease caused by the most recently discovered coronavirus. World Health Organisation (WHO) named this new virus as “COVID-19” (Corona Virus Disease -2019) on February 11, 2020 as this new virus and disease were unknown before the outbreak began in Wuhan, China, in December 2019

[2] As defined under RERA but inter alia including a person who constructs or causes to be constructed a building

[3] Generally considered to be an event which is beyond the normal control of the promoter viz. a natural calamity