RERA’s Dispute Resolution Mechanism: How Builders Can Defend Themselves

The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to protect homebuyers and bring transparency to the real estate sector. While it primarily addresses homebuyer concerns, RERA also provides builders and developers with a structured framework to defend themselves against unfair claims and disputes. Understanding RERA’s dispute resolution mechanism is crucial for developers to safeguard their rights and navigate legal challenges effectively.

This blog explores how builders can defend themselves in RERA disputes, the legal remedies available, and case laws that illustrate how developers have successfully contested complaints.

RERA establishes a three-tier dispute resolution system for handling complaints:

1. State Real Estate Regulatory Authority (RERA): The first level of dispute resolution where complaints are filed against builders, agents, or buyers.
2. Real Estate Appellate Tribunal (REAT): If either party is dissatisfied with the RERA ruling, they can appeal before the Appellate Tribunal.
3. High Court & Supreme Court: Further appeals can be made in case of dissatisfaction with the REAT’s decision.

Builders facing complaints must adopt a structured approach to defending themselves and presenting their case before the authorities

While RERA aims to protect homebuyers, developers also have legal safeguards to contest unfair claims. Here are some common grounds on which builders can defend themselves:

1. Force Majeure (Unforeseeable Circumstances)

• Builders can seek relief under Section 6 of RERA, which allows extensions in project completion timelines due to events beyond their control (e.g., natural disasters, pandemics, government-imposed restrictions).
• Case Law: M/s Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghavan (2019) – The Supreme Court acknowledged that delays caused by force majeure conditions could be valid defenses under RERA.

2. Compliance with All Regulatory Approvals

• Developers can defend themselves by proving that delays occurred due to procedural approvals from government authorities (e.g., environmental clearances, land acquisition issues).
• If approvals are delayed despite the developer’s compliance, the responsibility may shift to the government, rather than the builder.

3. Buyer Default in Payment

• If a homebuyer fails to make timely payments as per the agreement, builders can challenge claims of project delay.
• Builders can use the agreement for sale to demonstrate that delays were caused due to non-payment by the buyer.
• Case Law: DLF Southern Homes Pvt. Ltd. v. Shiv Kumar Aggarwal (2018) – The court ruled that homebuyers must fulfill their payment obligations before claiming compensation for delays.

4. Buyer-Induced Modifications or Delays

• Some homebuyers request custom modifications or changes in project specifications, causing construction delays.
• Builders can submit documented proof (emails, written requests) that the buyer’s changes led to project delays.

5. Misuse of RERA for Frivolous Complaints

• Developers can defend themselves against malicious or frivolous complaints by proving that the homebuyer has made claims without valid grounds.
• If a buyer has already accepted compensation, refunds, or alternative solutions but still approaches RERA, builders can highlight this contradiction in their defense.

6. No Defects Within the Defect Liability Period

Case Law: Swastic Buildtech Pvt. Ltd. v. State of Maharashtra (2021) – The tribunal dismissed a complaint since the defect was claimed after the liability period had expired.

Under Section 14(3) of RERA, builders must repair defects within five years of possession at no cost.

However, if a defect claim is made beyond this period, developers can use this provision as a defense.

Builders have multiple legal remedies under RERA to defend themselves effectively:

1. Filing a Counter-Complaint

• If a builder believes that the complaint filed by a buyer is unfair, they can file a counter-complaint with the State RERA authority.
• This is particularly useful in cases where buyers have defaulted on payments or violated contractual terms.

2. Seeking an Extension Under RERA

• If there are valid reasons for a project delay (e.g., force majeure, regulatory delays), developers can file an application under Section 6 of RERA for an extension.
• Builders must provide documentary proof to support their claim for an extension.

3. Challenging RERA Orders in the Appellate Tribunal

• If an order passed by RERA is unfavorable, developers can appeal to the Real Estate Appellate Tribunal (REAT) within 60 days of the decision.
• Case Law: Jaypee Infratech Ltd. v. Axis Bank Ltd. (2021) – The tribunal ruled that developers have the right to appeal unfair RERA orders if procedural lapses are identified.

4. Mediation as an Alternative Dispute Resolution (ADR) Mechanism

Mediation can be a time-efficient and cost-effective alternative to lengthy legal proceedings.

Some RERA authorities encourage mediation between builders and homebuyers for quicker dispute resolution.

1. Increased Use of Online Hearings

• Many RERA authorities have introduced virtual hearings to expedite dispute resolution.
• This helps developers present their case efficiently without unnecessary delays.

2. Stricter Penalties for False Complaints

• Some states have introduced penalties for homebuyers who file false or frivolous complaints against developers.
• This development ensures that only genuine grievances are addressed under RERA.

3. Revised Guidelines on Escrow Account Withdrawals

• New regulations allow partial withdrawals from escrow accounts under monitored conditions, helping developers manage cash flow better while adhering to RERA compliance.

While RERA is primarily designed to protect homebuyers, it also provides fair opportunities for builders and developers to defend themselves against baseless claims. By leveraging legal provisions such as force majeure, buyer default, and compliance with approvals, developers can effectively present their case before RERA authorities. Additionally, legal remedies such as filing counter-complaints, seeking extensions, and appealing in the Appellate Tribunal help builders protect their interests.

Staying informed about recent developments and case laws can help developers navigate disputes strategically and maintain compliance with RERA regulations. By proactively addressing disputes and maintaining transparency, builders can ensure smooth project execution while safeguarding their legal rights in the real estate sector.