New Delhi, 6th August 2023: The aspiration of owning a home resonates deeply with every Indian, yet the home-buying journey often presents a labyrinth of challenges. Concerns about delayed deliveries and discrepancies between promised and received properties plague buyers, resulting in prolonged disputes that drain resources and time. In some instances, developers default on their commitments, dragging buyers into bankruptcy court proceedings.
The Real Estate Regulatory Authority (RERA) emerged as a transformative mechanism, mitigating these woes by holding developers accountable and empowering buyers with enforceable regulations. While RERA’s inception was globally applauded as a pioneering step to cleanse the real estate sector, the key to its efficacy lies in its implementation, an aspect that exhibits significant disparities among Indian states.
Given that RERA is a state subject, the level of its adoption varies significantly. Certain states have exhibited robust enforcement against developer violations, while others tread cautiously. Moreover, some states emphasize enhancing consumer information, diverting slightly from RERA’s primary objective of reducing information asymmetry.
Disparities are evident even in the integration of Alternative Dispute Resolution (ADR) mechanisms within RERA. Section 32(g) of the RERA Act suggests alternative avenues like mediation, conciliation, and arbitration as alternatives to conventional legal routes.
For instance, Maharashtra RERA (MahaRERA) pioneered the implementation of conciliation, establishing 45 conciliation benches across the state. This innovative approach initially boasted a staggering 75% resolution rate, with cases typically settled within two months, a stark contrast to the 8-10 months under RERA orders. MahaRERA’s success in conciliation can be attributed to its voluntary nature, involving only consenting parties, representatives from both builder and consumer groups, and adept negotiators, while sidelining legal representatives. Additionally, disputes had to undergo conciliation before formal RERA registration, ensuring confidentiality.
Despite MahaRERA’s achievements, merely six out of India’s 28 states have adopted this conciliation model (Maharashtra, Gujarat, Uttar Pradesh, Haryana, Karnataka, and Madhya Pradesh). Maharashtra and Uttar Pradesh stand out for their proactive incorporation of conciliation in dispute resolution. Some states, like Karnataka RERA, lean towards the Lok Adalat mechanism, utilizing retired judges and legal professionals to simulate a court-like process. However, the efficacy of Lok Adalat as an ADR channel remains ambiguous due to a lack of publicly available data on unresolved cases.
Every RERA implementation should contemplate the significance of ADR mechanisms, especially conciliation, as indispensable tools to resolve disputes and alleviate case backlogs. A well-structured process can align the interests of developers and buyers, nurturing faith in the real estate domain. Trade associations such as CREDAI and NAREDCO should encourage their members to pursue amicable settlements, thus elevating trust in the industry.
