• The Supreme Court struck down a law regulating and promoting the real estate sector in West Bengal holding it to be unconstitutional and repugnant to Centre’s Real Estate (Regulation and Development) Act, 2016  (RERA). 

• The top court said that by enacting West Bengal Housing Industry Regulation Act (WB-HIRA), 2017, what the legislature of the state has attempted to achieve is to set up its parallel legislation involving a parallel regime'. 

• It said that the state legislature has encroached upon the legislative authority of Parliament which has supremacy within the ambit of the subjects falling within the Concurrent List of the Seventh Schedule. 

• The top court also said a significant and even overwhelmingly large part of WB-HIRA overlaps with the provisions of RERA and some of these provisions have been lifted bodily, word for word and enacted into the state's law.  

• The Supreme Court said that as Article 254(1) postulates, the legislation enacted by the State legislature is void to the extent of the repugnancy.

• Article 254 deals with inconsistency between laws made by Parliament and laws made by the legislatures of states.

What is RERA?

• Indian real estate sector was largely unregulated till 2016, which led to many anomalies resulting in various unfair practices and affected home buyers adversely. 

• Real Estate (Regulation and Development) Act, 2016 (RERA), passed in March 2016 brought in a transformation to ensure regulation and promotion of the real estate sector in an efficient manner and to protect the interest of home buyers.

• RERA marked the beginning of a new era in the Indian real estate sector and a step towards reforming the sector encouraging greater transparency, citizen centricity, accountability and financial discipline. 

• According to the Centre, 34 states/UTs have notified rules under RERA. In Nagaland, it is under process to notify the rules. West Bengal enacted its own legislation, which has now been struck down by the Supreme Court.

• Under RERA, each state and Union Territory will have its own Regulatory Authority (RA) which will frame regulations and rules as per the Act

• As many as 30 states/UTs have set up Real Estate Regulatory Authority.

• RERA makes it obligatory on the part of the builders not to book, sell or offer for sale, or invite persons to purchase any plot, apartment or building in any real estate project without registering the project with the authority.

• Some of the major provisions of the Act, besides mandatory registration of projects and real estate agents, include depositing 70 per cent of the funds collected from buyers in a separate bank account for construction of the project. This will ensure timely completion of the project as the funds could be withdrawn only for construction purposes. 

• The law prescribes penalties on developers who delay projects. All developers are required to disclose their project details on the regulator’s website, and provide quarterly updates on construction progress. In case of project delays, the onus of paying the monthly interest on bank loans taken for under-construction flats will lie on developers unlike earlier, when the burden fell on home buyers.

• RERA also states that any structural or workmanship defects brought to the notice of a promoter within a period of five years from the date of handing over possession must be rectified by the promoter. 

• Another highlight of the Act is imprisonment of up to three years for developers and up to one year in case of agents and buyers for violation of orders of appellate tribunals and regulatory authorities.

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