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Building a developed nation: RERA’s role for Viksit Bharat Mission 2047

Part I


The Economic Survey 2024-25 showcased the need of increased spending for developing the urban infrastructure of the nation as well as for achieving the objectives of Viksit Bharat Mission 2047. The Union Government from FY20 to FY24 has increased the capital expenditure on major infrastructure sectors by a trend rate of 38.8%.[1] In addition, estimates show that the Real Estate sector is expected to grow to a tune of USD 985.80 billion by 2030, at a CAGR of 24.25% during the forecast period (2025-2030).[2] Furthermore, a previous report by National Infrastructure Pipeline (NIP) estimated that India is required to invest USD 1.5 trillion in infrastructure for FY20-25 in order to meet its present objectives. However, public capital alone is insufficient to meet this demand, and Private-Sector Participation (PSP) in terms of investment is required.[3] Sources also suggests that by 2025, India's demand for Global Capability Centres (GCCs) in real estate is projected to grow by 15-18 million sq. ft.[4] This development demands a substantial increase in commercial as well as residential space.


Here, in order to get the private sector properly involved, it is crucial to reinforce their ability to conceptualize projects and boost-up their confidence in risk and revenue-sharing mechanisms, contract management, conflict resolution, and project closure.[5] What is required is a robust regulative framework in place to prevent trust deficit among The commencement of RERA had been somewhat transformational for the nation’s real estate sector, earlier there were issues like lack of transparency, inordinate project delays, financial mismanagement and lack of consumer protection. About 1.38 lakh real estate projects and 95,987 real estate agents have been registered under RERA in addition, around 1.38 lakh complaints have been disposed of by the RERA across the country. [6]

Part II


In the previous sections, we understood the important role played by RERA and learnt about the its significance for the economy and thus, for Viksit Bharat Mission 2047. However, even after the enactment of the act together with standardization and regulatory efforts. There are still issues that loom over, which are the following.


A.    Decentralized nature of the Act.


A critical issue that encompasses the real estate sector governed by RERA 2016, is the decentralized nature of the act. Since it allows each state to formulate their version of rules concerning definitions, procedures and functions of the act. This particular aspect of the act creates room for confusion due to variation of law in different states. Foreign developers face a heightened difficulty because of different versions of a single law in different states. For instance, the state of Maharashtra requires all ‘ongoing projects’ that have not received a completion certificate before the commencement of RERA, 2016 to register under the Act whereas, the state of Kerala exempts projects, that have applied for or received occupancy certificates from registration, even if they are incomplete. This implies that if a project has received a partial completion or occupancy certificate for certain sections, those sections may be exempt from registration under RERA in the state of Kerala.[7] This discrepancy mean that a project deemed ongoing and in need for registration in Maharashtra might be exempt in Kerala. In furtherance there is also discrepancy with regards to the penalizing provisions, the state of Haryana Imposes up to 10% of the project's estimated cost for developers failing to register a project.​ Whereas, the state of Punjab Sets the penalty at up to 5% of the project's estimated cost for the same offense. This variation works as a deterrent for the smooth functioning of the law, at the same time allowing the exploitation of the policy.


B.    Issue of Legacy Stalled Projects


"Legacy stalled projects" refers to long-standing real estate projects that have been abandoned or are severely delayed, often due to financial difficulties, regulatory issues, or legal disputes, leaving homebuyers in a precarious position. An estimate by the Indian Banks Association (IBA) shows that around 4.12 lakh stressed dwelling units involving ₹4.08 lakh crores are impacted in these stalled real estate projects.[8]. The Ministry of Housing and Urban Affairs (MoHUA) constituted a committee under the chairmanship of Dr. Amitabh Kant (G-20 Sherpa), to ascertain and examine issues relating to the stalled real estate projects and to provide various recommendations in completion of the same. In its report titled “Report of the Expert Committee on Rehabilitation of Legacy Stalled Projects” (‘report’).


The primary reason cited by the expert committee for the stalled real estate projects was the lack of financial viability of these projects. The committee emphasized on improving the Internal Rate of Return (IRR) rather than resorting to Insolvency & Bankruptcy Code, 2016 (‘IBC’) and stated that it should only be used as a last resort [9]. The expert committee in 2023, finalised its report and furnished various recommendations which inter alia, includes:


1)     Mandatory Registration of Projects with RERA


According to S.3 of the RERA Act, it is the duty of the promoter to do prior registration of the real estate project with RERA [10]. There might be a possibility that promoters shall have different projects running at the same time, in that case, they need to register every project separately. Consequently, they would be under an obligation to furnish details as to progress including details of construction, finances and legal matters. This fosters trust among various stakeholders and act as a deterrence to fraudulent practices. Further, as per S.4(2)(1)(D) [11] of RERA Act, RERA will issue directions for opening of an Escrow Account with a scheduled bank for maintaining financial discipline. Hence, it will create more transparent, accountable and efficient real estate sector. The infamous Adarsh Housing Society Scam [12], which allotted the flats that were originally meant for the dependants of the veterans of Kargil War (1999) [13] to politicians, bureaucrats, and military officers, by bending rules and diverting funds as uncovered by the report of Comptroller and Auditor General (CAG) [14] and subsequent judicial commissions [15]. It underscores the importance of mandatory registration and highlights the deep-rooted problem of financial mismanagement, misrepresentation, and lack of accountability in the real estate sector. Hence RERA aims at preventing the fraudulent practices that were rampant in the Pre-RERA period.


2)     Execution of Registration/Sub Lease Deeds for All Occupied Units


The expert committee has examined several instances of pending registration/sub lease deeds, notwithstanding the completion of the project. This impediment can be attributed to builders’ defaulting on their dues to concerned authorities. Sanjay Bhoosreddy, chairman, Uttar Pradesh RERA has also endorsed the report by Dr. Kant, stating that ‘delinking of registry of housing units from builders’ due helps in addressing the issues concerning the interests of the homebuyers’ [16]. In the landmark case of Vijay Building Apartment Owners Association vs. Ardee Housing Pvt. Ltd. & Anr. [17], which involved delay in executing and registering deed of apartment due to the builder's failure to fulfil certain obligations. This ruling highlighted that the registration process should proceed independently of the builder's financial issues. Similarly, in another landmark case of M/s. Samruddhi Developers vs. Kiran Vasant Verekar[18] The court emphasized that delays in handing over possession and registering the property is attributable to the builder's financial issues, violate the homebuyers' rights. It categorically stated that the execution of registration deeds should not be hindered by the builder's pending dues or internal disputes.

 

3)     Financing to Stalled Projects


The Committee suggests that funding for the completion of these projects should be classified as a priority. It recommends that the SWAMIH fund take a proactive approach in providing financial support to ensure their completion. Under the SWAMIH Fund, so far, 50,000 homes have been delivered, while another 40,000 homes are expected by 2025 [19]. In addition, the finance minister has announced the second instalment of the SWAMIH Fund amounting to Rs. 15,000 Crore on the budget day, thereby aiming to complete 1 lakh stalled housing projects [20]. As of March, 2023, the SWAMIH Fund has become one of the largest funds for social impact by completing stalled projects and raised Rs. 15,530 so far [21].


4)     IBC, 2016: The Last Resort


The Insolvency and Bankruptcy Code, 2016 (‘IBC’) is a legal framework in India designed to address financial distress in companies, including those in the real estate sector. However, due to the complex nature of real estate projects and the backlog of cases in the National Company Law Tribunal (NCLT), the IBC process can be lengthy and may not always be efficient & effective solution for stalled housing projects. Therefore, it is recommended to consider IBC as a last resort after exploring other resolution methods [22]. The expert committee chaired by Dr. Kant recommends the following:


a)     Adhering to the Judicial Pronouncements

 All involved parties such as government authorities, homebuyers, banks, and builders should adhere to the decisions made by the Hon'ble Supreme Court to avoid unnecessary legal disputes. For instance, in New Okhla Industrial Development Authority (NOIDA) v. Anand Sonbhadra[23], the Supreme Court ruled that New Okhla Industrial Development Authority (NOIDA) is not a ‘financial creditor’ under the IBC, which implies NOIDA’s claim for lease rent and other charges from real estate developers does not fall within the definition of ‘financial debt’. Since NOIDA is not a financial creditor, it cannot be part of the Committee of Creditors (CoC) that decides on the resolution of a bankrupt real estate developer. Instead, it may be classified as an operational creditor, whose dues are settled after financial creditors in insolvency proceedings. Such judgments should be accepted to prevent prolonged litigation[24].


b)    Clean Slate Principle:

Under the IBC, when a project is taken over by a new bidder, it is provided with a "clean slate," meaning past liabilities are cleared. All stakeholders should respect this principle to facilitate fresh investment and project revival. In the landmark case of Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta & Ors. [25] the Supreme Court upheld the primacy of the resolution plan approved by the Committee of Creditors (CoC) and reaffirmed that once a company is acquired, all prior liabilities, including claims from operational creditors and statutory dues, are extinguished. This judgment reinforced that a successful resolution applicant should not be burdened with the past liabilities of the corporate debtor.


c)     Project Extensions Without Immediate Dues:

Developers and co-developers should be allowed to obtain plan approvals and extensions without the immediate requirement to clear outstanding dues. A three-year extension can be granted at no additional cost, enabling continuous development despite financial constraints. In the landmark case of Union of India vs. Mago Construction Pvt. Ltd. [26] which involved disputes over extensions of time in a construction contract. The contractor sought extensions without being penalized for delays attributed to factors beyond their control.​ The Delhi High Court emphasized that when extensions are granted due to reasons not attributable to the contractor, imposing penalties or withholding approvals based on outstanding dues may not be justified.​

 

Part III


Thee Committee attributes ‘’ lack of financial viability’ as the primary cause for cost overruns, project and time delays.[27] However, many issues are a result of the fallacies present in the enforcement mechanism along with lack of transparency. The upcoming section draws on some international legislation and their lessons for India.


A.    Lessons From USA’s RESPA, 1974


The stakeholders face frequent hardships, encountering opacity opacity regarding project costs, timelines, and legal approvals, leading to mistrust and financial uncertainty. In this regard, the model of Real Estate Settlement Procedures Act, 1974 (RESPA) of the United States can be followed, RESPA makes it mandatory that lenders must furnish information to borrowers regarding the nature and costs of the real estate settlement process. This covers further disclosure regarding settlement costs and loan terms, so that the buyer is fully informed before going ahead. For example, the Section 1024.32 in Title 12 of the Code of Federal Regulations (CFR)[28] provides for General Disclosure requirements, Good faith Estimate (GFE) given in Section 1024.7 in Title 12 of CFR can be adopted. 


B.    Lessons from Switzerland Civil Code


Out of the key challenges that the Indian real estate sector faces, the issue of decentralized nature of the act is of a critical significance, the absence of a single unified framework disallows the seamless execution of projects, leading to potential delay. Switzerland’s Swiss Civil Code and the Swiss Code of Obligations provides for a centralized Land Register, which transcribes all real estate transactions and thereby provides transparency and legal certainty, the obligations and standards set forth by the Swiss Code apply to the participants in the real estate transaction to ensure ethical practice whereas Section 9 of RERA merely requires the real estate agents to register with authorities.

  

Part IV: Conclusion


The enactment of RERA has marked a transformative shift in India's real estate sector, addressing long-standing concerns related to transparency, accountability, and consumer protection. By instituting a robust regulatory framework, RERA has empowered homebuyers, curtailed malpractices, and fostered a more balanced relationship between developers and consumers. However, despite its significant impact, challenges persist in terms of full compliance, effective enforcement, and the need for greater awareness among stakeholders. Moving forward, continuous reforms, stricter implementation, and harmonization with other regulatory mechanisms will be essential to realizing the full potential of RERA in creating a sustainable and consumer-friendly real estate ecosystem.

 

 

 


[1] ​Press Information Bureau, Government Capital Expenditure on Key Infrastructure Sectors Grows at 38.8 Percent Between FY 20 and FY 25: Economic Survey 2024-25. https://pib.gov.in/PressReleasePage.aspx?PRID=2097902.

[3]​Department of Economic Affairs, Ministry of Finance, Government of India, Report of the Task Force National Infrastructure Pipeline (NIP) - Volume II (Apr. 30, 2020), https://dea.gov.in/sites/default/files/Report%20of%20the%20Task%20Force%20National%20Infrastructure%20Pipeline%20%28NIP%29%20-%20volume-ii_0.pdf.

[4] ​Mordor Intelligence, Real Estate Market in India - Industry Growth & Analysis (2025), https://www.mordorintelligence.com/industry-reports/real-estate-industry-in-india. 

[5] Government of India, Economic Survey 2024-2025, https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf.

[6] Id. 

[7]​Vinay Thyagaraj, RERA: Key Definitions and References in Indian Real Estate Laws (Dec. 7, 2023), https://taxguru.in/corporate-law/rera-key-definitions-references-indian-real-estate-laws.html.

[9] MoHUA, Report of the Expert Committee on Rehabilitation of Legacy Stalled Projects 1 (2023), https://mohua.gov.in/upload/whatsnew/64e31f9e36e0creport.pdf

[10] The Real Estate (Regulation and Development) Act, No. 16 of 2016, §3 (Ind.).

[11] The Real Estate (Regulation and Development) Act, No. 16 of 2016, §4 (Ind.).

[12] Astha Srivastava, Adarsh Housing Society Scam (2010): A Comprehensive Analysis of Political Collusion, Legal Violations, and Consequences, Lawful Legal, (Jan. 05, 2025). https://lawfullegal.in/adarsh-housing-society-scam-2010-a-comprehensive-analysis-of-political-collusion-legal-violations-and-consequences/ 

[14] Comptroller and Auditor General of India, Report of the Comptroller and Auditor General of India on Adarsh Co-operative Housing Society, Mumbai, 1, (2011-12). https://cag.gov.in/en/audit-report/details/16039 

[15] Staff Reporter, Adarsh panel summons Ashok Chavan, The Hindu, (Nov. 17, 2021).

[16] Ashish Mishra, Delayed Projects: Delinking registry of housing units from builders’ dues can help homeowners, says UPRERA Chairman, Money Control, (Sept. 04, 2023) https://bit.ly/4c4win5 

[17] AIR (2019) SCC OnLine Del 9526.

[18] AIRONLINE 2019 BOM 917.

[19] Saloni Dhumne, Swamih Scheme - Launch Date, Benefits, Eligibility, ClearTax, (Mar. 19, 2025). https://cleartax.in/s/swamih-scheme 

[20] Id.

[21] Press Release, Ministry of Finance, Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund, (Mar. 10, 2023).

[22] The Hindu Bureau, Use insolvency code as a last resort, says panel on stalled housing projects, The Hindu, (Aug. 21, 2023). https://www.thehindu.com/news/national/use-insolvency-code-as-a-last-resort-says-panel-on-stalled-housing-projects/article67219902.ece 

[23] ​New Okhla Industrial Development Authority v. Anand Sonbhadra, 5 S.C.R. 319 (2022)

[24] Khaitan & Co., Noida dues not financial debt under IBC – Supreme Court, (May 24, 2022).

[25] AIR (2019) 16 SCC 1.

[26] OMP (Comm.) No. 467/2018.

[27]Ibid

[28] 12 C.F.R. § 1024.32 (2024).

 
 
 

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