Real estate rules: Ghaziabad buyers sceptical over weak penalties

Homebuyers said that the penalties under Uttar Pradesh (Regulation and Development) Rules, 2016, seem to be weak as several of the imprisonment clauses have been made into compounding clauses under the section Real Estate (Regulation and Development) Act, 2016.

Compounding clauses are those under which offenders are fined instead of being sent to jail. The ‘offences and penalty’ chapter states that upon payment of the sum of money, “any person in custody in connection with that offence shall be set at liberty and no proceedings shall be instituted or continued against such person in any court.”

The offences for which money can be paid for include section 59 (2), 64, 66 and 68 of the act. For sections 59(2) and 64, the money to be paid for compounding shall be proportionate to the term of imprisonment, subject to a maximum of 10% of the estimated cost of the real estate project for three years.
Activists said that they have found it hard to get the imprisonment clauses implemented at the ground level, such as in the case of the UP Apartment Act.

“When compounding is available for offences, the erring developers/promoters will have no fear and they can be let off on paying the money. Under the UP Apartment Act, there are provisions for imprisonment and even lodging FIRs. But, at ground level, despite our repeated attempts, we have not been able to get the provisions enforced on erring builders,” Alok Kumar, founder, the federation of apartment owners’ association, said.
“There are many instances in which FIRs have been lodged but the developers have run away. What will happen in such a situation?,” he asked.

Under the new Uttar Pradesh (Regulation and Development) Rules, 2016, section 59(2) details that a promoter shall be punishable with imprisonment for a term which may extend up to three years or with a fine that may extend up to a further 10% of the estimated cost of the real estate project, or with both. Section 64 also specifies imprisonment up to three years or a fine for every day that the builder is defaulting on delivery.

Section 66 states that any real estate agent failing to comply with or contravening the orders or directions of the appellate tribunal shall be punishable with imprisonment for a term which may extend up to one year or with a fine. Section 68 also details imprisonment and a penalty clause.

However, activists said that the compounding amount is exceptionally high and will also prove a deterrent.
“The cost to be paid as compounding is high and it will also deter developers/promoters from violating the rules. We will get more clarity once we study the rules more clearly,” Abhishek Kumar, president of Noida extension flat owner’s association (NEFOWA), said.

“Similarly, we also demand that the appointment of the regulatory body and its members should be done at the earliest so that both the buyers and developers are benefitted. The appointments should be transparent as well,” he said.