The Supreme Court (SC) on Monday told the Centre that it does not favour individual state governments to have a builder-buyer agreement and rather prefers a national-level model agreement, to deter builders from fleecing unwitting home-buyers.
A bench of Justices DY Chandrachud and Surya Kant said if the Central government can engage with the central advisory council (CAC) under Real Estate Regulation and Development Act (RERA) to create a national model on builder-buyer agreement, then it would act as a deterrent for builder from fleecing unwitting home-buyers.
Emphasising that this is an important issue, justice Chandrachud told Solicitor General Tushar Mehta, representing the Centre: "consider it in broader public interest... we want a central national model for states to implement."
Senior advocate Menaka Guruswamy, representing petitioner Ashwini Upadhyay, submitted that Sections 41 and 42 of RERA provide enough room for Central government; however, the Union government has filed a reply that they don't have a role. She added that under Section 41 and 42, a central advisory committee is set up and the Centre works along with it to implement rules; however, the Centre has said the agreement is in the domain of the state governments.
Justice Chandrachud observed that this agreement cannot be left to the individual state governments and pointed out that the Court had struck down West Bengal's law on regulating the real estate sector—where it had said it was unconstitutional as the state's statute encroached upon RERA.
He further emphasised that some essential terms should be there, over which there should not be any negotiation—which is essential to protect the interest of home-buyers.
The top court scheduled the matter for further hearing after two weeks and asked Mr Mehta to urge the Centre to consider a uniform builder-buyer agreement at the Central level.
In November last year, the Centre told the Supreme Court that a robust regulatory mechanism and draft 'agreement for sale' already exists under provisions of the Real Estate (Regulation & Development) Act, to balance the rights and interest of home-buyers and promoters in an accountable and transparent manner.
The Centre's response came on a plea, filed by advocate Upadhyay, seeking direction to it to frame a 'model builder agreement' and agent-buyer agreement in the real estate sector to infuse transparency and fairness, restraining builders and agents from indulging into unfair and restrictive trade practices.
The ministry of housing and urban affairs, in an affidavit, said: "It is submitted that the prayer against answering respondent is infructuous, as there is a robust regulatory mechanism and draft 'agreement for sale' has already been prescribed under the provisions of RERA which seeks to balance the rights and interest of home-buyers and promoters in an accountable and transparent manner."
Advocate Upadhyay's plea claimed that the root cause of hardships caused to the petitioner is the agreement of sale and construction, which is manifestly one-sided and does not place the home-buyer on an equal platform as a promoter. The plea said that neither did the Centre enforce the 'model builder buyer agreement' in the spirit of RERA nor did the state governments take action against promoters.
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