RERA MAHARASHTRA

1. FINANCE TODAY, June 5-11, 20174 NEWS
T
he implementation of
Real Estate (Regula-
t i o n
and Development)
Act, 2016 (RERA) and
Regulations has offered
hopes to real estate buyers
across the country.,
Maharashtra Real Estate
Rules, 2017 has come in to
force from 1st
May 2017 both
RERA and Maha RERA
rules 2017 provides for pe-
nal action against the pro-
moter for non-
compliance
and compen-
sation to real
estate buyers
in case of delay in delivery
and other contractual non
compliances. Rule 3 and
Rule 4 of Maha RERA rules
provides disclosure while
registration of the projects
new as well as ongoing.
RERAprovidesforbuyers’se-
curity towards quality and de-
livery but at additional cost as
rulesprovidesforcostofinsur-
ance, liability towards struc-
tural defects and others but
the buyer will be benefited.
Looking at the current sce-
nario in Maharashtra, as un-
derstand and in the public
domain large numbers of
projects in Maharashtra are
stuck projects either due to
regulatory approvals or due
to financial crunch or may be
other reason. The major
challenges to the regulator is
how to give justice to these
buyer/s. Attempting to
merely fine or imprison de-
velopers would not help the
Sanjay “Uvãcha”
Maha RERA : Real Estate Buyer -Perspective
T
he NSE panel has sought
responses from 14 offi
cials who received show-
cause notices from Sebi
Mumbai: The National Stock
Exchange of India (NSE) has
formed a committee to look into
allegations that some brokers had
received unfair access to its al-
gorithmic trading facility.
The panel has sought responses
from 14 officials who have re-
ceived show-cause notices from
the Securities and Exchange
Board of India (Sebi), said two
people with direct knowledge of
the matter, including a member
of the NSE board.
“The panel which comprises se-
nior management and board rep-
resentatives has sought explana-
tions from the NSE officials on
the allegations that they failed in
their fiduciary responsibility.The
panel has been formed to fulfil
one of the primary directions of
Sebi, which has asked NSE to fix
responsibility,” the board mem-
ber cited above said on condition
of anonymity.
A spokesperson for the NSE said
the exchange was working with
the regulator for a quick resolu-
tion of the matter.
NSE’s internal inquiries are par-
allel to the investigation by Sebi,
which has issued show-cause no-
tices to the NSE and its officials
for allegedly violating Securities
Exchange and Clearing Corpora-
tion (SECC) regulations and Pre-
vention of Fraudulent and Unfair
Trade Practices (PFUTP) norms.
Separately it is examining
whether these officials had any
links with brokers and made ille-
gal monetary gains.
“The panel’s fact-finding exer-
cise will be completed in June.
The report would be submitted to
the board of NSE and Sebi for
next course of action. Action
could include suspension, a
criminal complaint but it is too
early to say,” said the second per-
son cited above, also on condi-
tion of anonymity.
Last week, Sebi issued show-
NSE sets up panel to probe
charges in algo trading case
cause notices to NSE directors
including board member and
vice-chairman Ravi Narain. The
allegations of unfair access be-
ing granted to some brokers
pertain to 2010-2014, when
Narain was serving as
chief executive officer and
managing director. Narain
was succeeded by Chitra
Ramkrishna in 2013; she
quit the organization in
December 2016.
Narain may recuse himself from
board functions which pertain to
the examination of these allega-
tions. “There are some things in
(the) pipeline. The board will
adhere to best corporate gover-
nance practices for a closure to
the matter,” said the board mem-
ber cited above.
The unfair access issue first came
to light when a whistle-blower
wrote to Sebi that certain brokers
were able to log into NSE sys-
tems with better hardware speci-
fications while engaged in algo-
rithmic trading, allowing them
unfair access and advantage.
These allegations were high-
lighted in a Sebi panel report and
a forensic audit report of NSE
systems.
NSE, in an explanations to Sebi,
has claimed that even if some
brokers had gained unfair ac-
cess, their order-to-trade ratio
was very poor to have a mate-
rial impact.
“(That) the order to trade ratio
was poor is sort of irrelevant -
that is a bit like saying ‘we
robbed a dozen banks but only
managed to get cash in one of
them’,” said Patrick Young, a
capital market expert and chief
executive officer of
crowdfunding platform Hanza
Trade.
“One should look for absolute
money. Profits in this case, but
should assess it by differentiat-
ing profits that were made due to
‘advantage’ as opposed to pure
conventional profits. Just looking
at order-to-trade ratio is disin-
genuous here as the absolute ex-
tra profit which is a windfall gain
(of sorts) was made at the ex-
pense of another party who did
not have the same speed to mar-
ket,” Young added.
ultimate purchaser. But a
few factors still need to be
fine-tuned to ensure protec-
tion of their rights i.e qual-
ity of construction, infra-
structure and timely delivery
of the project in case of stuck
and delayed project/s. Regu-
lators should act as facilita-
tors, Need to have notifica-
tion or order or rules in case
ongoing project if promoter
fails to deliver and complete
the project than the buyer
and other stake holder, how
they will proceeds in
completion of the project
,their rights and regulators
facilitation on this issues.
Like in case the promoter
unable to complete whether
buyer can take over the
project and complete under
the act and
rules or how
regulator will
mediate be-
tween the
buyer and promoter to com-
plete the project?
However in case of promoter
whoisdeveloperoftheproject
in JV or otherwise on parcel
oflandwherehe isnotowner
( In case of MMRDA region
and Pune most of develop-
ment is under the developing
rights to the developer of the
projects due to high cost of
land) . Now the contracting
party (land owner) will be
term as co-promoter of the
project along with the includ-
ingredevelopmentproject,the
cooperative housing society
will be co-promoter of the
project. Earlier most of cases
these co-promoter as per
MOU start getting their share
of money or consideration of
development agreement from
the cash flow of booking of
units.Nowpromoter willnot
able to withdraw from the
70% escrow account for pay-
ment to land owner and JV
partner ,as they are co-pro-
moter as clarified in the order
no,MahaRERA/LA/32/2017
dated 11 the May 2017 . But
buyerareinadvantageastheir
money will be used in the
project development for
which they had paid.
RERA and Maha RERA pro-
vides penal actions on non-
registration and non-compli-
ances,whichincludespenalty
and jail terms for the non-
compliances to the promoter.
However Maharashtra Real
Estate (Regulation and De-
velopment) (Recovery of In-
terest, Penalty, Compensa-
tion, Fine payable, Forms of
Complaints andAppeal, etc.)
Rules, 2017.Rule 3. Manner
of recovery of Interest, pen-
alty and compensation.—
Any interest or penalty or
compensation imposed on a
promoter or an allottee or a
real estate agent shall be re-
coverable under section 40 of
the Act, from such promoter
or allottee or real estate agent,
as the case may be, in the
same manner as applicable in
respect of land revenue as
provided in the Maharashtra
Land Revenue Code, 1966
(Mah. XLI of 1966).
Attempting to merely fine or
imprison developers/ pro-
moter would not help the ul-
timate purchasers to achieve
object of RERA namely
regulation and promotion of
the real estate sector in an ef-
ficient and transparent man-
ner and to protect the inter-
est of consumers in the real
estate sector. Buyer looking
forward for more clarifica-
tion and notification in near
future for protecting their in
stuck projects and the
mechanism for completion
of stuck projects.
CS Sanjay H. Indulkar,
sindulkar@hotmail.com
MahaRERA