Real Estate (Regulation and Development) Act, 2016 – Complete Guide

Chapter 9 – Interaction with Other Laws

Introduction

The Real Estate (Regulation and Development) Act, 2016 ("RERA") is a specialised legislation enacted to regulate the real estate sector, protect the interests of homebuyers and promote transparency and accountability in real estate development. However, RERA does not operate in isolation. Every real estate project is simultaneously governed by several other statutes relating to contracts, transfer of property, insolvency, consumer protection, banking, company law, arbitration, municipal regulations and environmental compliance.

In practice, disputes arising from real estate transactions frequently involve overlapping legal issues. A delayed housing project may simultaneously give rise to proceedings before the Real Estate Regulatory Authority, the Consumer Commission, the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, the Debts Recovery Tribunal under the SARFAESI Act, civil courts in limited situations, municipal authorities, and constitutional courts exercising writ jurisdiction. The interaction between these statutes has therefore become one of the most significant areas of real estate litigation.

Recognising the possibility of overlapping remedies, Parliament incorporated two important provisions within RERA. Section 79 bars the jurisdiction of civil courts in matters which the Regulatory Authority, the Adjudicating Officer or the Appellate Tribunal are empowered to determine, while Section 89 provides that the provisions of RERA shall have effect notwithstanding anything inconsistent contained in any other law. At the same time, judicial decisions have clarified that remedies available under RERA are generally in addition to, and not necessarily in substitution of, remedies available under other beneficial legislations unless there exists a direct statutory inconsistency.

This chapter analyses the interaction between RERA and other important statutes frequently encountered in practice, including the Consumer Protection Act, the Insolvency and Bankruptcy Code, 2016, the SARFAESI Act, the Transfer of Property Act, the Indian Contract Act, the Specific Relief Act, the Arbitration and Conciliation Act, the Companies Act, municipal development laws and constitutional remedies before the High Courts and the Supreme Court.

Why Interaction with Other Laws is Important

Real estate disputes seldom involve only one statute. A single project may involve contractual disputes, insolvency proceedings, mortgage enforcement, consumer claims, company law issues and regulatory compliance simultaneously. Lawyers and litigants must therefore determine not only whether RERA applies but also how it interacts with other applicable laws and whether multiple remedies may be pursued concurrently.

Sections 79 and 89 – Cornerstones of RERA

Two statutory provisions largely govern the relationship between RERA and other laws. Section 79 excludes the jurisdiction of civil courts in matters falling within the powers of the Regulatory Authority, the Adjudicating Officer and the Appellate Tribunal. Section 89 confers overriding effect upon RERA where its provisions are inconsistent with any other law. These provisions ensure that specialised disputes are decided by specialised forums while preserving the legislative objective of protecting homebuyers.

Relationship Between RERA and Other Laws

                    RERA
                      │
 ┌────────────┬─────────────┬────────────┐
 │            │             │            │
Consumer     IBC       SARFAESI     Contract
Protection                     & Property
 │            │             │            │
Concurrent   Insolvency   Security    Contractual
Remedies     Proceedings  Enforcement Rights

Interaction with the Consumer Protection Act, 2019

One of the earliest questions arising after the enactment of RERA was whether homebuyers could continue to approach Consumer Commissions under the Consumer Protection Act. This controversy has now been substantially settled. Section 88 of RERA expressly provides that the remedies available under the Act are in addition to, and not in derogation of, the provisions of any other law for the time being in force. Consequently, an allottee may, depending upon the facts of the case, pursue remedies under RERA as well as under the Consumer Protection Act.

Consumer Commissions generally adjudicate disputes involving deficiency in service, unfair trade practices and compensation, whereas RERA provides specialised remedies relating to project registration, regulatory compliance, possession, refund, interest and compensation under the Act. The choice of forum depends upon the nature of the grievance and the relief sought.

Interaction with the Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Code, 2016 ("IBC") has significantly influenced real estate jurisprudence. Homebuyers are recognised as financial creditors under the Code and are entitled to participate in the corporate insolvency resolution process. Consequently, disputes involving financially distressed developers often involve both RERA and the IBC.

While RERA focuses upon consumer protection and project regulation, the IBC seeks resolution of insolvency through a collective process involving all stakeholders. Once a moratorium under Section 14 of the IBC comes into operation, the maintainability of parallel proceedings may require careful examination depending upon the facts of the case and the prevailing judicial precedents.

Interaction with the SARFAESI Act, 2002

Large real estate projects are frequently financed through secured loans obtained from banks and financial institutions. Where the promoter defaults, secured creditors may initiate recovery proceedings under the SARFAESI Act. Such proceedings often overlap with the interests of homebuyers, particularly where possession has not been delivered or mortgages exist over project assets.

The interaction between RERA and SARFAESI has generated considerable litigation. Courts have consistently attempted to balance the statutory rights of secured creditors with the consumer protection objectives of RERA, depending upon the facts of each case.

Interaction with the Indian Contract Act and the Transfer of Property Act

Every Agreement for Sale executed under RERA remains fundamentally contractual in nature and therefore continues to be governed by the Indian Contract Act, 1872. Matters relating to offer, acceptance, consideration, breach, damages and contractual interpretation continue to be governed by general principles of contract law unless modified by the provisions of RERA.

Similarly, conveyance of title, transfer of ownership, mortgages, leases and other proprietary interests continue to be governed principally by the Transfer of Property Act, 1882. RERA supplements these statutes by introducing additional regulatory obligations without replacing the foundational principles governing contracts and transfer of property.

Interaction with the Arbitration and Conciliation Act, 1996

Many Agreements for Sale executed by promoters contain arbitration clauses requiring disputes to be referred to arbitration. The introduction of RERA gave rise to questions regarding the relationship between arbitration agreements and the statutory remedies available under the Act. Courts have generally recognised that RERA is a welfare legislation enacted to protect homebuyers and that the existence of an arbitration clause does not automatically oust the jurisdiction of the Regulatory Authority or the Adjudicating Officer where statutory remedies under RERA are invoked.

Accordingly, while contractual disputes may in appropriate cases be referred to arbitration, statutory rights and obligations created under RERA continue to remain enforceable before the authorities constituted under the Act, subject to the facts of each case and prevailing judicial precedents.

Interaction with the Specific Relief Act, 1963

The Specific Relief Act governs remedies such as specific performance, injunctions and declaratory relief. Although RERA provides specialised remedies including refund, possession, interest and compensation, situations may still arise where equitable remedies under the Specific Relief Act assume relevance. Both statutes therefore operate in complementary fields depending upon the nature of the dispute.

Interaction with the Companies Act, 2013

Where the promoter is a company, issues relating to corporate governance, management responsibilities, maintenance of statutory records, amalgamations and winding up continue to be governed by the Companies Act, 2013. RERA regulates the real estate activities of such companies without replacing the broader corporate law framework applicable to them.

Interaction with Municipal and Development Laws

RERA does not replace State planning statutes, municipal building regulations or development authority laws. Promoters must continue to obtain approvals relating to land use, building plans, environmental clearances, fire safety, occupancy certificates and completion certificates from the competent authorities. Compliance with RERA is therefore in addition to compliance with local development laws.

Practical Litigation Strategy

Selection of the appropriate legal remedy requires careful examination of the facts, statutory provisions and judicial precedents. The same dispute may involve concurrent issues relating to consumer protection, insolvency, mortgage enforcement, contractual obligations and regulatory compliance. Rather than adopting a single-forum approach, practitioners should evaluate all available remedies before initiating proceedings.

Interaction of RERA with Other Laws

                    RERA
                      │
 ┌──────────┬──────────┬──────────┬──────────┐
 │          │          │          │
Consumer   IBC     SARFAESI   Contract &
Protection                 Property Laws
 │          │          │          │
Concurrent Insolvency  Recovery  Civil Rights
Remedies   Process     Actions

Key Takeaways

• RERA is a specialised regulatory legislation but does not function in isolation.
• Sections 79, 88 and 89 collectively define the relationship between RERA and other statutes.
• Consumer Protection Act and RERA generally provide concurrent remedies.
• IBC proceedings significantly influence remedies available against financially distressed promoters.
• SARFAESI proceedings require balancing the rights of secured creditors and homebuyers.
• General principles under the Contract Act and the Transfer of Property Act continue to govern contractual and proprietary rights.
• An effective litigation strategy requires identifying every applicable statute before initiating proceedings.

Further Reading

• Chapter 5 – Agreement for Sale, Possession & Conveyance
• Chapter 7 – Complaints, Adjudication & Appeals
• Chapter 8 – Offences, Penalties & Enforcement
• Landmark Supreme Court and High Court decisions on the interaction between RERA and other statutes.

Professional Disclaimer