Central Ministry advocates 'Gujarat model' for recovering pending dues from builders

With builders paying scant heed to MahaRERA orders to refund homebuyers’ money if possession is not granted in time, the central government has recommended stronger powers to bodies and stricter measures against the builders. Representation Pic

With increasing instances of Real Estate Regulatory Authority's (RERA) orders being disregarded, across States including Maharashtra, by errant builders and developers, the Central government's Ministry of Housing and Urban Affairs (MoHUA) has directed state governments to adhere to the "Gujarat Model" of executing recovery warrants.

Civilian activists and watchdog bodies have for long been raising the issue, saying that even if the MahaRERA orders a builder to return a homebuyer's money - for reasons such as not giving possession in time - non-implementation of these orders defeats the purpose.

The GujRERA model is currently the talk of the real estate circles, with recent amendments in existing laws and strict action empowering the authority to do more than just issue orders. The GujRERA has vested officials with powers for execution of recovery warrants and, in a first, also constructed a civil prison in its premises to arrest and detain errant builders.

Feels that measures like the GujRERA's civil jail for errant builders need to be adopted in Maharashtra

"This ministry has requested six Regulatory Authorities namely, Tamil Nadu, Gujarat, Maharashtra, Haryana-Gurugram, Karnataka and Uttar Pradesh to examine the reasons for non-compliance of orders passed by RERA, and further suggest ways to ensure effective and timely execution of said orders, as envisioned under RERA," the MoHUA's notification, stated.

The Ministry received responses from Tamil Nadu, Gujarat and Maharashtra, which were deliberated in a Central Advisory Council (CAC) meeting last year and it was decided to forward the suggestions or best practices of all the States and Union Territories for taking necessary action.

"DO (Demi Official) letter dated January 1, 2024, was also sent to all States/Regulatory wherein they were advised to formulate a recovery mechanism/appoint a recovery officer under their respective recovery laws, on the lines of mechanism adopted by the GujRERA to ensure recovery of dues. Alternatively, Additional District Magistrates/Additional Collectors may be entrusted with the additional charge as dedicated ‘revenue recovery officers' for enforcement of recovery orders, especially in districts where pendency of such cases is huge," MoUHA's notification stated.

Last year, a two-member committee comprising Abhay Upadhyay and MS Shankar, President and General Secretary respectively of the Forum For People's Collective Efforts (FFPCE), Kolkata, visited the GujRERA office in Gandhi Nagar to study the model. They submitted a detailed report to the CAC working under the aegis of the MoHUA. Subsequently, the CAC on February 6 issued a directive requesting all states to implement the Gujarat model.

FFPCE President Abhay Upadhyay

The FFPCE report had detailed how the Gujarat government had in July 2019 appointed two land revenue officers with vested powers conferring the duties of the Collector to them under the Land Revenue code, and a retired Registrar General of the Gujarat High Court as its Adjudicating officer. Next, a civil prison was constructed on the top floor of the GujRERA building. In the months to come, the GujRERA took strict action against builders in several cases, ranging from detaining them in the civil jail to issuing notices attaching their property, which served as deterrents. Some builders had challenged the action in the Gujarat HC, but the GujRERA's action was upheld, with the HC observing that in some cases, there was wilful disobedience of the RERA's orders.

The issue was also discussed in a meeting held on January 19, during which the MahaRera on its part, opined that considering the huge number of cases spanning various districts, it is not practical to delegate the powers of recovery to only one or two officers. And that they (MahaRERA) interact regularly with district collectors to ensure effective implementation of orders passed by regulatory authorities. To this, Dinesh Kapila, the Economic Advisor for MoHUA, reiterated that a dedicated revenue recovery officer/s may be appointed in those districts where the pendency of the cases is high.

"The recovery of money from developers is crucial and unfortunately, the home buyers, irrespective of getting favourable orders under RERA, do not get their legitimate refunds. Maharashtra and rest of the states must take clue from the Gujarat Model of recovery and implement it, as endorsed by the MoHUA, so that the litigant homebuyers do not have to run from pillar to post, and the orders passed by respective State RERAs get executed within the time frame," said Abhay Upadhyay.

He added that the MahaRERA need to make this a priority, due to the large pendency of orders. "This sends out the impression that the RERA has failed to give relief to the homebuyers. It is high time that this perception of the RERA in the minds of the common man is changed," he said, adding. "And if need be MahaRERA and other states can send their representatives to Gujarat for understanding the ground functioning of Gujarart model adopted by GujRERA."