Supreme Court Favours National Level Builder-Buyer Agreement, Says ‘Can’t Leave It to States’

New Delhi, January 17: The Supreme Court 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 D.Y. 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." COVID-19 Vaccination is of Larger Public Interest But No Person Can Be Vaccinated Forcibly Without Consent: Centre to Supreme Court.

Senior advocate Menaka Guruswamy, representing petitioner Ashwini Upadhyay, submitted Sections 41 and 42 of RERA, provides enough room for Central government, however the Union, it 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 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 Affair, 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."

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.

(The above story first appeared on LatestLY on Jan 17, 2022 06:07 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).