Top Court asks 11 states to file response in plea seeking Model Builder-Buyer Agreement within 4 weeks

The Supreme Court on September 30 directed the states of Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Madhya Pradesh, Maharashtra, Manipur, Mizoram, Odisha, Uttar Pradesh and West Bengal to file their responses in the plea seeking a model /uniform builder buyer agreement.

On 12 August, 2022 a bench of Justices Chandrachud and Bopanna had directed the States/Union Territories to file their responses with the Union Ministry of Housing and Urban Affairs by 2 September 2022.

Court had also asked the Centre to prepare a road map for implementation of a model /uniform builder buyer agreement.

When the matter was taken up last week, Court was informed that only thirteen States and two Union Territories had filed their responses.

Hearing this, the Court ordered thus,

"The States which have not filed their responses shall do so positively within a period of four weeks from today, failing which the Principal Secretaries of the State Government in the Ministry of Urban Development/Affairs shall personally remain present before this Court on the next date of hearing to explain as to why they should not be proceeded with under the coercive arm of law."

ASG Aishwarya Bhati and Devashish Bharuka, Amicus Curiae, also suggested before Court a road map, including the following steps:

(i) Based upon the responses, the Central Government along with the amicus curiae would prepare a model agreement for sale containing -
Part A: ‘Core’ clauses in consonance with the mandatory provisions of the Real Estate (Regulation and Development) Act 20161 for the protection of the home buyers. These clauses cannot be altered by any State/UT and must necessarily be a part of every agreement for sale.
(ii) The above model agreement for sale with Part ‘A’ would be submitted for consideration and approval of this Court; and
(iii) The States/Uts shall then incorporate in the agreement for sale
Part B: Additional clauses based on individual needs and exigencies of each State/UT as permissible within the scheme of the 2016 Act. However, these clauses must not be contrary to or dilute in any manner the clauses in Part ‘A’.

The Supreme Court, in October 2021, issued notice in the plea filed by Advocate Ashwini Kumar Upadhyay seeking direction to the Central Government to frame a 'Model Builder Buyer Agreement' and 'Model Agent Buyer Agreement' to infuse transparency, ensure fair play, reduce frauds in the spirit of objects of the RERA Act 2016 and Constitution of India.

The court, in February 2022, directed the Ministry of Housing and Urban Affairs, Government of India to assess whether the rules adopted by the Central Government deviate from the rules notified by the States regarding the Model Builder Buyer Agreement.

Background:

Upadhyay's plea alleged that the injury caused to the public is extremely large because builders, promoters, and agents use arbitrary and one-sided agreement that does not place customers on an equal platform with them.

The plea sought directions from the court to provide compensation to the buyers who suffer losses due to inordinate delays on the part of promoters, builders, and agents.

The plea stated, "There have been many cases of deliberate inordinate delay in handing over possession. Buyers lodge complaints but the police don't register FIRs, citing arbitrary clauses of the agreement."

He made the Central Government and governments of all the States and Union Territories along with the Law Commission a party to the litigation stating that none of the States has yet notified and enforced the RERA Act and framed 'Model Builder Buyers Agreement' and 'Model Agent Buyer Agreement' ensuring transparency and fair-play.

Case Title: Ashwini Kumar Upadhyay vs. Union of India & Ors.