How RERA and NCLT would be a solution for stuck projects


Status as on- 15/09/2021

A buyer books a unit into a real estate project with a lot of expectations and dreams but now a days, it has become a casual practice of the real estate companies and builders to make a default in delivering possession or doing low quality construction or abandoning the projects without any valid reason. There may be many reasons for default of the builder but before 2016, there were no proper forum to redress the issues of the allottees and builders.

In 2016, Government has introduced RERA Act and Insolvency and Bankruptcy Code (IBC) to redress various issues. RERA (Real Estate Regulatory Authority) Act, 2016 was passed to have a separate body to regulate the real estate sector.

Specifications of RERA-

Under RERA Act, Courts and Authorities have been established to decide the complaints under the Act. The Act is exclusively dealing with the real estate sector only and makes all attempts to provide reliefs to the buyer or allottees immediately.

Allottees are entitled to file a complaint against the builder under section 31 before the Authority or the Adjudicating Officer, if the builder violates any provisions of the Act.

“Section 31 states that:

                   Filing of complaints with the Authority or the adjudicating officer:

  • Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter allottee or real estate agent, as the case may be. …….”

Complaint against builder could be filed with prayer for possession along with the interest for delayed period or refund of whole amount paid till date along with interest, compensation and cost of litigation. Relevant provisions to be remembered before filing the complaint are Section 3, 4, 11, 12, 18 of the RERA Act.

It is also to be remembered that the RERA Act provides that if anyone wants to file a complaint then he have to give an undertaking that no such claim is pending before any other court or forum. Therefore, complaints before Consumer Courts are withdrawn by the allottees to file the same before RERA.

Under IBC, Hon’ble NCLT has been provided with the powers to entertain applications considering insolvency and bankruptcy of the companies, including the construction companies. It admits the applications of the allottees as Financial Creditors under section 7 of IBC and after 2019 amendment, it also provides for a requirement that minimum 100 allottees or 10% allottees of a real estate project, whichever is less, could approach the NCLT with joint application.

NCLT after hearing both the parties admits the application and appoints a Resolution Professional to take over the company by replacing the Board of Directors. The resolution professional takes up the company and make all attempts to bring the company out of bankruptcy.

Reliefs provided by all of them:

Reliefs provided by both of these authorities are very different. RERA focuses on the allottees and seeks to provide reliefs to them and NCLT focuses on the resolution of the company and appoints Resolution Professional for reviving it, if possible.

RERA could order for:

  • Refund of whole amount paid till date alongwith interest till the date of actual realization.
  • Possession and interest for delayed period.
  • Penalty for delayed period until possession is delivered.
  • Compensation
  • Cost of legal expenses.

(Some of the above relieves could be provided collectively.)

NCLT could order for:

  • Initiation of Insolvency process for proper resolution for the default
  • Find the alternation revival plan
  • Getting the new management


Different forums provide for different reliefs and one must be cautious enough before choosing an appropriate forum. Before choosing the appropriate forum, points to be analyzed are type of violation by the builder, what relief is prayed for, urgency, repetitive nature, financial condition of the builder, status of other projects, etc.

A thorough knowledge of Real Estate and Company laws is required to analyze the situation correctly and a very good office infrastructure is required to handle such cases.

Disclaimer– the above article is based on the personal interpretation of related laws and judicial pronouncements, which may differ person to person. The readers are expected to take expert advice while placing reliance. For more information, please contact at


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