'Concerned About Middle-Class Home Buyers' : Supreme Court Urges Centre To Consider Framing Model Builder-Buyer Agreement

Noting that it concerns the "broader public interest of middle-class home-buyers", the Supreme Court on Monday requested Solicitor General Tushar Mehta a to seek the considered view of the Union Government of the need to formulate a model builder-buyer and agent-buyer agreement at the central level.The Court said that the model agreement should contain certain non-negotiable essential...

The Court said that the model agreement should contain certain non-negotiable essential conditions, which cannot be deviated from.

The bench of Justices D. Y. Chandrachud and Surya Kant was hearing a petition under Article 32 raising the grievances of flat-purchasers that in the absence of uniform Builder-Buyer and Agent-Buyer Agreements, the purchasers are left to the mercy of developers over the terms and conditions imposed.

The Court urged the Solicitor General to reconsider the counter-affidavit filed by the Union in which it has been stated that the RERA already addresses the issue and that the Act provides for a draft agreement.

While issuing notice on the petitions in October last year, the Court had noted that section 41 of RERA provides for the establishment of a Central Advisory Council by the Central Government, and that Section 42 provides for the functions of the said Council, one of which is to advice and recommend to the central government on (1) implementation of the Act; (2) major questions of policy; (3) protection of consumer interest; and (4) growth and development of real estate; (5) any other matter. Sub-section (2) of section 42 provides that the central government has the rule-making power to effectuate the recommendations of the Council. "The Act has sufficient enabling powers for the central government to frame the model agreements to subserve the public interest in ensuring buyers are nor exploited by framing standard form agreement", the Court had then observed.

On Monday, Senior Advocate Menaka Guruswamy, for the petitioner Ashwini Upadhyay, told the bench, "The Union (in its counter-affidavit) says we don't have a role in this, given the statute. Your lordships, in your order, also indicated sections 41 and 42. The union says it is the responsibility of the state governments. They ignore sections 41 and 42 which Your Lordships' reproduced in your order. If the SG (Tushar Mehta) could take instructions on this point that there are sections 41 and 42 of the RERA, that the Central Advisory committee is appointed, that the Union is tasked with implementation of the Act and formulation of rules, that the Union has a specific rule making power..."

At this, Justice Chandrachud put to the SG, "The whole purpose of the PIL is that there should be a model for the builder agreement which will be formulated by the Council so that there is some uniformity in the basic terms and conditions and the flat buyers are not exploited. It is an important matter. By order of 4 October, 2021, the court had indicated that it is important to have a module builder buyer agreement."

Continuing, the judge observed, "We are very keen on this instead of leaving it to all individual states...in fact, there was a matter before where one of the states (West Bengal) passed a law identical to the RERA, copying word-by-word the provisions of the same. We said this field is occupied by the central legislation and that the state law is to be struck down(judgment dated May 4,2021). If the union of India can consider whether the Central advisory committee can use its powers to formulate a model builder buyer agreement which can then form a national model. Otherwise, what is happening is that the builders can put in whatever terms they want and force them on the buyers. That is why we thought we should step in and ask the government of India to formulate an agreement. Whatever has been said by the union on the affidavit, if you (SG) could just reconsider. We are concerned about the broader public interest of the middle-class home buyers who are otherwise (unclear)..."

Justice Chandrachud said, "We are not on what the terms should be. Let the government of India or the central committee decide that. That, we will not enter into. We just want the national model to be there which the states will then follow. You retain seisin of the matter yourself."

"There must be some specific terms on which there can be no negotiation, in the sense that these essential terms cannot be deviated from", added the judge.

"For protecting the interest of the home buyers...it cannot be a one-sided contract...I undertake to appear", assured the SG.

Next, Advocate and petitioner-in-person Ashwini Kumar Upadhyay submitted, "Today, the agreement is around 50-60 pages. The entire agreement is in English whether a person is Tamil or Malayali or Telugu. Hardly 15% people are able to read and understand English. It should be crisp, it should be 10 to 15 pages, it should be addressed in two languages-one is English and the other is the state language... Also What is essential for a buyer is not there- Ratio of cement and 'Balu', size of 'sariya', quality of tiles, Pillar size, fitting, etc"

Justice Chandrachud observed, "The agreement cannot also be that detailed. The Union of India will prepare broad terms...but languages are not a problem. Now we can have multiple languages. Once the format is ensured, the translation is not an issue. We can have all the scheduled languages."

The bench then proceeded to dictate its order, recording that 2 weeks' time is granted to the SG to "seek the considered view of the union government of the need to formulate a model builder buyer and agent buyer agreement at the central level."

Case Title: Ashwini Kumar Upadhyay v. Union Of India And Ors

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'Concerned About Middle-Class Home Buyers' : Supreme Court Urges Centre To Consider Framing Model Builder-Buyer Agreement

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