**Executive Summary**
This document answers Unstarred Question No. 878 in the Lok Sabha, concerning misappropriation and fraud by builders, to be answered on December 4, 2025. It clarifies the roles of state and central legislation, specifically the Real Estate (Regulation and Development) Act, 2016 (RERA), and the Insolvency and Bankruptcy Code, 2016, in regulating real estate and protecting homebuyers. IBBI has formed a council to resolve real estate insolvencies and frame specific guidelines.
**Key Points / Main Content**
* **State vs. Central Jurisdiction:**
* Land and colonization are State subjects according to the Constitution of India.
* RERA was enacted by Parliament under the Concurrent List to regulate contractual relationships between homebuyers and promoters.
* **RERA Provisions:**
* Requires real estate projects and agents to register with the Real Estate Regulatory Authority before advertising, marketing, booking, or selling.
* Mandates that the Regulatory Authority maintain a website with project details for public viewing.
* Requires promoters unable to deliver apartments to refund the amount with interest and compensation to allottees (Section 18).
* Allows for recovery of interest, penalties, or compensation imposed on promoters, allottees, or agents as arrears of land revenue (Section 40).
* Provides for imprisonment (up to 3 years) and/or fines (up to 10% of the estimated project cost) for non-compliance with regulatory orders.
* **Insolvency and Bankruptcy Code (IBC):**
* Provides a framework for resolving insolvency of companies, individuals, and partnerships.
* Aims to maximize asset value, balance stakeholder interests, and promote economic activity.
* The IBC framework does not deal with fraudulent sale of the same flat to multiple persons.
* **Insolvency and Bankruptcy Board of India (IBBI):**
* IBBI has constituted a council to examine real estate sector insolvency issues.
* Council aims to frame specific guidelines for insolvency proceedings in the real estate sector.
* Council consists of representatives from the Ministry of Housing and Urban Affairs and Real Estate Regulatory Authorities.
**Impact Analysis**
**Homebuyers**
* **Impact**
* Protected by RERA provisions concerning project registration, information disclosure, and refund/compensation for undelivered projects.
* Potentially impacted by IBC resolutions regarding insolvency of real estate companies.
* **Action Required**
* Familiarize themselves with RERA provisions and their rights.
* Engage with the Real Estate Regulatory Authority for project information and dispute resolution.
**Real Estate Promoters/Builders**
* **Impact**
* Subject to RERA regulations on registration, transparency, and project completion.
* Liable for refunds, interest, and compensation for non-delivery of projects.
* Subject to penalties and potential imprisonment for non-compliance with RERA orders.
* Subject to the IBC framework in cases of insolvency.
* **Action Required**
* Comply with RERA registration and disclosure requirements.
* Ensure timely project completion and adherence to contractual obligations.
**State Governments / Union Territories**
* **Impact**
* Responsible for establishing and operating Real Estate Regulatory Authorities under RERA.
* Must regulate and promote the real estate sector within their jurisdiction.
* **Action Required**
* Establish and maintain functioning Real Estate Regulatory Authorities.
* Enforce RERA provisions and ensure compliance by promoters and agents.
**Real Estate Regulatory Authorities**
* **Impact**
* Responsible for project registration and ensuring compliance with RERA
* Act as adjudicating authorities and play a role in dispute resolution
* **Action Required**
* Maintain a functioning dispute resolution mechanism.
* Ensure promoters are compliant with the law.
Key Entities Referenced
Real Estate (Regulation and Development) Act, 2016 [RERA]: A law enacted by the Parliament to regulate the contractual relationship between homebuyers and promoters. It establishes Real Estate Regulatory Authorities and Appellate Tribunals and provides remedies for buyers if a promoter fails to fulfill their obligations.
Insolvency and Bankruptcy Board of India (IBBI): Regulates insolvency resolution and bankruptcy processes for corporate persons, partnership firms and individuals.
Insolvency and Bankruptcy Code, 2016: Provides a time-bound framework for resolving insolvency of companies, individuals, and partnerships.
Ministry of Housing and Urban Affairs: The central government ministry responsible for urban development and housing policies.
Real Estate Regulatory Authority: State/UT level authority required to be established under RERA to regulate and promote the real estate sector, including registration of projects and agents.
O.I.H. GOVERNMENT OF INDIA
MINISTRY OF HOUSING AND URBAN AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 878
TO BE ANSWERED ON DECEMBER 04, 2025
MISAPPROPRIATION AND FRAUD BY BUILDERS
NO. 878. SHRI ASHOK KUMAR RAWAT:
Will the Minister of HOUSING AND URBAN AFFAIRS be pleased to state:
(a) whether the Government is aware that several home buyers have been
looted by the Builders and Real Estate companies by selling the same
flat to multiple persons and the property assured to them has not been
handed over to them and if so, the details thereof, company/builder-wise
and State/UT-wise including Uttar Pradesh and Delhi;
(b) whether any Standard Operating Procedure (SOP) has been released in
this regard by the Insolvency and Bankruptcy Board of India (IBBI) to
refund the amount of the said home buyers through the liquidation of the
properties of the Builders;
(c) if so, the major provisions of the said SOP and the manner in which the
said SOP would help to ensure the refund of the affected home buyers in
a timely manner; and
(d) the steps taken/being taken by the Government to curb such fraudulent
incidents in future and to protect the interest of the said home buyers?
ANSWER
THE MINISTER OF STATE IN THE
MINISTRY OF HOUSING AND URBAN AFFAIRS
(SHRI TOKHAN SAHU)
(a) to (d): As per Entry 18 of List- II (State List) of 7th Schedule of
Constitution of India, ‘Land’ and ‘Colonization’ are State subjects.
However, by deriving powers from Entries 6, 7 & 46 of List-III
(Concurrent List) of the Seventh Schedule of the Constitution of India,
the Real Estate (Regulation and Development) Act, 2016 [RERA] was
enacted by the Parliament to regulate the contractual relationship
between homebuyers and promoters.
Under the provisions of the RERA, the 'Appropriate Government' i.e. the
States / Union Territories (UTs) are required to establish Real Estate
Regulatory Authority in the respective State / UT, to regulate and
promote the real estate sector in an efficient and transparent manner.
…2/--2-
RERA mandates for registration of the real estate projects and real
estate agents with the Real Estate Regulatory Authority of the
concerned State / UT before advertising, marketing, booking and selling
in any manner. Further, Real Estate Regulatory Authority is required to
maintain a website, containing relevant details of all registered real
estate projects and publish these details for public viewing.
Further, Section 18 of RERA provides that, in case the promoter fails to
complete or is unable to give possession of the apartment, plot or
building, as per the terms of the agreement for sale, he shall be liable to
refund the amount along with interest and compensation to allottees.
Moreover, as per section 40 of RERA, if a promoter or an allottee or a
real estate agent, as the case may be, fails to pay any interest or
penalty or compensation imposed on him, by the adjudicating officer or
the Regulatory Authority or the Appellate Tribunal, as the case may be,
it shall be recoverable from such promoter or allottee or real estate
agent, as arrears of land revenue.
RERA further provides for punishment up to 3 years of imprisonment
and/or with fine, which may extend up to ten percent of the estimated
cost of the real estate project, in case the promoter fails to comply with
the orders, decisions or directions issued by the Real Estate Regulatory
Authority or Real Estate Appellate Tribunal.
Further, the Insolvency and Bankruptcy Code, 2016 was enacted to
provide a time-bound, transparent and efficient framework for resolving
insolvency of companies, individuals and partnerships. Its primary
purpose is to maximize the value of assets, balance the interests of all
stakeholders and promote entrepreneurship and credit availability. The
Code seeks to ensure orderly resolution or liquidation so that
distressed assets are revived quickly and economic activity is
preserved. IBC framework does not deal with fraudulent sale of same
flat to multiple persons.
However, the Insolvency and Bankruptcy Board of India (IBBI) has
constituted a Council to examine the issues of insolvency of Real
Estate Sector and frame specific guidelines for insolvency proceedings
in real estate sector, including timelines for project-wise Corporate
Insolvency Resolution Process and safeguard the interests of
homebuyers. The Council comprises representatives of the Ministry of
Housing and Urban Affairs, certain Real Estate Regulatory Authorities,
among others.
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