Section 38: Powers of the Real Estate Regulatory Authority
Section 38 of the Real Estate (Regulation and Development) Act, 2016 (RERA) deals with the Regulatory Authority's power to impose penalties or interest, its obligation to follow natural justice, and its ability to refer specified competition concerns to the Competition Commission of India (CCI).
What does Section 38 provide?
The provision consists of three subsections. It addresses enforcement of obligations under RERA, fair procedure before the Authority, and competition issues arising in real estate development.
Section 38(1): Power to impose penalty or interest
The Authority may impose penalty or interest for contravention of obligations imposed on promoters, allottees and real estate agents under the Act and the rules and regulations made under it. The applicable obligation, prescribed consequences and facts of the particular case determine the nature of the order. Section 38 does not itself prescribe a uniform penalty amount for every breach.
Section 38(2): Natural justice and procedure
The Authority must be guided by the principles of natural justice. Subject to the Act and applicable rules, it may regulate its own procedure. Natural justice ordinarily requires a fair opportunity to respond to allegations, consideration of relevant material, and an impartial decision. The particular hearing procedure depends on the statutory scheme and applicable rules.
Section 38(3): Reference to the Competition Commission of India
Where an issue is raised about an agreement, action, omission, practice or procedure that:
- appreciably prevents, restricts or distorts competition in connection with development of a real estate project; or
- involves abuse of market power or a monopoly situation adversely affecting the interests of allottees,
the Authority may, suo motu (on its own initiative), refer the issue to the Competition Commission of India. This is a discretionary reference power; Section 38(3) does not make every RERA dispute a competition-law dispute.
Key legal terms explained
Authority: The Real Estate Regulatory Authority established under Section 20 of RERA for the relevant State or Union territory.
Promoter: A person or entity covered by the definition in Section 2(zk), including persons developing or constructing real estate projects for sale, subject to the statutory definition.
Allottee: A person to whom a plot, apartment or building has been allotted, sold or otherwise transferred as described in Section 2(d), excluding a person receiving it on rent.
Real estate agent: A person falling within Section 2(zm), generally involving negotiation or facilitation of transfers in a real estate project for remuneration.
Natural justice: Fundamental procedural fairness, including an unbiased decision-maker and a meaningful opportunity to be heard where required.
How Section 38 operates with other RERA provisions
Section 31 deals with filing complaints before the Authority or adjudicating officer, as applicable. Section 34 specifies the Authority's functions, while Section 35 empowers it to seek information and conduct inquiries. Section 36 concerns interim restraint orders and Section 37 concerns binding directions. Enforcement and recovery are addressed by Section 40.
The Authority's penalty jurisdiction should also be distinguished from the adjudicating officer's role in determining compensation under Sections 71 and 72. Remedies and appeals depend on the nature of the claim and order.
Practical implications
A promoter, allottee or real estate agent receiving a notice should identify the alleged statutory breach, check the applicable State or Union territory RERA rules and regulations, and submit supporting records within the specified period. A reasoned decision must take account of applicable law and fair procedure. An aggrieved person may consider the statutory appeal mechanism, including Section 44, subject to its conditions and time limits.
Official legal resources
India Code - Central legislation | Ministry of Housing and Urban Affairs | Competition Commission of India. For project-specific compliance, consult the applicable State or Union territory RERA portal.