Investor Protection Laws are not applicable to Builder-Buyer relations
The Hon’ble High court of Orissa in Mahasweta Biswal V. State of Odisha & Anr. (BLAPL No. 893 of 2020) held that the provisions of Odisha Protection of Interests of Depositors (in Financial Establishments) Act, 2011 will not apply to real estate transactions. It was observed by the court that “It is (Odisha Protection of Interests of Depositors (in Financial Establishments) Act, 2011), in essence, is a social protection enactment and its application to real estate transactions, will lead to absurd and unintended consequences. It is thus concluded that it was never the intention of the legislature to apply the provisions of the Act to neat real estate transactions and the application of the Act thereto will lead to absurd situations contrary to the legislative intendment. The instant case is a classic example of a transaction gone awry which has been strenuously given the color of a criminal offence.”
The Hon’ble Court further notes that the State Governments should give wide publicity to the provisions of the RERA Act,2016 so as to “injunct any unnecessary litigation” which arise out of the builder-buyer relations. The court further expounded that “The provisions of the Real Estate (Regulation and Development) Act, 2016, in fact, provide for umpteen fail-safe mechanisms to prevent most of the maladies associated with such cases. It is thus suggested that the State Government will do well to give wide publicity to the provisions of the said RERA Act, 2016 in order to injunct any such unnecessary litigations arising out of builder-buyer relations. The State will do well to ensure that the Regulatory Authority functioning under such an Act must be aided by all means possible.”