4.3 Penalties, Misrepresentation & License Revocation

4.3 Penalties, Misrepresentation & License Revocation

To enforce strict compliance among intermediaries, the Real Estate (Regulation and Development) Act, 2016 establishes robust penal provisions. Operating as an unregistered real estate broker, making false representations, violating advertising guidelines, or failing to comply with MahaRERA directions carries severe financial penalties, license revocation, and potential imprisonment.

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1. Statutory Penalties Framework (Sections 62, 65 & 66)

The RERA Act 2016 details three distinct tiers of penalties applicable to real estate agents based on the nature and severity of non-compliance.

Section 62: Penalty for Non-Registration & Breach of Section 9 & 10

If any real estate agent fails to register under Section 9, or facilitates transactions in unregistered projects, or commits a breach of duties under Section 10:

• Daily Accruing Penalty: The agent is liable to a penalty of ₹10,000 for every day during which such default continues.
• Maximum Cumulative Cap: The total penalty may extend up to 5% of the estimated cost of the plot, apartment, or building for which the sale or purchase has been facilitated.

Section 65: Penalty for Failure to Comply with MahaRERA Orders

If any real estate agent fails to comply with, or contravenes any order or direction issued by the Regulatory Authority (MahaRERA) under the Act or rules:

• Maximum Financial Penalty: Liable to a penalty for every day during default, which may cumulatively extend up to 5% of the estimated cost of the plot, apartment, or building facilitated.

Section 66: Penalty for Failure to Comply with Appellate Tribunal (MREAT) Orders

If any real estate agent fails to comply with, or contravenes any order, decision, or direction of the Maharashtra Real Estate Appellate Tribunal (MREAT):

• Imprisonment Risk: Punishable with imprisonment for a term extending up to 1 year.
• Financial Fine: Or with fine for every day during default, extending up to 10% of the estimated cost of the plot, apartment, or building facilitated, or with both.

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2. License Revocation & Suspension Procedure (Rule 15)

Revocation of an agent's registration is governed by Rule 15 of the Maharashtra RERA Rules 2017, read with Section 9(7) of the Act. (Rule 14 is the separate obligations rule requiring display and quoting of the registration number.) MahaRERA may act suo motu or on an application or complaint from a promoter or an allottee, and must inform all promoters of the revocation.

Statutory Grounds for Revocation

1. Misrepresentation or Fraud: Obtaining Form H registration by making false statements, suppressing material facts, or uploading forged documents in Form G.
2. Breach of Terms & Conditions: Violating any condition specified in the Form H registration certificate.
3. Marketing Unregistered Projects: Facilitating bookings in projects lacking valid RERA registration.
4. Non-Filing of Half-Yearly Reports: Continuous failure to publish the Form 6 half-yearly progress report under Order 43/2023.
5. Loss of Competency Certification: Failure to maintain a valid Certificate of Competency or employing uncertified sales personnel.
6. Insolvency or Criminal Conviction: Being declared bankrupt or convicted of an offense involving moral turpitude with imprisonment exceeding 6 months.

Natural Justice & the Six-Month Bar (Rule 15)

Before revoking or suspending a registration, MahaRERA must adhere to the principles of natural justice. Note the exact statutory wording — a frequent exam trap:

• Opportunity of Being Heard: The proviso to Rule 15(1), mirroring the proviso to Section 9(7), states that no revocation or suspension shall be made unless an opportunity of being heard has been given to the real estate agent. Neither the Act nor the rule prescribes a fixed 15-day or 30-day notice window — the requirement is a hearing, not a numbered notice period.
• Intimation in Form 'I': Under Rule 15(2), where the Authority revokes the registration it intimates the agent in Form 'I' — the same form used to communicate rejection of an application or of a renewal.
• Six-Month Cooling-Off: The proviso to Rule 15(2) bars a revoked agent from making a fresh application for registration for six months from the date of revocation.
• Publicity: MahaRERA informs all promoters and lists de-registered agents publicly on the portal under Real Estate Agent → List of Real Estate Agents Deregistered.

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3. Unfair Trade Practices & Civil Liabilities

In addition to regulatory fines, agents engaging in misrepresentation face civil liability before MahaRERA adjudication officers:

• Section 31 Complaints: Allottees or homebuyers can file formal complaints against real estate agents under Section 31 for compensation arising from false promises, misleading brochures, or non-delivery of amenities.
• Joint Liability: Where an agent knowingly markets unauthorized alterations or false project completion dates, MahaRERA may hold the agent jointly liable alongside the developer to compensate the allottee.

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4. Appellate Mechanism (Section 44 & MREAT)

An agent aggrieved by an order of MahaRERA (such as a penalty order or license revocation) has the right to file an appeal before the Maharashtra Real Estate Appellate Tribunal (MREAT) under Section 44.

Key Appellate Parameters

• Filing Limitation Window: The appeal must be filed within 60 days from the date on which a copy of the order is received by the agent.
• Pre-Deposit Requirement: Under Section 43(5), if the appeal involves a financial penalty, the tribunal will not entertain the appeal unless the appellant deposits the prescribed penalty amount or a percentage determined by MREAT.

RERA Statutory Penalty Master Matrix

The following table outlines the complete statutory penalty structure applicable to real estate agents under Sections 62, 65, and 66 of the RERA Act 2016.

Penalty Calculation Math Examples

Under Section 62 and Section 66, statutory penalty caps are calculated as direct percentages of estimated property value:

$\text{Max Penalty}_{\text{Sec 62}} = 5\% \times \text{Estimated Property Cost}$

$\text{Max Penalty}_{\text{Sec 66}} = 10\% \times \text{Estimated Property Cost}$

Sample Adjudication Scenario

An unregistered agent facilitates the sale of a luxury apartment valued at INR 2,00,00,000 (INR 2 Crore) and remains in default for 30 days:

1. Daily Accrued Fine (Section 62):

$\text{Daily Fine} = 30 \text{ days} \times \text{INR } 10,000 = \text{INR } 300,000$

1. Maximum Penalty Ceiling (5% Cap):

$\text{Maximum Cap} = 0.05 \times \text{INR } 2,00,00,000 = \text{INR } 10,00,000$

Since the accrued daily fine (INR 300,000) is below the 5% cap (INR 1,000,000), the agent pays INR 300,000. However, if default continued for 120 days (INR 1,200,000 accrued), the penalty would be capped at INR 10,00,000.