Lok Sabha Question No. 878 (UNSTARRED), answered on 2025-12-04
Subject: Misappropriation and Fraud by Builders
Ministry: HOUSING AND URBAN AFFAIRS
Asked by: Shri Ashok Kumar Rawat

## 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 ListII (State List) of 7 th   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.

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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