BACK TO RERA Act 2016
RERA Act 2016
Section 66
Compounding of Offences
THE STATUTE
Original Text
Any offence punishable under this Act (not being an offence punishable with imprisonment only, or with imprisonment and also with fine) may, either before or after the institution of any prosecution, be compounded by the Authority on such terms and conditions and on payment of such amount as may be prescribed:
Provided that such sum shall not, in any case, exceed the maximum amount of the fine which may be imposed for the offence so compounded:
Provided further that no offence shall be compounded if the commission of such offence by any person is a second or subsequent offence within a period of three years:
Provided also that a sum realised by way of compounding of an offence shall be credited to the Fund constituted under section 75.
Legal Commentary
Section 66 provides a pragmatic settlement mechanism for RERA criminal offences — allowing violators to pay a compounding fee in lieu of facing criminal prosecution. This encourages compliance without the costs and delays of full criminal proceedings.
**What can be compounded:** Offences punishable with fine — which includes most RERA violations under Sections 59(1), 60, 61, 63, 64. The pure imprisonment offences under Section 59(2) (continuing contravention after Authority order) cannot be compounded through Section 66 — the criminal prosecution must run its course.
**The compounding fee:** The fee is prescribed by state rules — typically set at a percentage of the project cost or the fine that could have been imposed. The compounding fee cannot exceed the maximum fine for the offence. States have set different rates — the legislative intent is that compounding should be financially significant enough to deter repeat violations.
**Three-year bar for repeat offenders:** If the same person has previously been convicted of the same or similar RERA offence within 3 years, compounding is not available — they must face full criminal prosecution. This prevents compounding from becoming a predictable cost of doing business for serial violators.
**Compounding ≠ civil discharge:** Critically, compounding discharges criminal liability only. The promoter still owes compensation to allottees under Section 18, and any RERA Authority directions for refund or specific performance remain in force. A builder cannot compound a Section 59 offence and thereby escape paying the allottees.
**Compounding fund (Section 75):** Compounding fees go to the Real Estate Regulatory Fund — used for RERA's regulatory activities and awareness programs.
Questions & Answers
Yes — Section 66 allows compounding (settlement) of most RERA criminal offences by paying the prescribed fee to the RERA Authority. The fee cannot exceed the maximum fine for the offence. However, compounding is not available for pure imprisonment offences (Section 59(2)) or for repeat offenders (second RERA conviction within 3 years).
No. Compounding under Section 66 discharges criminal liability only — the builder's civil obligation to refund amounts and pay Section 18 compensation to allottees is entirely separate and unaffected. A builder who compounds a penalty still owes full compensation to affected homebuyers.