Sections 38 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 38 gives the Authority power to impose penalty or interest for contravention of obligations by promoters, allottees and agents, binds it to natural justice while letting it regulate its own procedure, and lets it refer competition issues to the Competition Commission of India. Section 39 allows correction of mistakes apparent from the record within two years, but not of the substance of an order. For help with an order that has an error or a penalty you want to contest, our legal dispute resolution service can assist.
The Authority has power to impose penalty or interest for any contravention of obligations by promoters, allottees and real estate agents (38(1)). It is guided by the principles of natural justice and may regulate its own procedure, subject to the Act and rules (38(2)). It may suo motu refer to the Competition Commission of India an issue of appreciable prevention, restriction or distortion of competition, or abuse of market power or monopoly harming allottees (38(3)). Within two years of an order it may amend a mistake apparent from the record, and must do so if the parties bring it to its notice, but not for orders under appeal and not the substantive part (39).
At a glance
| Provision | What it provides |
|---|---|
| 38(1) | Power to impose penalty or interest for contravention of obligations by promoters, allottees and agents |
| 38(2) | Guided by principles of natural justice; power to regulate its own procedure |
| 38(3) | Suo motu reference to the Competition Commission of India on competition issues |
| 39 | Rectification of mistakes apparent from the record within two years |
| First proviso to 39 | No amendment of an order against which an appeal has been preferred |
| Second proviso to 39 | No amendment of the substantive part of the order |
Section 38(1): penalty or interest
"The Authority shall have powers to impose penalty or interest, in regard to any contravention of obligations cast upon the promoters, the allottees and the real estate agents, under this Act or the rules and the regulations made thereunder."
- It is a power, framed in general terms. The amounts and the grounds are in the specific penalty sections later in the Act; section 38(1) does not itself give a figure. See our overview of penalties under RERA.
- It covers all three persons: promoter, allottee and real estate agent.
- It covers obligations under the Act, rules and regulations.
- The word "interest" links with the definition in section 2(za), under which rates are those payable by the promoter or the allottee as prescribed; see our article on that definition.
How this differs from the adjudicating officer: compensation under sections 12, 14, 18 and 19 is adjudged by the adjudicating officer under section 71, while the Authority imposes penalty and interest. For the distinction in practice, see section 71 and section 31.
Section 38(2): natural justice and its own procedure
"The Authority shall be guided by the principles of natural justice and, subject to the other provisions of this Act and the rules made thereunder, the Authority shall have powers to regulate its own procedure."
| Part | Meaning |
|---|---|
| "Guided by the principles of natural justice" | The Authority must act fairly; the usual content is notice of the case and an opportunity to be heard, and decision without bias. The text itself does not list the elements |
| "Regulate its own procedure" | It sets its own procedure, subject to the Act and the rules |
This is the clause to turn to when an earlier section is silent about a hearing, such as sections 35 and 36. Section 36 allows an interim restraint "without giving notice to such party, where the Authority deems it necessary", and section 38(2) is the general backstop; see sections 36 and 37. How the two sit together is not spelt out in the text. Note that the phrase is "guided by", not "bound by the Code of Civil Procedure"; the Authority is not a civil court, though section 35(2) gives it some civil court powers.
Section 38(3): reference to the Competition Commission of India
"Where an issue is raised relating to agreement, action, omission, practice or procedure that—
- (a) has an appreciable prevention, restriction or distortion of competition in connection with the development of a real estate project; or
- (b) has effect of market power of monopoly situation being abused for affecting interest of allottees adversely,
then the Authority, may suo motu, make reference in respect of such issue to the Competition Commission of India."
| Point | Text |
|---|---|
| What can be referred | An issue about an agreement, action, omission, practice or procedure |
| Test (a) | Appreciable prevention, restriction or distortion of competition in connection with development of a real estate project |
| Test (b) | Abuse of market power or monopoly situation affecting allottees' interest adversely |
| Who decides | The Authority, "suo motu" |
| To whom | The Competition Commission of India |
Two cautions. First, the clause is permissive ("may"). Second, it only refers the issue; the Act does not say what the Commission then does, which is a matter for the competition law itself. This article does not go into that law. The text gives no example of such an issue.
Section 39: rectification of orders
"The Authority may, at any time within a period of two years from the date of the order made under this Act, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its notice by the parties."
| Element | Text |
|---|---|
| Time | Within two years from the date of the order |
| Ground | A mistake apparent from the record |
| "May" or "shall" | "May" amend on its own; "shall make such amendment if the mistake is brought to its notice by the parties" |
| Who raises | The Authority itself, or the parties |
Two provisos
- No amendment of an order against which an appeal has been preferred under the Act. Once appealed, the Authority cannot touch it; the Tribunal takes over.
- No amendment of the substantive part of the order. Rectification is for mistakes apparent from the record, such as a wrong name, a miscalculation or a clerical slip; it cannot change what was decided.
The text does not define "mistake apparent from the record". Its plain meaning is an error that is clear on the face of the record, not one that needs argument or fresh evidence. It also does not say how a party is to bring the mistake to notice, or whether a hearing is needed before the amendment. Section 38(2) points to natural justice.
Example. The Authority orders Rane Builders to pay Rs 4,00,000 as interest, but in the order the amount in words is Rs 40,000 while the working in the order shows Rs 4,00,000. Within two years the party brings the slip to the Authority's notice, and it shall correct it. If Rane Builders had already appealed, the Authority could not amend. If the party instead asked to change the rate of interest it had decided, that would affect the substance and is outside section 39.
What these sections do not say
- No amount of penalty in section 38; see the specific penalty provisions.
- No procedure or form for asking rectification.
- No statement of the effect of a rectification on the time for appeal; section 44 gives sixty days from receipt of the order, so check the dates carefully (see section 44).
- No definition of "market power" or "monopoly situation".
Need help with an order or a penalty?
Whether to ask for rectification, appeal, or both depends on whether the problem is a slip or a view on the merits, and on the dates. Our legal dispute resolution team can read the order, compute the time available and prepare the application or appeal.
Key takeaways
- The Authority has power to impose penalty or interest for contraventions by promoters, allottees and agents.
- It is guided by natural justice and regulates its own procedure.
- It may suo motu refer competition issues to the Competition Commission of India.
- Mistakes apparent from the record can be amended within two years, and must be if the parties bring them to notice.
- No amendment of an appealed order or of the substantive part of an order.
Read next
- Section 40: recovery of interest, penalty and compensation
- Sections 36 and 37: interim orders and directions
- Penalties under RERA: promoter, agent, allottee
- RERA Authority and Appellate Tribunal
Disclaimer: Based on the Real Estate (Regulation and Development) Act, 2016 as enacted, as consulted on 1 October 2026. Rules, forms, fees and procedures are made by each State and Union territory and its Real Estate Regulatory Authority and differ from State to State. This article is general information, not legal advice; check the official text and your State's rules before acting.