The Maharashtra Real Estate Appellate Tribunal (comprising Justice Shriram R. Jagtap and Shrikant M. Deshpande) has ruled that a housing society owning land and authorizing redevelopment qualifies as a “promoter” under Section 2(zk) of the Real Estate (Regulation and Development) Act, 2016 (RERA).
Case Background
The case involved New Sangeeta Co-operative Housing Society Ltd. (the appellant), which signed a redevelopment agreement in 2011 with a builder (Respondent No. 4) to demolish an old building and construct a new one. The agreement obligated the builder to hand over possession of completed flats, along with the Occupation Certificate, to the homebuyers (Respondents Nos. 1 to 3) by September 30, 2017. Delays were to incur a penalty of ₹6,000 per day starting October 1, 2017.
By March 2017, the builder had progressed construction up to the sixth floor. However, work slowed due to financial issues. A dispute arose between the builder and the society, leading to arbitration and ultimately the termination of the redevelopment agreement by the society. The society then took over the project and sought to appoint a new builder, causing further delays and leaving the homebuyers without their promised flats.
Aggrieved, the homebuyers filed a complaint with the RERA Authority, which, in its August 6, 2019, order, directed the society to make the homebuyers members, deliver possession after obtaining the Occupation Certificate, and imposed a ₹15 lakh penalty on the society for RERA violations. The society subsequently appealed this decision.
Issues Considered by the Tribunal
- Does the society qualify as a “promoter” under Section 2(zk) of RERA, 2016?
- Is the society obligated to fulfill the developer’s commitments?
Tribunal’s Observations and Directions
The Tribunal ruled that the society qualifies as a promoter under RERA. It reasoned that the society:
- Invested its land in the redevelopment project.
- Authorized the developer to construct both the rehab and sale components, benefiting from the rehab building for its members.
- Took control of the project following the termination of the agreement with the original builder and applied for project registration, thereby assuming the developer’s role.
Under Section 2(zk) of RERA, any entity acting as a builder or developer is considered a promoter. By stepping into the developer’s shoes, the society became responsible for fulfilling the project’s obligations under RERA.
The Tribunal also determined that the ₹15 lakh penalty for violating Section 15 of RERA was unwarranted, as the society did not require consent from two-thirds of the homebuyers or prior approval from the Authority to continue the project.
Conclusion
The Tribunal partially allowed the appeal, recognizing the society’s role as a promoter and its obligations under RERA. It also quashed the penalty imposed by the RERA Authority, emphasizing the society’s duty to complete the project.
Case: M/S New Sangeeta CHS Ltd vs. Kushal M. Haria & Others
Citation: Appeal No. AT006000000031756/19
Date: December 20
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