MahaRERA: Development Agreement Disputes Deemed Non-Maintainable

June 25, 2024

The Maharashtra Real Estate Regulatory Authority (MahaRERA) bench, including Member Mahesh Pathak, ruled that the Real Estate (Regulation and Development) Act, 2016, does not empower the authority to entertain disputes arising from development agreements. Such disputes fall under the jurisdiction of civil courts. As a result, the authority dismissed the complaint filed by the housing society.

In real estate, a Development Agreement is a legal contract through which the owner of a piece of land grants a developer the right to develop and construct buildings on that land. This agreement effectively transfers the development rights from the landowner to the developer, outlining the terms, conditions, and responsibilities of both parties throughout the development process.

BACKGROUND FACTS

City and Industrial Development Corporation of Maharashtra (CIDCO) leased the project land to the complainant, who subsequently, on May 12, 2004, entered into a development agreement transferring all development rights to M/s J.P Builders & Developers (J.P Builders).

On October 30, 2005, J.P Builders transferred these rights to the Builder (Respondent). Initially, CIDCO had sanctioned plans for a mixed residential and commercial building featuring one ground floor and four upper stories, including 17 flats and 10 shops. Nevertheless, as per the complainant, J.P Builders and the builder unlawfully appended three additional floors without CIDCO’s authorization, thereby increasing the number of flats to 29 while maintaining 10 shops.

Additionally, the complainant alleges that both J.P Builders and the builder did not obtain an Occupation Certificate (OC) and improperly registered the unauthorized project with MahaRERA.

As a result of these infractions, the complainant terminated the development agreement during a general body meeting on July 10, 2021. Subsequently, the complainant lodged a complaint with the appropriate authority, requesting the cancellation of the project registration and other remedial actions to address the violations.

CONTENTION OF BUILDER

The builder argued that the complaint is not within the jurisdiction of the authority as it pertains to issues arising from development agreements and is of a civil nature.

Further, the builder claimed that the complainant had withheld crucial information. They asserted that the construction of the additional 12 flats was carried out under deemed permissions from the Navi Mumbai Municipal Corporation (NMMC), implying it was legally sanctioned and not unlawful.

OBSERVATION AND DIRECTION BY AUTHORITY

The Authority made the following observations in its decision:

Construction permissions jurisdiction: Under the Maharashtra Regional and Town Planning Act of 1966, authority over construction permissions rests with the competent authority or Municipal Corporation, not MahaRERA.
Disputes related to Development agreements: The Authority clarified that RERA, 2016 does not empower MahaRERA to adjudicate disputes arising from Development agreements, which fall under the jurisdiction of the Civil court.
MahaRERA registration cancellation under Section 7: Section 7 of RERA allows MahaRERA to cancel project registration if the promoter fails to comply with RERA requirements, breaches approval terms, or engages in specified unfair practices. In this instance, the complainant failed to provide sufficient evidence substantiating that the builder violated Section 7 terms. Consequently, the complaint seeking revocation of the builder’s project registration was deemed unfounded.

Based on these points, the Authority concluded by dismissing the complaint filed by the Housing society, stating it was not maintainable under the circumstances.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

Human and Civil Rights Campaigner

President Citizens Justice Forum https://citizensjusticeforum.in