2018 (8) TMI 632 - HC - Indian Laws

Whether the Appellate Tribunal has committed an error in holding that, the provisions of the RERA are applicable to the Agreement of Lease executed between Appellant and Respondents? - Held that - The intention of the Legislature, which is found reflected in the Objects and Reasons of the Act and its various provisions, makes it abundantly clear that, to all the projects, wherein the possession of the apartments is to be handed over in consideration of the sale price or the market price, such projects are included under the purview of this Act. It has to be held that, the Legislature would have never intended to exclude the persons like the Respondents, who have invested their hard-earned money in such projects, from the protective and benefcial provisions of this Act. Here the Hayden s Rule of Suppression of Mischief needs to be applied with full force and if that Rule is applied, then the provisions of the RERA are required to be held as equally applicable to the long term leases, like the present one of 999 years ; or, where the substantial amount of consideration is already obtained by the Developer . Then the definitions of the terms Allottee , or, Real Estate Project , or, even that of Promoter , are required to be interpreted in that context and not in isolation, by placing reliance simplicitor on the word selling used in these three definitions - Merely because the Legislature has excluded the allotment, when it is given on rent, it does not exclude the long term lease like the present one. That will be defeating and frustrating the object of the Act. The Appellate Tribunal has rightly held that, so far as the present case is concerned, considering the long term lease of 999 years , it would definitely amount to sale. Whether the Appellate Tribunal has committed an error in holding that, the Adjudicating Authority under the RERA has jurisdiction to entertain the complaints filed by the Respondents, under Section 18 of RERA? - Whether the Adjudicating Authority, under the RERA, can go behind the Registration Certificate of the Appellant, so as to hold that it has no jurisdiction, though the project is registered under the said Act? - Held that - This course is not permissible under the law to challenge the Registration Certificate issued by one Authority before the another Authority and calling upon that Authority not to consider such Certificate of Registration and then to hold that the RERA is not applicable to the said project. Once there is registration under the RERA, then it follows that, all the provisions of the RERA become applicable to such project, unless some phases are specifically excluded from registration. It also becomes applicable to the persons, who have invested in the said real estate project. It is applicable both, to the Appellant and also to the Respondents. The Appellant, after having taken the advantage of registration under the RERA, cannot turn back and say that the provisions of the RERA are not applicable to the complaints made by the Respondents in respect of the very same project - The Appellant had, therefore, no choice but to get their project registered under the RERA, considering that it was for development of the plot, exceeding the area of more than 500 sq.mtrs. and it was for the number of apartments exceeding 8, inclusive of all phases. The very fact that the Appellant has got itself registered under the RERA makes it necessary to infer that, the Appellant was very well aware that this project was for sale of the apartments constructed in the project and that is why, it was bound by the provisions of the RERA - there is no question of applying the logic that, if the project is not registered, whether the RERA will not be applicable, even if it is otherwise proved to be a project of development, because, as per the mandate of the RERA, all the real estate projects are now required to be registered, if the apartments therein are constructed for the purpose of sale or otherwise. The fact that the Appellant has, therefore, registered the project also makes it necessary to infer that, the Appellant has invited upon itself the applicability of the provisions of the RERA, as Appellant is also fully aware that whatever Agreements executed by it with the Respondents are in the nature of sale, though they are titled as Agreements of Lease . The dispute in the present case definitely falls within the jurisdiction of RERA. The interplay of all the provisions contained in the Act, coupled with the real purport of the Agreement of Lease , leads to no other inference, but to hold that, the complaints filed by the Respondents before the Adjudicating Officer , under Section 18 of the Act, are definitely maintainable and the Adjudicating Officer is having the jurisdiction to entertain and decide those complaints. Appeal dismissed.

Summary

Issues Involved:
1. Applicability of RERA to 'Agreement of Lease'.
2. Jurisdiction of the Adjudicating Authority under RERA to entertain complaints under Section 18.
3. Authority of the Adjudicating Authority to go behind the 'Registration Certificate' under RERA.

Issue-wise Detailed Analysis:

1. Applicability of RERA to 'Agreement of Lease':

The court examined whether the Real Estate (Regulation and Development) Act, 2016 (RERA) applies to 'Agreements of Lease'. The Appellants contended that the agreements were leases for 999 years and not sales, thus falling outside RERA's purview. However, the court noted that the agreements required substantial payment (over 80% of the sale price) and included terms typical of sale agreements under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management, and Transfer) Act, 1963 (MOFA). The agreements, though titled as leases, were essentially sales due to their long duration and nominal rent (?1 per annum). The court emphasized that the nomenclature of a document does not determine its true nature; the substance of the agreement must be considered. The court concluded that these agreements were, in effect, sales and thus fell within the scope of RERA.

2. Jurisdiction of the Adjudicating Authority under RERA to entertain complaints under Section 18:

The court addressed whether the Adjudicating Authority under RERA had jurisdiction to entertain complaints filed by the Respondents under Section 18, which provides remedies for delayed possession. The Appellants argued that the Respondents were lessees, not allottees, and thus not entitled to remedies under Section 18. However, the court held that the Respondents, who had paid substantial amounts towards the apartments, were indeed allottees as defined under Section 2(d) of RERA, which includes leasehold interests. The court emphasized that excluding such long-term lease agreements from RERA's purview would defeat the Act's purpose of protecting consumers. Consequently, the Adjudicating Authority had jurisdiction to hear the complaints.

3. Authority of the Adjudicating Authority to go behind the 'Registration Certificate' under RERA:

The court considered whether the Adjudicating Authority could question the validity of the Registration Certificate issued to the Appellant under RERA. The Appellants had registered their project under RERA, which implied acceptance of RERA's jurisdiction. The court noted that under RERA, the Real Estate Regulatory Authority grants registration, while the Adjudicating Authority handles complaints. The two authorities have distinct roles, and the Adjudicating Authority cannot challenge the registration granted by the Regulatory Authority. The Appellants, having registered their project, could not now argue that RERA did not apply to their agreements with the Respondents. The court concluded that the Adjudicating Authority could not go behind the Registration Certificate, and the Appellants were estopped from denying RERA's applicability.

Conclusion:

The court dismissed the appeals, affirming that RERA applies to the agreements in question, the Adjudicating Authority has jurisdiction to entertain the complaints under Section 18, and the Adjudicating Authority cannot question the validity of the Registration Certificate. The court emphasized the need to interpret RERA in a manner that advances its purpose of protecting consumers and ensuring transparency and accountability in the real estate sector.