ON GOING REAL ESTATE PROJECT WILL COME UNDER ‘RERA’

[Mr. M. GOVINDARAJAN]

The proviso to Section 3 of the Tamil Nadu Real Estate (Regulation and Development) Act, 2016 provides that the projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act.

The Tamil Nadu RERA Authority upheld the validity of the proviso to section 3 of the Tamil Nadu Real Estate (Regulation and Development) Act, 2016, in ‘SERENE ROSE RESIDENTS WELFARE ASSOCIATION VERSUS M/S. SERENE SENIOR LIVING (P) LTD. AND COLUMBIA PACIFIC COMMUNITIES PVT. LTD.[ 2021 (3) TMI 976 - TAMIL NADU REAL ESTATE REGULATORY AUTHORITY].

The complaint is filed by senior citizens who formed Serene Rose Residents Welfare Association at Coimbatore.  The first respondent undertook the project ‘Serene Rose’ in 2013 with a promised delivery of March 2016.  The said deadline was revised to June 2016 for completion of project including all infrastructure facilities.  During October 2017 the first occupant owners were allowed to occupy without common facilities such as electricity supply etc.  The power supply was given in February, 2018.  The service lift was commissioned on 29.03.2019.  The completion certificate has not been obtained.  In between the provisions of RERA came into effect during 2016.  The first respondent did not register with the Authority of RERA. 

The complaint alleged the following-

• The first respondent mentioned the current status of ‘Serene Rose’ as ‘nearing completion’ and also ‘the residential project as completed and handed over’ which are contradictory to each other.
• The first respondent did not take care of providing the common facilities such as boundary wall, medical care centre, staff quarters, STP, roads and gardens which were promised.
• There are many defects in the occupied flats like leakages, blocked/chocked pipelines, unfinished painting works, unfinished tile work etc.

The Association filed the present complaint to the Authority seeking the following reliefs-

• to enforce the promoter to complete the project as planned and provide residents with all infrastructure facilities ;
• to provide common facilities including club house, gardens and handed over to the Association as per RERA Rules;
• to restore the common facilities sold to Serene Services Private Limited to the Residents Association;
• to attend to under warranty complaints.

The first respondent submitted the following before the Authority-

• It was agreed between the land owner and the first respondent that the development shall be carried out in four different phases.
• The project was conceived prior to the introduction of RERA and therefore does not fall under the ambit of RERA.
• The approval for construction of four blocks was obtained during 2013.
• Phases C and D were registered with RERA whereas A and B were not registered because they are prior to RERA.
• The first respondent provided all the infrastructural facilities to the inmates of the project and handed over to the service provider as per the agreement.
• The service provider is efficiently maintaining the same.
• Since the scheme has not been completed two units have been taken on rent and converted into staff quarters and the rent is borne by the first respondent without adding the same to the maintenance charges.
• Since the amenities need to be maintained, the said amenities are transferred to the service provider who maintains the same for and on behalf of the first respondent.
• The infrastructures  like STP, RO plant, driver way pavers, genset, lifts have been completed and handed over to the second respondent, the service provider as per the agreement and the second respondent is effectively maintaining the same.
• As regards repair and maintenance works, as per Clause 32 of the Construction Agreement entered between the Developer and the Allottee, all such work shall be undertaken by the Developer at his cost.
• The individual grievances shall be attended to in terms of the respective agreement.

The complainant refused the submissions put forth by the first respondent.  The buyers have never agreed to the proposal of building in four phases at any point of time and promised completion by March 2016, within three years from the date of inception.  This project must be considered as a single integrated project and should come under RERA’s ambit and audit.  The complainant further submitted that assurances were given by the service provider that all works connected with block ‘A’ and ‘C’ and infrastructure will be completed by the end of July 2017. Despite various complaints by the complainant association no remedy has been made out to the complainant association members.  The complainant further submitted that the ownership of common facilities should be with the ‘Resident’s Welfare Association’.  It was built by money paid by owners while buying their property.

In the rejoinder the complaint association prayed for the following-

• to take appropriate legal action against the promoter for not registering the entire project with RERA;
• to declare the project as a single project and direct the promoter to complete the project in a time bound manner, particularly the common facilities and amenities;
• to instruct the promoter to attend to the repairs/deficiencies reported in the flat/work handed over without further loss of time and before onslaught of another monsoon;
• to start  one year free warranty after the completion of all the repairs are attended to;
• to hand over all the common amenities to the complainant in accordance with RERA Act and Rules framed there under from the service provider

The second respondent submitted the following before the Authority-

• The grounds, facts and circumstances set out in the complaint does not make out a case maintainable before the Authority for want of jurisdiction.
• As there is no provision mandating registration of service provider under RERA no dispute could be invoked before this Authority.
• The complainant is not an agreement holder with the second respondent as such the complainant has no locus standii to file this complaint.
• The relationship of each flat owner and the second respondent is that of a ‘Senior Living Services Receiver’ and ‘services provider’ and hence this complaint is not maintainable.’
• The Real Estate Regulation Act came into effect during July 2017 much later point of time from the completion of the project.  Hence this complaint is not maintainable.
• A mere reading of the Act would show that the ‘service provider’ is not falling within the purview of the Act, unlike the builders and the flat owners and no claim or remedy can be made before the Authority.
• When there is a separate agreement between the parties such agreement binds the parties and common law cannot supersede the same.
• The construction agreement between the first respondent and each flat owner makes it clear that the second respondent is to be the ‘service provider’ and the flat owners are having full knowledge that the second respondent is the service provider.
• Therefore it is false and misleading to state in the complaint that they were not aware of the second respondent as ‘service provider’.
• The complainant has no control over the common area maintained by the service provider.
• The second respondent was allotted 25746 sq. ft. of UDS land in which the second respondent developed buildings, kitchens and other infrastructures and other facilities worth ₹ 5 crores which are necessary to render services to the flat owners and the flat owners did not pay anything for the same and there is no justification on the part of the complainant to hand over the common area to the complainant association.
• Since the project is not complete and only 38 clients have occupied and rest unoccupied they are facing loss of approximately ₹ 3.5 lakhs per month for the past two years.
• There is no single whisper in the complaint that the service provider is in fault in providing the service and even if such claim is made the remedy available to the flat owners is elsewhere.

The complainant, in response to the submissions by the second respondent, submitted that the TNRERA came into force in July 2017 and the project was not completed by that time and hence comes under the purview of TNRERA under ‘Ongoing Project’.  As per RERA Rules the ‘service provider’ should have been selected by the Residents Association after the promoter hands over the common facilities to the Registered Association.  Once TNRERA comes into existence in July 2017 it is the responsibility of the promoter and service provider to abide the rules of TNRERA.  

In the written submissions, the first respondent stated that the construction of compound wall could not be completed due to outbreak of COVID 19 pandemic and the same would be completed by the end of 2020. 

The Authority has examined the complaint, counter affidavits of the respondents the rejoinder filed by the complainant.  The Authority was to decide whether this project is ‘ongoing project’ or not.  The Authority observed that the first respondent did not produce documentary evidence to the effect that the project has been completed on or before 01.05.2017.  To qualify as a completed project the real estate projects including common areas and common facilities should be completed in all respects in a habitable condition as on 01.05.2017 to qualify as a completed project.  The Authority held that Block ‘A & C’ including common amenities and facilities promised to the allottees in the construction agreement by the first respondent is ‘ongoing project’ only under first proviso to section 3(1) of the Act.  The Authority directed the first respondent to register with RERA on or before 15.02.2021.

The Authority further directed that the first respondent is obliged to hand over the common areas, the common amenities and facilities to the Association of Allottees as per Section 17 of the Act on or before 28.02.2021.  The Authority further directed that the promoter should ensure that all common amenities and facilities as promised in the construction agreement with the allottees are completed in all respects before 31.12.2020.

The Authority further observed that the first respondent has sold 25746 sq. ft. to the second respondent.  This action is not only in contravention of Section 17 of RERA Act but also against the provision of construction agreement in para 22, 23 and 24  specifying the eligible person to whom the undivided share in the project can be sold.  The Authority held that the ownership of the Club house as well as the undivided share of the land on which the superstructure of the Club House is located has to be vested with the Association Allottees only.  The same should be conveyed in favor of the complainant association on or before 28.02.2021.