Dissecting registration dynamics of partly completed and ongoing projects under RERA, 2016

Introduction

Section 3 of the Real Estate Regulation and Development Act, 2016 provides for prior registration of projects under the Real Estate Regulatory Authority that are undergoing completion as of the commencement of the Act and have not been granted a completion certificate by their respective local authorities. The promoters of such projects are given a three-month window to have their projects registered. Due to each state having its version of the act and the differences in the local authority by-laws there exists a lack of legislative clarity on matters concerning completion certificates, occupancy certificates, and the jurisdiction of the Real Estate Regulatory Authority.

Main Blog

RERA,2016 has been a crucial legislation in the Indian real estate sector. The objective of the Act was to ensure transparency and accountability in the sector. The act sought to regulate a sector that was previously largely unregulated. For ongoing projects, compliance with the registration requirements was made mandatory to ensure legal validity and to protect the interests of both developers and homebuyers. Registration of a project under RERA consequently imposes liabilities on the promoters of the project such as providing and maintaining services associated with the apartment or plot as well as other functions imposed under Section 11 of the Act.

There are three conditions provided under the act through which a promoter may not be required to register the project under the authority. These are, firstly that the area of land that the project seeks to occupy does not exceed 500 square meters in total or the total number of apartments sought to be built are below 9 in number. The second condition is of particular importance, where a promoter has received a completion certificate for the project before the commencement of the act he/she would not be required to bring the project under the jurisdiction of the Real Estate Regulatory Authority. The third situation is where the existing project simply requires repairs and renovations and does not involve the sale of any new apartments.

The second situation brings to light the aspect of completion certification granted by the municipal corporation of the area in which the project is. However, within different states, there exists a difference in what can be constituted as a completion certificate. For example under the Delhi Municipal Corporation Act, 1957, Section 346 (2) the completion certificate and occupancy certificate are in effect congruent with each other, contemplating as follows; Completion Certificates.- No person shall occupy or permit to be occupied any such building or permit to be used any building or a part thereof affected by any such work until permission has been granted by the commissioner on this behalf in accordance with by-laws made under this act. Now in contrast to this the UP RERA Act,2016 makes a clear distinction between completion certificate under Sec. 2(q)occupancy certificate under Sec. 2(zf). Meanwhile, Delhi’s sister legislation is ambiguous in definition as it does not expressly differentiate between an occupancy certificate or a completion certificate, thus permitting the Delhi Municipal Corporation Act, 1957 to provide recourse in understanding the will of the legislature.

Examining Part Completion and Jurisdiction of Real Estate Regulatory Authority

The Authority only gains jurisdiction over matters on projects that are registered under RERA. Let us look at a landmark case law by the the Bombay High Court, in Macrotech Developers Ltd. v. State of Maharashtra, 2021 SCC OnLine Bom 283, the case clarified the intricacies surrounding part completion and the jurisdiction of the Real Estate Regulatory Authority (RERA). The petitioner, a real estate developer, sought a declaration that a phase-wise project, specifically the “Lodha Dioro” up to the 40th floor, did not require registration under Section 3 of RERA. The basis for this request for declaration was the issuance of a part occupancy certificate by the Mumbai Metropolitan Region Development Authority (MMRDA) before August 1, 2017. The complainants, who owned flats on the 25th floor, raised concerns about delays in possession and sought compensation. These grievances led to complaints filed before the Maharashtra Real Estate Regulatory Authority (MahaRERA). However, MahaRERA ruled that it lacked jurisdiction to entertain the complaint since the sale of the flats had occurred in 2015, prior to the enactment of RERA.

Upon appeal to the Bombay High Court, the petition was dismissed. The court held that the petitioner was not obligated to register the phase of the project up to the 40th floor under Section 3 of RERA. The crucial determinant was the issuance of the part occupancy certificate by the MMRDA before August 1, 2017. The judgment serves as an important precedent highlighting the significance of part occupancy certificates in exempting certain project phases from mandatory RERA registration.

Now let us consider a similar case of phase-wise building of a project in Mr. Haresh Jethmal Asher v. Bellissimo Crown Buildmart Pvt. Ltd. In contrast, the case of Mr. Haresh Jethmal Asher v. Bellissimo Crown Buildmart Pvt. Ltd presented a different perspective on RERA jurisdiction. The Real Estate Regulatory Authority (RERA) disregarded a Full Bench order, asserting that MahaRERA indeed had  jurisdiction to entertain Mr. Haresh Asher’s complaint despite the project not mandatorily requiring registration. The rationale of the authority depended on the objective of the act that provided for a consumer/allottee-centric approach wherein the interests of the allottee of the apartments/plots were to be kept foremost keeping special regard for their wellbeing.

Although later in the same case an order was passed by the Appellate Authority of MahaRERA elapsing the petitioner’s(developer’s/promoter’s) challenge. However, the subsequent Second Appeal brought the matter to the higher court. The case was ultimately resolved through a settlement, wherein the allottee acknowledged the petitioner’s contention that the project did not require registration under RERA. Thus there exists a lack of uniformity in regulating projects throughout the country that although do not possess a completion certificate but possess other in-effect similar documents such as an occupancy certificate, sale /lease deeds of all apartments in the project/ part completion for a phase of the project.

Cure to the lack of uniformity discussed above lies in the clear definition of crucial aspects of the Act such as defining and distinguishing between completion certificate and occupancy certificate; designating a uniform authority for issuing the same and preventing any retrospective application of law that may arise by bringing already completed projects under the purview of the Act. An aspect also to be kept in mind is that of the objectives of the Act must be fulfilled but by avoiding stretching the boundaries of the Act to include partly completed projects as unfinished and ongoing projects.

Conclusion

To conclude, while RERA has albeit brought positive changes to the real estate sector, addressing the fine print surrounding completion certificates, occupancy certificates, and jurisdictional matters remains vitally important for fostering an active and standardized regulatory framework across India. Achieving this consistency will further contribute to the objectives of enhancing transparency and protecting the interests of all stakeholders in the Indian real estate sector.

Author: Mayur Sherawat, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

References

1. Macrotech Developers Ltd. v. State of Maharashtra, 2021 SCC OnLine Bom 283
2. Neelkamal Realtors Suburban (P) Ltd. v. Union of India, 2017 SCC OnLine Bom 9302
3. The Real Estate (Regulation and Development) Act, 2016.
4. Delhi Municipal Corporation Act, 1957
5. The National Capital Territory of Delhi Real Estate (Regulation and Development) (General) Rules, 2016
6. The Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016