Society which took over redevelopment not liable under RERA for free sale flats: Bombay HC
A housing society which terminated its redevelopment agreement with a builder over delay and then took over redevelopment through court orders, cannot be liable as a 'promoter' under RERA to buyers who had booked free sale flats, Bombay high court has said. It held that the society and its members' right of rehabilitation assumes priority over free-sale flat buyers.
Justice S C Gupte quashed a city court order to pave way for completion of a 17-storey building to rehouse them, after they vacated their homes in a Goregaon building for its redevelopment. The members, noted Justice S C Gupte, have been waiting for 12 years, caught in a legal battle over delay, disagreements and disputes.
"Real Estate (Regulation and Development) Act, 2016, had been introduced to establish a regulatory authority for regulation and promotion of the real estate sector, to ensure sales efficiently and in a transparent manner, and to protect consumers,'' said Justice Gupte.
Goregaon Pearl cooperative housing society was at loggerheads with free-sale flat buyers who had booked flats from the builder. The society said they, as third parties, were not entitled to flats in the redeveloped building. Free-sale flat buyers argued that RERA would make the society now liable as a promoter or developer of the project. Under RERA, a promoter has to provide possession to buyers on time.
In August 2016, with the project nowhere near completion, the society terminated its agreement with the developer and the issue landed in court. The HC had earlier appointed an arbitrator, who last September appointed a receiver to enable completion of the project. One wing is now almost complete and the battle is whether free sale buyers can be accommodated there, as stipulated in the original agreement with the developer.
The arbitrator's interim order envisaged accommodation of all 60 society members in wing B, which includes three podium levels, and is almost complete. The society is expected to undertake balance construction through a new developer and house all its 60 members in wing B, which will be financed from sale of the remaining 12 flats in it.
But Justice Gupte said, "No RERA provision makes the owner of the freehold or leasehold interest in land, who enters into a development agreement with a developer (who, enters into flat purchase agreements with third parties on the basis of such development agreement), liable for complying with obligations of the developer under RERA.''
In fact, HC said Maharashtra Real Estate Regulatory Authority (MahaRERA) had clarified that only such individuals/organizations would fall within the definition of 'promoter' in RERA, on account of being landowners, who are specified as such during on-line registration with the authority. The HC said, "It is nobody's case that the (Goregaon) society is such a specified promoter in the online registration.''
The society had challenged an interim order passed by Dindoshi city civil court restraining it from creating rights or alienating free sale flats sold to Dr Seema Paryekar. The HC quashed the lower court order.
Around 60 society members who had handed over their flats for redevelopment are roofless, the HC said. The civic body had issued a commencement certificate in June 2008 and the new building with two wings was to be completed in two years. Both wings were to partly accommodate old members and new third-party buyers of free sale flats.
Justice S C Gupte quashed a city court order to pave way for completion of a 17-storey building to rehouse them, after they vacated their homes in a Goregaon building for its redevelopment. The members, noted Justice S C Gupte, have been waiting for 12 years, caught in a legal battle over delay, disagreements and disputes.
"Real Estate (Regulation and Development) Act, 2016, had been introduced to establish a regulatory authority for regulation and promotion of the real estate sector, to ensure sales efficiently and in a transparent manner, and to protect consumers,'' said Justice Gupte.
Goregaon Pearl cooperative housing society was at loggerheads with free-sale flat buyers who had booked flats from the builder. The society said they, as third parties, were not entitled to flats in the redeveloped building. Free-sale flat buyers argued that RERA would make the society now liable as a promoter or developer of the project. Under RERA, a promoter has to provide possession to buyers on time.
In August 2016, with the project nowhere near completion, the society terminated its agreement with the developer and the issue landed in court. The HC had earlier appointed an arbitrator, who last September appointed a receiver to enable completion of the project. One wing is now almost complete and the battle is whether free sale buyers can be accommodated there, as stipulated in the original agreement with the developer.
The arbitrator's interim order envisaged accommodation of all 60 society members in wing B, which includes three podium levels, and is almost complete. The society is expected to undertake balance construction through a new developer and house all its 60 members in wing B, which will be financed from sale of the remaining 12 flats in it.
But Justice Gupte said, "No RERA provision makes the owner of the freehold or leasehold interest in land, who enters into a development agreement with a developer (who, enters into flat purchase agreements with third parties on the basis of such development agreement), liable for complying with obligations of the developer under RERA.''
In fact, HC said Maharashtra Real Estate Regulatory Authority (MahaRERA) had clarified that only such individuals/organizations would fall within the definition of 'promoter' in RERA, on account of being landowners, who are specified as such during on-line registration with the authority. The HC said, "It is nobody's case that the (Goregaon) society is such a specified promoter in the online registration.''
The society had challenged an interim order passed by Dindoshi city civil court restraining it from creating rights or alienating free sale flats sold to Dr Seema Paryekar. The HC quashed the lower court order.
Around 60 society members who had handed over their flats for redevelopment are roofless, the HC said. The civic body had issued a commencement certificate in June 2008 and the new building with two wings was to be completed in two years. Both wings were to partly accommodate old members and new third-party buyers of free sale flats.
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