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TMI Blog2018 (8) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Second Appeal (Stamp) NO.9717 OF 2018 With Civil Application No.683 Of 2018 Along With Second Appeal (Stamp) No.18465 Of 2018 With Civil Application No.791 Of 2018 With Second Appeal (Stamp) No.18467 Of 2018 And Civil Application No.792 of 2018 - - - Dated:- 7-8-2018 - DR. SHALINI PHANSALKAR-JOSHI, J. For The Appellant : Mr. Raj Patel, a/w. Mr. Ruturaj Bankar, I/by M/s. Lex Legal and Partners And Mr. Kaustav Talukdar, a/w. Mr. Ruturaj Banker, I/by M/s. Lex Legal For The Respondents : Mr. Mayur Khandeparkar, a/w. Mr. Tushar Gujjar, Ms. Shweta Merchant and Mr. Deepak Singh JUDGMENT 1. Heard finally, at the stage of admission itself, with the consent of learned counsel for the Appellant and Respondents. 2. Admit. 3. These three Appeals are preferred, under Section 58 of the Real Estate (Regulation and Developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectively. As per the said 'Agreements', the Respondents have booked the apartments on the basis of lease for the period of 999 years in the Township Scheme of the Appellant. They had paid most of the consideration amount, which is, approximately, to the extent of 80% of the sale price. They have also paid substantial amount towards the stamp-duty and the registration charges. 7. As per the 'Agreements of Lease' executed between the parties, the project was to be completed and the possession of the apartments was to be handed over to the Respondents within a period of 24 months. After waiting bonafidely for all these six to seven years for getting the project completed and after making several enquiries with the Appellant about the progress of the said project, the Respondents found that there are no chances of the project being completed in a near future. Hence, after the Appellant registered itself with the RERA, Respondents approached the 'Adjudicating Authority' under the MahaRERA with an application, under Section 18 of the RERA, for compensation with interest for every month of the delay in handing over possession of the apartments and for vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Agreements', in effect, they are the agreements of absolute sale and, therefore, the provisions of the RERA will be applicable. The Appellate Tribunal also held that, the Appellant has got itself registered under the provisions of the RERA and, therefore, now it is precluded or estopped from contending that the provisions of the RERA are not applicable thereto. In this respect, the Appellate Tribunal has relied upon the 'Principle of Estoppel', laid down in Section 115 of the Evidence Act and, thus, allowed the Appeals and held that the 'Adjudicating Officer' of MahaRERA has jurisdiction to entertain the complaints on its merits. The matters were, therefore, directed to be placed before the 'Adjudicating Officer' of MahaRERA, to be decided in accordance with law. 11. While challenging these orders of the Appellate Tribunal, the submission of learned counsel for the Appellant is that, the impugned orders are clearly against the express provisions of the RERA and hence, they cannot be sustainable in law. To substantiate this submission, learned counsel for the Appellant has taken this Court initially through various clauses in the 'Agreements of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of apartment, as mandated in law. Thus, it is submitted that, when as per the own case of the Respondents, they had entered into 'Agreements of Lease' with the Appellant and now also, they are seeking compliance of the said 'Agreements of Lease', the question of attracting the provisions of the RERA does not arise in the present case. 13. In this respect, learned counsel for the Appellant has also relied upon the definition of the term 'Promoter', as given in Section 2(zk) of the RERA, which contemplates a person, who constructs or caused to be constructed an apartment for the purpose of selling . It is urged that, the very definition of the term 'Allottee', as given in Section 2(d) of the RERA, specifically provides that, Allottee does not include a person to whom such plot, apartment or building, as the case may be, is given on rent . Even the definition of the term 'Real Estate Project', as given in Section 2(zn) of RERA, means the development of a building or a building consisting of apartments for the purpose of selling all or some of the said apartments. Hence, it follows that, the Legislature has made its intention very clear o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to learned counsel for the Appellant, if registration under the RERA can be the sole test for applying the provisions of the said Act, then, applying the same logic, the RERA will not be made applicable to the projects, which are not registered. That cannot be the intention of the Legislature. Therefore, according to him, merely because the Appellant has sought registration under the RERA, it is not precluded or estopped from raising the contention that, as the 'Agreements' executed with the Respondents are that of 'Agreements of Lease' and the status of the Respondents is only of a 'Lessee' and not that of a 'Purchaser', their complaints cannot be entertained under the RERA. It is submitted that, as those complaints are clearly under Section 18 of the RERA and to these Respondents, therefore, RERA cannot be made applicable and hence, the Adjudicating Authority, under Section 31 of RERA, has no jurisdiction to entertain those complaints. According to learned counsel for the Appellant, on this score also, the Appellate Tribunal has committed an error in law, which is required to be rectified in these Second Appeals. 17. Per contra, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is urged that, the terms of the 'Agreement' make it clear that, the 'Lease-Deed' is yet to be executed. The rent fixed @ ₹ 1/-only, also makes it abundantly clear that, it was an 'Agreement of Sale' and not an 'Agreement of Lease' as such. 20. In this respect, learned counsel for the Respondents has also brought to the attention of this Court the definition of the 'Lease Premium', as given in the 'Agreement of Lease', meaning thereby, 'the premium consideration payable in respect of lease of the apartment'. It is urged that, Clause No.5.1 uses the term 'Customer' and not the 'Lessee' in the context of the Respondents. 21. According to learned counsel for the Respondents, all the terms and conditions of the 'Agreement of Lease' are pari materia to the terms and conditions of the 'Agreement', which is executed under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963, (for short, MOFA ). In this respect, he has drawn attention of this Court to Clause No.10, which deals with 'Common Amenities and Facilities' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dichotomy in the submissions advanced by learned counsel for the Appellant, which cannot be upheld at all. Therefore, the impugned order passed by the Appellate Tribunal, holding that the provisions of the RERA are equally applicable to the Appellant and the 'Adjudicating Authority' under the RERA has jurisdiction to entertain the complaints filed by the Respondents, being just, legal, correct and in tune and in consonance with the 'Objects and Reasons' of the RERA, no interference is warranted in the said orders. 24. In the light of these rival submissions, advanced by learned counsel for the parties and having regard to the factual aspects of the case and the provisions of the RERA, the three substantial questions of law are raised in these Second Appeals, on which the Appeals are admitted and the parties were heard finally at the stage of admission itself. Those questions can be stated as follows :- ( i) 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? (ii) Whether the Appellate Tribunal has committed an err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tection, uniformity and standardization of business practices and transactions in the real estate sector. 30. The RERA is, therefore, enacted to provide for establishment of the 'Real Estate Regulation and Development Authority' for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner. The object of the RERA is stated to be to protect the interests of consumers in the real estate sector, like the Respondents herein. 31. Thus, the RERA is brought on Statute Book to ensure greater accountability towards the consumers and significantly reduce frauds and delays, as also the current high transaction costs. It attempts to balance the interests of consumers and promoters, by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions and set minimum standards of accountability and a fast track dispute resolution mechanism. The RERA, as stated in its 'Objects and Reasons', was enacted for inducting professionalism and standardization in the sector, thus, paving th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... till a dream come true. The respective Governments, Corporations have declared beneficial schemes for low and high income groups for allotment of residential houses. However, that is not proving to be sufficient. The hard-earned money of the consumers, their life-time savings were invested in many such projects. It was found that many projects are lying idle for various reasons, due to which public at large, consumers of real estate sector are adversely affected financially and otherwise. A comprehensive law was the need of the day. The Parliament, therefore, thought it fit to comprehend under one umbrella regulatory mechanism for a disciplined growth of the real estate sector. 36. It was, thus, held that, If the RERA is for the benefits of both the 'Allottees' and the 'Promoters', then there is no substance in the challenge to the Constitutional validity of the said Act. 37. Thus, it can be seen that, the enactment of the RERA is to meet the need of an hour. The need of the hour is to regulate this real estate industry and to ensure that some standardization and professionalism is brought into this real estate sector, which would help to protect no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other persons and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of - (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level Co-operative Housing Finance Society and a primary Co-operative Housing Society, which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or (v) any other person, who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment. 44. Clause No.5.2 of the 'Agreement' provides that, the 'Lease Deed' was to be executed only after the development and construction of the said apartment has been fully completed and all the lease premium amounts are paid by the customer to Lavasa. The lease term was to commence from the date of execution of the registration of the 'Lease Deed' by Lavasa in respect of the said apartment in favour of the customer. 45. Clause No.6 of the 'Agreement' lays down the 'Schedule of the Payment', which shows that the payment was to be made as per the progress in the construction and except for some nominal amount, entire consideration was to be paid before possession was to be delivered. This clause is a typical clause, which is normally found in the 'Agreement of Sale' under MOFA. Clause No.9.1 states that, the possession of the apartment was to be handed over within a period of 24 months, on the customer depositing the entire lease premium installments. 46. Further clauses in the 'Agreement', like Clause No.10 pertaining to 'Common Amenities and Facilities'; Clause No.12.1 pertaining to 'Charges and Contri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1031 of 2007; decided on 7th April 2014), wherein, reliance was placed on the Judgment of the Hon'ble Apex Court in the case of R.K. Palshikar (HUF) v. CIT, M.P., Nagpur and Bhandara, 1988 (172) ITR 311, holding that, Having regard to the lease of plot for 99 years, it is clear that, under the lease in question, the Assessee has parted with an asset of an enduring nature, namely, the rights to possession and enjoyment of the properties leased for a period of 99 years, such transaction amounts to transfer of capital assets, as contemplated under Section 12B of the Income Tax Act, 1922. 50. Relying on this decision of the Apex Court in this Judgment, the Madras High Court has also held that, Having regard to the fact that the period of lease was of 99 years, it was as good as a lease in perpetuity or a permanent lease in as much as an alienation as a sale . It was further held that, the mere use of the word 'lease' or the fact that a long term is fixed would not by itself make the document in lease. The payment of lumpsum amount also does not make it a permanent lease any the less an alienation than a sale . 51. Here in the case, the period of lease b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the intention of the Legislature was to protect those persons like Respondents, who have invested substantial amounts in the real estate projects. Hence, they are required to be called as 'Consumers' or 'Allottees'. If they are excluded from the definition of 'Allottee' and thereby from the protection given under the Act, by giving restrictive meaning to the term 'Allottee', the very object of the Act would stand frustrated. 55. Here in the case, Respondents have already invested more than 80% of the consideration amount of the said apartment in the Real Estate Project of the Appellant. Their interests in the project undertaken by the Appellant are that of the 'Allottees', who have entered into such 'Agreements' for the purpose of purchase of the said fat/apartment. The object of the RERA cannot be to exclude such persons, who have invested huge amount in the Real Estate Project, may be under the 'Agreement of Lease' and taken such apartment on the lease of '999 years', which transaction is, in reality, the transaction of sale. 56. As rightly submitted by learned counsel for the Respondents, the definitions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he object of the RERA is to protect the 'Allottees' and simplify the remedying of the wrongs committed by the 'Promoter'. The RERA assures completion of project in time-bound manner. The main object is to ensure accountability on the part of the Real Estate Sector and to provide a comprehensive, effective and speedy remedy to the persons, who have invested large sums of money for having a home of their dreams. The very enactment of the Act was found necessary, because it was noticed that all over the country in large number of projects, the Allottees did not get possession for years together. Huge amount of money was found locked in. Hence, to suppress this mischief and to provide effective remedy to the consumers, this law was enacted. One of the modes prescribed under the Act to regulate the Real Estate Sector was to impose some penalty on the Developer, who has failed to complete the project in stipulated time. The provisions of Section 18 of the Act are in that way compensatory in nature. As held by this Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. (Supra), When the 'Promoter' is, in effect, constructing the apartments for the 'All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ject within 24 months, as assured in the 'Agreements', is nothing but defeating the very purpose of the Act. Therefore, as held in Heydon's Rule, the interpretation of the statute has to be not only to suppress the mischief, but also to advance the remedy and also to suppress subtle inventions and evasions for continuance of the mischief. Interpretation of the provisions should be such as it will add force and life to the cure and remedy according to the true intent of the makers of the Act and not to defeat that intent. 62. The provisions of any statute for that matter, as held by the Apex Court in the case of Tata Engineering Locomotive Co. Ltd. v. State of Bihar and Anr., [2000] 5 SCC 346, are required to be considered in their practical application, as to how they will achieve the object of the Act. In this Judgment, the Hon'ble Apex Court has very lucidly and effectively held that; 15. 'Statutes', it is often said, should be construed not as theorems of Euclid, but with some imagination of the purposes, which lie behind them, and to be too literal in the meaning of words is to see the skin and miss the soul. The method suggested for adoption, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 'Buyers' and 'Promoters' in that sector. Hence, it was found that, for this lack of adequate consumer protection, which, to some extent, was given by the specific statute, like MOFA, being not available in other statutes and to all the consumers to protect their interests effectively, this Act was enacted. Now allowing the Respondents to remain out of the purview of this Act, merely because their 'Agreements' are titled as 'Agreement of Lease', will not give justice to the provisions of this Act also. 64. Another object of the Act was also to bring under the umbrella of 'Adjudicating Authority' all the disputes between the Buyers on the one hand and the Promoters, Developers and Development Authorities on the other hand in respect of the Real Estate Projects undertaken by them. The Division Bench of this Court in the case of Neelkamal Realtors (Supra) has considered this adequate mechanism provided under the Act for balancing rights of 'Allottees' and 'Promoters', by observing in paragraph No.124, as follows :- The entire scheme of the RERA is required to be kept in mind. It is already submitted during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretative possibility permits. But, at the same time, the Courts will have to keep in mind that, the object-oriented approach cannot be carried to the extent of doing violence to the plain language used in the statute, by re writing the words of a statute in place of the actual words used, or, by ignoring definite words used in the statute. 67. Here in the case, as regards the word Allottee , as a matter of fact, it can never be the intention of the Legislature to exclude long term leases from the purview of the Act; otherwise, the Legislature would not have used the words 'freehold' or 'leasehold', when it has defined the term 'Allottee', under Section 2(d) of the Act. 68. Moreover, exclusion of such long term lease from the purview of the Act would be defeating the very object of the Act. The Developer-Promoter may, in such cases, by executing the 'Agreement' with the nomenclature as the 'Agreement of Lease', can very conveniently escape from the clutches of the provisions of this Act. When the Legislature has stated in the definition of the term 'Allottee' that it does not include the person, to whom the plot, apart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... project. 70. Here in the case also, the consideration amount for the apartments agreed to be handed over to the Respondents is already obtained by the Appellant. As per the 'Agreement', the possession of the apartments was to be delivered within 24 months from that date; however, even after the lapse of 7 years, the Respondents have not received the possession; thereby indicating default on the part of the Appellant in fulfilling his obligations. If such 'Allottees', like the Respondents herein, cannot be kept out of the purview of the Act, which is clearly enacted with express intent to ensure that, they get the succor. At the cost of repetition, it has to be stated that, the mischief, to suppress which, the Act was enacted, was that there was no law regulating the real estate sector development work and obligations of 'Promoters' and 'Allottees'. This need was felt by the 'Parliament', because, it was noticed that, all over the country, in large number of projects, the 'Allottees' did not get possession for years together and huge sums of money of the 'Allottees' was locked in such projects. Hence, if, in the similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Real Estate Regulatory Authority (1) No Promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any Real Estate Project or part of it, in any planning area, without registering the Real Estate Project with the Real Estate Regulatory Authority established under this Act: Provided that, projects that are on-going 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: Provided further that, if the Authority thinks necessary, in the interest of Allottees, for projects, which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the Promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made thereunder, shall apply to such projects from that stage of registration. (2) Notwithstanding anything contained in sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant also that only some parts of the components of the said project are registered. Though it is contended that, the RERA is applicable only to some part of the project, despite that, the entire project is registered under the RERA, as is evident from the 'Registration Certificate'. 75. Hence, there is definitely some substance in the submission advanced by learned counsel for the Respondents that, if the Appellant has registered itself under the RERA, it follows that Appellant has submitted itself to the jurisdiction of the RERA. Now Appellant cannot contend that the provisions of Section 18 of the RERA are not applicable to it, as the 'Agreements' executed with the Respondents are 'Agreements of Lease' and not an 'Agreement of Sale'. As rightly submitted by learned counsel for the Respondents, by registering itself under the RERA and availing the benefits, which were available under the RERA, now Appellant cannot approbate and reprobate by contending that, the said provisions are applicable only to a particular aspect and not to the complaints, which are filed by the Respondents and that too merely on the count that, the 'Agreements' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulatory Authority'. Section 21 thereof deals with 'Composition of the said Authority' and Section 22 thereof deals with 'Qualification of Chairperson and Members of the Authority'. It is for this Authority to consider whether to grant registration or not and in case of breach of terms and conditions on the part of the Promoter, whether to revoke the said registration under Section 7 of the Act. The Rules framed under the RERA are more than sufficient to that effect. 77. As against it, the Adjudicating Authority under the RERA is defined in Section 2(a) as the 'Adjudicating Officer' appointed under sub section (1) of Section 71. This 'Adjudicating Authority', as can be seen from Section 71(1) of the Act, is established for the purpose of adjudging the compensation under Sections 12, 14, 18 and 19 of the said Act. Section 31 provides that, the complaints are to be filed by the aggrieved persons under the RERA with the 'Adjudicating Authority' for any violation or contravention of the provisions of this Act. 78. Therefore, the 'Authority', which grants registration under RERA, is different than the 'Authority', which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity established under the RERA. Even in respect of ongoing projects also, this mandate applies, unless it is shown that, 'Completion Certificate' has been already issued. The word used in Section 3(1) and the Proviso to Section 3 in respect of 'ongoing project' is shall , thereby making the intention of the legislature clear that, in respect of those ongoing projects also, the registration has to be sought within a period of three months from the date of commencement of the Act. Sub-clause (2) of Section 3 provides for some exceptions, where registration of real estate project shall not be required and those exceptions are pertaining to the projects, where the area of land proposed to be developed does not exceed 500 sq.mtrs., or, the number of apartments proposed to be developed does not exceed 8, inclusive of all phases, or, where the Promoter has received Completion Certificate prior to commencement of the Act. One more exception laid down in Clause (c) of sub-section (2) of Section 3 is that, when the project undertaken is for the purpose of renovation or repair or re development, which does not involve marketing, advertising, selling or new allotment of any ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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'. 84. Thus, having regard to the totality of the facts and circumstances and the terms and conditions of the 'Agreements', having regard to the entire purport and object of the Act, it has to be held that, 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. The mechanical interpretation given by the 'Adjudicating Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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