Housing Society Declared Promoter Under RERA: Maharashtra Tribunal's Landmark Ruling
In a significant decision, the Maharashtra Real Estate Appellate Tribunal (comprising Justice Shriram R. Jagtap and Shrikant M. Deshpande) ruled that a housing society that owns land and authorizes redevelopment qualifies as a "promoter" under Section 2(zk) of the Real Estate (Regulation and Development) Act, 2016 (RERA). This ruling establishes critical precedents for redevelopment projects across the state.
Case Background
The case revolved around New Sangeeta Co-operative Housing Society Ltd., which entered into a redevelopment agreement in 2011 with a developer to demolish an old building and construct a new one. Under the agreement, the developer was obligated to hand over completed flats, along with the Occupation Certificate, to the homebuyers by September 30, 2017. In case of delays, the developer was to pay a penalty of ₹6,000 per day.
However, construction slowed significantly by March 2017, with work progressing only up to the sixth floor. Financial difficulties hampered the developer’s ability to complete the project, leading to disputes with the housing society. Eventually, the society terminated the agreement, took control of the project, and initiated efforts to appoint a new developer. These actions caused additional delays, leaving home buyers without their promised homes.
Frustrated by the delays, the affected homebuyers filed a complaint with the RERA Authority. In its order dated August 6, 2019, the Authority directed the society to make the homebuyers members deliver possession after obtaining the Occupation Certificate, and imposed a ₹15 lakh penalty on the society for RERA violations. The society subsequently appealed the decision.
Tribunal’s Observations
The key questions before the Tribunal were:
- Whether the housing society qualifies as a "promoter" under RERA.
- Whether the society is obligated to fulfill the commitments made by the developer.
The Tribunal observed that the society played a pivotal role in the project by:
- Investing its land into the redevelopment.
- Authorizing the developer to construct both the rehabilitation and sale components, benefiting from the rehabilitation segment.
- Taking control of the project after terminating the agreement with the original developer and registering the project under RERA.
Citing Section 2(zk) of RERA, the Tribunal clarified that any entity acting as a builder, developer, or in control of a project qualifies as a promoter. By assuming the developer's responsibilities, the society became legally obligated to complete the project and meet the commitments made to homebuyers.
Penalty Decision
The Tribunal also reviewed the ₹15 lakh penalty imposed by the RERA Authority for allegedly violating Section 15 of the Act. It determined that the society was not required to seek consent from two-thirds of the homebuyers or approval from the Authority to proceed with the project after taking over from the developer. Consequently, the penalty was quashed.
The Tribunal's ruling partially allowed the appeal, recognizing the housing society’s status as a promoter and its obligations under RERA. By emphasizing the society’s duty to complete the project, the decision reinforces the rights of homebuyers in redevelopment cases.
