POOJA CONSTRUCTIONS v. SECRETARY KERALA URANMA DEVASWOM BOARD
2024-08-30
M.A.ABDUL HAKHIM
body2024
DigiLaw.ai
JUDGMENT : M.A. ABDUL HAKHIM, J. 1. This Miscellaneous Second Appeal filed under Section 58 of the Real Estate (Regulation and Development Act) 2016 (for short, ‘RERA’) is admitted by this Court, formulating the following substantial questions of law. (i) Whether the term “person causes to be constructed” used in the definition of “promoter” as per Section 2 (zk) of the RERA includes landowners? (ii) Whether the Explanation to the definition of ‘promoter’ as per Section 2(zk) of the RERA a landowner is also to be treated as a promoter for all the functions and duties under the RERA? (iii) Whether the landowners are also liable to be treated as a co-promoter for the purpose of registration of real estate projects under Section 3 of the RERA? 2. This Miscellaneous Second Appeal is filed by the appellant-builder challenging the Order of the Kerala Real Estate Regulatory Authority (for short ‘the K-RERA’) dated 18.09.2023 holding that the appellant is the sole promoter of the project “Pooja Arcade” and directing the appellant to register the said project before the K-RERA under Section 3 of the RERA within 15 days from the date of receipt of the order, failing which, the K-RERA shall be constrained to initiate proceedings under Section 59 of the RERA, which is confirmed by the Kerala Real Estate Appellate Tribunal ( for short ‘the Tribunal,’) as per order dated 29.05.2024. 3. The respondents are the landowners in which the appellant constructed the project “Pooja Arcade.” The appellant is the 1st respondent and the respondents are the 2nd and 3rd respondents in the suo motu Complaint initiated by K-RERA. 4. The K-RERA initiated a suo motu complaint under Section 3 of the RERA against the appellant when it noticed various advertisements for the sale of the apartments in the project “Pooja Arcade” by issuing a Show Cause Notice dated 15.09.2021 directing to show cause with sufficient explanation for the no-nregistration of the project ‘Pooja Arcade’.
4. The K-RERA initiated a suo motu complaint under Section 3 of the RERA against the appellant when it noticed various advertisements for the sale of the apartments in the project “Pooja Arcade” by issuing a Show Cause Notice dated 15.09.2021 directing to show cause with sufficient explanation for the no-nregistration of the project ‘Pooja Arcade’. The appellant submitted a Reply dated 28.09.2021 that the project was not an ongoing project on the date of commencement of the RERA since the entire apartments had been sold in 2016 and that the project was a joint venture housing apartment project owned by the respondents; that the construction was entrusted with the appellant to construct four-storied residential apartment as a contractor; that the appellant constructed the four-storied apartments as per the approved plan and permit obtained in the name of the respondents. 5. The K- RERA on perusal of the documents submitted by the appellant, found that the project was an ongoing project which is liable to be registered under S.3 of the RERA and accordingly issued Notice dated 09.02.2022 directing the appellant to register the project under S. 3 of the RERA within 15 days on receipt of the notice failing which further action will be taken under S. 59 of the RERA. The appellant challenged the said Notice before the Tribunal by filing REFA No. 24/2022 and as per order dated 29.06.2022, the Tribunal set aside the Notice dated 09.02.2022 issued by the K-RERA and remanded the matter back to K-RERA for fresh consideration. The Tribunal remanded the matter, taking note of the contention of the appellant that the project is a joint venture housing apartment project owned by the respondents, who are the real promoters, and that the appellant is only a contractor. The Appellate Tribunal directed the authority to take a decision and pass an order under S.3 of the RERA after conducting an enquiry after hearing all the parties, including the promoter. 6. After remand, notices were issued to the appellant and the respondents and K-RERA conducted an enquiry into the matter. 7. The appellant contended that the landowners are also liable to be considered as promoters. The appellant produced various documents obtained in the names of the respondents with respect to the project.
6. After remand, notices were issued to the appellant and the respondents and K-RERA conducted an enquiry into the matter. 7. The appellant contended that the landowners are also liable to be considered as promoters. The appellant produced various documents obtained in the names of the respondents with respect to the project. On the other hand, the respondents contended that the appellant is the promoter of the project, and the appellant alone is liable to register the project under S.3 of the RERA. 8. The K-RERA, as per the order dated 14.11.2022, directed the appellant to register the project “Pooja Arcade” within 15 days from the date of receipt of the said order. The appellant again challenged the order of the K-RERA dated 14.11.2022 before the Tribunal by filing REFA No. 80/2022. None of the parties had produced the Agreement between the appellant and the respondents with respect to the Project before the K-RERA. The appellant produced the Development Agreement dated 16.01.2014 executed between the appellant and the respondents before the Tribunal. The Tribunal set aside the order of K-RERA dated 14.11.2022 and remanded the matter back to K-RERA as per order dt. 07.11.2023 to take a fresh decision on the ground that the parties did not produce the material document namely, the Development Agreement dt. 16.01.2014 before the K-RERA for facilitating a legal decision thereon by K-RERA. 9. After the second remand, Ext.A1 was marked on the side of the appellant and Ext.B1 to B9 were marked on the side of the respondents. The Development Agreement dated 16.01.2014 executed between the appellant and the respondents was marked as Ext.B9. 10. As per Ext.B9 development agreement, multi-storied residential apartment by name Pooja Arcade is to be constructed on 26.788 cents consisting of 13 cents belonging to the 1st respondent and 13.788 cents belonging to the 2nd respondent; the respondents agreed to transfer 80% and 75% undivided share in their respective properties to the appellant; the appellant agreed to construct and handover two numbers of 3 BHK individual apartments having super built area of 1270 sq.
Ft each on the first floor and two individual apartments having a total super-built area of 2540 Sq.Ft with electricity and water connections to the 1st respondent; the appellant also paid Rs.5 lakhs to the 1st respondent; the appellant agreed to construct and hand over three 3 BHK individual apartments having a super built area of 1230 Sq.Ft each on the first floor with three covered car parking with electricity and water connections to the 2nd respondent; the appellant paid a refundable advance of 2 lakh to the 2nd respondent which was agreed to be refunded without interest to the appellant on completion of the project; the appellant agreed to develop the land and construct multi-storied building and complete the same in every respect at his own cost, expenses, risks and on his own account; and the appellant would be at liberty to sell or allot apartments with undivided rights, title and interest to the prospective buyers and to enter into agreements with prospective buyers or allottees individually or collectively on such terms and conditions as he might think fit and proper without affecting any right or interest of the respondents. 11. After consideration of Ext.B9 Development Agreement executed between the appellants and respondents, the K-RERA found that the respondents cannot be considered as promoters as contended by the appellant taking note of the decisions of the Hon'ble Supreme Court in Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd. and another, 2008 (10) SCC 345 and Bunga Daniel Babu v. M/s Sri. Vasudeva Construction and others, 2016 (8) SCC 429 . K-RERA, as per order dated 18.09.2023, directed the appellant to register the project within fifteen days from the date of receipt of the order, holding that the appellant is the sole promoter of the project Pooja Arcade. 12. The appeal as REFA No. 81/2023 filed by the appellant before the Tribunal was dismissed by Order dated 29.05.2024 confirming the Order of the K-RERA. The Tribunal also extensively considered the nature of the Ext.B9 agreement and found that the respondents are not co-promoters, as contended by the appellant. 13. I heard the learned counsel for the appellant Sri. Sreevalasalakrishnan P.K. and counsel for the 2nd respondent Sri. P.J Stephen. 14.
The Tribunal also extensively considered the nature of the Ext.B9 agreement and found that the respondents are not co-promoters, as contended by the appellant. 13. I heard the learned counsel for the appellant Sri. Sreevalasalakrishnan P.K. and counsel for the 2nd respondent Sri. P.J Stephen. 14. The Counsel for the appellant argued that the landowner is a promoter within the meaning of S.2(zk) of the RERA, and hence, the promoter referred to in S.3 includes the landowner also. As such, in the Application for registration under S.4 the respondent landowners should join with the appellant. Only if the landowners are registered as the promoters of the real estate project registered under S.3, they would be liable to comply with various obligations on their part under the Act. He pointed out that if the landowner is not treated as a promoter, in case of refusal on the part of the landowner, an aggrieved person cannot file a complaint before the K-RERA or Adjudicating Officer under S.31 of the RERA since the complaint is maintainable only against any promoter, allottee or real estate agent. He also pointed out that there is a bar of civil court jurisdiction under S.79 in respect of any matter by which the Authority or Adjudicating Officer or the Appellate Tribunal is empowered by or under this Act. Hence, the aggrieved persons would be remedied less against the landowner. The registered conveyance deed in favour of the allottee is to be made as required under S.17 by the promoter. If a narrow interpretation is given to the promoter excluding the landowner, the landowner could not be made liable to execute a registered conveyance deed, which is required under S.17. He argued that the presence of the word ‘person who causes to be constructed’ includes the landowner. Learned Counsel relied on the decision of the High Court of Mumbai in Wadhwa Group Housing P. Ltd. v. Vijaychoksi and Another, Second Appeal (Stamp) No. 21842/2023 in support of his contentions.
He argued that the presence of the word ‘person who causes to be constructed’ includes the landowner. Learned Counsel relied on the decision of the High Court of Mumbai in Wadhwa Group Housing P. Ltd. v. Vijaychoksi and Another, Second Appeal (Stamp) No. 21842/2023 in support of his contentions. Learned Counsel also referred to the Circular dated 04.12.2017 issued by Maharashtra RERA, which mandates that the landowner, promoter, and investor should also submit a declaration in Form B. He referred to the Public Notice No. K-RERA/T3/102/2020 dated 29.09.2023 issued by K-RERA under S.37 of the RERA, which deals with the application for registration of real estate projects involving a registered agreement for sale executed between promoter and the landowner in lieu of a registered joint venture agreement executed between the promoter and the landowner for the purpose of obtaining K-RERA registration. According to him the said Public Notice also indicates that the landowner is covered under the definition of promoter. Learned Counsel cited the Circular No. F1(152)RJ/RERA/Land2020/1202 dated 30.06.2020 issued by the Rajasthan Real Estate Authority specifying the categories of promoter and role and status of landowner under RERA. The said Circular provides that if, under the Development Agreements, the landowner proposes to share the profit or loss of the project, he has to be named and treated as a promoter, irrespective of his role in the project. Learned Counsel argued that in the case on hand, the landowner is sharing the profit of the Project by accepting the completed apartments, and hence, he cannot wriggle out from his obligations as a promoter. The respondents are bound to join with the appellant for registration under S.3 of the Act. 15. The learned Counsel for the 2nd respondent submitted that the Ext.B9 Agreement is not a Joint Venture Agreement. It is only a Development Agreement between the landowner and the promoter. The appellant is alone shown as the promoter. There is no obligation on the landowners to take part in the construction in any form. The respondents do not share any profit. What is given to them in the form of apartments is a consideration for the land they parted for the project. He invited my attention to the Statement of Objects and Reasons of RERA.
There is no obligation on the landowners to take part in the construction in any form. The respondents do not share any profit. What is given to them in the form of apartments is a consideration for the land they parted for the project. He invited my attention to the Statement of Objects and Reasons of RERA. He argued that the landowner could not come under the definition of the promoter under S.2(zk) since clauses (i) and (ii) therein only cover the person who constructs, causes to be constructed the building, or develops land into a project for the purpose of selling to other persons. So, mere construction or development is not sufficient, and it should be for the purpose of selling the same to others in order to attract the said provision. 16. On analysing the facts available in the case on hand, I am of the view that the respondents have no role in the process of development of the project. On going through Ext.B9, it is seen that there is no provision indicating any kind of role for the landowners in the matter of construction and development. The landowners do not share any profit or loss out of the Project. The Project is fully under the control of the appellant. The landowners do not have any say in the development and construction of the project. The landowners have no obligation to the allottees of the apartments, apart from obtaining the required Permits and Plans and executing the required Sale Deeds. Ext.B9 Agreement entered into between the appellant and the respondent is not a joint venture agreement. 17. It is clear from the terms of Ext.B9 that the respondents are parting their lands for a fixed consideration. They accept a part of their consideration in kind as completed apartments in the constructed project. Their consideration is clearly specified and limited irrespective of the profit or loss of the project. Acceptance of consideration in kind, cannot be termed as participation in the construction and development of the Project. They remain only as landowners and do not promote or develop the Project in any way. So, on the facts of the case, it could not be said that they are also promoters of the project. 18.
Acceptance of consideration in kind, cannot be termed as participation in the construction and development of the Project. They remain only as landowners and do not promote or develop the Project in any way. So, on the facts of the case, it could not be said that they are also promoters of the project. 18. The contention of the Counsel for the appellant is that the landowner comes within Sub Clauses (i) and (ii) of the definition ‘promoter’ provided in S.2(zk) of the RERA. I am unable to accept the said contention. If the intention of the Legislature was to include the landowner in sub-clauses (i) and (ii), there is no need to include an Explanation to Sub-clause (vi) dealing with the case of the landowner. The non-inclusion of the landowner in sub-clauses (i) and (ii) and inclusion of the landowner in Explanation to Subclause (vi) indicates the legislative intention that the term ‘promoter’ in the normal course does not include landowner. It cannot be said that wherever the term ‘promoter’ is used it is inclusive of landowners. 19. The term promoter is widely used in different provisions of RERA. The term promoter used in RERA would not include landowner in normal cases, unless there is an indication that it includes landowner. 20. The question in the present appeal is whether the term ‘promoter’ in Sections 3 and 4 dealing with registration of the real estate project is inclusive of the landowner. There are indications in Sections 3 and 4 itself that the term ‘promoter’ used therein does not include landowner. 21. S.4(2) provides for the documents to be submitted by the promoter along with an application for registration referred to in S.4(1). It is apposite to extract S.4(2) (l) (A): “4 (2) The promoter shall enclose the following documents along with the application referred to in subsection (1), namely: ****** (l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorized by the promoter, stating: (A) that he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title if such land is owned by another person. ******” 22. The above provision mandates the promoter to submit a Declaration if the land is owned by another person. There is no requirement for the landowner to give any kind of declaration.
******” 22. The above provision mandates the promoter to submit a Declaration if the land is owned by another person. There is no requirement for the landowner to give any kind of declaration. The above provision clearly indicates that the promoter mentioned in Sections 3 and 4 and the landowner are separate and distinct persons, and the term promoter used in Sections 3 and 4 does not include the landowner. 23. Rule 3(6) of the Kerala Real Estate (Regulation & Development) Rules, 2018 mandates submission of a Declaration in Form No. B as required under S. 4(2)(l) of the RERA. The said Form is in the form of an Affidavit cum Declaration. It is to be sworn by the Promoter. It is useful to extract Clause 1 of Form B. “1. That I/promoter have/has a legal title to the land on which the development of the project is proposed OR .......................have/has a legal title to the land on which the development of the proposed project is to carry out. AND A legally valid authentication of title of such land along with an authenticated copy of agreement between such owner and promoter for development of the real estate project is enclosed herewith.” 24. Clause (1) of the said Form B is a declaration that either the promoter named therein has legal title to the land on which the development of the project is proposed, OR such other person named therein has legal title to the land on which the development of the project is to be carried out. The said Clause also states that a legally valid authentication of the title of such land along with an authenticated copy of the agreement between such owner and promoter for the development of the real estate project is enclosed herewith. 25. From Form B, it is clear that even if the landowner is a person different from the Promoter, he need not join with the Promoter to submit the Application for registration. All the details are to be submitted by the Promoter himself along with his Application after obtaining the same from the land owner. It affirms that the landowner and the promoter are different persons, and the term promoter does not include landowner for the purpose of registration of the real estate project. 26.
All the details are to be submitted by the Promoter himself along with his Application after obtaining the same from the land owner. It affirms that the landowner and the promoter are different persons, and the term promoter does not include landowner for the purpose of registration of the real estate project. 26. Rule 4 of the said Rules, 2018 provides for the additional information and documents to be submitted by the promoter along with the Application for registration of the real estate project. The clause under Rule 4(1) (f) is extracted below: (4)(1) The promoter shall furnish the following additional information and documents, along with those specified under the relevant sections of the Act, along with the application for registration of the real estate project with the authority namely: ****** (f) Where the promoter is not the owner of the land on which development is proposed, details of the consent of the owner of the land along with a copy of the collaboration agreement, development agreement, joint development agreement, or any other agreement, as the case may be, entered into between the promoter and such owner and copies of title and other documents reflecting the title of such owner on the land proposed to be developed. ****** 27. Clause (f) under Rule 4(1) mandates the Promoter to furnish details with respect to the agreements with the landowner including the consent of the landowner where the promoter is not the owner of the land. 28. The aforesaid statutory provisions make it abundantly clear that the Application for registration of the Real Estate Project under Sections 3 and 4 of the RERA is to be submitted by the Promoter/s alone who do not include the land owner. There is no provision mandating the Landowner to submit any Application or document directly to the Authority for registration of the Project. Even in the case of a Joint Venture Agreement, the landowner need not join with the promoter for registering the real estate project as per Sections 3 and 4. 29. There are provisions in the RERA providing duties and obligations on the landowners. In case the landowners fail to discharge their functions and obligations under RERA, the aggrieved person can very well file a complaint under S.31 against the landowner. The term ‘promoter’ in Section 31 includes landowner. 30. In Cordial Foundation P. Ltd. (M/s) v. Dr.
29. There are provisions in the RERA providing duties and obligations on the landowners. In case the landowners fail to discharge their functions and obligations under RERA, the aggrieved person can very well file a complaint under S.31 against the landowner. The term ‘promoter’ in Section 31 includes landowner. 30. In Cordial Foundation P. Ltd. (M/s) v. Dr. Purushothama Bharati, 2023 (6) KLT 806 , this Court considered an Agreement similar to the terms of Ext.B9 and held that the status of the landowner is not that of a builder or promoter. His status is that of an allottee, and the status of the builder is that of the promoter. 31. The decision of the Hon’ble High Court of Mumbai cited by the learned Counsel for the appellant in Wadhwa Group Housing Project P.Ltd (supra) is clearly distinguishable on facts. It is not a case with respect to the landowner. In that case, an Investor who entered into a Development agreement with the Builder disputed the claim of the Allottee on the ground that it is not liable as it is not a promoter. 32. The Tribunal addressed and answered the contention of the appellant that if the landowners are not made liable as co-promoters, they will not turn up to discharge their functions of executing sale deeds, in the following words. In view of Explanation to Sub Clause (vi) of S.2(zk) of the RERA, the landowners will have to be deemed as a promoter for the specified functions of the landowner under the Act. The registration under S.3 is a function to be performed by the promoter and not the landowner because registration is not a specified function that the landowner has to perform. In view of Explanation Sub Clause (vi) of S.2(zk), if a person who provided land for the development process as the landowner is different from the person who actually developed the project, the landowner also will have to be deemed as a promoter not for all legal and practical purposes, but only for the specified functions of the landowner under the Act. S.17 of the RERA which provides for specified functions of the landowner to execute conveyance deed in favour of the allottees.
S.17 of the RERA which provides for specified functions of the landowner to execute conveyance deed in favour of the allottees. A reading of S.17 of the RERA along with the Explanation to Sub Clause (vi) of S.2(zk) will clearly show that for the purpose of executing sale deed in favour of the allottees, landowner will have to be deemed as a promoter. This does not mean that for all purposes or for all functions, or for all liabilities under the Act, the landowner can be treated as a promoter. The law is very clear that landowners’ liability or function must be for the limited functions specified under the law. For all other liabilities and functions than those specifically mentioned in the case of landowner the liability must be that of the promoter who developed the project. The liability of the respondents herein as landowners must be only as landowners to discharge their functions under S.17 of the Act and also the other specified functions as landowners and not for other liabilities and functions in the development process. Such liabilities and functions must be that of the promoter who developed the project. Just because the law has imposed certain specified functions of the landowner under a deeming provision, it cannot be said that the landowner must be liable for all other functions. In the case on hand, the respondents have only provided the land for consideration, and they have no role at all in the process of development. These findings of the Tribunal are well founded, do not require any interference and hence they are affirmed. 33. In view of the aforesaid propositions of law, all the substantial questions of law are answered in the negative and in favour of the respondents. I do not find any error or illegality in the orders of the K-RERA and the order of the Appellate Tribunal. Accordingly, this Miscellaneous Regular Second Appeal is dismissed.