Does Silence Equal Exemption? Bombay High Court Questions Mandatory RERA Registration

In a significant move for real estate developers, the High Court of Judicature at Bombay, bench at Aurangabad, has stayed an order by the Maharashtra Real Estate Appellate Tribunal that compelled a developer to register specific project wings. Justice Arun R. Pedneker, presiding over the Second Appeal, has placed the matter under judicial scrutiny, raising fundamental questions about the scope of Section 3 of the Real Estate (Regulation and Development) Act, (RERA), 2016.

The Conflict at "Project Flamingo"

The dispute involves Goldendreams Buildcon Pvt Ltd, the developer of "Project Flamingo," and its financier, Saffron Infradev Pvt Ltd. The project, designed in four distinct phases, already has "Wing A" registered under MahaRERA. However, the registration of "Wings B and C" became the focal point of a legal battle when the financier sought either the compulsory registration of these wings or a full refund of their investment.

While MahaRERA initially rejected the respondent's complaint in 2019, characterizing them as a joint promoter rather than an allottee, the Appellate Tribunal later reversed this, ordering the registration of the entire project within 60 days under threat of penalty.

The Appellant’s Argument: The "Negative" Form of the Law

Counsel for the appellant argued that Section 3 of the RERA Act is framed in the "negative," meaning that registration becomes a mandatory obligation only when a promoter initiates the advertisement, marketing, or sale of a project or its components. They contended that because Wings B and C were never advertised or offered for sale, the legislative mandate for compulsory registration had not yet been triggered.

Key Observations

The Court’s order highlights the necessity of analyzing the RERA framework in the context of commercial intent:

• "No promotor shall advertise, market, book, sell or offer for sale or invite persons to purchase in any manner any plot, apartment or building, in any real estate project or part of it, in any planning area, without registering the real estate project with the authority under this Act."
• "In terms of section 3 of the RERA Act, no compulsory registration is required unless the promotor advertise for sale or invite persons for purchase."
• "Whether the promotor has to mandatorily register a project under the provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA), despite the promotor not advertising or selling units in the Project?"

Implications of the Court’s Decision

Justice Pedneker admitted the appeal, noting that the case invites serious reflection on whether a regulatory authority can force a project's registration in the absence of market-facing activities.

By staying the Appellate Tribunal's order, the High Court has granted the developer a reprieve, preventing the immediate imposition of penalties for the non-registration of Wings B and C. The court has also strictly prohibited the appellant from advertising or selling any portion of those wings until the legal questions are settled.

This case stands as a critical test for developers and investors alike, signaling a potentially narrow reading of Section 3 that could redefine how "projects" are categorized under the umbrella of RERA compliance. The court is expected to deliberate further on these and other substantial questions of law during the next hearing, scheduled for December 23, 2025.