An association facilitating construction for its members qualifies as a promoter under the Real Estate (Regulation and Development) Act, 2016, and is liable for statutory obligations.

JUDGMENT :

(R. Subramanian, J.)

Challenge in these Appeals is to the order of the Appellate Authority constituted under the Real Estate (Regulation and Development) Act, 2016, hereinafter referred to as “the Act”),

2. The short background facts that are necessary for the disposal of the Appeals are as follows:

The appellant which is the Chennai Circle to the State Bank of India Officers Association had with an object of benefitting the employees of State Bank of India and their kith and kin promoted a Housing Project. It had purchased vast extent of land by collecting money from its members in its name and has entered into construction agreements with its members and others, who are allowed to purchase flats in the project. Problems arose during the implementation of the construction project and several of the allottees chose to move the Tamil Nadu Real Estate Regulatory Authority complaining that the project has not been completed and there are several lapses on the part of the promoter viz. the appellant in completion of the project.

3. The complaints were resisted by the appellant mainly contending that it cannot be termed as a promoter within the meaning of Section 2(zk) of the Act, since its role is only to facilitate construction on behalf of the members and whatever was done by the Association was only on behalf of the members with the approval of the members. Therefore, it cannot be termed as a promoter strictly within the meaning of the term promoter defined under Section 2(zk) of the Act.

4. The Regulatory Authority rejected the contention and concluded that in view of the wide language in which the definition is couched, the appellant would answer the description as a promoter and therefore, it would be liable to perform the obligations that are statutorily imposed upon a promoter under Section 11 of the Act. Upon such finding, the Authority issued a slew of directions aimed at implementation of the project as envisaged in the agreements. Aggrieved by the directions, the Appeals were preferred by the appellant before the Appellate Authority viz. the Tamil Nadu Real Estate Appellate Tribunal (TNREAT). The Tribunal after examining the rival contentions rejected the claim of the appellant and dismissed the Appeals, hence these Civil Miscellaneous Second Appeals.

5. While admitting the Appeals, the following questions of law were framed.

1.Whether the Appellate Tribunal is correct in directing the Appellant without impleading the 3rd party contractors who are the actual builders/ promoters as they are proper and necessary parties;

2. Whether Appellate Tribunal is correct in terming the Appellant as a promoter under Section 2 of the TNRERA Act when the Appellant did not perform in a commercial nature as a promoter.

6. We have heard Mr.S.Mukunth, learned Senior Counsel appearing for M/s. Sarvabhauman Associates, for the appellant in all the Appeals, Mrs. Vasudha Thiagarajan, learned counsel appearing for the first respondent in CMSA Nos.52 and 57 of 2022, Mr.Sittrarasu, learned counsel appearing for the first respondent in all the other Appeals and Mr.P.N.Bhuvaneswaran, learned counsel appearing for the second respondent in all the Appeals.

7. There are two Civil Miscellaneous Petitions in CMP Nos.11214 and 11217 of 2024 for impleading. While CMP No. 11214 of 2024 is by the SBIOA Unity Enclave Owners Welfare Association and CMP No.11217 of 2024 is by an individual owner. The sum and substance of the Appeals lies in very short campus. In view of the limited scope of the questions of law that have been framed in these Appeals, we do not think the proposed parties are either necessary or proper parties to these Appeals. They being third parties to the proceedings before the Tribunal and the Regulatory Authority cannot canvas the correctness of the orders in these Appeals filed by the appellant. Hence these Petitions for impleading are dismissed.

8. The questions of law read as follows:

Whether the Appellate Tribunal is correct in direct