Searching Case Laws & Precedent on Legal Query.....!
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Searching Case Laws & Precedent on Legal Query.....!
Scanned Judgements…!
In the complex world of real estate development in India, homebuyers often face misleading promises from agents acting on behalf of builders. A pressing question arises: Can a builder (promoter) be held responsible for fraud committed by an agent, even if the project is not registered under RERA? This issue is critical for buyers seeking justice and developers navigating compliance. This article explores the legal landscape, drawing from RERA provisions, the Consumer Protection Act, and judicial precedents. Note: This is general information based on legal interpretations and not specific legal advice. Consult a qualified lawyer for your situation.
The Real Estate (Regulation and Development) Act, 2016 (RERA) defines a 'promoter' broadly under Section 2(zk), encompassing not just builders but also agents, power of attorney holders, and even separate sellers. As per the provision: 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 which the building or apartment is constructed or plot is developed for sale Wadhwa Group Housing Private Ltd. VS Vijay Choksi - 2024 0 Supreme(Bom) 274.
The Explanation to this section is pivotal: where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act Wadhwa Group Housing Private Ltd. VS Vijay Choksi - 2024 0 Supreme(Bom) 274. This joint and several liability means promoters, including agents, share responsibility for project-related actions, such as sales and marketing, even extending to investors entitled to sell shares: even a person who is merely an investor in the project alongwith the Promoter and who is entitled to benefit in the real estate project is also covered by definition of the term ‘Promoter’ Wadhwa Group Housing Private Ltd. VS Vijay Choksi - 2024 0 Supreme(Bom) 274. Section 2(zk) is consistently reinforced across rulings Bikram chatterji VS Union Of India - 2019 5 Supreme 3.
While Section 3 mandates registration for ongoing projects before sales, liability isn't confined to registered projects. Unregistered projects violate RERA, but promoter status persists, triggering accountability for fraudulent acts by agents Wadhwa Group Housing Private Ltd. VS Vijay Choksi - 2024 0 Supreme(Bom) 274Pioneer Urban Land and Infrastructure Limited VS Union of India - 2019 0 Supreme(SC) 843. A promoter remains a promoter regardless of registration status—what is registered is the project, not the promoter: A promoter would remain always a promoter under RERA. ... What is registered under Section 3 of RERA is a project and not a promoter Air Force Naval Housing Board Air Force Station VS U. P. Real Estate Regulatory Authority - 2022 Supreme(All) 454Neelkamal Realtors Suburban Pvt. Ltd. VS Union of India - 2017 Supreme(Bom) 1982.
Crucially, RERA does not override other laws. Section 88 states: the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force, and Section 89 ensures RERA's overriding effect only where inconsistent Pioneer Urban Land and Infrastructure Limited VS Union of India - 2019 0 Supreme(SC) 843. Thus, even for unregistered projects, remedies under parallel statutes remain available.
Judicial interpretations affirm RERA's prospective application for ongoing projects without completion certificates, allowing fresh timelines upon registration, but non-registration doesn't erase promoter duties Macrotech Developers Limited VS State of Maharashtra - 2021 Supreme(Bom) 804. Assignee developers also step into the promoter's shoes: the said M/s.Rebuilt Developers having assigned the Real Estate Project in favour of the appellant herein, the appellant is the promoter within the meaning of Section 2(zk) of the said RERA and thus is bound to comply with all the obligations under the said RERA Samruddhi Developers VS Kiran Vasant Verekar - 2019 Supreme(Bom) 1515. This underscores enduring liability chains.
Section 31 permits aggrieved allottees to complain against promoters, supplementing other forums Pioneer Urban Land and Infrastructure Limited VS Union of India - 2019 0 Supreme(SC) 843Yogesh Keshav Bele VS Maharashtra Real Estate Regulatory Authority - 2023 0 Supreme(Bom) 1354. However, locus standi under RERA is limited to project-connected persons, like allottees, not unrelated parties Yogesh Keshav Bele VS Maharashtra Real Estate Regulatory Authority - 2023 0 Supreme(Bom) 1354.
Independent of RERA, the Consumer Protection Act, 2016 (CPA) holds builders accountable for agent fraud. Builders are service providers, and allottees are consumers. False or misleading representations constitute 'deficiency in service': If a builder of a house uses sub-standard material in construction of a building or makes false or misleading representation about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value under the Act Faqir Chand Gulati VS Uppal Agencies Pvt. Ltd. - 2008 5 Supreme 76.
Agents' actions within the scope of authority bind the principal via vicarious liability. A landmark principle: The only difference, in my opinion, between the case where the principal receives the benefit of the fraud, and the case where he does not, is that in the latter case the principal is liable for the wrong done to the person defrauded by his agent acting within the scope of his agency; in the former case he is liable on that ground and also on the ground that by taking the benefit he has adopted the act of his agent; he cannot approbate and reprobate West Bengal Infrastructure Development Finance Corporation Limited VS UCO Bank - 2017 Supreme(Cal) 568. This applies even if the principal benefits indirectly from sales proceeds.
No joint venture or shared control exempts the builder; direct accountability persists Faqir Chand Gulati VS Uppal Agencies Pvt. Ltd. - 2008 5 Supreme 76. CPA claims proceed without RERA registration prerequisites, offering a robust avenue for fraud akin to misrepresentation.
While liability is broad, caveats exist:- RERA Complaints: Restricted to allottees; unconnected parties must use other channels Yogesh Keshav Bele VS Maharashtra Real Estate Regulatory Authority - 2023 0 Supreme(Bom) 1354.- Unregistered Projects: Primary recourse shifts to CPA or civil courts, as Section 3 breaches invite penalties but don't negate other remedies Pioneer Urban Land and Infrastructure Limited VS Union of India - 2019 0 Supreme(SC) 843Wadhwa Group Housing Private Ltd. VS Vijay Choksi - 2024 0 Supreme(Bom) 274.- Criminal Aspects: Focus here is civil/regulatory; IPC fraud may apply separately, but minors/non-parties face limits Ritesh Agarwal VS Securities & Exchange Board of India - 2008 4 Supreme 269.- Pre-Deposit in Appeals: Promoters must comply with Section 43(5) pre-deposit, affirming their status post-enforcement Air Force Naval Housing Board Air Force Station VS U. P. Real Estate Regulatory Authority - 2022 Supreme(All) 454.
For part-completed projects with occupancy certificates pre-RERA, registration may be exempt, limiting RERA jurisdiction Macrotech Developers Limited VS State of Maharashtra - 2021 Supreme(Bom) 804.
In unregistered scenarios, CPA provides swift consumer forums without high costs.
Real estate transactions demand vigilance. Stay informed on RERA evolutions and seek tailored advice to protect interests.
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. ... estate agent. ... 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. ... There is no provision mandating the Landowner to sub....
After hearing all parties, MahaRERA passed Order dated 24 September 2021 holding both Complainant as well as promoters responsible for violation of provisions of Section 4 of the MOFA and held that the complainant could not claim any equity under the provisions of RERA. ... Definition of the term ‘promoter’ under Section 2(zk) of the RERA would indicate that even persons/entities with whom a flat purchaser does not enter into contract are also covere....
The “aggrieved person” under the RERA Act could be an allottee or real estate agent or promoter or association of allottees or any voluntary consumer association registered under any law for the time being in force. ... (2)(b), the project does not require registration and same would not be governed by the RERA Act. ... On 26th April, 2019, the Regulatory Authority disposed of the above referred complaint on the ground that since the Respondent No. 3....
This Court further held that an environment clearance certificate is mandatory, and obtaining of post-facto clearance would not legalize the construction put up by the Builder. ... Therefore, the TNRERA Rules, 2017 clearly contemplates that even where a project in developed in phases, a builder is required to register the project under RERA by enclosing copies of partial completion certificate obtained for each of such phases. 4.8. ... Thereafter, a ....
This Court further held that an environment clearance certificate is mandatory, and obtaining of post-facto clearance would not legalize the construction put up by the Builder. ... Therefore, the TNRERA Rules, 2017 clearly contemplates that even where a project in developed in phases, a builder is required to register the project under RERA by enclosing copies of partial completion certificate obtained for each of such phases. 4.8. ... Thereafter, a ....
In all such cases the promoters of the project would be responsible for fulfilling all obligations under the RERA Act and Rules made there under.”34. ... Moreover, in the present case, the project was registered under the Act of 2016 and therefore, the disputes are amenable to the jurisdiction of RERA. 32. ... jurisdiction and the RERA or the Adjudicating Officer is not a competent authority to adjudicate the dispute pertaining to the landowner and #....
In all such cases the promoters of the project would be responsible for fulfilling all obligations under the RERA Act and Rules made there under.” 34. ... Moreover, in the present case, the project was registered under the Act of 2016 and therefore, the disputes are amenable to the jurisdiction of RERA. 32. ... and the RERA or the Adjudicating Officer is not a competent authority to adjudicate the dispute pertaining to the landowner and pro....
C] Third Ground:- (i) As far as the contention of the appellant-Builder i.e., the agreement entered into with the respondent and marketing all are done before the commencement of the RERA Act, is concerned, the Tribunal held that the project is not completed ... Since the Appellant did not complete this process within the required time frame, the project is not exempted from registration under RERA. ... not at all....
Even otherwise, the project of the appellants is not required to be registered under the said Act, as, Section 3(2) (a) of the RERA Act imposes two conditions, viz., the land should not be developed exceeding 500 square metres 'or' ii) project should not exceed eight apartments, inclusive of all phase ... only to the registered project and would extend even in respect of unregistered pro....
If a project is not capable of being registered or is not liable to be registered, a person effectuating such project does not contravene any of the provisions of section 3 of the RERA. ... That proviso to Section 12 of the RERA uses the word 'proposed project' which clearly implies that even unregistered project would carry obligations for promoter thereof unde....
A promoter would remain always a promoter under RERA. In a given fact situation of the case, the authority may ask the promoter to sell already constructed flats for generating finances so that one is not put to any loss and the remaining development work is carried out. What is registered under Section 3 of RERA is a project and not a promoter. This is a crucial distinction which needs to be understood while analyzing the scheme of RERA.
From the scheme of RERA and the subject case laws cited above, we do not find that first proviso to Section 3(1) is violative of Article 14 or Article 19(1)(g) of the Constitution of India. In that sense, the application of RERA is prospective in nature. What the provisions envisage is that a promoter of a project which is not complete/sans completion certificate shall get the project registered under RERA, but, while getting project registered, promoter is entitled to prescribe a fresh time limit for getting the remaining development work completed. The Parliament is compe....
The rights of the respondents are confirmed by the appellant even before the competent authority and thus cannot be allowed to now challenge their locus in these second appeals. In view of the definition of "promoter" under Section 2(zk), the said M/s.Rebuilt Developers having assigned the Real Estate Project in favour of the appellant herein, the appellant is the promoter within the meaning of Section 2(zk) of the said RERA and thus is bound to comply with all the obligations under the said RERA.
In a given fact situation of the case, the authority may ask the promoter to sell already constructed flats for generating finances so that one is not put to any loss and the remaining development work is carried out. Having sufficient experience in the open market, the promoter is expected to have a fair assessment of the time required for completing the project. After completing all the formalities, the promoter submits an application for registration and prescribes a date of completion of project. What the provisions envisage is that a promoter of a project which is not complete....
“The only difference, in my opinion, between the case where the principal receives the benefit of the fraud, and the case where he does not, is that in the latter case the principal is liable for the wrong done to the person defrauded by his agent acting within the scope of his agency; in the former case he is liable on that ground and also on the ground that by taking the benefit he has adopted the act of his agent; he cannot approbate and reprobate.” The point that arose therein was that if an agent committed a fraud while acting in course of the business, which he is authorized ....
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