India: Real Estate (Regulation & Development) Act, 2016 – Milestones In 2018

Last Updated: 9 January 2019
Article by Sana Khan and Sonam Mhatre

The Maharashtra Real Estate Regulatory Authority ("RERA") and the Real Estate Appellate Authority ("REAT"), under the provisions of Real Estate (Regulation & Development) Act, 2016 ("the said Act"), its Rules and Regulations that came into force since 1st May 2017 has been brought into force with a view to bring transparency in the real estate sector.

The year 2018 has been one wherein RERA has taken varied views to ameliorate home buyers without disturbing the sustenance of real estate sector. It is functioning with an endeavor to bring about transparency in the real estate sector. A few vital and prominent rulings passed by RERA and REAT in the passing year 2018 are enlisted hereinbelow:

  1. Unilateral Cancellation prior to RERA coming into force

    In Bharti Shah vs. Manish Shah & Ors1; the allottee unilaterally cancelled her booking in 2013 and approached RERA for refund along with interest. RERA noted the fact that no steps were taken by the allottee since 2013 and also that there was no allotment letter or Agreement for Sale executed in favour of the allottee. It was held that the claim agitated by the allottee is time barred and thus reliefs prayed were not entertained.

    On the other hand, unilateral cancellation of bookings by Surti Developers Pvt. Ltd.2 were challenged through multiple complaints filed against the said Promoter. Though the Promoter contended that the cancellations were before RERA came into force, it was held otherwise. On the contrary, it was held that though the cancellations were executed prior RERA, since the monies paid by the allottees were still lying with the Promoter, RERA had jurisdiction to adjudicate the complaint. The parties were directed to instead execute agreements for sale as per the provisions of the Act, its Rules and Regulations.
  2. An investor is not an "Allottee"

    In the year 2017, RERA chalked out a difference between an allottee and an investor in real estate projects. In Mahesh Pariani vs. Monarch Solitaire3, the allottee and promoter had entered in to a Memorandum of Understanding wherein the parties had agreed to a profit sharing ratio on sale of the flat. It was held that the complainant was an 'investor' and so had the status of 'co-promoter' of the project. The complaint was held to be of a civil nature and was dismissed.

    In 2018, a deeper thought was given as to who can be called an investor / financer of a project. In Ketan Gajara vs. JVPD Properties Pvt. Ltd.4, the following facts were considered before deciding whether the complainant was an investor or an allottee. The terms and conditions of the allotment letter were considered and seen that merely because the allotment letter mentions that the complainants were investors does not make them investors in real sense. It was reasoned that a person who pays money to the investor in anticipation of buying a flat, in fact invests money and that section 12 of the said Act also refers to such amount as 'investment'. It was also noted that there was no mention of the complainants being investors of the project on the RERA project registration webpage. Therefore, RERA held that the respondent was estopped from denying the status of allottees.
  3. Multiple proceedings discouraged by RERA

    In Jatin Mavani vs. Rare Townships Pvt. Ltd.5, the allottee was a member of an Association which had already filed a complaint before RERA and an order was passed in the said complaint. At the same time, the allottee had filed a separate complaint in the same project praying for similar relief as prayed for by the Association. RERA appreciated the principles of res judicata and it was held that the Complainant cannot separately agitate a complaint before MahaRERA when he was already a party to the proceedings filed by the Association as it will amount to multiple proceedings on the same issue.
  4. Pending litigation pertaining to project is not a defense for delay

    In Sunita Pawar vs. Rupji Constructions6; Promoter's submissions that the delay was caused due to pending litigation and that they were in a process of bringing another financer for the project were not excused. In the interest of natural justice, Promoter was directed to refund the entire amount paid by the allottee. In the absence of a registered agreement for sale, the allottee's prayer for interest was not granted in the above matter.
  5. Claim of compensation in the absence of registered agreement for sale

    Before RERA came into force, in many cases, allottees and promoters would merely enter into Memorandum of Understanding ("MOU") or Allotment letters or booking receipts were granted to the allottees to document the transactions. Section 13 of the said Act states that the promoter shall not accept payments more than 10% of the total consideration receivable from the allottees without entering into a written agreement for sale with such allottee. In nascent 2018, RERA interpreted section 18 in a strict sense. Therefore, in a few instances, it was construed that provisions of section 18 of the said Act in the absence of a registered agreement for sale.

    In matters of Nalini Jadhav & Anr. vs. Omega Premises Pvt. Ltd.7 and Melwin Lobo & Ors. Vs. Rashmi Realty Builders Pvt. Ltd.8; the allottees had executed MOU with their respective promoters and due to delay in handing over possession of their flats, the allottees sought relief under section 18 of the said Act and prayed for interest. RERA recorded that the allottee was explained that provisions of section 18 are not applicable to them as they do not have a registered agreement for sale executed with the promoter. Thereby, RERA advised the allottees of Omega Premises Pvt. Ltd. to take possession of their respective flat as the promoter had already obtained part occupation certificate and was offering possession of flats to the allottees. Whereas in Melwin Lobo & Ors. vs. Rashmi Realty Builders Pvt. Ltd. RERA directed both the parties to execute agreement for sale within a stipulated period.

    However, this position changed in mid-2018. While deciding fifteen complaints together filed against JVPD Properties Pvt. Ltd.9, RERA reiterated its view that in the absence of an agreement for sale, section 18 of the said Act has no role to play. However, REAT reversed this view and held that there cannot be a strict use of terminology of agreement for sale to be entered into. The words, "in accordance with the terms of the agreement for sale or, as the case may be," in Section 18(1)(a) of the said Act were interpreted to mean that depending on circumstances, the cumulative effect of a letter of allotment will not be short of branding it to be the terms agreed upon between the parties.
  6. Encourage completion of real estate projects

    The preamble of Real Estate (Regulation and Development) Act, 2016 emphasizes that RERA has been established for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building or sale of real estate project in an efficient and transparent manner and to protect the interest of the consumer in the real estate sector. Keeping this principal in mind, in Rujuta Thatte vs. Forefront Private Limited10, RERA held that in the larger interest of all the allottees of a project, awarding interest to Complainant would mean jeopardizing the project completion. It was noted that the money for payment of interest would be withdrawn from the separate account meant for completion of the project and would eventually slow down the progress of the project.

RERA and REAT were established with an intention to bring about speedy redressal for disputes between allottees and promoters. In order to bring about transparency in the real estate sector, it is mandated that all projects registered under RERA must provide all the disclosures required including pending litigations and Orders relevant to the projects. The above milestones laid out by RERA and REAT go on to show that that they endeavor to boost the completion of real estate projects and at the same time work towards welfare of the allottees being a weaker sect as compared to the class of promoter.


1. MahaRERA Complaint No. CC001000000000072

2. Champatlal Jain vs. Surti Developers Pvt. Ltd. MahaRERA Complaint No. CC006000000012571

3. MahaRERA Complaint No. CC006000000000789

4. MahaRERA Complaint No. CC006000000001312

5. MahaRERA Complaint No. CC006000000055013

6. MahaRERA Complaint No. CC006000000001420

7. MahaRERA Complaint No. CC005000000000343

8. MahaRERA Complaint No. CC006000000000248

9. MahaRERA Complaint No. CC006000000001358

10. MahaRERA Complaint No. CC006000000023293

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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