1. INTRODUCTION
1.1 Recently, the Maharashtra Real Estate Appellate Tribunal ("MREAT") in Techno Drive Engineering Pvt. Ltd. Vs. Renaissance Indus Infra Pvt. Ltd.1 dealt with the issue of applicability of Real Estate (Regulation and Development) Act, 2016 ("Act") to industrial units.
2. FACTS
2.1 The brief facts of the case are that Techno Drive Engineering Pvt. Ltd. ("Buyer"/"Appellant") had purchased an industrial unit from Renaissance Indus Infra Pvt. Ltd. ("Developer") in an 'integrated industrial area' project consisting of residential, commercial, and industrial units ("Project").
2.2 The Developer failed to hand over the possession of the purchased unit on the date as agreed in the respective agreement for sale and hence the Appellant approached the Maharashtra Real Estate Regulatory Authority ("MRERA") under Section 18(1) and Section 18(3) of the Act for refund of the paid amounts with interest and compensation.
2.3 The MRERA rejected the complaint of the Buyer on the ground that the Act is not applicable to industrial units and industrial units are governed by the provisions of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 ("MOFA") after interpretation of the defined term 'flat'2 under Section 2(a-1) of the MOFA.
2.4 Aggrieved by the same, the Buyer approached the MREAT in appeal and the key issues along with the judgment of the MREAT is summarized in the following paragraphs.
3. ISSUES
3.1 The key issue dealt by the MREAT is whether the Act is applicable to a project consisting of industrial units? ("Issue"). The MREAT addressed the following questions pertaining to the Issue:
Whether the defined terms of 'apartment', 'building' and 'real estate project' under Section 2(e), Section 2(j), and Section 2(zn) of the Act includes industrial use?
The MREAT compared the defined terms of 'apartment' 3 , 'building' 4 and 'real estate project' 5 under Section 2(e), Section 2(j), and Section 2(zn) of the Act respectively. The MREAT held that the defined terms restrict the usage of the terms for residential or commercial purposes or for any ancillary or related purpose and no reference is made to industrial use.
The MREAT on a conjoint reading of the defined terms 'apartment', 'building', and 'real estate project' held that the applicability of the Act depends on the usage of a particular unit and industrial units do not fall under the purview of the Act.
3.2 Whether the legislature intended to extend the applicability of the Act to industrial units?
The MREAT discussed the circumstances against which the Act was enacted and referred to the 30th report of the standing committee on Urban Development (2013-14) in the 15th Lok Sabha pertaining to the draft legislation framed before the Act was finalized. The MREAT noted that earlier the application of the draft legislation was only restricted to residential units, however the same was extended to commercial units in the Act on a recommendation made by a law firm.
Further, the Secretary of the Ministry of Financial Services recommended that the draft legislation should be extended to industrial units, however the recommendation was not accepted when the Act was enacted. Hence, the MREAT held that the legislature did not intend to extend applicability of industrial units to the Act.
3.3 Whether mere registration of a project irrespective of the applicability of the project confers jurisdiction under the Act?
The MREAT held that mere registration of a project under the Act would not confer jurisdiction in respect of industrial units under the Act. It noted that the Project of the Developer consisted of residential, commercial, and industrial units.
However, the application of the Act would not extend to industrial units despite the registration of the entire Project consisting of residential, commercial, and industrial units was made. It was further clarified by the MREAT that the Act would be applicable in respect of non-industrial units in the Project.
4. INDUSLAW VIEW
4.1 The above discussed Issue has been raised time and again and it is to be seen whether the order would be appealed before the Hon'ble Bombay High Court. Similar to the MREAT order that states that applicability of the Act depends on the usage of a unit, the National Consumer Disputes Redressal Comission in Freight System (India) (P) Ltd. Vs. Omkar Realtors and Developers (P) Ltd6 . has held that a complaint in respect of a commercial space purchased by a company would not fall within the provisions of the Consumer Protection Act, 2019 ("CPA"). It is inferred that in social welfare legislations like the Act and CPA, the usage of a particular unit has been given particular importance. Further, on an analysis of this order, it appears that in integrated projects it would be advisable to give separate identification for units with different usage and a conscious decision would have to be taken by promoter-developers with respect to the type of units that are to be registered basis the applicability of the Act.
Footnotes
1 Appeal No. AT006000000052195 in Complaint No.CC006000000078620 of 2019
2 "Flat" means a separate and self-contained set of premises used or intended to be used for residence, or office, showroom or shop or godown or for carrying on any industry or business and includes a garage, the premises forming part of a building and includes an apartment,
3 "apartment" whether called block, chamber, dwelling unit, flat, office, showroom, shop, godown, premises, suit, tenement, unit or by any other name, means a separate and self-contained part of any immovable property, including one or more rooms or enclosed spaces, located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for any residential or commercial use such as residence, office, shop, showroom or godown or for carrying on any business, occupation, profession or trade, or for any other type of use ancillary to the purpose specified.
4 "building" includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial or for the purpose of any business, occupation, profession or for any other related purpose.
5 "real estate project" means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto.
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