By Staff Reporter
On December 20, 2024, the Maharashtra Real Estate Appellate Tribunal (MREAT) issued a landmark judgment in the case of M/s. New Sangeeta CHS Ltd vs. Mr. Kaushal M. Haria and Others. The ruling clarified the responsibilities and liabilities of housing societies recognized as Promoters Under RERA when involved in redevelopment projects under the Real Estate (Regulation and Development) Act, 2016 (RERA).
In this case, New Sangeeta CHS Ltd owned the land and building and had entered into a development agreement with M/s Valdariya Construction for redevelopment. The project involved both rehabilitation and sale components. Disputes between the developer and the society eventually led to arbitration, allowing the society to proceed with self-redevelopment.
The society contended that it was not a promoter under RERA and denied liabilities for obligations towards flat purchasers. However, the MREAT examined whether the society, as a landowner, fell under the definition of “Promoter” under Section 2(zk) of the RERA Act.
Society’s Status as Promoter
MREAT ruled that the society, as the landowner, falls under the definition of “Promoter.” It emphasized that:
- The society authorized the developer to construct and sell flats, benefiting from funds contributed by flat purchasers.
- As per RERA, the term “Promoter” includes landowners who authorize developers to undertake construction.
- The society must register the project and comply with all obligations under RERA.
Liabilities Towards Flat Purchasers
The tribunal ruled that agreements for sale (AFS) entered into by the developer with flat purchasers create rights enforceable against the society. Key points include:
- The society, stepping into the shoes of the developer, must discharge pending statutory obligations under RERA.
- The society cannot deny liabilities on the grounds of no direct contract (privity) with flat purchasers.
- The principal-agent relationship between the society and the developer binds the society to the actions of the developer.
Significance of the Judgment
This judgment reinforces the principle of joint liability for promoters and co-promoters under RERA. Societies engaging in redevelopment projects cannot evade responsibilities towards homebuyers, ensuring greater protection for allottees.