MahaREAT: An act of the partner is binding on the partnership firm.

By Fiona Mehta

 

In the matter of Mr. Jervis Anthony Creado and Mrs. Rose Jervis Anthony Creado vs. Aishwarya Light Construction Company (Appeal No. AT006000000052415), this appeal emanates from the order dated 24th December, 2019 passed by MahaRERA whereby the learned Authority had not granted reliefs of interest / compensation under section 18 of the RERA as sought by appellants in their complaint.

 

Facts of the case: The complainants have booked a flat No. 504, on 5th floor, ‘A’
wing ad measuring 466 sq. ft. along with one open parking space in the project ‘Aishwarya Heights’ of the respondent situated at Andheri, Mumbai for a consideration of Rs. 80,00,000/-. The respondent had issued allotment letter dated 27th February 2017 to the allottees. The allottees have paid entire consideration to the developer.

On 27th February, 2017 the respondent has executed unregistered agreement for sale with the CC006000000141152 filed by the appellants whereby, the complainants and agreed to handover possession of the subject flat to complainants by December, 2017. The developer neither registered agreement for sale nor handed over possession of suit flat to complainants therefore the complainants filed complaint and sought directions to developer.

The developer appeared in the complaint and disputed the claim of complainants contending in his reply that the alleged agreement for sale does not confer any right to the complainants as it was an arrangement between them and therefore the same has not been registered.

It is worthy to note that though the agreement for sale was undated but the facts remains that one of the partners of the respondent has agreed to handover the possession of the subject flat to allottees by December, 2017. An act of the partner is binding on the partnership firm.

 

What options does Section 18 of RERA Act gives you? Section 18 gives an option to the allottees either to continue with the project by claiming interest on delayed period of possession or to withdraw from the project and to claim refund of entire amount along with interest including compensation. In the instant case allottees have chosen the first option. It clearly shows that the allottees are interested in getting possession of the flat as they have already paid substantial amount out of the total price of the flat to the promoter.

 

Order: The impugned order shows that the learned authority has denied relief of interest on account of delayed possession only for the reason that there is no registered agreement for sale executed between the parties showing any agreed date of possession. However, the material produced on record and the impugned order clearly indicate that one of the partners of respondent executed undated agreement for sale with the complainants.

Moreover, the respondent has also not disputed the factum of execution of undated agreement for sale by its partner. Therefore, we are of the view that the allottees are entitled to interest on their investments from January, 2018. Therefore, the appeal is allowed by the MahaREAT.

Delhi High Court: Amount spent by man to support divorced sister must be taken into account while deciding maintenance to wife

By Fiona Mehta

 

In a recent matter of Sarita Bakshi vs. State & Anr, the Delhi High Court observed that a brother cannot be a mute spectator to his divorced sister’s miseries especially when she is in need of financial help.

Advocates GP Thareja and Rahul Singh appeared for the petitioner (wife). Advocate Saurabh Kansal appeared for the respondent (husband).

Justice Swarana Kanta Sharma said that in Indian culture, a brother and a sister have a deep sense of care towards one another. As a result, it was decided that the amount paid by a man to assist his divorced sister must be included while determining maintenance for his wife.

 

Facts:

Justice Sharma was hearing a revision petition from a wife who was contesting a family court ruling ordering her husband (Respondent-2) to pay her 6,000 in maintenance. According to reports, the spouse remarried and had a kid. Even though the sister was receiving some support from her ex-husband, his 79-year-old father and a divorced sister relied on him.

Justice Sharma noted that the man had remarried and had a kid and that a balance must be struck between supporting the ex-wife, son, and other dependents.

“It is the duty of the son/daughter to take care of his/her parents during the golden days of their life. The father of Respondent no. 2 is a non-earning member of the family who should enjoy his old age seeing his family happy. Thus, to make sure that the son is able to fulfil the wishes and wants of the father during his golden years, it becomes vital to consider some amount as expenditure for looking after and well-being of his father while determining the amount of maintenance,” the Court said.

Finally, the Court stated that relationships cannot be encapsulated in a mathematical formula in every situation and that each case must be judged in light of its unique circumstances, which may deserve the Court’s forbearance.

On the issue of dependency, the Court said that it can only be enhanced from a date when a person’s salary has increased, and the definition has to be read in light of the Indian culture.

 

Decision:

The court finally concluded that even if five shares are apportioned from the man’s salary the amount in favour of the petitioner’s wife would come to ₹8,000. However, considering the circumstances regarding the dependence of the aged father of the respondent on the respondent and other circumstances, approximately ₹7,500 will come to share of all the dependents, the court held.

The maintenance cannot be enhanced from the date of the application as the present petition is under Section 127 Cr.P.C. wherein, the maintenance amount has to be decided on the basis of the date on which the salary of the husband had changed,” the Court held.

 

How a recent Supreme Court ruling extends the legal rights of a daughter to her father’s property

By Fiona Mehta

 

In the matter of Arunachala Gounder, the Supreme Court Judgment dated 20th January 2022 has whipped up a lot of interest and intrigue – more so among the general population than the legal community. The Judgment delivered by a Bench of Hon’ble Justice Abdul Nazeer and Hon’ble Justice Krishna Murari delves into the realms of a daughter’s rights on her father’s self-acquired property or his share in partitioned coparcenary/family property.

 

What was the issue?

The most recent Supreme Court decision addresses a daughter’s legal entitlement to inherit her father’s “self-acquired” property in the absence of any other legal successor with inheritable rights. This implies the Hon’ble Court decided whether the property’s lawful heir would be the daughter by ‘inheritance’ or her father’s brother’s son through survivorship. One important fact is that the Judgment deals with a scenario before the commencement of the Hindu Succession Act, 1956.

 

What the Supreme Court has said:

The Honorable Court stated unequivocally that a self-acquired property or a share received in a partition of a coparcenary property by a Hindu male who died intestate (without leaving behind a legally valid Will) will devolve (i.e. be transferred) by “inheritance” rather than “survivorship,” implying that the daughter of a Hindu male will be entitled to such property before any other collaterals.

In the present case – The Hindu male died intestate. He was living in a joint family. However, the property in question was his ‘self-acquired’ property and therefore, his sole surviving daughter had all the rights to inherit his property and not his brother’s son (through survivorship).

 

Who inherits the property after the death of the daughter of the Hindu male who died intestate?

The Hindu Succession Act of 1956 solidified inheritance among all Hindus (irrespective of school of philosophy). A Hindu female’s property (including property gained by inheritance) is her absolute property, according to Section 14 of the aforementioned Act. As a result, the misunderstanding caused by some old conventions that a Hindu girl could only enjoy the inherited property throughout her ‘lifetime’ was also dispelled.

The succession of such properties (owned by Hindu females) in absence of a Will/testament is governed by Section 15 of The Hindu Succession Act, 1956 and in terms of the ‘order of succession’ as provided for in Section 16 of the same Act.

 

Legal heirs of Hindu female who dies without a valid will:

When a Hindu female dies intestate, her self-acquired property will devolve in terms of Section 15(1), firstly by her class-I legal heirs viz. the children and the husband, if alive.

However, when a Hindu female dies intestate leaving behind inherited property, then as per Section 15 (2), if she dies issueless viz. without any children, then the property inherited from her father or mother will go to the heirs of her father. Similarly, property inherited from her husband or father-in-law will go to the heirs of the husband. The Supreme Court in the present Judgment has affirmed the sanctity of this provision by stating that the intent of the Legislature in carving out the ex ..

 

Supreme Court Decision:

The recent Supreme Court pronouncement clarifies the inheritance laws as applicable to a Hindu female as follows:

(a) The Hindu daughter inherits the self-acquired property of her father

(b) The rule of ‘inheritance’ prevails and not the rule of ‘survivorship’.

(c) The Hindu female has an ‘absolute’ right in such property (in terms of the Hindu Succession Act, 1956) and not a limited ‘lifetime’ interest.

(d) Such property can revert to the ‘source’ only when the Hindu female dies without leaving behind a child.

(e) In absence of a Will/Testament, such property devolves upon her legal heirs as per the terms of Section 15 and 16 of The Hindu Succession Act, 1956.

 

The Hon’ble Court has answered all the unanswered questions and redefined the law. While there could be a minuscule percentage of such cases, they would not drag on for many years, because the law has been clearly laid, leaving no room for any conundrum.

SEBI tweaks cybersecurity and cyber resilience framework for AMCs

By Fiona Mehta

 

The Securities and Exchange Board of India (SEBI) June 2022 tweaked the cyber security and cyber resilience framework for asset management companies (AMCs) and mandated them to conduct a comprehensive cyber audit at least twice in a financial year.

AMCs have been asked to submit a declaration from the managing director (MD) and chief executive officer (CEO) to stock exchanges and depositories, along with the cyber audit reports, certifying compliance with all Sebi guidelines and advisories related to cyber security issued from time to time, according to a circular. The new framework will come into force on July 15, 2022.

Under the new framework, asset management organisations must identify and classify important assets based on their sensitivity and criticality for company operations, services, and data management.

Further, business-critical systems, internet-facing applications/systems, systems containing sensitive data, sensitive personal data, sensitive financial data, and personally identifiable information data, among others, should all be considered critical assets.

All auxiliary systems that connect to or communicate with critical systems, whether for operations or maintenance, must be designated as critical systems as well.

The board of AMC is required to approve the list of critical systems.

“To this end, Mutual funds/ AMCs shall maintain an up-to-date inventory of its hardware and systems, software and information assets (internal and external), details of its network resources, connections to its network and data flows,” Sebi said.

According to SEBI, they must conduct regular Vulnerability Assessments and Penetration Tests (VAPT) that include critical assets and infrastructure components in order to detect security vulnerabilities in the IT environment and an in-depth evaluation of the security posture of the system through simulations of real attacks on their systems and networks.

AMCs are required to conduct VAPT at least once in a financial year. However, the mutual funds/ AMCs, whose systems have been identified as “protected systems” by National Critical Information Infrastructure Protection Centre (NCIIPC) need to conduct VAPT at least twice in a financial year.

Further, they are required to engage only CERT-In (Indian Computer Emergency Response Team) empanelled organisations for conducting VAPT. Within a month from the completion of the VAPT, the final report must be submitted to Sebi with the approval of the technology committee of respective AMCs.

“Any gaps/vulnerabilities detected shall be remedied on an immediate basis and compliance of closure of findings identified during VAPT shall be submitted to the stock exchanges/depositories within three months post the submission of final VAPT report,” the regulator said.

Earlier, the regulator came out with modified cyber security and cyber resilience framework for stock brokers and depository participants, market infrastructure institutions – stock exchanges, depository and clearing corporations – and KYC registration agencies (KRAs).

MahaRERA: Failure of completion of a flat project will lead to money refunded plus interest to buyers

RERA

RERABy Fiona Mehta

 

In the matter of Mr. Vikas Gupta and Neena Gupta v. M/s. Wheelabrator Alloy Castings Ltd and M/s. Runwal Real Estates Pvt. Ltd (CC006000000197002) under the MahaRERA Authority on 17th January 2022, the complainants had filed this complaint seeking directions  from MahaRERA to the respondent to refund the amount with interest and  handover possession under the provisions of section 18 of the Real Estate  (Regulation & Development) Act, 2016 in  respect of the booking of a flat in the  respondent’s registered project known as “Runwal Forests Tower 5-8” in Mumbai.

During the hearing on September 2, 2021, the respondents were fined Rs. 10,000/- for failing to file their replies on MahaRERA’s record. The respondents, on the other hand, filed a review application to have the order set aside, which the MahaRERA granted after hearing the parties on October 5, 2021.

 

Facts:

The complainants had reserved the aforementioned flat in the project registered by the landowner, respondent No. 1, for which a letter of allotment dated 18th October 2015 was properly issued to the complainants upon payment of the booking price of Rs. 59,91,565/-. Respondent No. 1 specified August 2019 as the date of possession in the stated assignment letter. Following that, on August 19, 2016, an agreement for sale was signed and registered, and the date of possession was altered to February 2020. The complainants alleged that they had paid a significant portion of the compensation.

Furthermore, the proposed completion date for Tower 8 has been pushed back several times till October 31, 2021. The complainants were then informed, via an e-mail dated 8th April 2021, that the project was completed up to 40 levels. The complainants then asked to be removed from the project. Furthermore, work on the flat sold to the complainants under the agreement for sale has yet to begin. As a result, the complainants are seeking a return of the monies spent to date, plus interest, as well as amounts paid for Stamp Duty and Registration, GST, VAT, Service Tax, and other taxes.

The MahaRERA has reviewed both parties’ submissions as well as the public record. The complainants, who are allottees of this project, have approached MahaRERA with this complaint, requesting a refund as well as interest for the delayed possession under section 18 of the RERA. The complainants further claimed that section 12 of the RERA had been also violated.

The respondent promoter refuted the complainants’ claim by filing written representations on record with MahaRERA, claiming that the delay in this project was caused by the competent authorities issuing Stop Work Notices due to a lack of Naval NOC, and that this was beyond its control. In light of the Hon’ble Punjab and Haryana High Court’s decision in the case of Janta Land Developers, the respondent has also rejected the complainants’ claims by raising the question of MahaRERA’s single bench’s jurisdiction to decide this complaint on its own.

 

Judgement/Held:

Given the facts and circumstances of this matter, the MahaRERA believes there is substance to the grounds for delay provided by the respondent, and that the delay was beyond the respondent’s control. As a result, the respondent is entitled to request MahaRERA’s assistance in completing this project. However, the respondent has now committed to finish the project and hand over control of the property to the complainants by acquiring the occupancy certificate on or before June 30, 2022.

Given these facts, the present complaint is dismissed with a directive to the respondent promoter to complete the project, obtain an occupancy certificate, and hand over possession of the said flat to the complainant on or before June 30, 2022, failing which, the complainants’ money will be refunded, plus interest, at the rate of SBI’s Highest Marginal Cost of Funds Based Lending Rate (MCLR) plus 2%, as prescribed under the provisions of the SBI Act.

MAHAREAT: Obtaining OC/completion of construction at any time will not render the Section 18 inapplicable

By Fiona Mehta

In light of the Hon’ble High Court’s judgement dated 15th April 2020, the promoter has filed Miscellaneous Application (M.A.) 108 of 2020 to collect the outstanding sum owed by the Appellants, plus interest. It is also requested that the aforementioned Application be considered concurrently with the appeal under review (AT006000000010885).

 

Facts of the case: Appellants (hereinafter referred to as Allottees) claim to have originally booked the flat on September/October, 2009 in the project of Respondent known as Indiabulls Greens-1, at Panvel, District Raigad. According to Allottees, promoter promised to give possession within a period of 3 years i.e. October, 2012. subsequently registered agreement for sale dated 20 August 2011 was executed by the parties as per clause 9 of which possession was agreed to be given within 60 months with grace period of 9 months and with entitlement to further reasonable extension in period of possession subject to mitigating events listed under the said clause claiming inter alia that Allottees have paid 100% amount as per demands raised by promoter and alleging further that amenities and facilities as promised in brochure/advertisements etc., as obtained from Times of India were not provided in the almost completed project in 2012,Allottees filed complaint with the Authority seeking inter alia possession of the flat and interest for delay in possession.

In the complaint hearing, the Promoter contested the grounds presented by the Allottees and sought the Authority to issue an order to give over possession by December 2018 as specified in a prior complaint in the same project. The promoter further argued that because the occupancy certificate (OC) was obtained prior to the filing of the lawsuit and possession had already been offered to Allottees in accordance with it, the provisions of section 18 for interest payment would not apply. The promoter also stated that it will not charge for services or amenities that will not be available when possession is handed over.

After examining the parties’ views, the Authority concluded in the impugned order dated 24 October 2018 that Section 18 would not apply after the project was completed or possession was delivered, and declined to award interest to Allottees for the delay in possession. As a result, the Authority recommended Allottees to take possession with instructions to the promoter not to charge for any amenities/ facilities that were not delivered at the time of possession until such time as they were. The stated order is being contested by Allottees in this appeal.

Following the foregoing order, Allottees desperately sought to make the amount asked by Promoter under protest for taking possession, as evidenced by comments made by Allottees via multiple emails. It appears that Promoter declined to accept the offer and did not hand over possession until the Hon’ble Bombay High Court ordered it to be handed over in the second appeal filed by Promoter, vide order dated 09th January 2020, subject to keeping all contentions of the parties open with regard to claims of both parties regarding outstanding amount. This application is being submitted in accordance with the above-mentioned instructions.

 

Order: The Tribunal has repeatedly concluded that getting OC/construction completion at any moment does not make Section 18 inapplicable. If an OC is obtained after the parties have agreed on a date, such an OC, as is the situation in this case, cannot negate the effect of the provisions of Section 18. As a result, if OC is not obtained and/or ownership is not transferred before the agreed-upon date, the provisions of Section 18 will be invoked, making Allottees entitled to the reliefs granted thereunder. As a result, the contested order, which is contradictory to the law, deserves to be set aside and requires intervention.

Promoter/Respondent is directed to pay Allottees interest on the total amount excluding stamp duty and registration charges, if any, within 30 days from the date of this order, w.e.f. 21st May 2017 until the date of handing over possession, at 2% above the highest SBI MCLR prevailing on the date of the impugned order.

Bombay High Court: ordered the builder to deposit 100% of the interest due to flat buyers

By Fiona Mehta

 

As a condition of hearing its appeal, the Bombay high court upheld an order of the RERA (Real Estate Regulation and Development Act) appellate tribunal (MAHAREAT) directing a builder to deposit 100% of the interest due to buyers for delays in handing over flats at a project called Wintergreen in Borivali in May 2022.

However, the HC, accepts an undertaking by the builder, CCI Projects Pvt Ltd, and gave it 5 months to deposit over Rs 19 crore before the Tribunal, of which Rs 5.5 crore is to be paid in 4 weeks.

The developer said it will deposit Rs 33 lakh, or 30% of the Rs 1.1 crore ‘penalty’ due to flat buyers, in 4 weeks. It will also provide more than Rs 10 lakh to expenses as directed. In their May 6 judgement, Justices Revati Mohite Dere and Madhav Jamdar stated that failure to fulfil deadlines will result in the rejection of any pending appeal before the panel.

CCI Projects’ counsels had challenged the tribunal’s orders under the RERA Act requiring it to deposit a 100 percent deposit “without recording any reasons.” According to the counsels, Section 43 (5) of the RERA Act provides the tribunal power to request a deposit of at least 30% of the amount, and “the appellate tribunal has directed deposit of considerably lesser amount in numerous other situations.”

The HC also heard from Central government’s counsel and the apartment buyers’ attorney where they pointed out that the Act only requires a minimum 30% deposit of the imposed ‘penalty,’ not any additional amounts. She stated that a pre-deposit of the total sum is mandatory before an appeal is considered.

The project is finished, according to the builder’s counsel, and the flats have been handed over to the buyers. According to him, the MahaRERA order is merely for compensation for delays, and hence, flat buyers’ concerns should have been dismissed.

 

Flat buyers filed 173 complaints, of which 69 have been resolved, 83 are awaiting hearing before the Authority, and 19 are awaiting conciliation. There were 112 appeals before the tribunal, 42 of which were settled, and 53 of which were granted a pre-deposit order.

The builder’s counsel then requested further time, claiming that the builder is willing to make the deposit in five months and has agreed to pay the interest deposit in five months, as well as not to create third-party rights in four shops at Arcade, Rivali Park in Borivali, valued at around Rs 12 crore.

The HC ordered that if the builder and flat buyers do not reach a settlement within five months, the builder is free to seek a revision of the ruling.

Section 43(5) of the Act envisages the filing of an appeal before the appellate tribunal against the order of an authority or the adjudicating officer by any person aggrieved and where the promoter intends to appeal against an order of authority or adjudicating officer against imposition of penalty, the promoter has to deposit at least 30 per cent of the penalty amount or such higher amount as may be directed by the appellate tribunal.

If the appeal is against any other order involving the return of funds to the allottee, the promoter must deposit with the appellate tribunal the total amount to be paid to the allottee, including any interest and compensation owed to him, if any, or both, as the case may be, before the appeal is filed.

Supreme Court: Homebuyers can move RERA Authority against Bank’s Recovery Actions

RERA

RERABy Fiona Mehta

 

The Supreme Court of India, vide its order dated 14th February, 2022, in the matter of Union Bank of India vs. Rajasthan Real Estate Regulatory Authority & Ors. while upholding the order dated 14th December 2021 of the Hon’ble High Court of Rajasthan, inter-alia held that the RERA Authority.

The RERA Authority read with the rules and regulations made thereunder (“RERA Act”) has the jurisdiction to entertain a complaint filed by an aggrieved person against the bank as a secured creditor in the event the bank takes recourse to any of the provisions contained in Section 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) provided that the proceedings filed before the RERA Authority have been initiated by the homer buyers to protect their rights.

 

Background: In a recent writ petition, the division bench of the Hon’ble Rajasthan High Court issued a landmark decision protecting home-buyers’ rights and interests by ruling that secured creditors such as financial institutions and banks fall under the jurisdiction of the RERA Authority, and that home-buyers can file a complaint with the RERA against such secured creditors.

The High Court further held that:

(i) The Real Estate Regulatory Act, 2016 (“RERA Act”) operates retrospectively only in the cases where the security interest is created because of fraud or collusion between banks/financial institutions and developers;

(ii) The RERA Act would prevail over the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) in case of a conflict between the two; and

(iii) The RERA has jurisdiction to entertain complaints against secured creditors like banks/financial institutions once they take recourse under Section 13(4) of the SARFAESI Act to enforce their security interest. The High Court judgment has already been discussed in our previous update which can be accessed.

 

Supreme Court Judgement: The Hon’ble Supreme Court, in its order dated 14th February 2022, resolved one of the outstanding legal questions by concluding that Banking Institutions can be made parties before the RERA Authority and are subject to the RERA Authority’s jurisdiction.

While upholding the Rajasthan RERA authority’s landmark decision, the Hon’ble High Court further ruled that the RERA act will take precedence over the Bank’s recovery actions under the SARFAESI Act. This order of the Hon’ble Supreme Court established that the rights of Allottees are fundamental, and their interests are prioritized over the rights of banking institutions.

In light of the aforementioned judgments, a bank or financial institution taking recourse under Section 13(4) of the SARFAESI Act in response to a developer’s default in payments would be deemed to be a promoter in relation to the secured asset for the purposes of the RERA Act, allowing Allottees to file RERA Act complaints against such bank or financial institution.

SC awards builder 7 days’ jail and fine for contempt of court

By Fiona Mehta

 

In the matter of Urban Infrastructure Real Estate Fund v. Dharmesh S. Jain and another, the Supreme Court sentenced Respondent 1- real estate developer Dharmesh Jain to 7 days imprisonment at civil prison in Byculla on May 14, 2022 under the Contempt of Courts Act with a fine of Rs. 5 lakh to be deposed before the Bombay High Court in 2 weeks.

Vide detailed judgment and order dated March 10, 2022 passed in the aforesaid Contempt Petition, this Court held that Dharmesh Jain, for the contempt of this Court for wilful disobedience of the order dated October 28, 2021 passed by this Court in Miscellaneous Application No. 1668 of 2021 in Special Leave Petition (Civil) No. 14724/2021, as also, for wilful disobedience of the order passed by the High Court dated 08.08.2019 in Notice of Motion No. 960 of 2019 in Commercial Arbitration Petition No. 55 of 2019.

Two months prior, the SC had found him guilty of wilful disobedience of his October 2021 ruling as well as an August 8, 2021 Bombay High Court order. Following an arbitral award of Rs. 78 crore against him and Nirmal Infrastructure Pvt. Ltd, of which he is a director, in a commercial dispute with Urban Infrastructure Real Estate Fund over a share purchase agreement, the HC ordered him to deposit a certain amount.

The HC stated that they provided the respondents/contemnors with sufficient opportunities to either comply with the orders of this Court and the High Court, for which wilful disobedience has been established and they are liable to be punished suitably under the provisions of the Contempt of Courts Act, or to settle the dispute amicably with the petitioner herein, but neither the respondents/contemnors have complied with the orders passed by this Court and the High Court.

However, so as to give one last opportunity to the contemnor to purge the contempt and comply with the orders passed by the Bombay High Court as well as this Court, it is observed that the aforesaid sentence shall be kept in abeyance for a period of two weeks from today, failing which, the aforesaid sentence shall take effect and on non-compliance, the respondent No.1 herein – Dharmesh Jain will then surrender before the concerned Court/Authority to undergo the sentence imposed by this Court.

Delhi High Court: Real Estate Appellate Tribunal does not have suo motu powers.

By Fiona Mehta

 

In the matter of Praveen Chhabra v. Real Estate Appellate Tribunal (2022) under the High Court of New Delhi, the Court quashed the suo motu proceedings initiated by the Appellate Tribunal to monitor construction activity in the National Capital Territory.

The court held that under the Real Estate (Regulation and Development) Act, 2016 (RERA), the jurisdiction of the Appellate Tribunal stands confined to consideration of challenges raised against orders passed by either the Real Estate Regulatory Authority or the Adjudicating Authority under the RERA.

In this matter, the Appellate Tribunal had filed suo moto proceedings in the national capital against a number of residential and commercial projects, as well as construction activities associated with them, and had issued restriction orders against them. Additionally, it had passed an order stating that all construction activity, residential or commercial, would be stayed till the project is registered under RERA Act.

Aggrieved by the same, Praveen Chhabra, the builder developer approached the High Court after he was informed that the plans he had submitted could not be approved in light of the Appellate Tribunal order. The Appellate Tribunal neglected to consider the scope of the Act, according to the Court.

According to Sections 43 and 44 of the RERA Act, which provide for the establishment of tribunals and the definition of what disputes can be brought before such tribunals, the Appellate Tribunal was established as a forum whose jurisdiction could be invoked by a person aggrieved by an order, decision, or direction of the Authority.

The High Court also said that the Appellate Tribunal being a creation of statute, is not part of traditional judicial institutions.

The Court, therefore, quashed the order staying the construction of projects until they are registered under with the RERA authority.

“The Court also takes into consideration the significant portent of the direction issued. It has practically injuncted all construction activity in the NCT of Delhi. The aforesaid injunction is not shown to have been preceded by any enquiry with respect to the validity of a particular project or even a prima facie assessment or evaluation of the validity of a single project,” the Court observed while quashing the order.

The judge, however, clarified that he was not interfering with the Authority’s right to independently examine individual projects under the RERA Act.

Therefore, the Real Estate Appellate Tribunal does not have powers to initiate cases suo motu, the Delhi High Court recently held while setting aside such proceedings initiated by the tribunal to monitor construction activity in the National Capital Territory.

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