Plot owners liable under RERA : Maharashtra Government tells HC

Plot owners liable under RERA : Maharashtra Government tells HC
01/08/2017 , by , in News/Views

The Maharashtra state government told Bombay High Court that plot owners are covered by the definition of a promoter under Real Estate (Regulation and Development) Act if they take part in the construction and also in the sale of flats. The government was replying to a petition challenging a circular by the State authority under RERA which makes owners co-promoters in a real estate project.

The Maharashtra Real Estate Regulatory Authority had notified, in the May 11 office order, that any owner or organization which signs a development agreement with a builder will also have to register under RERA and will be treated as a co-promoter of the project. It said this is because the owner will be entitled to a share of the total revenue generated from the sale of flats or total area developed. It also states that liabilities of such co-produced will be at par with the promoter of the project.

Arguing for the owners of a 3 acre plot at Malad (west), advocate Girish Godbole with advocate Vishwajeet Kapase, argued that the Authority has no jurisdiction to define a co-promoter. They pointed out that under Maharashtra Ownership Flats Act the owner hands over the land to the developer under a power of attorney and is not included as a promoter.

Advocate General Ashutosh Kumbhakoni, alongwith advocate Shardul Singh said all that the Authority has done “is issue a clarification of how the definition should be seen”. “General public is not aware of the niceties of the Act,” he said. Kumbhakoni explained that RERA is aimed to regulate construction activity and also sale of flats to third party. ”If he (owner) is part of construction and also the sale of flats he is a promoter,” he said, adding that the petition deserves to be dismissed. He also added that the owners have retained 35 per cent of the flats and will sell the flats.

The judges said the court will have to consider the definition of promoter. “It depends on the facts and circumstances of each agreement and is not a general agreement,” said Justice Mohta. The judges directed the government to file its reply and posted the hearing after three weeks.

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