‘Projects having completion certificate after July 2017 under ambit of Rera’
JURISDICTION MATTERS Haryana Rera (Panchkula) has held that ongoing projects where completion certificate was granted after publication of state rera rules come under the Rera jurisdiction
Developers will no longer be able to keep themselves out of the purview of the real estate (regulatory and development) act on the pretext of having got the completion certificate.
In a landmark order, the Haryana real estate regulatory authority (Panchkula) comprising Rajan Gupta (chairman), Anil Kumar Panwar (member) and Dilbag Singh Sihag (member), held that only developers who got completion or occupation certificate before the publication of the state real estate (regulatory and development) rules 2017 are exempted from the purview of the Act.
The authority held, “An occupation certificate granted after July 28, 2017 will be of no consequence for claiming exemption in respect of registration of a project.”
The state real estate regulatory authority has full jurisdiction over developers who applied for and got completion certificate after the publication of the Rera rules; and in such cases, aggrieved allottees can approach the authority against defaulting developers.
The order came in the case, ‘Madh uS are en versus B PT P Ltd and others’.
Complainants in the case were allottees of flats in a BPTP real estate project and the developer offered them possession, but only on payment to escalated price, enhanced area cost and GST, etc.
According to complainants, developer increased the super area of the flats unilaterally without informing them and without seeking their consent.
They further alleged that developer was required to deliver possession before coming into force of GST law in terms of agreement entered with them.
And since the developer himself is responsible for delaying the completion of the project, they are not liable to pay the enhanced cost or even the GST. So, the complainants prayed for grant of interim relief restraining the developer from charging escalated price and GST, till the final decision of their complaint.
The developer in his reply questioned the very maintainability of the complaints averring that he has been already granted occupation certificate on February 26, 2018 in respect of a part of his project and that his project, after issuance of such occupation certificate, has been excluded from the purview of the Rera Act, 2016. So, the Authority has no jurisdiction to deal with the complaints.
Complainants, while referring to the Section 3(2) (b) of the Act, argued that only such project which has received completion certificate will not require registration and the project in question was an ‘ongoing project’ requiring a mandatory registration under Section 3 of the Act for the reason that no completion certificate for it was received on or before the date of commencement of the Act, that is, May 1, 2017. So, the developer cannot claim that his project does not fall within the jurisdiction of the authority.
The respondent argued that the project in question does not fall in the category of “ongoing project” as defined in Rule 2(1) (o) of the Rules because occupation certificate in respect of a part of the project has been granted by the competent authority.
THE AUTHORITY ORDER
The authority after hearing from both the parties and on appraisal of their submissions, arrived at a prima facie conclusion that the application of the developer for issuance of completion certificate was not filed with bona fide intention and he cannot take the benefit of occupation certificate for claiming exemption from the provisions of Section 3 of the Act or even for defeating the present complaints.
The Authority held that the proviso attached to Section 3 makes it mandatory for a developer even to get such a project registered with the Authority, which was ‘ongoing’ on the date of commencement of the Act and for which the completion certificate has not been issued by the competent authority.
In its interim order, the authority observed, “The first part of the Rule 2(1) (o) of the Haryana real estate (regulatory and development) rules 2017 defines the expression ‘ongoing project’ THE RELIEF AWARDED TO A COMPLAINANT CAN ALSO BE EXTENDED TO OTHER ALLOTTEES IN A PROJECT WHO HAVEN’T APPROACHED THE AUTHORITY FOR RELIEF as a project for the development of which a license has been granted by the competent authority and development work of which were not yet completed on May 1, 2017. Second part of Rule 2(1) (o) contemplates that expression ‘ongoing project’ shall not include any project which is covered by the provisions contained in clause (i) and clause (ii) of said rule. What deserves to be specially noted in these provisions is that the last word separating clauses (i) and (ii) is not ‘or’ and the word used is rather ‘and’. So, any project or its part will qualify for exemption from the definition of ‘ongoing project’ only if all conditions laid down in clauses (i) and (ii) are satisfied. The condition laid down in clause (ii) of Rule 2 (1) (o) is that completion/occupation certificate must have been granted on or before the publication of the Rules.”
An occupation certificate granted after July 28, 2017 will be of no consequence for claiming exemption in respect of registration of a project. “Undeniably, the occupation certificate in the present case was granted to developer on February 26, 2018, that is, after the publication of Rules and therefore, the developer, on its basis, can neither claim that his project was not requiring registration nor he can legitimately argue that the authority has no jurisdiction to deal with the complaints filed by the allottees of his project,” stated the authority in the order.
WORK FINISHED BEFORE APPLYING FOR COMPLETION CERTIFICATE
Verifying whether developer completed development work before applying for completion certificate: The authority, before giving the interim relief to allottees, verified with the department of town and country planning, Haryana (TCP) whether the developer had bona fide intentions in applying for the completion certificate or was the application made only to get exemption from the Act.
After the verification and reply filed by TCP, the authority observed, “The project of the present developer was not even qualifying the conditions mentioned in clause (i) of Rule 2(1) (o), for its exclusion from the definition of ‘ongoing project’. Clause (i) clearly mandates that application for grant of occupation certificate can be made to the competent authority only after the completion of development works.
The reply filed by the Director, Town and Country Planning, Haryana on April 9, 2018 reveals that the district town planner (DTP) and senior town planner (STP) vide their letters dated July 4, 2017 and July 5, 2017 had pointed out deficiencies in the completion of development works and the developer took more than 5 months to inform the department that the shortcomings pointed out by the above mentioned officers had been removed.
The span of 5 months time taken by the developer to remove the short comings, by itself, prove that substantial amount of development work was incomplete on the date the developer had filed application for grant of occupation certificate.”
The Authority held that application of developers for grant of occupation certificate was not bona fide because he made the application without completion of development works.
“So, grant of occupation certificate on the basis of an application filed without completion of development works was neither permissible nor the certificate granted on the basis of such application can save the developer from seeking registration of his project as is mandatory under Section 3 of the Act,” the order reads.
Respondent argued that development work, for the purpose of filing an application to obtain completion/occupation certificate, needs to be complete only in the developer’s own estimation and not as per the milestones set by the competent authority granting the certificate.
Rejecting the developer argument, the authority held, “Upholding of such argument will not only undermine the role of the authority granting the certificate but it could further warrantevena chancefor unscrupulous developers to abuse the provisions of Rule 2(1) (o) with the connivance of the officials, who are required to verify the completion of development work on the spot before granting completion/occupation certificate. So, the aforesaid argument of the developers permissions learned counsel is rejected being wholly misconceived.”
The authority also observed that the developer was issued license in 2010 and the validity of said license had lapsed on August 14, 2014. The license was thereafter renewed only on February 26, 2018.
“So, the developer on the day when he moved the application for grant of occupation certificate did not have a legal right either to carry out development works or to claim an occupation certificate. Construed from this perspective, the developer’s application for grant of occupation certificate was not even maintainable having no sanctity in the eyes of the law,” held the authority.
RELIEF EXTENDABLE TO THOSEWHOHAVEN’T FILED COMPLAINT
Respondent, argued that the authority, at the most, can only grant relief to the allottees who have filed complaints and not to all allottees who may be similarly placed but have not yet filled any complaint.
In response the authority held, “The argument is again bereft of merit because the authority for achieving the main object of the act, is duty bound to protect the interest of all those allottees who had entered into dispute with the developer and even after paying the amounts demanded from time to time have not yet received the possession of their flats on time as per terms of the buyer’s agreement.”
The authority thus deemed it be a fit case for granting interim relief not merely to the complainants but also to all other similarly placed allottees of the project.
Consequently, the developer was restrained from charging increased price or enhanced area cost or even the GST from the complainants and other similarly placed allottees of the project, till the final disposal of the complaints.
The state real estate regulatory authority has full jurisdiction over developers who applied for and got completion certificate after the publication of the Rera rules. HT PHOTO