Kerala High Court
M/S. Shwas Builders & Developers Pvt Ltd ... vs Premchand Surendran on 5 September, 2024
MSA No. 22 of 2024
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IN THE HIGH COURT OF KERALA AT ERNAKULAM CR
PRESENT
THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
THURSDAY, THE 5TH DAY OF SEPTEMBER 2024 / 14TH BHADRA, 1946
MSA NO. 22 OF 2024
AGAINST THE ORDER DATED 28.06.2024 IN REFA NO.48 OF 2023 OF
KERALA REAL ESTATE APPELLATE TRIBUNAL, ERNAKULAM ARISING OUT OF THE
ORDER DATED 05.07.2023 IN CO NO.37 OF 2023 OF KERALA REAL ESTATE
REGULATORY AUTHORITY, THIRUVANANTHAPURAM
APPELLANTS/APPELLANT NOS 1 TO 4/RESPONDENTS NO. 1 TO 4:
1 M/S. SHWAS BUILDERS & DEVELOPERS PVT LTD , REPRESENTED BY
MANAGING DIRECTOR
GROUND FLOOR, MYSTIC HEIGHTS PHASE-1, KANIYAMPUZHA BRIDGE,
KANIYAMPUZHA ROAD, EROOR P.O., ERNAKULAM DISTRICT, PIN -
682036
2 SREENI PARAMESWARAN
AGED 47 YEARS
DIRECTOR, M/S. SHWAS BUILDERS & DEVELOPERS PVT LTD GROUND
FLOOR, MYSTIC HEIGHTS PHASE-1, KANIYAMPUZHA BRIDGE,
KANIYAMPUZHA ROAD, EROOR P.O., ERNAKULAM DISTRICT, PIN -
682036
3 PARAMESWARAN NAIR
DIRECTOR, M/S. SHWAS BUILDERS & DEVELOPERS PVT LTD , GROUND
FLOOR, MYSTIC HEIGHTS PHASE-1, KANIYAMPUZHA BRIDGE,
KANIYAMPUZHA ROAD, EROOR P.O., ERNAKULAM DISTRICT., PIN -
682036
4 SHEEJA P,
MITHILA, 104 5TH CROSS, RELIABLE TRANQUIL, HARALUR,
SOMASUNDRA PALAYA, BANGALORE, PIN - 560102
MSA No. 22 of 2024
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BY ADVS.
S.S.ARAVIND
P.B.KRISHNAN (SR.)(K/1193/1994)
RESPONDENT/RESPONDNET/COMPLAINANT:
PREMCHAND SURENDRAN
B-23, JALVAYU VIHAR, PANAMPILLY NAGAR SHIHAB THANGAL ROAD,
ERNAKULAM, PIN - 682036
THIS MISC. SECOND APPEAL HAVING BEEN FINALLY HEARD ON 30.08.2024
ON 05.09.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
MSA No. 22 of 2024
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CR
JUDGMENT
1. The respondents 1 to 4 in Complaint No.37/2023 of the Kerala Real
Estate Regulatory Authority (the K-RERA) are the appellants in the
Miscellaneous Second Appeal filed under Section 58 of the Real
Estate (Regulation and Development Act, 2006 (the RERA). The
respondent is the complainant in the said complaint.
2. The parties are referred to according to their status before the K-
RERA.
3. The complainant is an allottee in the Villa Project by name 'Epcot
County' launched by the 1st respondent. The 1st respondent is a
private limited company engaged in the business of development
and construction of real estate projects. The respondents 2 to 4 are
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its Directors. The 4th respondent is the landowner of the Project
also. The 5th respondent is another private limited company, which
is a sister concern of the 1st respondent.
4. The complainant filed the complaint claiming amounts under
various heads from the respondents alleging various defects,
deficiency and delay from the part of the respondents with respect to
the real estate project.
5. When the complaint was taken on file, the K-RERA found that the
Real Estate Project of the 1st respondent requires registration under
S.3 of the RERA and accordingly issued Show Cause Notice dt
06.03.2023 in the Complaint itself calling upon the respondents to
explain why action should not be initiated for violation of S.3 of the
RERA.
6. The Respondents did not file a Reply to the Show Cause Notice.The
K- RERA found that the Building Permit was issued on 28.11.2015
and since no documents were produced by the respondents to prove
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that the villas and common areas in the real estate project were
completed before 01.05.2017, the K-RERA issued Interim Order dt
25.04.2023 directing the respondents to appear in person on
30.05.2023 at 11.00 a.m at its Head Office along with all the
relevant documents to explain as to why penalty as per S.59(1) of
the RERA shall not be imposed. The respondents filed a Reply to
the Show Cause Notice on 29.05.2023.
7. After considering the contentions of the respondents the K-RERA
passed interim order dt 05.07.2023 ordering the respondents to
register the real estate project within 30 days from the date of
receipt of the said order, imposing a penalty of Rs.2.59 lakhs, being
0.5% of the estimated cost of the real estate project and further
ordering that if the promoter fails to pay the penalty and continue to
violate S.3 even after 30 days from the date of receipt of the said
order, proceedings under S.59(2) shall be initiated.
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8. The respondents filed Appeal before the Kerala Real Estate
Appellate Tribunal (the Tribunal) as REFA No. 48/2023 challenging
the said order dt 05.07.2023 of the K-RERA. The Tribunal vide its
order dt 28.06.2024 allowed the appeal in part confirming the order
with respect to the registration of the real estate project, setting
aside the imposition of penalty and exonerating the 5 th respondent.
It is also ordered that K-RERA shall take appropriate steps under
S.59(1) of the K-RERA at the appropriate stage if the contravention
is brought to its notice. The respondents are given one month's time
from the date of the Appellate Order to register the real estate
project with the K-RERA. The penalty was set aside on the ground
that penalty could not be imposed simultaneously with the direction
for registration. The 5th respondent was exonerated from the liability
on the ground that it has no connection whatsoever with the real
estate project launched by the 1st respondent.
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9. I heard the learned Senior Counsel for the appellants Sri.P.B
Krishnan instructed by Adv. Sri.S.S.Aravind.
10. When the appeal came up for admission on 16.08.2024, the learned
Senior Counsel submitted that the impugned order dt.05.07.2023
passed by the K-RERA is unsustainable on account of jurisdictional
error since the same was passed by a Single Member of the K-RERA
which is impermissible under S.29 of the RERA. In view of the said
submission, a Report from the K-RERA was called for and the K-
RERA submitted a Report dt. 22.08.2024 stating that individual
members of the K-RERA are given powers by the K-RERA in its
meeting held on 27.11.2021 by delegation in the exercise of the
powers under S.81 of the RERA. The scope of Section 81 is
considered by the Hon'ble Supreme Court in Newtech
Promoters and Developers Pvt.Ltd. V. State of U P
and others [2021 SCC online SC 1044]. It is
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apposite to extract Paragraph 112 of the said
decision.
112. S.81 of the Act 2016 empowers the authority, by
general or special order in writing, to delegate its powers
to any member of the authority, subject to conditions as
may be specified in the order, such of the powers and
functions under the Act. What has been excluded is the
power to make regulations under S.85, rest of the
powers exercised by the authority can always be
delegated to any of its members obviously for
expeditious disposal of the applications / complaints
including complaints filed under S.31 of the Act and
exercise of such power by a general and special order to
its members is always permissible under the provisions
of the Act.
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11. Hence, the Single Member of K-RERA has the power and
jurisdiction to consider a complaint as it is perfectly within his
jurisdiction in view of the delegation of power by the K-RERA in
exercise of its powers under S.81 of the RERA.
12. The learned Senior Counsel further contended that the appellants are
only contractors as the land on which the villa of the complainant
was constructed belonged to the complainant as per the sale deed
executed by the 4th respondent landowner. The status of the
respondents is that of a contractor and not a promoter and the
respondents are not promoters as defined under S.2(zk) of the
RERA. On transfer of title as per S.17, the real estate project comes
to an end, thereafter, there could not be any registration of the real
estate project. The real estate project could not be treated as an
ongoing project since the project was completed on 24.05.2019, i.e.,
much before the establishment of K-RERA in Kerala. The direction
to register the project is a direction to do an impossible act. The
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impugned order passed by the K-RERA is in the nature of an interim
order, the said order was passed without complying the procedure
under S.36 of the RERA which deals with the power of the K-RERA
to issue interim orders. The K-RERA ought to have conducted an
enquiry giving sufficient opportunity for the respondents to produce
documents and ought to have accepted the documents produced by
the respondents by marking the same in evidence. The prayers in the
complaint are not maintainable in view of the provisions under S.18.
13. It is revealed from the admitted pleadings in the case that the 1 st
respondent launched a villa project by name, 'Epcot County'
consisting of 15 twin villas (30 villas) in a land having an extent of
49.60 Ares owned by the 4th respondent. Building Permit was issued
for the project on 28.11.2015. An agreement for sale was executed
with the complainant on 01.06.2016. The Construction Agreement
was executed with the complainant and 1st respondent on
30.12.2016. The complainant agreed to purchase Plot No.11 having
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an extent of 2.91 cents from the 4th respondent. The entire
construction of the villas was completed by the 1st respondent in
January, 2019. The Villa of the complainant was handed over on
12.02.2019. The Construction Agreement clearly mentions that the
1st respondent made a scheme to construct villas in the real estate
project; that the project is managed by the 1st respondent; that the
common area, common amenities and facilities proposed in the
village project shall be completed and handed over by the 1 st
respondent. The aforesaid clauses clearly indicate that the 1st
respondent is a promoter with respect to the real estate project. The
1st respondent is not a mere contractor engaged by the complainant
to construct his individual villa. The status of the 1 st respondent is
that of a promoter within the meaning of Se.2(zk) of the RERA and
not of a contractor.
14. The learned Senior Counsel contended that in the case of the villa
of the complainant, the occupancy certificate would be obtained by
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the complainant on completion of the villa, and the 1 st respondent
has nothing to do with the matter. It is true that when the promoter
is not the owner of the land, the documents like building permits,
completion certificates, etc., are obtained in the name of the
landowners. But it does not in any way absolve the liability of
respondents 1 to 4 as a promoter of the project.
15. Proviso to S.3(1) of the RERA provides that the promoter shall
make an application for registration of the real estate project if the
project is ongoing on the date of commencement of the RERA and
for which completion certificate has not been issued. Admittedly,
the 1st respondent had not completed the project as on 01.05.2017,
ie, the date of commencement of the RERA. The 1st respondent does
not have a case that it has received the Completion Certificate with
respect to the real estate project prior to the commencement of the
RERA in order to avoid registration in view of S.3(2) (b) of the
RERA. Gong by the scheme of registration as provided in Section 3
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of the RERA, with respect to a real estate project existing as on the
date of commencement of the RERA, the only two material factors
which are to be considered is whether the project was an ongoing
project as on the date of commencement of the RERA and whether
the Promoter has received Completion Certificate before the
commencement of the RERA. The date of establishment of the K-
RERA is not relevant and material in the statutory scheme to decide
whether a project is liable to be registered or not. Since the subject
real estate project was admittedly an ongoing one as on the date of
commencement of the Act, the respondents 1 to 4 are liable to
register the same under S.3 (1) of the RERA.
16. I am unable to accept the contention of the learned Senior Counsel
that the real estate project is concluded on the transfer of title as per
S.17 of the RERA and that since the transfer was done before
01.05.2017, there could not be any direction to register the project.
As per the statutory scheme of the RERA, it is the completion of the
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project, what is relevant and material and not the transfer of title.
The RERA is enacted essentially to protect the interests of the
allottees of a real estate project. Their interests are to be protected
till the handing over of the agreed allotted apartment, villa or plot
with title over the same after completion of the project. The
adjudicatory mechanisms are provided for addressing all their
grievances till the handing over of the agreed allotted apartment,
villa or plot with title over the same after completion of the project.
The allottees of the real estate project may purchase divided or
undivided shares in the project by registered conveyances much
before the completion of the real estate project. Sometimes, such
registered conveyances are required for the allottees to create
mortgages for availing loans for payments to the promoter. It could
not be said that on the execution of the conveyance deed transferring
the title of the land, the real estate project would come to an end
even if the construction was not completed. There is no indication
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in S.17 that once the transfer of title is made in favour of the
allottee, the real estate project has come to an end. If such a
contention is accepted it is easy for every promoter of a real estate
project to defeat the provisions of the RERA by transferring the title
of the land to the allottee before completion of the project. The
question of whether the project land is transferred to the allottee or
not is not a relevant factor for deciding whether the real estate
project is complete or not.
17. It is true that the impugned order dt 05.07.2023 is titled as an interim
order, but it could not be said that it is an interim order passed by K-
RERA invoking its power under S. 36. It is an order passed by K-
RERA when it is noticed that the real estate project of the
respondents is not registered under S.3 of the RERA. It is a
proceeding independent of the complaint. The said proceeding ends
with an order on the finding whether the project is registrable or not.
It has nothing to do with the allegations and claims in the complaint
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which are proceeded and decided in the complaint itself. True, the
K-RERA ought to have initiated the proceedings under a separate
numbering either as suo motu or as I.A in order to avoid technical
objection. But failure to do so will not affect the nature and character
of the said order. It is essentially an order in an independent
proceedings and it does not have the trappings of an interim order
and hence compliance of the provisions in S. 36 of the RERA is not
necessary for passing orders under Ss.3 and 59 of the RERA.
18. In the case on hand, the impugned order was passed after giving
sufficient opportunities to the respondents to submit necessary
pleadings and evidence from their part. The said order is based on
material details, which are relevant for considering whether a real
estate project is liable for registration. It could not be said that the
respondents could not submit any relevant materials for the
adjudication of whether the real estate project is liable for
registration. All the contentions raised by the respondents were
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considered on the basis of the admitted pleadings from the parties.
The respondents could not point out any material document which
could not be produced by them before the K-RERA in the matter of
registration.
19. As stated earlier, with respect to a real estate project existing as on
the date of commencement of the RERA, what is relevant is whether
it is an ongoing project and whether the completion certificate with
respect to the project is issued. The K-RERA is perfectly justified in
adjudicating the question of whether registration is required or not
when these two relevant materials are available. No prejudice
whatsoever is caused to the respondents.
20. Though the learned Senior Counsel advanced arguments with
respect to the sustainability of the claims of the complaint with
reference to S.18 of the RERA, I do not propose to consider the
same in this appeal as the said contentions are to be considered by
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the K-RERA while considering the complaint. The impugned order
is limited to the question of registration of the project.
21. The K-RERA as well as the Tribunal considered all the contentions
of the respondents on the basis of the pleadings and evidence in the
case. The order of the K-RERA and the order of the Tribunal do not
require any interference. No substantial question of law arises in the
matter for invoking the jurisdiction of this Court under S.58 of the
RERA Act. The Miscellaneous Second Appeal is liable to be
dismissed.
22. Since the time of one month granted by the Tribunal to respondents
1 to 4 to register the real estate project with the K-RERA has
already expired, one month time from the date receipt of the
certified copy of this judgment is granted to the respondents 1 to 4
to register the real estate project with the K-RERA.
23. Since no separate procedure is prescribed for adjudicating the
question as to the registration of real estate projects under S.3, and
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for adjudicating the imposition of penalty under S.59, the K-RERA
is free to adopt a procedure of its own in full compliance of the
principles of natural justice. Of course, a uniform procedure is to be
adopted by the K-RERA in all cases. Since the question of
registration of a project is to be adjudicated independently of the
allegations and claims in the main complaint, hereafter the K-RERA
shall initiate separate suo motu proceedings when the K-RERA is
prima facie of the view that a real estate project is liable for
registration, in the absence of any prayer with respect to the same in
the complaint.
24. The Miscellaneous Second Appeal is dismissed without costs.
Sd/-
M A ABDUL HAKHIM, JUDGE
jma
