Bombay High Court Says RERA Provisions Will Apply To Long-Term Lease Agreements
The Bombay High Court has ruled that provisions of the Maharashtra Real Estate Regulatory Authority will apply in cases of long-term lease agreements and that compensation complaints can be heard by it.
A single bench of Justice Shalini Phansalkar Joshi passed the ruling yesterday while hearing appeals filed by the Lavasa Corporation, which is developing a township project near Pune, registered under the Maharashtra RERA.
The judge held that RERA had the jurisdiction to hear and decide complaints of people seeking compensation for delay in possession of three flats in the Lavasa township.
The court said provisions of the state real estate regulatory law were applicable to the three apartments, booked on a 999-year agreement of lease at Lavasa and for which 80 percent of the purchase price was paid.
The appeals were filed by the Lavasa Corporation, challenging orders passed by the Maharashtra RERA’s appellate tribunal in March this year, holding that the regulatory authority’s provisions were applicable to the three persons who had taken apartments in Lavasa through agreement of lease.
The company, in its appeals, claimed that provisions of RERA would not apply in cases of agreement of lease and that the definition of ‘promoter’ under the regulatory authority would not include 'lessor.’
Lavasa argued in the high court that in these particular cases, the relationship between the company and the persons was that of “lessor and lessee” and there was absolutely no sale or transfer of title of the apartments. The high court, however, held that since Lavasa was a project registered under RERA, the Act’s provisions would apply to it.
Justice Phansalkar Joshi said the legislative intent could never have been to exclude long-term lease as it would defeat the purpose of the law, with developers executing agreement of lease and “conveniently escaping clutches of the Act's provisions”.
“Merely because the legislation excluded allotment, when given on rent, it does not exclude long-term lease. That would be defeating and frustrating the objective of the Act,” the court said in its judgement.
It said the intention was only to exclude rent as lessees in those cases would not have invested substantial amounts like the purchase price.
“But one cannot exclude persons who have paid 80 percent of an apartment’s purchase price,” the judge said, adding 999-year lease agreement was as good as sale of the apartment.
“The main objective (of RERA) is to ensure accountability on part of the real estate sector and to provide a comprehensive, effective and speedy remedy to persons who have invested large sums of money for having a home of their dreams,” the court said in the order.
It further said the three persons in this particular case could avail remedy provided under section 18 of the Act, seeking compensation. “Depriving them of the remedy available under section 18 of the Act is as good as allowing the unjust enrichment on part of the appellant (Lavasa),” the order said.