MahaRERA, has passed an order stating that a developer can de-register a residential project if he is unable to develop it as the RERA Act has no provision to force completion of a project if the developer expresses inability to complete it.
According to Moneycontrol.com, Turf Estate Joint Venture LLP of DB Turf View, which had plans to develop a 93-story tower in South Mumbai could not proceed with the project and instead refunded money with interest to two-thirds of the buyers. However, five buyers didn’t accept the refund and challenged the decision.
The South Mumbai residential tower was registered as an ongoing project in August 2017. An application for the change of developer, under section 15 of the RERA Act on the grounds of conversion of Turf Estate JV to Turf Estate Joint Venture LLP was submitted in July 2021 and approved by MahaRERA in October 2021.
Turf Estate Joint Venture LLP in January 2022, submitted an application regarding de-registration of the project. Out of the 27 allottees, allotments of 21 allottees were cancelled and a refund of their amounts with nine percent interest per annum was given. A simpliciter cancellation was done for one allottee who hadn’t paid. The remaining 5 allottees challenged the de-registration in the Bombay High Court, which directed the MahaRERA to hear the matter.
According to MahaRERA order, a project’s registration number doesn’t remain forever and there can be events when they can be revoked or they lapse. However, MahaRERA stated, “There is a situation herein where the project in itself as was planned is now sought to be abandoned. This in effect means that there will be no project available for allotting premises as was promised. In such a situation one has to look for a legislative remedy to force the hand of a Promoter (developer) to complete a project which he wants to abandon. Unfortunately, there is no provision in the said Act which provides a path for forcing a promoter to complete a project which the promoter has voluntarily come forward to say that he is unable to complete the project in the present form.”
The order added, “Further it is not the case of any of the respondents (buyers who challenged the termination of the allotment) that the applicant promoter is unable to complete the said project due to financial fraud or misappropriation of the monies provided by the allottees. Thus, this Authority sees no mechanism to force the hand of a developer where a case of fraud or misappropriation is not made out.”
MahaRERA Chairman Ajoy Mehta, in his September 2, 2022, order further added conditions before allowing de-registration of the project. It concluded by saying, “The said project is deregistered and the applicant promoter shall not advertise, market, book or create third-party rights by the offer for sale, enter into an agreement for sale of any apartment in the said project. No order as to cost.”
According to legal experts, this landmark judgement may encourage other developers who are unable to proceed with developing the project explore the option of de-registration. Trupti Daphtary, Advocate & Solicitor based in Mumbai said, “There is no specific provision in RERA Act for deregistration. This order could pave the way for developers to explore this option in case the real estate project is commercially unviable. However, deregistration orders must be passed on a case-to-case basis looking at the overall project status, the number of allottees, and their interests.”
See also: MahaRERA project search: How to search registered projects, agents and file complaints online
