No land or project? Karnataka REAT rules landless housing societies are not ‘promoters’ under RERA Act
The Karnataka Real Estate Appellate Tribunal (REAT) has ruled that a housing co-operative society that had neither acquired land for development nor undertaken any real estate project could not be considered a ‘Promoter’ under the Real Estate (Regulation and Development) Act, 2016 (RERA Act).
The tribunal consequently held that a complaint seeking relief was not maintainable before the Karnataka Real Estate Regulatory Authority (RERA), reported LiveLawBiz.
A Bench comprising Chairperson Justice JM Khazi and Judicial Member Santhosh Kumar Shetty N made the observations while dismissing an appeal filed against BSNL Employees Welfare House Building Co-operative Society Ltd.
The tribunal said: “Undisputedly, the Respondent No.1/Co-operative Society has not acquired any land for development and consequently it does not fall into the definition of Promoter and there is no project in existence, let alone the Complainant could be called as an Allottee.”
BSNL employee paid ₹7.66 lakh for proposed site
The appellant had worked with BSNL for more than 18 years before becoming a member of the housing society. The society had been established by BSNL employees to provide houses or residential plots to its members at comparatively lower rates.
According to the complaint, the society represented that sites were available at Madhavanagara. The appellant subsequently paid ₹7,66,800 during 2013 and 2014 towards the proposed BSNL Madhavanagara Project Phase-II, located off Nelamangala Road.
However, the promised site was not delivered. The appellant said he made repeated requests to the society for a refund, but neither the money was returned nor was the site registered in his name.
Society argued that RERA had no jurisdiction
Before Karnataka RERA, the society opposed the complaint, contending that the project had not been registered with the Authority and, therefore, the Authority had no jurisdiction to adjudicate the dispute.
It also argued that the receipts issued to the appellant could not be considered allotment letters. According to the society, the payments were not made against any specific plot and the parties had never executed an agreement for sale.
The society further submitted that it had not acquired any land for development. Consequently, there was no real estate project and it could not be classified as a ‘Promoter’ under RERA. It also disputed the appellant’s status as an “Allottee” under the legislation.
RERA dismisses complaint
Karnataka RERA dismissed the complaint, following which the appellant approached the appellate tribunal.
The appellant argued that the Authority had failed to properly assess the evidence and relevant provisions of RERA. He also submitted that because the project remained incomplete, Section 18 of the Act entitled him to the relief sought.
Section 18 provides remedies to an Allottee where a Promoter fails to complete a project or hand over possession in accordance with an agreement for sale. Where an Allottee chooses to withdraw from the project, the provision permits recovery of the amount paid, along with applicable interest and compensation under the Act.
The tribunal found that the society had not acquired any land for development and that no real estate project was in existence. It was therefore concluded that the society did not fall within the statutory definition of a Promoter.
Since there was no Promoter or project to which the appellant could be linked as an allottee, the tribunal also held that the appellant could not be treated as an “Allottee” under RERA.
The tribunal observed that the society had enrolled members and collected different amounts towards the proposed purchase of sites, which were to be allotted if and when the society developed a project or layout.
Agreeing with the Karnataka RERA’s earlier decision, the tribunal held that RERA did not apply to the dispute. The complaint was therefore not maintainable before the Authority, and the appeal was dismissed.
