Mumbai: In a recent ruling, the Maharashtra Real Estate Appellate Tribunal (MREAT) has held that landowners and the new developer of a residential project are jointly liable for the long-pending dues and rights of homebuyers under an old agreement for sale.
The case revolves around the incomplete real estate project originally launched as “Sambhav Classic” in suburban Mumbai by an erstwhile promoter under a 2009 development agreement with landowner Jayantilal Jain. Homebuyer Devang Juthani, who was appeared by advocate Nilesh Gala before the Tribunal , informed the tribunal that Juthani’s had purchased a flat in the project in 2014 for Rs 1.2 crore, with full payment made to the old promoter. However, the project never progressed beyond partial plinth construction.
After the development agreement was terminated in 2015, the landowners took possession of the project land and later registered it anew with MahaRERA under the name “Rajkamal Building”. A further transfer occurred in 2021, when the landowners sold their interest to a new promoter, who obtained fresh RERA registration under the name “Dipti’s Royale Arc”.
The Tribunal strongly rejected the contention of the landowners and new promoter that they bore no contractual liability as they were not signatories to the original agreement for sale. It ruled that under the broad definition of “Promoter” in Section 2(zk) of the RERA Act, 2016, any party associated with the construction, marketing, or benefit of the real estate project — including landowners and subsequent transferees — assumes the statutory obligations of the promoter.
Further while explaining the term ‘Promoter’ the tribunal held, “It has been so widely defined that it virtually includes every person associated with the construction of the building. Even a person who is merely an investor or a landowner who authorizes development is covered.”
Though the original agreement for sale and project launch pre-dated the RERA Act, the Tribunal ruled that the statute applies retroactively to incomplete projects registered under MahaRERA. It emphasized that once the landowners took control and registered the project anew, they stepped into the shoes of the original promoter and became jointly liable for all pre-existing obligations.
“The rights accrued by the allottees under the agreement for sale are absolute and indefeasible,” the Tribunal stated. “The new promoter, having taken over the same project property and obtained new registration, is bound by these obligations.”
The Tribunal further expressed serious concern over the existence of two simultaneous RERA registrations — one in the name of the landowners and another in the name of the new promoter — on the same land and based on the same commencement certificate. Calling it a “regulatory anomaly”, the Tribunal directed that only one registration can be permitted on the given project land to avoid confusion and protect consumer interests.
The Tribunal also questioned the veracity of the landowners’ application for de-registration of the first project, in which they falsely declared that no allottees existed. It ordered MahaRERA to hear the aggrieved homebuyers before deciding on the de-registration and to ensure their rights are protected.
The Tribunal further ruled that both the landowners and the new promoter are jointly and severally liable for discharging the duties of a promoter under RERA, including honoring the original agreement for sale, executing conveyance deeds, and compensating for losses due to project delays.
