Karnataka High Court - RERA has no Authority Over Projects Granted ‘Partial’ Occupancy Certificate Prior to Enforcement of RERA

RERA has no Authority Over Projects Granted ‘Partial’ Occupancy Certificate Prior to Enforcement of RERA

Provident Housing Limited Vs Karnataka Real Estate Regulatory Authority Writ Petition No.18448 of 2021

Date of Judgement/Order : 02/01/2023

Brief Facts of the Case:

• The petitioner is engaged in the business of real estate development. 
• On receiving respondent’s request to allot an apartment in the project, the petitioner entered into an agreement for sale and Construction with Respondent on 10/09/14. 
• The proposed date of completion of project was 31/01/17. 
• On 18/11/15– A partial occupancy certificate was granted by the competent authority i.e. BDA to the petitioner. 
• On 27/04/17– Second partial occupancy certificate was issued in favour of petitioner. 
• On 14/05/17– Respondent seeks to cancel the agreement on the ground that there was information to him that the land had not been legally acquired by the petitioner for construction of the Apartment complex. 
• On 04/12/17– The contract between petitioner and respondent is concluded, petitioner refunds the amount after deducting the cancellation charges.
• In 2019– Respondent by invoking Section 31 of the RERA Act, files a complaint before RERA Authority seeking a refund of remaining amount. 
• The authority passes the impugned order, directing the petitioner to refund the said amount. 
• On receiving the authority’s order, Petitioner files a petition before Karnataka HC challenging the maintainability of the complaint filed by respondent before the authority.

Petitioner’s Contentions:

• The partial occupancy certificate was issued in favor of petitioner before the commencement of the Act.  
• Therefore, the project of petitioner had already passed the stage of ‘ongoing project’ and is a ‘completed project’. 
• Since the project was completed before the commencement of the RERA Act, the Act is not applicable to petitioner’s project and therefore any complaint filed before the authority by invoking the provisions of the Act is not maintainable.

Respondent’s Arguments:

• The project is still an ‘ongoing project’ as no ‘competition certificate’ was issued in favour of petitioner.

Issues:

• Whether the complaint filed by respondent before the Karnataka Real Estate Authority is maintainable? 
• Whether ‘on-going’ project includes the project for which completion certificate has not been issued.

Court’s Decision: 

• The court while taking into consideration the provisions of RERA Act (Section 2(q), 3, 18, 31, 43 and 84) and the rules made by Karnataka Government (Rule 3 and 4) under Section 84 of the Act, made following observations- 
• Section 3 of the Act mandates the registration for all ongoing projects at the time of commencement of the Act.  
• Section 3(2)(b) specifically excludes those projects to be registered under the act for which ‘completion certificate’ has been issued before the commencement of the Act. 
• In the present case, partial occupancy certificates have been issued, the project would be considered to be not completed at the time of commencement of this Act. 
• The explanation of ‘ongoing project’ under the Karnataka Government Rules (Rule 4) exempts the application of the Act to those projects for which partial occupancy certificate has been issued prior to coming into force of the Act. 
• Therefore as per Rule 4 of the Karnataka Government Rules, the project is not an ongoing project as the explanation in Rule exempts such an ongoing project for which partial certificate has been obtained to the extent of the portion for which the partial occupancy certificate is obtained.
• Therefore, the provisions of the RERA Act are not applicable to the project and the order issued by the Authority is without jurisdiction and thus is not maintainable. 

• Held: The order passed by Karnataka Real Estate Regulatory Authority is without jurisdiction. The project in question is a registered project in view of grant of partial occupancy certificates. In light of the same, the complaint filed before the authority by the respondent, itself is not maintainable.

Mere obtaining of occupancy certificate does not oust the jurisdiction of the RERA Authority

Occupancy Certificate - Developer has obtained the occupancy certificate and not the completion certificate before the RERA came into effect - Therefore, it cannot be held that there was no requirement for even registration of the project by the developer with the RERA authority.

Court would not consider the petitioner to be outside the purview of the jurisdiction of the respondent- authority - Mere obtaining of occupancy certificate does not oust the jurisdiction of the respondent authority.

Section 3 - Haryana Real Estate Regulation and  Development Rules, 2017, Rule 2 - Registration - Petitioner having already applied for and obtained an occupation certificate as referred to above in terms of the Haryana Building Code, 2017, prior to  01.05.2017 - Petitioner still Required to get itself registered with the Authority - 

Held that simply obtaining of an occupancy certificate or having applied for  such certificate in terms of the Haryana Building Code, 2017 - Petitioner not outside the purview of the jurisdiction of the Authority.

Experion Developers Private Limited v. State of Haryana, 2022 (2) Law Herald 1660: 2022 (4) R.C.R.(Civil) 339 : 2022 (3) PLR 290 (P&H) (DB): Law Finder Doc Id #1981966 

CCI- A mere letter from the company that the super area has increased is not sufficient to claim any amount from the allotte

 In the Matter of Belaire Owners' Association vs Dlf Limited, Huda CASE NO.19/2010 the Competition Commission of India held that 

" there may be instances where at the time of actual construction, certain minor changes are required to be made in some of the drawing board plans and the building is constructed slightly different from the drawing board plan but it,  more or less, conforms to the drawing board plan. In such a case, there may be either minor (say + 2%) increase or decrease in the super area as well as the carpet area of each apartment. However, the company if substantially changes the lay-out plan resulting, in more than 2% increase or decrease in super area, the allottees' consent should be obtained for such changes in the lay-out plans. Since the price paid by the allottee is per sq. ft. of super area, the price of the apartment would increase or decrease after the actual building is constructed. In order to lay a claim on the basis of increase in super area, the company is supposed to give information to the allottee about the difference in the initial building plan and the actually-constructed building plan on the basis of which the new super area is calculated. The actual plan should be the one submitted to the authorities for completion certificate and on the basis of which occupancy certificate is granted. The calculations of increased area should be sent to the allottee, so that the allottee knows and can verify on ground as to how his super area has increased. A mere letter from the company that the super area has increased is not sufficient to claim any amount from the allottee. Thus, whenever a claim on the basis of increase in super area is made, the company is bound to give the relevant information as to how the super area stands increased.

The project completion means that it must be completed in all respects and the entire project was handed over to the respective buyers

 In the Matter of M/S.Sare Shelters Project Pvt. ... vs Sare Squires C.M.S.A.No.27 of 2020 decided on 16.02.2021 before THE HIGH COURT OF MADRAS, the High court held that “The project completion means that it must be completed in all respects and the entire project was handed over to the respective buyers and all the original documents are handed over to the apartment owners association. Therefore, the builder cannot enter thereafter into the project premises as they lost their legal rights except with the permission of the owners or with reference to the agreement, if any, between the parties.

In the Matter of Subashini Thulasiram vs M/S.Spr & Rg Constructions C.M.S.A.No.22 of 2019 decided on 15 September, 2020 before THE HIGH COURT OF MADRAS it was held by the high court that  “The application for completion certificate without environmental clearance certificate is a defective application and in the eye of law, it cannot be called as an application for completion certificate…… The State Level Environmental Impact Assessment Authority cannot issue post facto environmental clearance certificate”,