RERA Registration Not Required Where Leasehold Developer Has No Right to Sell Units: Allahabad High Court
Case Title: U.P. Real Estate Regulatory Authority v. M/s Maa Bhagwati Commercial Reality N Resorts LLP
Case No.: RERA Appeal No. 169 of 2025
Court: Allahabad High Court, Lucknow Bench
Decision Date: May 8, 2026
The Allahabad High Court has held that a developer holding only leasehold rights in a property, without the legal authority to sell apartments, plots or buildings, does not fall within the definition of a "promoter" under the Real Estate (Regulation and Development) Act, 2016 (RERA).
Justice Syed Qamar Hasan Rizvi held that where the developer's rights are confined to developing the property and creating sub-leases, and it has no right to sell the units, the project does not qualify as a "real estate project" requiring registration under RERA.
Dispute Over Registration of 'Samrajya' Project
The case concerned the proposed "Samrajya" project in Ayodhya, being developed by M/s Maa Bhagwati Commercial Reality N Resorts LLP.
The land belonged to a public charitable trust, Udasin Sangat Rishi Aashram, Ranopali, Ayodhya. The trust had executed a registered lease dated September 29, 2023, in favour of the developer for a period of 29 years and 11 months.
The lease permitted construction of a commercial building and contained provisions permitting sub-leasing of the property.
The developer subsequently applied to U.P. RERA for registration of the project. However, the Authority raised objections concerning the nature of the leasehold rights and the developer's authority to create sub-leases in respect of the trust property.
U.P. RERA ultimately rejected the registration application.
RERA Appellate Tribunal Had Directed Registration
The developer challenged the rejection before the Real Estate Appellate Tribunal (REAT), Lucknow.
The Tribunal allowed the appeal and directed U.P. RERA to register the project and issue the registration number, Login ID and password within seven days.
U.P. RERA thereafter approached the Allahabad High Court under Section 58 of the RERA Act, challenging the Tribunal's decision.
High Court Examines Whether Leasehold Project Falls Under RERA
The High Court considered, among other issues, whether a real estate project could be developed and registered under RERA on land taken on lease for 29 years and 11 months when the developer did not possess the right to sell the apartments or buildings.
The Court examined the definitions of "promoter" under Section 2(zk) and "real estate project" under Section 2(zn) of the RERA Act.
It noted that the statutory definition of a real estate project contemplates development for the purpose of selling apartments, plots or buildings.
Right to Sell Held to Be Essential
The Court found that the lease deed did not confer upon the developer a right to sell the property. Instead, the relevant clauses permitted the developer to create sub-leases.
The Court therefore held that mere possession of leasehold rights is not sufficient to make a person a "promoter" under RERA.
The judgment observed that the status of a promoter is determined not merely by possession or a leasehold interest, but by the developer's role in developing and selling units in a real estate project.
According to the Court, a lessee who does not sell units to prospective allottees does not fall within the statutory definition of a promoter.
RERA Registration Not Mandatory
The Court concluded that the purpose of sale is a necessary element for attracting the provisions of RERA relating to real estate projects.
Since Maa Bhagwati Commercial Reality N Resorts LLP did not have the legal authority under its lease to sell the apartments, plots or buildings, the proposed project did not fall within the ambit of the RERA Act.
Consequently, the Court held that the developer was neither required to obtain RERA registration nor could it be compelled to obtain registration for the project.
Tribunal's Direction to Register Project Set Aside
The High Court consequently disposed of the appeal and held that U.P. RERA was under no obligation to issue a registration number, Login ID or password pursuant to the developer's application.
The Authority was also directed to withdraw the Form-D communication containing prohibitory and restrictive clauses issued in relation to the project.
The Court concluded that the RERA framework is attracted to projects undertaken for the purpose of sale to prospective allottees, and not to a development where the developer merely holds leasehold rights and can only create sub-leases.
Key Takeaway
The judgment draws an important distinction between leasehold development rights and the statutory concept of a promoter under RERA.
According to the High Court, possession of land under a long-term lease, by itself, does not trigger RERA registration. The crucial consideration is whether the developer has the legal authority to develop and sell apartments, plots or buildings to prospective allottees.
Where the developer has no right to sell and is limited to creating sub-leases, the project would not constitute a "real estate project" for the purposes of mandatory registration under RERA.
