HomePress ReleaseTOI: Long term leases covered by Rera: Bombay HC

TOI: Long term leases covered by Rera: Bombay HC

MUMBAI: Provisions of the real estate regulatory law were applicable to three apartments booked on a 999-year ‘agreement to lease’ in Lavasa, near Pune, and for which 80% of “purchase price” had been paid, said the Bombay high court on Tuesday.
It added that complaints for compensation for a delay of six to seven years in possession of these apartments could be decided by the adjudication officer under MahaRera, the state’s real estate regulatory authority.

Justice Shalini Phansalkar-Joshi, after analyzing the salutary object of Real Estate (Regulation and Development) Act (Rera), held that “merely because the legislation excluded allotment, when given on rent, it does not exclude long term lease… That would be defeating and frustrating the object of the Act”. The judge dismissed three appeals filed by Lavasa Corporation, which is developing a township project, registered under Rera.

The appeals were against orders passed by the Maharashtra real estate appellate tribunal, which had held that Rera provisions were applicable for the three persons who had booked apartments through ‘agreements to lease’ at Lavasa. Their complaints could be entertained under section 18, providing for compensation with interest for delay by a builder in giving possession in terms of ‘agreement for sale’.

An adjudicating officer under Rera had earlier held that since the agreement was not of ‘sale’, they cannot seek compensation from the developer, here, the lessor.

Arguing for Lavasa, counsel Raj Patel and Kaustav Talukdar raised a common question of law: whether the provisions of Rera would apply in case of ‘agreement to lease’, whether the definition of ‘promotor’ under Rera would include ‘lessor’, and whether the remedy provided under section 18 can be against a lessor too? Lavasa’s case was that theirs was a relationship as “lessor and lessee” and that there was “no sale” or “absolute transfer of right or title” of the apartments.

For the compensation-seeking trio, counsel Mayur Khandeparkar and Tushar Gujjar argued that since the project was registered under Rera, the provisions of the Act would apply. Lavasa countered that mere registration can’t be the sole test for applicability of Rera, and that it was a huge project and Rera was applicable only to some parts.

But the HC said the fact that Lavasa got itself registered under Rera necessitates an inference that it was aware that the project was “for sale of apartments constructed” and hence “it was bound by Rera provisions”.

The HC held that the legislative intent could never have been to exclude “long term lease” as it would defeat the purpose of the law, with developers executing ‘agreement of lease’ and “conveniently escaping from clutches of provision of this Act”. The intention was only to exclude ‘rent’ as lessees there have not invested substantial amounts like the purchase price. But one cannot exclude persons who have paid 80% of an apartment’s purchase price. It also held that the 999-year lease was as a good as a sale.