OBTAINING PART OC BEFORE 30
JUNE 2017 | DOES NOT EXCLUDE PROJECT FROM RERA JURISDICTION
The main purpose for enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA)
was to protect the right and interest of the flat purchasers /
allottees in real estate projects. RERA came into effect on 1 May 2017.
The issue brought before Maharashtra Real Estate Regulatory Authority (MahaRERA) was whether obtaining the Part Occupancy Certificate (Part OC) before 30 June 2017 will exempt the project from the jurisdiction of RERA.
Vide interim order on 12 September 2018 in the matter of Haresh Jethmal Asher v. Bellissimo Crown Buildmart (i.e. Lodha Developers) bearing Complaint Number CC0060000000044384, MahaRERA has held that that it has jurisdiction over a project where Part OC had been issued under local laws.
The issue brought before Maharashtra Real Estate Regulatory Authority (MahaRERA) was whether obtaining the Part Occupancy Certificate (Part OC) before 30 June 2017 will exempt the project from the jurisdiction of RERA.
Vide interim order on 12 September 2018 in the matter of Haresh Jethmal Asher v. Bellissimo Crown Buildmart (i.e. Lodha Developers) bearing Complaint Number CC0060000000044384, MahaRERA has held that that it has jurisdiction over a project where Part OC had been issued under local laws.
In the present case, Lodha Developers obtained Part OC vide letter dated
8 June 2018 for the 1st to 40th Floor. For rest of the floors for which
the Part OC had not been obtained, MahaRERA clearly had jurisdiction
under the RERA. However, the promoter of the project failed to provide
proper amenities to the allottee (the complainant) as promised. Hence
the complainant filed the complaint before MahaRERA for refund of the
entire paid amount along with interest.
The main issue that came up before MahaRERA while hearing the complaint was whether the Part OC obtained under local laws exempted the project from registration under RERA and consequently, excluded the jurisdiction of MahaRERA.
Lodha Developers relied on the judgment of Prasad Patker v. Runwal Projects Private Limited (Complaint No CC006000000000182) where MahaRERA had already held that ongoing projects which have already received Part OC do not require registration.
The main issue that came up before MahaRERA while hearing the complaint was whether the Part OC obtained under local laws exempted the project from registration under RERA and consequently, excluded the jurisdiction of MahaRERA.
Lodha Developers relied on the judgment of Prasad Patker v. Runwal Projects Private Limited (Complaint No CC006000000000182) where MahaRERA had already held that ongoing projects which have already received Part OC do not require registration.
DECISION OF MahaRERA
Section 3 of RERA exempted real estate projects from registration where the promoters of the project had received the completion certificate prior to commencement of the Act. On the other hand Rule 4 of the MahaRERA Rules, 2017 (Rules) exempted real estate projects where the promoters of the project had received either the completion certificate or the occupancy certificate prior to commencement of the Act.
To address this dichotomy MahaRERA compared the definition of completion certificate under the RERA and the definition of occupancy certificate and completion certificate under the Development Control Regulation for Greater Bombay, 1991 (DCR). MahaRERA while interpreting the definition of occupancy certificate under DCR and completion certificate under RERA held that in the State of Maharashtra the occupancy certificate is issued by the local authority (Municipal Commissioner) after obtaining the certificate from the private architect or engineer supervising the construction if the project complies with the laws and the sanctioned plan. Completion certificate is issued by the local authority (Municipal Commissioner) provided such project is as per sanctioned plans, layout and specifications. So after comparing the above definitions, MahaRERA concluded that Rule 4 of the Rules and Section 3 of RERA mean to say the same thing and are not contrary to one another. It also held that the occupancy certificate issued under the local municipal laws comes within the definition of completion certificate defined by RERA.
Further while answering the main issue, MahaRERA primarily relied on the judgment of the apex court in Union of India through Director of Income Tax v. Tata Chemicals Limited to hold that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning unless such interpretation leads to some absurdity.
MahaRERA referred to Section 3 of RERA which states that, if any project is ongoing and its completion certificate is not obtained prior to the commencement of the Act i.e. before 1 May 2017, then such project needs registration under the RERA. As in the given case, the project obtained its Part OC as per local laws on 8 June 2017, the said project requires registration under RERA.
In addition MahaRERA also held that in the interest of all the allottees of the project it would be anomalous to hold that some part of the building is covered by MahaRERA’s jurisdiction and other part is exempted. Hence it held that the entire project comes under the jurisdiction of MahaRERA.
MHCO Comment: Although the given order is an interim
order, it clarifies the position in law that obtaining Part OC for a
project does not exclude the jurisdiction of MahaRERA over such project.
Similar orders have been passed by Haryana-RERA. This order is bound to
cause tremendous discomfort to builders / developers who rushed to
obtain occupancy certificates to avoid the provisions of the RERASection 3 of RERA exempted real estate projects from registration where the promoters of the project had received the completion certificate prior to commencement of the Act. On the other hand Rule 4 of the MahaRERA Rules, 2017 (Rules) exempted real estate projects where the promoters of the project had received either the completion certificate or the occupancy certificate prior to commencement of the Act.
To address this dichotomy MahaRERA compared the definition of completion certificate under the RERA and the definition of occupancy certificate and completion certificate under the Development Control Regulation for Greater Bombay, 1991 (DCR). MahaRERA while interpreting the definition of occupancy certificate under DCR and completion certificate under RERA held that in the State of Maharashtra the occupancy certificate is issued by the local authority (Municipal Commissioner) after obtaining the certificate from the private architect or engineer supervising the construction if the project complies with the laws and the sanctioned plan. Completion certificate is issued by the local authority (Municipal Commissioner) provided such project is as per sanctioned plans, layout and specifications. So after comparing the above definitions, MahaRERA concluded that Rule 4 of the Rules and Section 3 of RERA mean to say the same thing and are not contrary to one another. It also held that the occupancy certificate issued under the local municipal laws comes within the definition of completion certificate defined by RERA.
Further while answering the main issue, MahaRERA primarily relied on the judgment of the apex court in Union of India through Director of Income Tax v. Tata Chemicals Limited to hold that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning unless such interpretation leads to some absurdity.
MahaRERA referred to Section 3 of RERA which states that, if any project is ongoing and its completion certificate is not obtained prior to the commencement of the Act i.e. before 1 May 2017, then such project needs registration under the RERA. As in the given case, the project obtained its Part OC as per local laws on 8 June 2017, the said project requires registration under RERA.
In addition MahaRERA also held that in the interest of all the allottees of the project it would be anomalous to hold that some part of the building is covered by MahaRERA’s jurisdiction and other part is exempted. Hence it held that the entire project comes under the jurisdiction of MahaRERA.
The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.
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