Madras High Court
The Real Estate Regulatory Authority vs S.M. Syed Abdul Khader Mutawalli on 9 June, 2025
Author: Anita Sumanth
Bench: Anita Sumanth
2025:MHC:1309
W.A. No.1723 of 2023 & W.P. No. 32506 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 25.04.2025
PRONOUNCED ON : 09.06.2025
CORAM:
THE HON’BLE DR. JUSTICE ANITA SUMANTH
AND
THE HON’BLE MR. JUSTICE C. KUMARAPPAN
W.A.No. 1723 of 2023 & W.P. No. 32506 of 2023
&
C.M.P.No. 15235 of 2023 & W.M.P. Nos. 32112 & 32113 of 2023
W.A. No. 1723 of 2023
The Real Estate Regulatory Authority,
rep. by its Chairperson,
Thalaimuthu Natarajan Maligai,
No.1, Gandhi Irwin Bridge Road,
Egmore, Chennai – 600 008. ..Appellant
Vs.
1.S.M. Syed Abdul Khader Mutawalli,
S.M.M. Mohideen Wakf Alal Aulad,
55/24, Soorapamudali Street,
Triplicane,
Chennai – 600 005.
2.The Sub-Registrar,
Virugambakkam,
47/5, Arcot Road,
Udhayam Colony,
Lambert Nagar, Virugambakkam,
Chennai – 600 083.
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3.The Inspector General of Registration,
100, Santhome High Road,
Chennai – 600 028. ..Respondents
Prayer in W.A.No. 1723 of 2023: Writ Appeal filed under Clause 15
of Letters Patent Act as against the order dated 22.11.2022 made in W.P.
No. 28488 of 2022.
For Appellant : Mr. Om Prakash
Senior Counsel for
Mrs.R.Varalakshmi
For Respondents : Mr. Mukundan for
M/s. Menon, Karthik
and Mukundan
for R1
Mr.K. Karthik Jagannath,
Govt. Advocate for R2 & R3
W.P. No. 32506 of 2023:
M/s. Radial IT Park Pvt. Ltd.,
Unit 7 & 8, First Floor,
Pinnacle Building,
International Tech Park,
CSIR Road, Tharamani,
Chennai – 600 113 rep. by its
Authorised Signatory ..Petitioner
Vs.
1.State of Tamil Nadu,
rep. by its Principal Secretary,
Housing and Urban Development,
Secretariat, Fort St. George,
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W.A. No.1723 of 2023 & W.P. No. 32506 of 2023
Chennai – 600 023.
2.The Tamil Nadu Real Estate Regulatory
Authority, rep. by its Chairman,
No.1A, 1st Floor,
Gandhi Irwin Bridge Road, Egmore,
Chennai – 600 008.
3.The Member Secretary,
Chennai Metropolitan Development
Authority,
No.1, Gandhi Irwin Road,
Egmore, Chennai – 600 008.
4.The Sub Registrar,
Pallavaram,
Chennai South Sub Registrar Office,
No.7, 2nd Main Road,
New Colony, Chrompet,
Chennai – 600 044. ..Respondents
Prayer: Petition under Article 226 of the Constitution of India praying
for issue of a Writ of Certiorarified Mandamus to call for the records from
the file of the 2nd respondent bearing Letter No. TNRER/A4/05688/2023
dated 11.07.2023 issued to the 4th respondent and quash the same as illegal
and consequently direct the 4th respondent to register any document
presented by the petitioner.
For Petitioner : Mr.A.R.Karunakaran
For Respondents : Mr.K.Karthik Jagannath
for R1 & R4
Mr.P. Kumaresan
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Addl. Advocate General
assisted by
Mr.V. Sudalai Selvan,
Standing Counsel for R3
Mr. Om Prakash,
Senior Counsel for
Mrs. R.Varalakshmi for R2
COMMON JUDGMENT
(Per :- DR. ANITA SUMANTH,J.)
This common order is passed disposing the writ appeal and
connected writ petition since the questions that arise for resolution are one
and the same, and they have thus been clubbed to be heard together. The
facts involved also turn more or less on a similar factual matrix.
Facts in W.P.No.32506 of 2023 and submissions of
Mr.Karunakaran:
2. First, the facts in W.P.No. 32506 of 2023 as set out by
Mr.Karunakaran, appearing for the petitioner. The petitioner claims to be
the owner of lands in several survey numbers in MMRD Road (Radial
Road) in Zamin Pallavaram village (property / property in question). The
Petitioner set about developing a commercial complex comprising triple
basement floors, ground floor and ten floors comprising office space,
food court, shops, waiting area space for GIS substation and other
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W.A. No.1723 of 2023 & W.P. No. 32506 of 2023amenities for the purposes of IT/ITES companies, in two blocks.
3. The Member Secretary to the Chennai Metropolitan Development
Authority (CMDA), arrayed as 3rd Respondent in the writ petition, had
issued a planning permit dated 03.10.2020 valid till 02.10.2025. Soon
thereafter, the petitioner received a letter from the Tamil Nadu Real Estate
Regulatory Authority (TNRERA/Authority) putting the petitioner to notice
that every promoter / individual / developer should apply to it seeking
registration of their real estate projects, prior to marketing or alienating the
plots.
4. Reference was made to Section 3(1) and 4(1) of the Real Estate
(Regulation and Development) Act, 2016 (Act) and Rule 4 of the Tamil
Nadu Real Estate (Regulation and Development) Rules, 2017 (Rules). The
petitioner was called upon to comply under threat of action under Section
59(1) and 59(2) of the Act.
5. The petitioner responded stating that no alienation of the building
was intended, notwithstanding which, TNRERA insisted on the
registration, cautioning the petitioner not to market the project or alienate
plots until such time the project was registered. The petitioner yet again
reiterated that the project was developed using its own funds and that it
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W.A. No.1723 of 2023 & W.P. No. 32506 of 2023did not intend to market or sell any part of the project.
6. It made clear its intention to only rent the built-up area to IT
companies and that too after receipt of completion certification from
CMDA. There was no response to the aforesaid communications leading
the petitioner to believe that its stand had been accepted. By way of
abundant caution, and having regard to the initial stand taken by the
Authority, the petitioner approached the Authority for a No Objection
Certificate (NOC) as CMDA insisted thereupon as a pre-condition for
issuance of completion certificate (CC).
7. The Authority had issued a letter on 11.07.2023 acquiescing to
the position that the project of the petitioner did not call for registration
with it, as it had been informed that the building was not meant for sale or
lease. Based on the same, CMDA issued a partial completion certificate on
31.08.2023.
8. While so and the petitioner was proceeding with the completion
of the building, and raising monies using the same to fund its business
activities, it came to know that the Authority had issued a direction to the
Sub Registrar, Pallavaram (Sub Registrar) to desist from registering any
documents relating to the petitioner’s property.
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9. On an enquiry made under the Right to Information Act, 2005
(RTI Act), the petitioner came to know that the Sub-Registrar had been
called upon under impugned order dated 11.07.2023 not to register any
sale / lease deeds relating to the property in question.
10. The Sub Registrar has acted upon the impugned order refusing
to register lease deed dated 16.10.2023 for a period of 12 months entered
into by the petitioner with Capital Land Services (India Private Limited)
issuing refusal cheque slip dated 17.10.2023 bearing No.
RFL/Pallavaram/14/2023.
11. The petitioner states that it is seriously prejudiced by virtue of
the aforesaid orders as being wholly contrary to the provisions of the Act.
Having noted that the building was intended for the petitioner’s own use,
the Authority had erred in issuing the impugned directive to R4.
Mr.Karunakaran confirms that the petitioner does not intend to either
circumvent the provisions of the Act or to let out the units on a perpetual
or a long lease.
12. In such circumstances, there is no requirement for registration
under the Act, particularly since the Authority had itself accepted the
position that the petitioner’s project does not require registration under
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its letter dated 11.07.2023 as the units were not intended for sale / lease.
13. Our attention is drawn to Section 3 of the Act as per which prior
registration with the Authority is required only in the case of those projects
in respect of which completion certificates have not been issued. In the
present case, CMDA had issued completion certificate on 31.08.2023
itself and hence there can be no further requirement for registration
thereafter. He relies on the decision of the Bombay High Court in Lavasa
Corporation Limited v Jitendra Jagadish Tulsiani and another1.
Facts in W.A.No.1723 of 2023 and the submissions of
Mr.Mukundan
14. Now, the facts in W.P.No. 28488 of 2022, the allowing of
which had led to W.A.No. 1723 of 2023 filed by TNRERA, wherein that
Writ Petitioner is arrayed as R1 (hereinafter referred to as R1). R1 had
sought a quash of order dated 24.06.2021 passed by the TNRERA, and a
consequential direction to the Sub Registrar, Virugambakkam to register
lease deed entered into by it with one Infinity Retail Limited. The writ
petition came to be allowed as against which the Authority is in appeal.
15. Mr.Mukundan, who appears on behalf of R1 submits that R1
1 2018 SCC OnLine Bom 2074
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had obtained planning permission from CMDA on 15.06.2016 for
constructing a building comprising stilt plus three
floors plus part fourth floor in Door No. 175/1L and 2L, Arcot Road,
Survey No. 15/1, Block No.8, Saligramam Village, Chennai – 600 026
(property 1 / property in question 1)
16. According to R1, property 1 comprises Waqf property as per
Waqf deed dated 20.06.1957. R1 confirms that Waqf property cannot be
sold under any circumstances under the Waqf Alal Aulad as the property is
only for the benefit of his children and their descendants. This position was
conveyed to the Authority on 03.10.2017 and reiterated on 16.06.2021
wherein R1 confirms that the property was being retained for their own use
and was not intended to be sold or leased.
17. It is true that despite such confirmation R1 has proceeded to
execute lease deed for a period of 18 years with Infinity Private Limited on
27.08.2022. To this extent, the statements of R1 under letters dated
03.10.2017 and 16.06.2021 are incorrect. Be that as it may,
Mr.Mukundan, submits that there is no prohibition under the Act for lease
of the units and R1 confirms categorically that he does not intend to
sell the property.
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18. Since the arrangement with Infinity Private Limited was only a
lease for 18 years, the impugned communication dated 24.06.2021 to the
CMDA and Sub-Registrar, Virugambakkam, is unwarranted, contrary to
the provisions of the Act and the learned Judge had rightly quashed the
same allowing the writ petition and directing the Sub Registrar to register
the lease deed on payment of necessary stamp duty and registration
charges. He also places reliance on the decision of the Bombay High Court
in Lavasa Corporation Limited2.
Submissions by Mr.Om Prakash for Mrs. Varalaxmi on
record for the Tamil Nadu Real Estate Regulatory Authority
19. Mr.Om Prakash, learned Senior Counsel, appearing for the
Authority, arrayed as respondent in writ petition and appellant in W.A.No.
1723 of 2023 would take us through the scheme of the Act highlighting
that the Act was intended to regulate and promote the real estate sector. It
is an aid to efficiency and transparency. Importantly, it is intended to
protect the interest of consumers in the real estate sector. Thus the
grievances portrayed by the project developers are unwarranted.
20. The Act, according to him, enables the monitoring and
overseeing of all real estate projects in the larger interest of the citizenry as
2 Foot note supra 1
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well as potential purchasers. It provides for a mechanism to ensure that the
investment by purchasers are protected and the role of the Authority
extends to ensuring that the quality of construction is sound, in the general
interests of society. He points out that, if really the statements of the
Petitioner and R1 to the effect that the properties will not be sold is
correct, there can have no grievance in registering the projects in terms of
the Act.
21. Our attention is drawn to the provisions of the Act, including the
definitions, indicating the role of the Authority, the purpose that it is
intended to serve and the ample power that has been vested in the
Authority to check non-compliance with the provisions of the Act,
including non-registration and imposition of penalties in this regard.
22. Learned Senior Counsel draws attention to the observations of
the writ court under impugned order dated 22.11.2022 where the Court
has interpreted the provisions of the Act literally, to conclude that the
Tamil Nadu Real Estate (Regulation and Development) Act, 2016 is
intended to apply only in those cases where the property concerned has
been sold.
23. Various nuances in the interpretation of the statutory provisions
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and the fact that the enactment is itself intended as a measure of protection
against unscrupulous real estate developers has not been taken note of by
the writ court. He cites the following cases in support of his submissions
(i) Bar Council of Maharashtra v M.V.Dabholkar and others3, (ii)
Regional Transport Authority, Meerut Region, Meerut, through its
Secretary, Regional Transport Officer, Meerut and another v Sri Ram4
and (iii) Gujarat Real Estate Regulatory Authority v Satyam Infracon5.
24. We have heard all learned counsel and have perused the material
papers.
Outline and scheme of the Act
25. The object of the Act is to regulate the real estate sector and as a
consequence, to ensure professionalism in the sector, standardisation in
quality of real estate projects and to afford adequate consumer protection.
In the statement of objects and reasons, it is said that though remedies
under the Consumer Protection Act are available to buyers in the real
estate market, such recourse is only curative and has not been seen to be
adequate or effective in addressing the concerns of buyers. It is for that
3 Foot Note supra 3
4 1973 SCC OnLine All 12
5 R/RERA Appeal No.1 of 2020 dated 09.03.2021 (Guj HC)
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purpose that the legislation has been enacted, also providing for an
Appellate Tribunal to hear appeals from the orders of the Real Estate
Regulatory Authority.
26. Under the definition clause, an allottee is defined as follows:
2. Definitions.- In this Act, unless the context
otherwise requires,
….
(d) “allottee” in relation to a real estate project,
means the person to whom a plot, apartment or
buildings, as the case may be, has been allotted,
sold (whether as freehold or leasehold) or
otherwise transferred by the promoter, and
includes the person who subsequently acquires the
said allotment through sale, transfer or otherwise
but does not include a person to whom such plot,
apartment or building, as the case may be, is given
on rent;
27. An apartment is defined under Section 2(e) as follows:
(e) “apartment” whether called block, chamber,
dwelling unit, flat, office, showroom, shop,
godown, premises, suit, tenement, unit or by any
other name, means a separate and self-contained
part of any immovable property, including one or
more rooms or enclosed spaces, located on one or
more floors or any part thereof, in a building or
on a plot of land, used or intended to be used for
any residential or commercial use such as
residence, office, shop showroom or godown or for
carrying on any business, occupation, profession
or trade, or for any other type of use ancillary to
the purpose specified;
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28. The Act seeks to regulate all types of units, be it commercial,
residential or a unit of any other nature, including a flat, office,
showroom, shop, godown or called by any other name. The activity in
such a unit may be business, professional, commercial or residential,
irrespective of which, the overseeing of such a project would come under
the sweep of the Act.
29. Likewise, a ‘building’, defined under clause (j) of Section 2,
includes any structure or erection or part of a structure or erection which is
intended to be used for residential, commercial or for the purpose of any
business, occupation, profession or trade, or for any other related
purposes.
30. The promoter of a real estate project is defined under 2 (z)(k) as
follows:
(zk) “promoter” means,-
(i) a person who constructs or causes to
be constructed an independent building or a
building consisting of apartments, or converts an
existing building or a part thereof into apartments,
for the purpose of selling all or some of the
apartments to other persons and includes his
assignees; or……………..
(ii) a person who develops land into a
project, whether or not the person also constructs
structures on any of the plots, for the purpose of
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thereon; or
(iii) any development authority or any other
public body in respect of allottees of—
(a) buildings or apartments, as the case may
be, constructed by such authority or body on lands
owned by them or placed at their disposal by the
Government; or
(b) plots owned by such authority or body or
placed at their disposal by the Government, for the
purpose of selling all or some of the apartments or
plots; or
(iv) an apex State level co-operative housing
finance society and a primary co-operative
housing society which constructs apartments or
buildings for its Members or in respect of the
allottees of such apartments or buildings; or
(v) any other person who acts himself as a
builder, coloniser, contractor, developer, estate
developer or by any other name or claims to be
acting as the holder of a power of attorney from
the owner of the land on which the building or
apartment is constructed or plot is developed for
sale; or
(vi) such other person who constructs any
building or apartment for sale to the general
public.
31. A real estate project is defined under 2(z)(n) thus:-
(zn) “real estate project” means the development
of a building or a building consisting of
apartments, or converting an existing building or
a part thereof into apartments, or the development
of land into plots or apartments, as the case may
be, for the purpose of selling all or some of the
said apartments or plots or building, as the case
may be, and includes the common areas, the
development works, all improvements and15/37
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appurtenance belonging thereto;
32. Section 3 places an embargo on a promoter from advertising,
marketing, booking, selling or offering for sale, or inviting persons to
purchase a plot or apartment or a building in a real estate project without
registration of that project with the Real Estate Regulatory Authority. The
first proviso to Section 3 states that projects that were on-going on the
date of commencement of the Act, for which completion certificate had not
been issued, shall be registered within a period of three months from date
of commencement of the Act.
33. The Act applies to all real estate projects, barring those
exclusions set out under Section 3(2), meaning that no registration is
required in the case of a project where the area of land proposed to be
developed does not exceed five hundred square meters or where the
number of apartments proposed to be developed does not exceed eight,
inclusive of all blocks/phases.
34. In a case where the real estate project satisfies the parameters
set out under the Act, an application is to be made to the Authority under
Section 4 of the Act for registration, which is to be considered by the
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Authority within 30 days of receipt thereof, in terms of Section 5, dealing
with the grant of registration.
35. The Application is to contain the details stipulated under
Section 4(2), being:
…
(2) The promoter shall enclose the following documents along
with the application referred to in sub-section (1), namely:—
(a) a brief details of his enterprise including its name, registered
address, type of enterprise (proprietorship, societies, partnership,
companies, competent authority), and the particulars of
registration, and the names and photographs of the promoter;
(b) a brief detail of the projects launched by him, in the past
five years, whether already completed or being developed, as
the case may be, including the current status of the said
projects, any delay in its completion, details of cases pending,
details of type of land and payments pending;
(c) an authenticated copy of the approvals and commencement
certificate from the competent authority obtained in
accordance with the laws as may be applicable for the real
estate project mentioned in the application, and where the
project is proposed to be developed in phases, an
authenticated copy of the approvals and commencement
certificate from the competent authority for each of such
phases;
(d) the sanctioned plan, layout plan and specifications of the
proposed project or the phase thereof, and the whole project
as sanctioned by the competent authority;
(e) the plan of development works to be executed in the
proposed project and the proposed facilities to be provided
thereof including fire- fighting facilities, drinking water
facilities, emergency evacuation services, use of renewable
energy;
(f) the location details of the project, with clear demarcation
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including the latitude and longitude of the end points of the
project;
(g) proforma of the allotment letter, agreement for sale, and
the conveyance deed proposed to be signed with the allottees;
(h) the number, type and the carpet area of apartments for
sale in the project along with the area of the exclusive balcony
or verandah areas and the exclusive open terrace areas
appurtenant with the apartment, if any;
(i) the number and area of garage for sale in the project;
(j) the names and addresses of his real estate agents, if any,
for the proposed project;
(k) the names and addresses of the contractors, architect,
structural engineer, if any and other persons concerned with
the development of the proposed project;
(l) a declaration, supported by an affidavit, which shall be
signed by the promoter or any person authorised by the
promoter, stating:—
(A) that he has a legal title to the land on which the
development is proposed along with legally valid documents
with authentication of such title, if such land is owned by
another person;
(B) that the land is free from all encumbrances, or as the case
may be details of the encumbrances on such land including
any rights, title, interest or name of any party in or over such
land along with details;
(C) the time period within which he undertakes to complete the
project or phase thereof, as the case may be;
(D) that seventy per cent. of the amounts realised for the real
estate project from the allottees, from time to time, shall be
deposited in a separate account to be maintained in ascheduled bank to cover the cost of construction and the land
cost and shall be used only for that purpose:
36. In the event the Authority believes that the application is not
liable to be considered positively, a speaking order setting out the reasons
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for refusal shall be passed after hearing the promoter. If the application is
accepted, or in the event, no order has been passed on the application
within 30 days from receipt thereof, in which case it shall be deemed to
have been accepted, the Authority shall register the project and grant
access to promoter to the website to take the project online in
the official portal of the Authority.
37. Section 7 provides for the revocation of registration of the
project if the Authority believes that there are defaults or violations by the
promoter or is the promoter was engaging in malpractices or irregularities.
The obligations of the Authority in the event of lapse of, or revocation of
registration are provided under Section 8. We are not concerned with this
scenario in the present case and hence do not elaborate.
38. Under Chapter III, Sections 11 to 18 touch upon the functions
and duties of a promoter. In the context of lease hold land, clause (c), sub-
section 4 of Section 11 is relevant and states thus:
11. Functions and duties of Promoter
…
(4) The Promoter shall-
…
(c) be responsible to obtain the lease certificate, where the
real estate project is developed on a leasehold land,
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specifying the period of lease, and certifying that all dues
and charges in regard to the leasehold land has been paid,
and to make the lease certificate available to the association
of allottees.
39. Section 19 under Chapter IV deals with the rights and duties of
an allottee and sets out in detail such entitlements. Section 19 proceeds on
the basis that an allottee is a purchaser of a unit in the real estate project.
40. Section 20 to 40 coming under Chapter V touch upon the
establishment and incorporation, composition, constitution, functions and
powers of the Real Estate Regulatory Authority. Suffice it to say that the
powers are wide and comprehensive and are intended to ensure that the
Authority oversees and manages all aspects of functioning of the real estate
sector. Section 32 provides for its functions, and clause (c) thereof extends
the functions to encompass the creation of a transparent and robust
grievance redressal mechanism against acts of omission and commission by
competent authorities and their officials.
41. Competent authority is defined under Section 2(p) to say ‘the
local authority or any authority created or established under any law for
the time being in force by the appropriate Government which exercises
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authority over land under its jurisdiction, and has powers to give
permission for development of such immovable property’.
42. Section 35 endows powers on the Authority to call for
information and conduct investigations, including in situations where
enquiry is necessary into the affairs of a promoter, allottee or real estate
agent. Chapter deals with the establishment and functions of the Central
Advisory Council and Chapter VII with the establishment and other details
of the Appellate Authority, culminating with Section 58 providing for an
appeal to the High Court.
43. Chapter VIII enumerates the provisions relating to offences,
penalties and adjudication, the last, in the context of compensation under
various provisions under the Act. Chapters IX and X deal with finance and
other miscellaneous matters.
Discussion and conclusion on the issue whether registration
under the Act is mandatory in respect of projects involving lease of
units/apartments.
44. We now apply the scheme of the Act as above, to the legal
issue arising in this matter, being, whether registration under the Act is
compulsory for all real estate projects irrespective of whether the units are
for sale/lease.
45. In the present case, there is no doubt that both the petitioner and
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R1, are ‘real estate promoters’ as per the definition under the Act. There is
also no dispute that the projects in question constitute ‘real estate projects’.
Petitioner and R1 have argued that notwithstanding that they are
promoters, and the projects are real estate projects for the purposes of the
Act, such projects would not attract the rigour of the Act as the lessees are
not ‘allottees’, as per the statutory definitions, and as there has been no
transaction of sale in their favour.
46. In our view that would be an oversimplification of the matter.
True, the definition of a ‘promoter’ is ‘a person who constructs or causes
to be constructed an independent building or apartments . . . . for the
purpose of selling to other persons all or some of the plots in the said
project or a person who develops land into a project . . . . , for the
purpose of selling to other persons all or some of the plots in the said
project’. (emphasis supplied)
47. Moreover, the definition of ‘allottee’ also specifically excludes
those persons ‘to whom such plot, apartment or building, as the case may
be, is given on rent’. However, the definition of allottee also states that an
allottee is one ‘to whom a plot, apartment or buildings, as the case may,
has been allotted, sold (whether as freehold or leasehold) or otherwise
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transferred by the promoter..’.
48. One has thus to reconcile the position that the definition of
‘allottee’ contains two conflicting positions, that the transaction not be one
of ‘sale’ but may include the owner of leasehold rights as well. We find
only two instances where the term ‘lease’/’leasehold’ has been used, the
first in Section 2(d) defining ‘allottee’ and the second in Section 11(4)(c)
touching upon duties of a promoter.
49. Section 11(4)(c) states that a promoter would be responsible for
obtaining a lease certificate in cases where the project has been developed
on leasehold land. The certificate must be handed over to the association
of allottees and must stipulate that all dues and charges in relation to that
land have been paid.
50. In our view, neither Section 2(d) nor Section 11(4)(c) further the
position canvassed by the Authority that registration of all real estate
projects is compulsory. The term ‘freehold’ indicates unrestricted
ownership of both the land as well as super-structure thereupon and the
term ‘leasehold’ indicates ownership of the right to use and enjoyment of
the land and building albeit for a demarcated period only. The extent of
regulation under the Act extends to projects developed on leasehold land
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alone and a combined reading of Section 11(4)(d) and 2(d) nowhere leads
to the inference that transactions of lease of units in a project renders the
project vulnerable to registration.
51. Section 5(3) is relevant in that it states that the registration so
granted or deemed to have been granted under the Act shall be valid for the
period stipulated under Section 4(2)(C), which is the time period within
which the promoter had undertaken to complete the project or phase
thereof. Thus, the overseeing of a project by the Authority is only till such
time the project is completed and the units handed over to the purchasers.
The role of the Authority ends with this.
52. One of the arguments by Mr.Om Prakash is that the
responsibility of the Authority extends to overseeing the structural
stability of the building as well as the compliance of the promoter with
planning and building permits. While that is correct, such an exercise can
be carried out by the Authority only for the life/validity of the registration
granted under the Act and not beyond.
53. While seeking registration, the promoter is expected to furnish an
undertaking as to when the project/phase of the project, will be completed.
Such an exercise is rendered impossible in the context of lease of property
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as the transaction between the promoter and the lessee is a continuing one
till the parties so desire. The question of the promoter furnishing a
declaration that the project has been completed and the unit handed over to
the purchaser does not arise in such circumstances.
54. The only reasonable and practicable conclusion is that the Act,
and the provisions thereunder, are not expected to apply in the case of a
lease and will apply only in the case of a sale of unit where there will also
be a finality to the role of the promoter with such sale.
55. Mr.Om Prakash has argued that the apprehension of the
Authority, centers around the possibility of a transaction of sale being
disguised as one of lease, to evade statutory registration under the Act.
The statement of objects and reasons to the Act, the relevant portion of
which is extracted below, indicates that it seeks to balance the interests
between the industry and consumers and this approach will therefore aid
the interpretation of its provisions as well.
56. This aspect has also been noted by the division bench of the
Bombay High Court in the case of Neelkamal Realtors Suburban Pvt. Ltd.
and another V. Union of India and others (AIR 2018 (NOC) 398 (Bom).
‘. . .
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3. The proposed Bill will ensure greater accountability
towards consumers, and significantly reduce frauds and
delays as also the current high transaction costs. It attempts
to balance the interests of consumers and promoters by
imposing certain responsibilities on both. It seeks to establish
symmetry of information between the promoter and
purchaser, transparency of contractual conditions, set
minimum standards of accountability and a fast-track dispute
resolution mechanism. The proposed Bill will induct
professionalism and standardization in the sector, thus
paving the way for accelerated growth and investments in the
long run.’
57. We agree that the provisions of the Act cannot be interpreted so
as to entitle a promoter/agent to draw an unfair and unintended benefit.
The anxiety and apprehension of the Authority is a legitimate one though it
remains to be seen as to whether it has been properly applied in the
present cases.
58. The definition of ‘allottee’, that includes the owner of
leasehold rights, cannot thus be literally interpretated or understood to
conclude that the Act would apply only in situations of a sale simplicitor.
As a general proposition therefore, we conclude that the Act would apply
to promotors of real estate projects involving sale of properties as well as
perpetual leases or leases in excess of a particular tenure. As of now, it is
moot as to what would be the threshold to determine such tenure and no
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guidance has been provided in this regard.
59. In fact, the State has notified the Tamil Nadu Real Estate
(Regulation and Development), Rules 2017 in order to implement the
Central Act, making it mandatory for the promoter to produce the
TNRERA Registration Certificate as a pre-condition for issuance of
completion certificate by the CMDA and the Directorate of Town and
Country Planning as well as Local Planning Authorities and local bodies in
case of all projects without there being any verification of whether at all
the project concerned required registration under the Act.
60. The Authority had, on 02.11.2018, requested the State to issue
necessary orders making project registration mandatory, and vide G.O.Ms.
No. 166 dated 29.11.2018, the request of the Authority has been accepted
in the following terms:-
…
5. The Government carefully examined the request
of the Chairperson, TNRERA in para 4 above and
direct the Member Secretary, Chennai
Metropolitan Development Authority and
Commissioner of Town and Country Planning to
include the registration of projects with TNRERA
as one of the conditions in the planning permission
and its compliance is a pre-requisite for issue of
Completion Certificate, where the area of land
proposed to be developed exceeds 500 sq.m. or the
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this condition shall also be checked and ensured
before issue of Completion Certificate. This
condition is also to be incorporated in the Tamil
Nadu Combined Development Regulations and
Building Rules, 2018.
61. The above Government Order is unconditional and does not take
into account the position that the Act does not apply to transactions of
lease simpliciter, and can be called upon to address only transactions of
sale or perpetual/unusually long leases where the authority is of the view
that the substance of the transaction is really one of sale and not one of
lease. This aspect of the matter has escaped the attention of both the State
and the Authority.
62. Now coming to the applicable period, the Articles under the
Schedule to the Indian Stamp Act 1899 (Stamp Act) provides some
guidance. Article 35 of Schedule I to the Stamp Act deals with lease and
provides as follows:
35. LEASE, including an under lease or sub-lease and any
agreement to let or sub-let-
(a) Where the period of lease is below thirty years – One
rupee for every Rs.100 or part thereof of the amount of rent,
fine, premium or advance, if any, payable;
(b) Where the period of lease is thirty years and above and
upto ninety-nine years – Four rupees for every Rs.100 or part
thereof of the amount of rent, fine, premium or advance, if
any, payable;
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(c) Where the period of lease is above ninety-nine years-
Eight rupees for every Rs.100 or part thereof of the amount
of rent, fine, premium or advance, if any, payable.
63. Article 23 of Schedule I to the Stamp Act 1899 dealing with
‘conveyance’ provides as follows:
23. Conveyance (as defined by section 2(10), not being a
Transfer charged or exempted under No.62-
(a) of immovable property situated within the Chennai
Metropolitan planning Area and the Urban Agglomeration of
Madurai, Salem and Tiruchirapalli and the City of
Tirunelveli – Eight rupees for every Rs.100 or part thereof of
the market value of the property which is the subject matter
of conveyance
(b) of any other property – Seven for every Rs.100 or part
thereof of the market value of the property which is the
subject matter of conveyance.
64. The rates of stamp duty are graded and increase along with the
tenure of leases. The duty payable in respect of conveyance in excess of
30 and 99 years is more than the rates for a lease below 30 years. In fact,
lease of a property for a period in excess of 99 years is equated to a sale
in terms of clause (2) of Article 23, and the rate of stamp duty is 8% in
both cases. For the purposes of the Act, where one is to exclude leases
simplicitor from the purview of registration, we thus adopt the tenure of
lease under clause (a) of Article 38 of the Stamp Act, being 30 years.
65. Needless to say, in the event the Authority is in possession of
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information that a real estate project is liable to be registered under Act but
is designed deviously in any way whatsoever, including by using the
nomenclature of ‘lease’ obfuscating the nature of the transaction merely to
subvert such registration, it is bound to lift the veil and take prompt action
to contain such an endeavour.
66. This liberty is available to the Authority even in cases where the
lease is for a period of less than 30 years if it believes that the transaction
is, in substance a sale, and the Authority certainly can, in appropriate
cases, and for reasons to be recorded in writing, lift the veil, directing
registration of the project concerned.
67. In Lavassa Corporation, the agreement of lease executed by the
promoter was for a period of 999 years. The Authority had thus taken the
stand, and legitimately, in our view, that the transaction was, in essence,
one of sale and not lease as projected.
68. The Adjudicating Authority in that case, had preferred to focus
on the nomenclature used by the parties, rather than the substance of the
documentation. The Tribunal had rightly held that the interpretation of the
Authority that since the agreements were styled as lease agreements no
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registration under the Act was necessary, was clearly erroneous. The
orders of the Adjudicating Authority had been reversed by the Tribunal
which order stood confirmed by the High Court.
69. Our answer to the question as to whether the Authority can
insist that a promoter register a project under the Act where (i) the lease is
for a period less than 30 years (ii) the promoter has confirmed that the
property is for own use or that it/he does not intend to alienate the property
by sale or perpetual lease (iii) the authority has no information in its
possession to the effect that the promoter intends to circumvent the
provisions of the Act, is thus, in the negative.
70. We conclude this issue reiterating that balance must be
achieved between all the stakeholders in the sector in interpreting the
provisions of the Act, cautioning abstinence by the Authority in cases
where there is no indication that the promoters intend to circumvent the
provisions of the Act.
71. This position will be verified on the basis of an undertaking to
be furnished by the promoter/agent of a project to the CMDA that the
project is for own use and not for sale/long perpetual lease in excess of 30
years, at the time of seeking planning permission. The format of the
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undertaking will be finalised by the Authority in conjunction with the
State, within six weeks of receipt of this order. An application
unaccompanied by such undertaking such be treated to be invalid.
72. A copy of the undertaking shall parallelly be furnished to the
Authority to enable it to carry out a verification, if it believes it so
necessary, as to the legitimacy of the claim of the promoter/real estate
agent. While we agree with the procedure contemplated under G.O.Ms.
No. 166 dated 29.11.2018, we clarify that the requirement of registration
will only be of such projects as stipulated under this Order and not all
leases.
73. We have also protected the power of the Authority to
intervene, and mandate registration, in cases of leases less than 30 years,
for reasons to be recorded in writing. The Authority may also, in such
cases, consider issuing a fiat to the concerned sub-registrar that
documents shall not be registered. The question that now remains is as to
whether such action is justified in the present case.
Whether in the present cases, registration of the real estate
projects is required
74. The Authority has not denied the position that the petitioner and
R1 have executed only lease agreements with the proposed lessees, in the
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case of the petitioner, the tenure of lease being one year, and in the case of
R1, the tenure of lease proposed to be executed being 18 years.
75. As far as R1 is concerned, it is true that he has stated in some
communications that he does not intend to even lease the building. This is
clearly a mis-statement, in light of the lease deed proposed to be executed
with Infinity Retail Limited. However, we draw no adverse conclusion
therefrom, as the error would have no bearing on the legal issue being
decided.
76. The CMDA, arrayed as the 3rd respondent in the writ petition,
has confirmed the position that planning and building permissions had
been sought and issued by the CMDA and the Commissioner, Pallavaram
Municipality respectively on 03.10.2020 and 27.10.202 respectively. A
partial Completion Certificate had also been issued by the CMDA on
31.08.2023.
77. As far as registration of the project with the RERA is
concerned, the CMDA has referred to the letter issued by the Authority
confirming that planning permission had been obtained by the Petitioner
stating that the building was intended only for their own use and not for
sale or lease and confirming that no registration was required under the
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Act for their project.
78. On the same date, the Authority has issued the impugned
communication to R4. The above communication refers to letter dated
19.06.2023 from the writ petitioner confirming that ‘the building is for
their use only and not for sale’.
79. It is not the case of the Authority in either of the matters before
us, that the nomenclature of lease is a disguise, and that the transactions
are of sale. It is also not their case that there is any other information in
their possession to lead to the suspicion that the parties intended to
circumvent the provisions of the Act.
80. In fact, in the cases of both the petitioner and R1, the Authority
has itself, on 11.07.2020 and 24.06.2021 written to the CMDA that no
prior registration under the Act is required as the project is intended for
its own use and not meant for sale/lease. On the same dates, the
Authority issues the impugned orders to the concerned sub-registrars to the
effect that no sale/lease deed shall be registered.
81. In doing so, the Authority has lost sight of the tenures of lease
which is 12 months in the case of the petitioner and 18 years in the case of
R1. In the case of the petitioner, the Authority also makes reference to
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creation of a charge upon the property by way of encumbrance. We find
no statutory backing for such creation of charge.
82. In light of the detailed discussion in the paragraphs supra, we
are of the considered and categoric view that the impugned orders have no
force in law. We quash order dated 11.07.2020 impugned in the writ
petition and confirm order passed on 22.11.2022 challenged in the writ
appeal though with the caveats and directions contained in this order.
83. In the writ petition, it has been argued that a completion
certificate has been obtained and hence the Act is thus, inapplicable. We
however find that the certificate relied upon is only one of partial
completion and hence, while this might be a valid argument in a case
where final completion certificate has been issued, it will not come to the
aid of the petitioner before us.
84. The Writ Petition is allowed and the Writ Appeal is disposed in
terms of this order. Miscellaneous petitions are closed. No order as to
costs.
[A.S.M., J] [C.K., J]
09.06.2025
Index:Yes
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Neutral Citation:Yes
ssm
To
1.The Sub-Registrar,
Virugambakkam,
47/5, Arcot Road,
Udhayam Colony,
Lambert Nagar,
Virugambakkam,
Chennai – 600 083.
2.The Inspector General of Registration,
100, Santhome High Road,
Chennai – 600 028.
3.The Principal Secretary,
Housing and Urban Development,
Secretariat, Fort St. George, Chennai – 600 023.
4.The Member Secretary,
Chennai Metropolitan Development Authority,
No.1, Gandhi Irwin Road, Egmore, Chennai – 600 008.
5. The Sub Registrar, Pallavaram,
Chennai South Sub Registrar Office,
No.7, 2nd Main Road,
New Colony, Chrompet,
Chennai – 600 044.
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DR. ANITA SUMANTH,J.
and
C. KUMARAPPAN,J.
ssm
W.A.No. 1723 of 2023 &
W.P. No. 32506 of 2023
09.06.2025
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