MAHA RERA de-registration of Projects

LegalJune 28, 2023

      MAHA RERA de-registration of Projects

Adv Ajit R. Powar


With the surge of applications from promoters for de-registration of projects Maha RERA recently came up with its Order No. 42 of 2023 dtd. 10/02/2023 notifying that in the exercise of its functions under section 34 ‘to register and regulate real estate projects and real estate agents registered under the Act’, it may allow deregistration of real estate projects since some promoters are unable to complete the construction of the same or having commenced the construction of the real estate project (illustrations not exhaustive) such as, lack of funds, project not economically viable, interse disputes / family dispute… such promoters are desirous of discontinuing the project. In such cases keeping the real estate projects as the projects registered with Maha RERA will serve no fruitful purpose, nor will the same be beneficial to any stakeholder. The said notification while prescribing the procedure for deregistration also provides for filing of complaints by aggrieved persons against such applications for deregistration. Thereafter Maha RERA has couple of times notified that persons / legal entity having objection to the deregistration of the Real Estate project as per the displayed lists can submit their objections within 15 days.

RERA Act does have a provision in the form of section 7 for revocation of registration and section 8 provides the obligations of the real estate regulatory authority upon such revocation. However, there is no such provision in the act for the de-registration of projects as rightly observed by the Mumbai Grahak Manch which has demanded for revocation of de-listed projects and not deregistration.

The plain and simple difference between revocation and deregistration is while the former has penal consequences for the promoters the latter gives them a clean chit for future projects with no ramifications for their past deeds. Besides revocations of registration casts obligations on the Authority u/s 8 in the interest of the allottees including carrying out the remaining development of the project while deregistration relieves the authority of its obligations u/s 8 while leaving the allottees high & dry unless the authority prescribes for an immediate remedial measure like loss of interest which too will not be sufficient.

The question is when the substantive enactment does not provide for the cancellation of a project where does the authority derive the power / authority to permit it, well to some extent one can trace these powers under functions of the Authority in section 34(a) to register and regulate real estate projects and real estate agents registered under the Act. The question is do these regulatory functions entitle importing new provisions in the enactment such as de-registration?

While being critical about the authority’s proposed decision of de-registration one has to admit that the Authority is trying to find out the most practical way out in the interest of all the stakeholders though favoritism towards promoters will always loom over any such decision-making. However, one big question that arises is what should be the compensation for the allottees in the given situation. Certainly, the compensation as provided in the case of withdrawal from the project or delay in possession is not sufficient. Besides apart from the compensation the question that next arises is the jurisdiction of RERA for recovery of this compensation. The Authority has already held in a few cases that its Jurisdiction is coextensive with the Registration of the project and has jurisdiction even beyond the completion or lapse of the project. However, de-registration stands on a completely different footing as the project gets delisted from the list of registered projects and logically the project will have to be treated outside RERA’s jurisdiction therefore allottees need to be compensated to the complete satisfaction of the allottees and the Authority before the Authority delists the project.

The interests of the allottees should be the paramount consideration, particularly in any attempt to legalising de-registration. One thing that the State Government and the Authority should be doing before permitting de-registration is to provide adequate Rules & Regulations to protect the interests of all concerned and to prevent its misuse which the consumers fear.

Another important factor to be taken into consideration is the form of raising an objection to any such de-registration of a project. Maha RERA had notified through its OrderNo. 29 of 2022 dtd 25.04.2022 that Regulatory matters that take the form of adversarial nature shall be filed in the manner as detailed in Annexure A. Now any objection shall certainly be of adversarial nature and to ease out things for the allottees such objections though being adversarial in nature should not be requiring the complainants to file a regular complaint. Further, Annexure A is nothing less than filing a regular complaint and if the Authority intends the objections to de-registration to be filed in the form as detailed in Annexure A as per Order No. 29 of 20022, it would be like placing an unnecessary burden on the allottee for no reason. It is rather suggested that in cases of all objections, there should be a simple form to be followed with no expenditure to the allottees who for no fault of theirs are placed in the hapless situation of project de-registration.

The contents of this article are the views and opinions of the author on the subject matter. The readers are expected to take expert advice based on the facts and circumstances of their case.

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