Former Developer’s Delayed-Apartment RERA Complaint Can Proceed After JV Ends: Madras HC

The petitioner and the respondents had entered into a joint venture agreement for development of property. That agreement was later terminated by consent, after which the respondents assumed responsibility for construction and the petitioner agreed to purchase an apartment and the corresponding undivided share of land under separate sale and construction agreements.

Alleging delay in construction and failure to hand over possession, the petitioner filed a compensation complaint before the TNRERA Adjudicating Officer. The complaint was rejected as not maintainable, on the view that the transaction was commercial and belonged before a Commercial Court. The petitioner challenged that order under Article 227 of the Constitution.

Section 2(d) of the Real Estate (Regulation and Development) Act, 2016 defines an “allottee” to include a person to whom an apartment or plot is allotted, sold, or otherwise transferred by a promoter.

Section 2(zk) defines “promoter” to include persons who construct or cause construction of buildings for sale, develop land for sale, or otherwise act as builders or developers; where construction and sale are undertaken by different persons, both may be deemed promoters and jointly liable for statutory responsibilities.

The Court also stated that an aggrieved flat buyer or allottee may seek relief under RERA even if the project has not been registered as required by the Act.

The Court treated the sale and construction agreements as independent of the earlier joint venture, which had been terminated by consent. Once the respondents took on the role of developers and the petitioner agreed to acquire an apartment and undivided share, the petitioner fell within the statutory definition of an allottee and the respondents were subject to the relevant RERA obligations.

The Adjudicating Officer therefore erred by relying on the former relationship to characterise the later transaction as commercial and exclude it from RERA; that reasoning could not defeat the petitioner’s right to seek relief under the Act.

It directed the Adjudicating Officer to entertain and number the complaint if otherwise in order, issue notice to the respondents, provide them a reasonable opportunity to respond, and decide the complaint on its merits and in accordance with law. There was no order as to costs.