Project registration under RERA is not mandatory for developers holding only leasehold rights without the authority to sell.

The Respondent, a lessee under a 29-year and 11-month lease from a public charitable trust, applied for registration of its commercial project 'Samrajya' under the Real Estate (Regulation and Development) Act, 2016 (RERA).

The U.P. RERA (Appellant) rejected the application, questioning the lessor's authority to grant sub-leasing rights and the non-permanent nature of the lease.

On appeal, the Real Estate Appellate Tribunal (REAT) set aside the rejection and directed RERA to grant registration.

RERA challenged this before the High Court, arguing that because the Respondent only holds leasehold rights and cannot "sell" units, it does not qualify as a "promoter" and the project is not a "real estate project" under the Act.

The Court primarily applied Section 2(zk) of the RERA Act, 2016, which defines a "promoter" as a person constructing or developing land for the purpose of selling apartments or plots.

Section 2(zn), defining a "real estate project" as development for the purpose of selling.

Under Section 105 of the Transfer of Property Act, 1882, a lease is a transfer of a right to enjoy property, whereas Section 54 defines "sale" as a transfer of ownership.

The principle of A Verbis Legis Non Est Recedendum (no departure from plain words of law), as affirmed in Hardeep Singh v. State of Punjab and M/s Newtech Promoters and Developers vs. State of U.P., holding that statutes must be read literally.

The Court reasoned that the statutory definitions of "promoter" and "real estate project" under RERA are strictly predicated on the intent to "sell".

Upon examining the lease deed, the Court found that the Respondent only possessed conditional leasehold rights and the power to sub-lease, but lacked the legal authority to transfer ownership through sale.

Since the element of "sale" is indispensable to the Act's jurisdiction, the Court determined that a developer who can only assign leasehold rights does not satisfy the mandatory criteria of a "promoter".

The Court accepted the Appellant’s own admission in its stay application—that the project was beyond the purview of the Act because it lacked a sale component—as the "best proof" of facts.

Consequently, the project does not qualify for registration under Section 5 because the regulatory framework of RERA is intended to protect consumers in transactions involving the sale of real estate, not mere rental or sub-lease arrangements.

The High Court disposed of the appeal, setting aside the REAT’s direction to RERA to grant registration and directed the U.P. RERA to withdraw its "Form-D" communication containing prohibitory/restrictive clauses.