2021 (3) TMI 1266 - HC - Companies Law

Court rules Adjudicating Officer lacked jurisdiction in RERA case. Res judicata principle applied.

Macrotech Developers Limited (earlier known as Lodha Developers Ltd.) Versus The State of Maharashtra, Sanjay Phulwaria, Paromita Phulwaria

The court ruled in favor of the petitioners, holding that the Adjudicating Officer lacked jurisdiction to entertain the complaint as the determination of ... Jurisdiction - power to entertain the complaint as the subject project did not require registration in terms of Section 3 of the Real Estate (Regulation and Development) Act, 2016 - requirement to register the Phase of its project 'Lodha Dioro' upto 40th floors - part occupancy certificate in respect thereof having been obtained/issued by the Mumbai Metropolitan Region Development Authority (MMRDA) prior to 1st August 2017 - Authority's sphere of powers to pass the necessary orders and/or directions regarding the registration of the project in terms of Section 3 read with Section 31 of the Act. HELD THAT:- The present writ petition is maintainable. It has been observed in the decision of the Supreme Court in WHIRLPOOL CORPORATION VERSUS REGISTRAR OF TRADE MARKS, MUMBAI & ORS. [1998 (10) TMI 510 - SUPREME COURT] where it was held that where the order or proceeding are wholly without jurisdiction, Writ Petition is maintainable inspite of an alternate statutory remedy. This particularly where the writ is filed showing that the authority had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. Considering these decisions as well as the issues that arise in this Petition, particularly where it has been alleged that the Adjudicating Authority has wrongly and prematurely exercised its jurisdiction, which exercise of jurisdiction is in derogation to orders passed by the Authority on this issue, there is no substance in the challenge to the maintainability of this Petition and in fact this Petition is very much maintainable. From the plain language of Section 3(1) it is clear that registration must be in respect of any Real Estate Project or part of it. The window of three months in the first proviso of Section (3) (1) makes it clear that in so far as ongoing projects are concerned, the promoter has been given the said window of three months within which he can apply for registration of the said ongoing project. The ongoing project would be a Real Estate Project and/or a phase of the project which would require registration during the three months window after the commencement of Section 3 of the Act i.e. 1st May 2017. Section 3(2) (b) would apply only to completed projects that have received the completion certificate before the commencement of the Act and thus entitled to exemption from registration. Thus there is a clear distinction made between the projects 'that are ongoing projects' and 'projects which have received completion certificate before commencement of the Act' - the submission of the learned Senior Counsel for the Petitioners is submitted that the scope of the proviso to Section 3 and Section 3(2)(b) can never be the same or overlapping and that would amount to or attributing surplusage to legislature which could never have been the intention. The Respondents/Complainants inspite of having failed in its Writ Petition seeking revocation of part occupancy certificate granted to the Petitioners and directions from this Court against the Authority to register the project of the Petitioners under the Act, had filed Second Complaint before the Adjudicating Officer. This filing had been done by apparently misusing the RERA registration number of a different phase of the another project - The provision under the Act i.e. Section 59 which provides that non-registration of a real estate project is an offence & punishable therein can only apply to projects which although requiring registration have not been registered in contravention of Section 3 of the Act. The first issue viz. whether the Adjudicating Officer had no jurisdiction to entertain the complaint as the subject project did not require registration in terms of Section (3) of the Act, in the affirmative. Whether the procedure and scheme of the Act warrant that it is solely within the Authority's sphere of powers to pass necessary orders and directions pertaining to aspects of registration in terms of Section 3 read with Section 31 of the Act? - HELD THAT:- The Authority is established under Section 20 of the Act and derives its powers from Section 31 and its functions are contained in Section 34 of the Act. It has been observed in Sections 34(1) of the Act that the Authority has been entrusted with the function to register and regulate the Real Estate Projects - The power to adjudicate has been provided for under Section 71 of the Act. It is provided under that Section that for the purpose of adjudging the compensation under Sections 12, 14, 18 and 19, the Authority shall appoint in consultation with the Government one or more judicial officers as deemed necessary which is or has been a District Judge to be an Adjudicating Officer for holding an inquiry in the prescribed manner and after giving the person concerned a reasonable opportunity of being heard. Thus, the scope of the powers of the Adjudicating Officer is restricted to adjudication of compensation and only in respect of violation of Sections 12, 14, 18 and 19 - It is is thus clear from the scheme of the Act that the Authority which grants registration under the Act is different from the Adjudicating Authority. The Adjudicating Officer had no jurisdiction to determine the registration of the project or phase thereof under Section 3(1) of the Act. This was solely within the sphere of powers of the Authority to pass the necessary orders and directions pertaining to aspects of registration of the project or part thereof in terms of Section 3 read with Section 31 of the Act, being one of its functions under Section 34 of the Act. Both the issues raised in the Petition are thus decided in the affirmative - Petition disposed off. Issues Involved:1. Jurisdiction of the Adjudicating Officer under the Real Estate (Regulation and Development) Act, 2016 (RERA).2. Requirement of registration for the phase of the project 'Lodha Dioro' under RERA.3. Applicability of the principle of res judicata.4. Maintainability of the writ petition under Article 226 of the Constitution of India.Issue-wise Detailed Analysis:1. Jurisdiction of the Adjudicating Officer:The petitioners argued that the Adjudicating Officer did not have the jurisdiction to entertain the complaint as the project did not require registration under Section 3 of the Act. The court noted that the scope of the Adjudicating Officer's power is restricted to adjudicating compensation under Sections 12, 14, 18, and 19 of the Act. The authority to determine whether a project requires registration lies with the Real Estate Regulatory Authority (RERA), not the Adjudicating Officer. The court held that the Adjudicating Officer had wrongly exercised jurisdiction, as the determination of registration is solely within the Authority's sphere of powers.2. Requirement of Registration for the Phase of the Project:The petitioners contended that the phase of the project up to the 40th floor did not require registration under RERA as a part occupancy certificate was obtained before the statutory period of registration ended. The court examined the relevant provisions of the Act and the Registration Rules, concluding that a project or phase thereof that has received a part occupancy certificate within the three-month window from the commencement of Section 3 of the Act does not require registration. The court found that the part occupancy certificate issued on 8th June 2017 indicated the completion of that phase, exempting it from registration.3. Applicability of the Principle of Res Judicata:The petitioners argued that the second complaint filed by the respondents was barred by the principle of res judicata, as the first complaint had already been dismissed by the Authority. The court agreed, noting that the respondents had not pursued an appeal against the dismissal of the first complaint. The court held that the principle of res judicata applied, preventing the respondents from re-litigating the same issue.4. Maintainability of the Writ Petition:The respondents contended that the writ petition was not maintainable due to the existence of an alternative statutory remedy under Section 44 of RERA. The court, however, held that the writ petition was maintainable as it raised fundamental questions about the jurisdiction of the Adjudicating Officer. The court cited precedents where writ jurisdiction was exercised despite alternative remedies being available, particularly when the order or proceedings were wholly without jurisdiction.Conclusion:The court ruled in favor of the petitioners, holding that the Adjudicating Officer had no jurisdiction to entertain the complaint regarding the project that did not require registration. The court quashed the impugned order dated 31st December 2020 and declared that the phase of the project 'Lodha Dioro' up to the 40th floor did not require registration under RERA. The writ petition was thus allowed, and the impugned order was set aside.