Ongoing real estate projects must be registered, with common areas conveyed to allottees and warranty defects rectified.
A real estate project not completed in a habitable condition by the statutory cut-off date is treated as an ongoing project requiring registration under the Act. In that situation, the promoter must convey the common areas, common amenities and promised club house to the association of allottees, and the association is entitled to control common property and related service arrangements. Any transfer of undivided land share or service-control arrangement inconsistent with that statutory scheme does not survive. Reported defects such as leakage, plumbing faults, wet walls and peeling paint fall within the warranty obligation and must be rectified when notified within the relevant period.
Issues: (i) whether the project, along with its common areas and amenities, was an ongoing project requiring registration under the Act; (ii) whether the promoter was obliged to convey the common areas, common amenities and the club house to the association of allottees; (iii) whether the sale of undivided share of land and club house to the service provider and the corresponding service arrangement could stand; and (iv) whether the promoter was liable to rectify reported defects in the flats under the warranty period.
Issue (i): whether the project, along with its common areas and amenities, was an ongoing project requiring registration under the Act.
Analysis: The relevant date for determining completion was the commencement of Section 3 of the Act. The materials showed that electricity supply was obtained only in February 2018, the service lift was commissioned only in March 2019, and the project had not been completed in all respects on the cut-off date. The contemporaneous minutes also indicated that works and amenities were still scheduled for completion after the cut-off date. On that basis, the project was not treated as a completed project in habitable condition.
Conclusion: The project was held to be an ongoing project and required registration under the Act.
Issue (ii): whether the promoter was obliged to convey the common areas, common amenities and the club house to the association of allottees.
Analysis: Once the project was held to be ongoing, the statutory scheme placed the responsibility for common areas and common amenities on the association of allottees. The club house was treated as a promised common facility and therefore formed part of the common assets to be conveyed. The promoter was therefore required to execute the conveyance and hand over possession of the common areas and amenities in favour of the association.
Conclusion: The promoter was directed to convey the common areas, common amenities and the club house to the association of allottees.
Issue (iii): whether the sale of undivided share of land and club house to the service provider and the corresponding service arrangement could stand.
Analysis: The transfer of undivided share of land to the service provider was found to be contrary to the statutory obligation to preserve and convey the common property for the association of allottees. The service arrangement clause placing control of maintenance with the service provider was also treated as ineffective to the extent it conflicted with the statutory regime, because the association of allottees alone was entitled to control common areas and enter into service contracts with service providers.
Conclusion: The sale and the inconsistent service arrangement were held not to survive against the statutory scheme, and the association's entitlement to the common property was upheld.
Issue (iv): whether the promoter was liable to rectify reported defects in the flats under the warranty period.
Analysis: Complaints relating to leakage, plumbing defects, wet walls and peeling paint were treated as defects requiring attention if brought to the promoter's notice within the relevant period from handing over possession. The statutory warranty obligation covered such defects and required rectification by the promoter.
Conclusion: The promoter was directed to rectify the reported defects within the warranty framework.
Final Conclusion: The complaint was allowed in substance, with directions securing registration of the ongoing project, transfer of common property to the association, invalidation of inconsistent service-control arrangements to that extent, and rectification of defects.
Ratio Decidendi: A real estate project is treated as ongoing where it was not completed in a habitable condition by the statutory cut-off date, and in such a case the promoter must convey common areas and amenities to the association of allottees, which alone controls the common property and service arrangements.
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