TaxTMI 
TaxTMI 
2018 (8) TMI 632
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.... developing a Township Project to construct 'Lake Views' and which is registered under the RERA. 4. These Appeals are raising the common questions of law as to 'whether the provisions of the RERA would apply in case of an 'Agreement to Lease'?'; particularly in the facts of the present case, 'whether the definition of the term" Promoter", as provided under Section 2(zk) in the RERA, would include a 'Lessor', and 'whether the remedy provided to the 'Allottees' under Section 18 of the RERA can be available only against the 'Promoter', or, in that sense, also against a 'Lessor'?' 5. The Appellants are aggrieved by the three separate orders passed by the Maharashtra Real Estate Appellate Tribunal in three separate Appeals filed by the Respondents, under Section 43(5) of the RERA, against the orders passed by the 'Adjudicating Authority', under Section 18 of the said Act. By the impugned orders, the Appellate Tribunal has set aside the orders passed by the 'Adjudicating Authority' and held that, the provisions of the RERA are applicable even in case of 'Agreement of Lease' in the present case a....
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....ever, on its appearance before the Adjudicating Authority, challenged the very applicability of the provisions of the RERA to the 'Agreements of Lease' entered into by the parties contending inter alia that, the Respondents are the 'Lessees', as the 'Agreements' entered into between the parties are clearly the 'Agreements of Lease' and not an 'Agreement of Sale'. Therefore, such 'Agreements of Lease' being specifically excluded from the ambit of the RERA, the Adjudicating Authority under the RERA has no jurisdiction to entertain the complaints. 9. After perusing the complaints, 'Agreements of Lease' and the provisions of RERA, the Adjudicating Authority was pleased to hold that, as the definition of the 'Allottee', as given in Section 2(d) of the RERA, does not include a person, to whom such plot, apartment or building, as the case may be, is given "on rent"; and as the definition of the 'Promoter', as given in Section 2(zk) of the RERA, includes only the person, who has constructed or caused to be constructed a building or apartment for the "purpose of selling" and thereby excluding from its purview the "purp....
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....no way can be called as 'Agreements of Sale'. It is submitted by him that, the parties had entered into the 'Agreements of Lease', knowing fully well that those were the 'Agreements' to book the apartment "on lease for 999 years" in the project of the Appellant. The definitions given in the 'Agreements of Lease' also clearly indicate and prove that it was purely a transaction of lease and not of sale. It is submitted that, the 'Agreements' nowhere use the terms 'sale', 'sale-consideration' or 'purchase price', but, the 'lease' and 'rent'. The term 'Rent' is defined to mean, 'the yearly rent amount payable by the customer to the Appellant-Lavasa, once the lease is actually granted in respect of the apartment'. As per Clause No.5.1 of the Agreement, the "Annual Lease Rent" is fixed at Rs. 1/- only, for the said apartment. Clause No.7 defines the "Rent" as "yearly rent" of Rs. 1/- for the lease of the said apartment'. Clause No.9.1 of the Agreement also states that, possession was to be given, subject to the Respondents making timely payment of the deposit amount against the "lease prem....
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....ase where the premises are given on rent. 14. Here in the case, it is, therefore, submitted that the remedy under Section 18 of the RERA, which is available only against a "Promoter", cannot be available against the Appellant, who is not the "Promoter" and when the Respondents are not the "Purchasers" or the "Allottees", but the "Lessees". According to him, even combined reading of Sections 18 and 31 of the RERA, which provide for filing of complaints under Section 18 of the said Act to the Adjudicating Officer, makes it clear that the Adjudicating Officer can entertain such complaint, only if the complaint is filed under Section 18 of the RERA. Here in the case, as the complaint does not come within the parameters of Section 18 of the RERA, the Respondents not being the 'Allottees', nor the Appellant is the 'Promoter', nor it is a 'Real Estate Project', undertaken for the purpose of "selling" of the apartments, the 'Adjudicating Officer' had rightly held that, it has no jurisdiction to entertain such complaints filed by the Respondents. 15. It is urged that, the Appellate Tribunal has, however, misconstrued the provisions of the RERA, misread the ....
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....also its various provisions to advance his submission that, it is applicable wherever the project is undertaken for development of the property and for handing over possession of the apartment, after its development, on payment of consideration amount. Here in the case, it is submitted that, the 'Agreement of Lease' is to be read as a whole to understand its real purport and object. According to him, the various clauses in the 'Agreement'; especially the clause relating to the period of lease and also the payment of consideration amount, clearly go to prove that the 'Agreement' was for long term duration of lease, to the extent of 999 years; thereby clearly indicating that, it was an 'Agreement of Sale' and not an 'Agreement of Lease', though it was titled as such. In his submission, mere title or nomenclature of 'Agreement' cannot determine its real nature. Here in the case, it is urged that, more than 80% of the consideration amount is already paid to the Appellant. Even the stamp-duty and the registration charges are paid on the purchase price of the apartments. Therefore, in the real sense, it is an 'Agreement of Sale'. 1....
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....hereof relating to 'Statutory Payments' is also found often in the 'Agreement' executed under the MOFA. In his opinion and submission, therefore, here in the case, the intention of the parties was very much clear as to the "sale" of the said apartment by the Appellant to the Respondents. Hence, in no way, it can be called as an 'Agreement of Lease', though it is titled as such. 22. Moreover, according to him, if the Appellant has subjected itself to the jurisdiction of the RERA by registering under the RERA, which fact is not disputed, then Appellant cannot blow hot and cold at the same time by saying that, the Adjudicating Authority under the RERA has no jurisdiction to entertain the complaint filed under Section 18 of the RERA. It is urged by him that, the provisions of the RERA are beneficial both to the 'Allottee' and also to the 'Promoter'. If the Appellant, in its capacity as 'Promoter', is availing the benefits given under the RERA, then, under Section 115 of the Evidence Act, Appellant is estopped from contending that the 'Adjudicating Authority' has no jurisdiction to entertain the complaints made under Section 18 of....
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....Respondents, under Section 18 of RERA? (iii) Whether the Adjudicating Authority, under the RERA, can go behind the 'Registration Certificate' of the Appellant, so as to hold that it has no jurisdiction, though the project is registered under the said Act? Point No.1 25. In order to decide these substantial questions of law raised in these Second Appeals, it is necessary to consider in detail the provisions of the RERA, along with its 'Objects and Reasons'. 26. The Real Estate (Regulation and Development) Act, 2016, as its 'Preamble' shows, is enacted by the Legislature, "To establish the 'Real Estate Regulatory Authority' for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy redressal and also to establish the Real Estate Appellate Tribunal to hear Appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and Adjudicating Officer and for the matters con....
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.... or invite persons to purchase any plot, apartment or building, as the case may be, in any real estate project, without registering the real estate project with the Authority. It makes the registration of real estate project compulsory, in case where the area of land proposed to be developed exceed 500 sq.mtrs. or number of apartments proposed to be developed exceed 8, inclusive of all phases. It imposes an obligation upon the Real Estate Agent also not to facilitate sale or purchase of any plot, apartment or building, as the case may be, without registering himself with the Authority. The Act imposes liability upon the Promoter to pay such compensation to the Allottees in the manner, as provided under RERA, in case if he fails to discharge any obligations imposed on him under RERA. 33. When the Constitutional validity of the RERA was challenged in the case of Neelkamal Realtors Suburban Pvt. Ltd. and Anr. v. Union of India and Ors., 2017 SCC OnLine Bom. 9302, along with connected matters, by the various Developers and Promoters on the ground that, its provisions are discriminatory against them, the Division Bench of this Court was pleased to consider all the provisions of the RER....
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....ct the interests of the 'Promoters', as without protecting their interests, the interests of the 'Allottees' or the 'Consumers' also cannot be safeguarded. The Act is enacted also to encourage the growth of the real estate industry, so that the common man's dream of a dwelling house can be fulfilled. The RERA is, therefore, essentially for regulation and healthy growth of the real estate sector. 38. The provisions of the Act are hence required to be construed and interpreted keeping in mind these 'Objects and Reasons' of the Act in the backdrop of the facts and reality on ground, which made it necessary to have some comprehensive law on the subject. 39. Section 2 of the Act gives definitions of the important terms used in the Act. 40. In the context of the 'Agreements of Lease', which are executed by the Appellant with the Respondents, in this case, the definitions of the terms "Allottee", as defined in Section 2(d) of the Act; "Agreement for Sale", as laid down in Section 2(c) of the Act, the word "promoter", as defined in Section 2(z) of the Act, and the term "Real Estate Project", as defined in Section 2(zn) of the Act, are very muc....
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....the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto." 41. The terms "Apartment" and "Building" are defined in Section 2(e) and 2(j) of the RERA Act, respectively, and they cover not only the residential property, but also the commercial property, such as offices, show rooms, shops or godowns. In that sense, the RERA has wide scope and coverage in the real estate projects. 42. In this context, vis-a-vis, these definitions given in the RERA, it would be essential to go through the 'Agreements' executed between the parties. No doubt, it is true, that the 'Agreements' are titled as 'Agreements of Lease'. The word "Rent" is also defined therein to mean 'the yearly rent amount payable by the customer to Lavasa, once the lease is actually grante....
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.... Sale' executed under MOFA. As a matter of fact, though these Agreements are titled as 'Agreements of Lease', they are just the replicas of the 'Agreement of Sale', which is executed under the MOFA, except for the words 'lease' and 'rent' used therein. 47. Thus, if the entire 'Agreement' is perused as such, then it becomes apparent on the face of it also, that it cannot be termed or treated as an 'Agreement of Lease', but, in its real purport, it is an 'Agreement of Sale'. The very fact that more than 80% of the entire consideration amount is already paid by the Respondents to the Appellant and the lease premium agreed is only of Rs. 1/- per annum, including the clause relating to the period of lease of 999 years, are self-speaking to prove that, in reality, the transaction entered into by the parties is an 'Agreement of Sale' and not an 'Agreement of Lease'; though it is titled as such. The law is well settled that the nomenclature of the document cannot be a true test of its real intent and the document has to be read as a whole to ascertain the intention of the parties. 48. Needless to state that, in a....
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....n, which can be called as 'sale'. 52. As to the contention of learned counsel for the Appellant that this Judgment of the Madras High Court pertains to the assessment under the Income Tax Act, in my considered opinion, even if it is so, the ratio laid down therein, which is pertaining to the legal aspects as to when the document titled as a 'lease' can be considered as an 'alienation by sale' is equally applicable to the facts of the present case also. 53. In this respect, this Court has also to consider the provisions of the RERA, which are required to be construed, having regard to its objects and reasons. When the very object of the RERA is to protect the consumers, the persons, who have invested their hard-earned money by entering into an 'Agreement', which is in the nature of purchase of the apartment itself, mere nomenclature of the document as 'Agreement of Lease' will not in any way take away the rights given to them by the statute. 54. Though much reliance is placed by learned counsel for the Appellant on the definition of the word "Allottee", as given in Section 2(d) of the RERA, to contend that the Allottee does not include a pe....
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....estion arises as to the meaning of a certain provision in a statute, it is not only legitimate, but proper to read that provision in its context. The 'context' means, 'the statute as a whole, the previous state of the law, other statutes in pari materia, the general scope of the statute and the mischief, that it was intended to remedy." 57. It is a rule now firmly established that the intention of the Legislature must be found by reading the statute as a whole. Every clause of a statute has to be construed with reference to the context of the other clauses of the Act, to make a consistent enactment of the whole statute. An isolated consideration of the definitions may not give justice to the objects and reasons of the Act and the intention of the Legislature. 58. In this context, the 'Heydon's Rule of Suppression of Mischief' is required to be considered and highlighted. In Heydon's case (76 ER 637), it was held that, "For the sure and true interpretation of a statute in general (be they penal or beneficial, restrictive or enlarging of the common law), four things are to be discerned and considered: 1st - What was the common law before the making....
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....of the apartment and still he is not given possession and the 'Promoter' is enjoying the benefit of the said amount of consideration, it is expected under the Act that he is bound to pay compensation to the 'Allottee'. In other words, it becomes a case of unjust enrichment on the part of the 'Promoter', if he is not liable to compensate the 'Allottees' by paying interest on the amount retained by him, the 'Authority' under the RERA also can impose penalty or interest on the 'Allottees' for contravention of the obligations cast upon both of them, in view of Section 38 of the Act. Thus, the legislation has done balancing of rights and liabilities of 'Promoters' and 'Allottees'." 60. Now here in the facts of the present case, the Appellant has availed more than 80% of the consideration amount of the apartments booked by the Respondents. Respondents had also paid registration charges and stamp-duty on the purchase price of the said apartments. Therefore, they are now entitled to get the benefts, which are given under the Act to such Allottees, as in that sense, they become the 'Allottees' of the apartments. Depri....
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....rehensive in their literal sense, are interpreted from the context and scheme underlying in the text of the Act. The decision in Utkal Contractors & Joinery (P) Ltd. v. State of Orissa, (1987) 3 SCC 279, case also emphasizes the need to construe the words in a provision in the context of the scheme underlying the other provisions of the Act as well, which ultimately was considered to be in tune with the object set out in the 'Statement of the Objects and Reasons' and in the 'Preamble'. Apart from the fact that the observations contained in the decision have to be understood in the light of the issue raised and exercise undertaken by the Court therein, the fallacy in the submission on behalf of the Appellant lies, though not in the principles of construction to be adopted, but in the assumption of the counsel to confine or restrict and construe the law in question to be one made to regulate the trade of sawing, contrary to the very 'Preamble', which reads, "to make provisions for regulating in the public interest the establishment and operation of saw-mills and saw-pits and trade of sawing for the protection and conservation of forest and the environment".....
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....during completion of project, so on and so forth. Under the RERA, now this function is assigned to the Authority, Tribunal. An Appeal lies to the High Court. Under one umbrella, under on regulation and one law, all the issues are tried to be resolved." 65. Thus, it can be seen that the object of establishing this 'adjudicating mechanism' was to provide for speedy dispute redressal by bringing all the disputes under one umbrella. This 'redressal mechanism' is to ensure that, the consumers like the Respondents, who have invested their large amount of hard-earned money in the real estate projects, should get its returns at the earliest, either in the form of completion of the projects and possession of the apartments, or, by way of compensation with interests. If the Respondents, who have invested such money, are not allowed to approach this 'Adjudicating Authority', established under the RERA, and the 'Adjudicating Authority' merely holds that, as the 'Agreement' is titled as an 'Agreement of Lease', it has no jurisdiction to entertain their grievances raised under Section 18 of the said Act, then such interpretation cannot be in conso....
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....persons, who have invested more than 80% of the purchase price of the apartment. One also cannot exclude the transactions, in which the apartment was to be built and then the possession thereof was to be handed over on payment of the entire consideration amount at the market rate. Such 'Agreements' can in no way be called as 'Agreements of Lease' at all. The intention of the Legislature, which is found reflected in the 'Objects and Reasons' of the Act and its various provisions, makes it abundantly clear that, to all the projects, wherein the possession of the apartments is to be handed over in consideration of the sale price or the market price, such projects are included under the purview of this Act. It has to be held that, the Legislature would have never intended to exclude the persons like the Respondents, who have invested their hard-earned money in such projects, from the protective and benefcial provisions of this Act. 69. As held by this Court in the case of Neelkamal Realtors Suburban Pvt. Ltd. (Supra), "The provisions like Section 4(2)(l)(D) of RERA, which contemplates that, 'promoter' should deposit 70% of the amounts realized for the....
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....ule of Suppression of Mischief needs to be applied with full force and if that Rule is applied, then the provisions of the RERA are required to be held as equally applicable to the long term leases, like the present one of "999 years"; or, where the substantial amount of consideration is already obtained by the 'Developer'. Then the definitions of the terms 'Allottee', or, 'Real Estate Project', or, even that of 'Promoter', are required to be interpreted in that context and not in isolation, by placing reliance simplicitor on the word 'selling' used in these three definitions. As rightly submitted by learned counsel for the Respondents, the word 'selling' is grammatical variation of the word "sold", used in section 2(d) of the Act in the definition of the term "Allottee". If the allotment of a plot, apartment or building, as the case may be, can be whether as a freehold or as leasehold, then the word 'selling' used in the definitions of 'Promoter' and 'Real Estate Project' also includes the allotment of a plot by lease. Merely because the Legislature has excluded the allotment, when it is given on rent, it does....
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....below five hundred square meters or eight apartments, as the case may be, inclusive of all phases, for exemption from registration under this Act; (b) where the Promoter has received Completion Certificate for a Real Estate Project prior to commencement of this Act; (c) for the purpose of renovation or repair or re development, which does not involve marketing, advertising, selling or new allotment of any apartment, plot or building, as the case may be, under the Real Estate Project. Explanation - For the purpose of this Section, where the Real Estate Project is to be developed in phases, every such phase shall be considered a stand alone Real Estate Project, and the Promoter shall obtain registration under this Act for each phase separately." 74. This Section thus makes registration of the project mandatory for its sale. As per Clause (2) of Section 3, the RERA is made applicable even to the projects that are on-going on the date of commencement of the RERA and for which, Completion Certificate has not been issued. In respect of such projects also, Promoters are required to register the projects with the Real Estate Regulatory Authority within three months from the comm....
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....espect of which the 'Agreements of Lease' are executed. The Appellant had not exercised that option. Without any qualification or reservation, Appellant has registered the entire project with RERA. Appellant cannot, therefore, contend that, the Adjudicating Authority established under the RERA has no jurisdiction to entertain the complaints filed by the Respondents-Allottees under Section 18 of the said Act. The provisions of the RERA cannot be bifurcated in the sense that, only in respect of certain aspects, the Appellant can avail benefit of the said Act; by registering itself and as per its convenience, whenever Appellant has to comply with the obligations therein, it can raise contention that the provisions of the RERA are not applicable, because it is an 'Agreement of Lease'. The provisions of Section 115 of the Evidence Act definitely prevents, precludes and estopps the Appellant from doing so. 76. Moreover, if the Appellant is permitted to raise such defence, it would be as good as allowing the 'Adjudicating Authority', established under the RERA, to go behind the Registration Certificate for holding that the said registration under RERA is not appli....
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....udicating Authority', established under Section 71 of the RERA, to go behind that 'Registration Certificate' and to hold that the provisions of RERA are not applicable to the Appellant. 79. In my considered opinion, this course is not permissible under the law to challenge the Registration Certificate issued by one 'Authority' before the another 'Authority' and calling upon that 'Authority' not to consider such 'Certificate of Registration' and then to hold that the RERA is not applicable to the said project. Once there is registration under the RERA, then it follows that, all the provisions of the RERA become applicable to such project, unless some phases are specifically excluded from registration. It also becomes applicable to the persons, who have invested in the said real estate project. It is applicable both, to the Appellant and also to the Respondents. The Appellant, after having taken the advantage of registration under the RERA, cannot turn back and say that the provisions of the RERA are not applicable to the complaints made by the Respondents in respect of the very same project. 80. As submitted by learned counsel for the Ap....
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....phases. The Appellant's project is also not completed; at-least, as no Completion Certificate is obtained and, therefore, it is an on-going project. Thus, when the Registration Certificate for such real estate project was compulsory, in order to book, sell or offer for sale the plots or apartments constructed therein, and it was obtained accordingly, then Appellant can no more contend that such Registration Certificate will not be applicable for the construction of the apartments in the said project and to the Allottees, who have entered into 'Agreements' in respect of the said apartments. 82. It is pertinent to note that, if, according to the Appellant also, the project undertaken was not of "development" and "sale of the apartments" constructed therein, then the Appellant was not bound to register the same and would not have registered the same, under Section 3 of the RERA. If the Appellant has also understood the 'Agreements' executed with the Respondents as only 'Agreements of Lease', then Appellant could have very well avoided the registration under the RERA; because, in that case, Appellant could have contended that, it is not bound by Section 3 o....