18 June, 2019
The Maharashtra Real Estate Regulatory Authority (MahaRERA) in its recent order has held that mere non-procurement of an occupancy certificate by a developer does not make the developer liable to register the real estate project[1] under Section 3 of the Real Estate (Regulation and Development) Act, 2016 (Act).
This order has been passed following a complaint filed by Sulatana Dalal (Complainant) against Asia Group (Developer), before MahaRERA in relation to a project named as ‘Miracle Mall’ situated at Bhiwandi, Thane, Maharashtra. The Complainant’s contention was that even though the building was completely occupied, the Developer had failed to obtain an occupation certificate and committed breach of law. Against this background, the Complainant sought directions from MahaRERA to register the building under the provisions of the Act.
Compulsory Registration – What Does The ‘Act’ Say?
Section 3 of the Act provides that a real estate project should be registered with the real estate authority before undertaking its advertisement and marketing, acceptance of booking, selling or offering for sale, or inviting persons to purchase the said real estate project. Further, the first proviso to Section 3 of the Act has widened the ambit and scope of the Act to ongoing projects as well.
By virtue of this proviso, real estate projects that are ongoing on the date of commencement of the Act and for which the completion certificate has not been issued are also required to be registered with the real estate authority.
Completion and Occupancy Certificate
The Act provides for distinct meanings to ‘completion certificate’ (CC) and ‘occupancy certificate’ (OC):
- Section 2(q) of the Act defines the CC to be a certificate issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws.
- Section 2(zf) of the Act defines an occupancy certificate to be a certificate issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity.
The principal distinction between these two certifications are that while the CC certifies that the building construction has been done as per the approved plans, the building can be legally and validly occupied only once an OC has been issued by a competent authority.
It must be noted here that the development control regulations applicable to the State of Maharashtra require a professional such as an architect, surveyor, engineer, supervisor or structural engineer to issue a CC to the competent authority, certifying that the construction of a particular building has been carried out in accordance with the approved plans in adherence with local laws. On acceptance of such CC, the concerned authority issues an OC to the developer of a project.
MahaRERA’s Position On The Dispute
In the instant case, the Developer contended that all units of the concerned project were constructed after obtaining due permissions from the concerned authorities and all units in the building were sold to its customers prior to the commencement of the Act. Therefore, the concerned project was not required to be registered under the Act.
MahaRERA while adjudicating the dispute, looked at the pith and substance of the proviso to Section 3 of the Act. The proviso to Section 3 of the Act reads as follows:
“Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act.”
From a bare reading of the proviso, the intention of the legislators appears to clearly include all projects whose construction is ongoing and which have not received a CC. In order to fall within the premise of the aforementioned proviso to Section 3 of the Act, a real estate project is required to satisfy both these conditions – i.e., construction is ongoing and the project has not received a CC.
In the present factual matrix, the project got completed in 2012-13 and the Developer had failed to procure a CC, thereby satisfying only one out of the two conditions for registering a project under the Act. Note that the State of Maharashtra does not have a framework for issuance of a CC by its own competent authority, so the present order uses the terms ‘completion certificate’ and ‘occupancy certificate’ interchangeably.
In the instant case, the MahaRERA held that mere non-procurement of an OC will not trigger a registration requirement under the Act and dismissed the complaint with the following observations:
- There was no ongoing construction activity in the project, where the Complainant resides.
- The building where the Complainant resides had been occupied prior to the commencement of the Act and hence no registration under the Act is required.
Effect Of This Order
Although the present order does not deal with the intricacies of occupying a building without an OC, it certainly draws a definite perimeter around the scope and applicability of the proviso clause to Section 3 of the Act in the State of Maharashtra.
To conclude, any real estate project falling within the proviso clause to Section 3 of the Act, shall have to pass the two-fold test – i.e., construction should be ongoing and it should not have obtained a CC for getting itself registered under the provisions of the Act. Further, this order will certainly help in weeding out frivolous litigations seeking orders from various real estate regulatory authorities for registering real estate projects on account of non-procurement of an OC.
[1] ‘real estate project’ means 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 apartment, 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.
For further information, please contact:
Abhilash Pillai , Partner, Cyril Amarchand Mangaldas
abhilash.pillai@cyrilshroff.com
