Appeal No.

AT006000003 1756-2019

BEFORE THE MAHARASHTRA REAL ESTATE

APPELLATE TRIBUNAL, MUMBAI
Appeal No. AT006000000031756 I L9
In
Complaint No. CC006O000O005638O/ 18

M/s. New Sangeeta CHS Ltd )

Plot No.4709,7th Road, Rajawadi, )
Ghatkopar (E), Mumbal 400 077. ) .. Appellant

Versus
1. Mr. Kaushal M. Haria )
2. Mr.Girish K Chheda )
& Mr.Meghna D. Visaria )
& Devang H Visaria )
3. Ms. Velbai P Haria )
4. Mls. Valdariya Construction ) .. Respondents.

Adv. Dr. Mr. Pawankumar K. Pandey for Appellant.

Mr. R.S. Prabhu C.A. along with Adv. Mr. Neel Gala for Respondent
Nos.l to 3,
Mr.Pinkesh lain the Partner of Respondent No.4 in Person.

co M : SHRIRAM R. JAGTAP, MEMBER (J) &

SHRIKANT M. DESHPANDE, MEMBER (A)
DATE : 20th December,2024

(THROUGH VrDEO CONFERENCTNG)

JUDGEMENT

LPER : SHRIRAM R. JAGTAP, MEMBER

(J)]

1. The captioned appeal emanates from the Order dated 6th August

zOLg passed by the Member 1 of MahaRERA (For shoft "the

AuthorityJ in the complaint No.CC006000000056380/18 filed by

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 Appeal No.AT006000003 1756-20 19

the allottees whereby the learned Authority has disposed of the

complaint directing the appellant society to join the complainants
as its member within a period of 30 days from the date of the
order. The learned Authority has further directed the appelant
to give possession of their respective flats to the complainants
by obtaining occupation certificate as the society has taken
entire project for self development as per the order of the
Arbitrator. Besides, the Authority has imposed penalty of Rs.15
lakh on the appellant society for violation of Section 15 of RERA
Act 2016.
2. For the sake of convenience appellant hereinafter will be referred

to as t'the Society". M/s. vardariya construction a proprietary

concern hereinafter will be referred to as '.the Devetoper,,. The
complainants hereinafter will be referred to as..the Allottees,,.
3. The brief facts culled out from the pleadings of the paties,
impugned order and material on record revealed that the Society is
an owner of land bearing crs No.4709 admeasuring 608.6 sq.mtrs.
situated at Plot No.48, New sangeeta co-operative Housing society
Limited, Rajawadi, 7th Road, Ghatkopar(E ), Mumbai 4oo 077. (For
the sake of brevity it will be referred to as ..said property,). The
society is also owner of structure/building standing on the said land.
The members of the society decided to develop the said plot by
demolishing the standing structure/old building on the said plot and
to construct new building thereon by utilizing FSI of the plot and
also by loading TDR for such new construction. As a result thereof

w Society had entered into development agreement dated

with M/s. valdariya construction the proprietary concern
Ls.lz.2otl
and
assigned the development rights. The society had also executed a

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 Appeal No.AT006000003 1756-2019

registered power of Attorney in favour of developer. It is a re-

development project. The developer has launched the project
under the name and style as "New sangeeta co-operative Housing
Society Ltd".
4. After completion of documentations viz. requisite permissions
etc.
the developer undertook the development of the said property.
By
virtue of the development agreement the developer agreed to
construct a new building by demolishing existing building for
the
society. Besides, the developer also agreed to allot additional
area
to the members of the society. The project consists of two
components viz rehab component and sate component. The
developer was entitled to sell flats and car parking spaces to the
new buyers in sale component in open market.
5. The Allottees have booked the flats in the sale component of the
said project. The position regarding flat numbers, dates of
agreement for sale, due date of possession, total consideration
agreed between the parties and payment made by altottees
towards part consideration are shown in the table below:

Name of Flat Total Payment made Date of Date of

Allottees. No. consideration. towards part agreements possession
Rs. consideration (AFS)
-f,
Mr. 602 1,0150,000/- 94,5L,0001- 9.s.2016 30.9.2017
Kaushal

Haria

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 Appeal No.4T006000003 1756-2019

Mr. Girish 202 96,60,000/ 7L,5t,0001- 9.5.2016 30.9.20t7

Chheda &
Mrs.

Meghna
Visaria

Ms. Velbai 302 96,00,000/- 84,26,0001- 9.5.2016 30.9.2017

P Haria

6. As per the agreements for sale the developer had committed to

hand over the possession of respective flats to allottees with
Occupation Certificate on or before 30.09.2017 failing which the
developer was liable to pay penalty of Rs.6000/- per day for delayed
possession from 1.10.2017 till actual date of possession. After
obtaining necessary permissions from the Competent Authority viz.
M.C.G.M. such as IoD, commencement certificate etc. the
developer started construction on site. In the month of March ZOLT
the developer had called upon the complainants/ allottees to pay
instalments of balance consideration as the construction work had
gone beyond 6th floor. The subject flats were on znd,3rd and 6th
floor. The construction work was not going on as per the required
pace. The developer was facing financial crunch, however the
developer has assured the comptainants that the possession of
subject flats will be delivered to allottees by specified dates.
-f, Accordingly, allottees have made substantial payment towards
consideration of their respective flats to developer.
7. rn the meantime a dispute arose between the devetoper and
society. The matter went to Arbitrator. Upon termination of
development agreement by developer the society took over the
subject project. The society tried to appoint a new developer to

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 Appeal No.AT0060000031756-2019

complete the remaining work. The society has adopted a modus

operandi to defeat legitimate rights of allottees in respect of their
flats. Because of internal dispute between developer and society
the subject project has got seriously jeopardized. The society being
owner of the said propefi is equally llable to discharge the liability
of developer towards allottees and also bound by the agreements
for sale executed between allottees and developer, since the same
came to be executed pursuant to development agreement dated
L5.L2.20LL and power of attorney dated L4.02.20L2. The
developer and society are in hand-in-glove with each other and
trying to evade their responsibility of providing flats to the
complainants/allottees in the sale component. The conduct of the
developer and the society redounded the allottees to file the
complaint. The allottees sought following reliefs in their complaint.
(i) To restrain the respondents (developer and society) from
selling out, creating third party rights in the subject flats
and from creating encumbrances on the subject flats.
(ii) To direct the respondents jointly and severally to hand
over the possession of subject flats including car parking
spaces along with amenities to the complainants/ allottees
with Occupation Certificate within period of 30 days.
(iii) To direct the respondents to pay interest at the rate of
LBo/op.a. on the consideration amount paid by the
complainants/ allottees from 9.5.2016 till actual date of

w possession for delay in delivering the possession of flats.

(iv) To direct the society to issue share certificate to
com pla i na nts/ a I lottees.

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 Appeal No,AT006000003 1756-2019

(v) To direct respondents (developer and society) jointly and

severally to pay a sum of Rs.6000/- per day to
complainants/ allottees from 30.9.2017 till handover of the
possession of flats to the allottees.
(vi) To issue injunction against respondents restraining them
from appointing new developer for carrying out
construction of the subject project.
(vii) To direct respondents to pay Rs.10 lakh towards costs of
the litigation.
B. The Developer has appeared in the complaint and remonstrated the
complaint by filing written submissions contending therein that
pursuant to the development agreement and deed of power of
attorney executed by the society, he applied for requisite
permissions to the M.C.G.M. He got the requisite permissions for
construction and thereafter he sold flats to the complainants under
registered agreements for sale dated 16.5.2016. However, on
07.02.2018 he terminated the development agreement with society
due to circumstances created by the society. The Managing
Committee of the society, after receipt of the termination notice
issued by the developer, accepted termination and took over the
possession of the site. The society had applied to the sole arbitrator
for fufther construction of the project by appointing a new
contractor/ promoter or self development. The Arbitrator was
pleased to allow the said application and thereby authorized the

v{ society for self development. Pursuant to the said order of

Arbitrator, the society has appointed a new developer/ contractor
for completion of the project. The erstwhile developer i.e.
respondent No.1 shall not be held responsible for any such

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 Appeal No.AT0060000031756-2019

damages, interest and compensation to the complainants on

account of delay in handing over the possession of subject flats.
since the society being an owner of the property is a promoter
within the meaning of definition of "promoter" provided under the
provisions of RERA Act 2016.
9. The society/ appellant has appeared in the comptaint and disputed
the claim of complainants/allottees. The society has claimed that
the complainants are investors and they are in collusion with the
developer. The society is not aware of the transaction which took
place between the complainants and developer. section l8(i) (b) of
the RERA Act 20t6 provides that where the promoter gets
discontinued for any reason, the promoter shall be liable to return
the amount received by him in respect of the flats sold. Therefore,
equally efficacious remedy is available to the comptainants. The
said provision clearly talks about the promoter. The society cannot
be included as promoter. Besides the developer has not shown the
society as co-promoter while registering the subject project with
MahaRERA.

10. The society has further contended that flat No.602 has already
been shown as allotted to a member of the society and therefore
the agreement for sale cannot be implemented or executed. Apart
from this without approved plans, the developer has sold flat
No.602 to one of the complainants which is illegal. The developer
has sold flats to the complainants below market price. The

f,
agreements executed by and between the complainants and
developer are illegal and bogus. The society has further contended
that the complainants can ask for refund of the amount from the
developer, however they cannot seek injunction against the society.

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With these contentions the society has prayed for dismissal of the
complaint.
11. We have heard learned advocate Dr. Mr. Pawankumar K Pandey
for appellant society, learned C.A. R.S.Prabhu along with Adv. Mr.
Neel Gala for Respondent Nos.1 to 3 (allottees) and Mr. Pinkesh
Jain the partner of respondent No.4 in person.
t2. The submissions advanced by the parties are nothing but
reiteration of contents of Appea! Memo, affidavit in reply and
written submissions.
13. The learned adv. Dr. Mr. Pawankumar K. Pandey has placed his
reliance on the following citations.
1. Vaideshi Akash Housing Pvt Ltd. Vs New DN Nagar CHS Union
Ltd & Others (2015 (3) ABR 270 Goregaon Pearl CHSL Vs Dr.
Seema Mahadev Paryekar & Ors. AOA(ST) No.22143 of 2019
Nirmala Jha Vs Vaidehi Akash Housing Pvt Ltd & Ors. NM
No.1029 of 2015 in Suit No.511 of 2015 single Bench.
2. Parpati I Bhojwani Anr. Vs Vaidehi Akash Housing Pvt Ltd &
Others NM No.1011 of 20L7 in Appeal No.L2 of 2015 Division
Bench.

3. SSD Escatics Pvt Ltd Vs Goregaon Pearl CHSL Com Arb Petition
(St) No. L072 of 2018 decided on l4lL2l20LB by Hon. Bombay
High Court SL to Appeal (Civil) 1365 of 2019 SSD Escatics Pvt
Ltd Vs Goregaon Pearl CHS Ltd. Supreme Court confirmed the
order dated L4l L2120L8.

w 4. Chaurangi Builders & Developers Pvt. Ltd. V/s.

Airpoft Development Ltd ARBPL NO 1999 of 2013
Maharashtra

5. Heritage Lifestyle & Anr. Vs Cool Breeze Co-operative Bombay

High Court Arbn Petn No.600 of 2013.

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 Appeal No.AT0050000031756-2019

6. Satyabrata Ghose vs Mugnee Ram Bangur & Co. 1954 AIR 44

Three Bench judgment of Supreme Court.
7. Deepak Prabhakar Thakoor & Ors V/s. MHADA WP (L) No.1776

of 2023 Division Bench of Bombay High Court K Chellakannu &

Ors. V/s. MHADA 27.L0.2023 Division Bench.

B. Udayachal Goregaon CHS Ltd Vs Manoj Kumar Mistry & Ors.
Appeal No.AT105569 by MahaRERA Appellate Tribunal
9. Samudra Darshan CHS Ltd V/s. Peter Almeida & Ors. Neumec
Developers & Builders V/s. Antop Hill Warehousing Co. Ltd.
Adarsh Industrial Estate Pvt Ltd. V/s. Malti Ashok Gupta D.N.
Nagar Samrat CHS Ltd V/s. Umanath Agarwal & Anr. (decided
on 19/0612023) Decided by RERA Appellate Tribunal.

lO.Kapilkunj CHS Ltd Vs State of Maharashtra WP No.2L57 of 202L

on r31t212023.

14. The learned R.S.Prabhu C.A. along with Adv. Mr. Neel Gala for
Respondent Nos.1 to 3 (allottees) has placed his reliance on the
following citations.

1. Goregaon Pearl Co-operative Housing Society Limited Vs.

Sandeep Grover and Ors. (Supreme Court of India - Civil Appeal
No.51BB of 2023).

2. Sandeep Grover &Anr. Vs. Sai Siddhi Developers &Anr. (National

Consumer Disputes Redressal Commission, New Delhi - Consumer
Case No.1710 of 2016).

w 3. Wadhwa Group Housing Private Ltd. Vs. Mr. Vijay Choksi (High
Court Bombay - Second Appeal (L) No.21842 of 2023).

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 Appeal No.AT006000003 1756-2019

15. on examination of the pleadings of the parties, submissions

advanced by the learned counsel appearing
for the respective
record by the
parties, impugned order and material produced on
we have
parties, following points arise for our determination and
recorded our findings thereon for the reasons
to follow:-

Sr. Points Findings

No.
1 Whether the appellant/ societY In the affirmative

falls in the definition of the

term "Promoter" under Section
2 (zk) of RERA Act?
2 Whether the aPPella nt/ societY In the affirmative
is liable to Perform obligations
of the develoPer towards
allottees/ third Parlry
purchasers?

3 Whether the imPug ned order In the affirmative

warrants interference in the
appeal?

4 What order? As per final Order

reveals that
rf, t6.On ensemble of the pleadings of the parties as above
the society is an owner of the said property and had
entered into

an agreement with the developer for re-development of its

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 Appeal No.AT0060000031756-2019

property. Re-development envisages construction of the society's

building to accommodate its members and also construction of
flats/ premises to be sold to outsiders. The development agreement
authorizes the developer to construct such buitding and sell flats/
premises therein to outsiders. Such authority or entitlement is to
the developers' account and in his own right, and as an

independent contractor. After obtaining requisite permissions from

the concerned authorities the developer launched the subject
project, allottees/ flat purchasers booked subject flats in the project
and paid substantial amounts to the developer which are used for
constructing rehab building and sale component. The society being
land owner falls in the definition of term "Promoter" and therefore
the developer is required to show the society as promoter on the
web page of MahaRERA. It is seen from the submissions of the
society that terms of the development agreement executed by and
between the society and the developer have clearly provided in an
uncertain manner that the developer is entitled to construct free
sale component on his own account as independent contractor and
developer alone would be liable and responsible to the flat buyers
in case of delay in construction and other issues and shall bear all
the related consequences. The society is kept absolved of any

obligation relating to the developer towards allottees. The terms of

the development agreement create no vested rights or obligations
of allottees which the society is liable to discharge as promoter nor
there is any document to establish that society has privity of
contract with allottees/ flat purchasers. Thus the society cannot be
EP termed as promoter liable to perform obligations towards allottees
and hence does not call for registration as promoter or society

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 Appeal No.AT0060000031755-2019

cannot be shown as promoter on the web page of the developer'

Third paflry purchasers have no right over the assets of the society.
17.We have given thoughtful consideration to the submissions
advanced by the learned counsel appearing for the respective
parties. The subject project has been registered as ongoing project
u/s. 3 of RERA Act. Thus RERA Act 2016 applies even to the
ongoing projects. Therefore before adverting to the submissions
advanced by the learned counsel appearing on behalf of parties, it
I is appropriate to first appreciate the need for a New Regulatory
Regime i.e. the enactment of RERA Act 2016.
Object and Reasons of RERA Act 2016
18. The need for regulation was essential because of urbanization and
need for housing of growing population in urban areas. While
taking a bird's-eye view of the scheme of the RERA Act 2016 the
Hon'ble Apex court in M/s. NEWTECH PROMOTERS AND
DEVELOPERS PVT. LTD. V/s. STATE OF UP & ORS. ETC. in
Civil Appeal No(s). 6745'6749 of 2O2L (Arising out of SLP
(civil No(s). 37LL-3715 of 2O2].) has obserued as under:
Z. At the given time, the real estate and housing sector was largely
unregulated and the consequence was that consumers were unable to
procure comptete information for enforced accountability towards
buitders and developers in the absence of an effective mechanism in
place. Though, The Consumer Protection Act, 1986 was available to
cater the demand of home buyers in the real estate sector but the
experience shows that this mechanism was inadequate to address the
needs of the home buyers and promoters in the real estate sector.
B. At this juncture, the need for Real Estate (Regu/ation) Bill was badly
e# felt for estabtishing an oversight mechanism to enforce accountability
to the real estate sector and providing an adjudicating machinery for
speedy dispute redressal mechanism and safeguarding the
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 APPeal No'AT0050000031756-2019

legislation to
investments made by the home buyers through
the extent permissible under the law'
g.ThestatementofobiectandreasonsoftheActindicatesthattheprimal
position of theffitii"i authority is to re911!a!9 the real estate sector
having jurisdiction to ensure compliance
wltlt tle obligation cast yp.on
the promoters. The opening statement of
objects and reasons which has
follows.
a iaterial bearing on the subiect reads as
the need and
,,The
real estate sector ptays a catalytic role in futfitling
demand ror niusing and in'frastructure in the
country' While this sgctor
has b?r, targely unregulated,
has grown significintty in recen! years, i!
and lack of
with absence oi iioressionatiim and standardizationProtection Act'
adequate consumer protection. Though the consumer
1986isavaitableasaforumtotheouyersintherealestatemarket'the
concerns
to address all the
recourse is onty cirative and is not adequate
lack of standardization' has
of buyers ana'piiiit rs in that sector. The
growth of .industry'
been a consfraint to the heatthy and orderly
has been emphasized in
Therefore, tni-ieed to regutating the sector
various forums.

2,Inviewoftheabove,itbecomesnecessarytohaveaCentral
legislation, nrr-ity, the Reat Estate (Regutation
ald Development) Bill,
protection, uniformity and
2013, in the intirit of the effedi4 ionirrer
in the real estate
standardization of business practices and transactions
of the Real
sector. rne prwosea Bitt provides for the estabtishment promotion
regulation and
Estate negutatfriinority (the Authority) for
of real estate ,"ao, and to ensure sate of
plo| apaftment or building,
as the ,ur" ,ii be, in an efficient and transparent manner and to
establish the
protect the inteiest of consumers in real estate sector and
Reat Estate lpiittate Tribunat to hear appeats
from the decisions'
directions or orders of the Authority''

10. was introduced with an obiect to ensure.greater accountability

It detays and also the
towards ,orriiru, to significanlty reduce l'rauls.&
interests of consumers
current high transaction iosts, and to balance the
on both, and to bring
and promoters by imposing ceftain responsibitities
standards of
transparenry o7'tir' cont'ractuat conditions, set minimum
mechanism' It also
accountabitity and a fast-track dispute resolution
proposes to iidict professionatism and standardization
in the sector'
investments in the long
thus paving tnii iai for accelerated growth and
run.
shows that this Act
19. A close examination of objects of RERA Act
Development
regulates only the sale and transfer of Real Estate

q# products namely plots, buildings and apartments for orderly

of
growth of real estate market, by protecting the interests
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 Appeal No.AT0060000031756-2019

different buyers in planned manner and by facilitating

informed choice of the consumers/ buyers'

RERAAcT2016IsRETRoACTIVEINNATURE

20. The subject project came to be launched prior to the

for sale
Notification of RERA Act 2016. Besides, the agreements
with regard to the flats in sale component also came to be
subject
executed prior to the enactment of RERA Act 2016' The
project being ongoing has been registered with MahaRERA u/s
3 of RERA Act, 2016. The provisions of RERA Act are
retroactive
to
in nature and apply retroactively to the transactions relating
incomplete project registered under RERA Act. Thus
the

provisions of RERA Act 2016 would equally apply to the

transactions executed by the parties in the instant matters'
It
has been held by the Hon'ble supreme court in M/s. Newtech
Promoters and Devetopers Pvt. Ltd. vs. state of u.P. and
Ors. that:
" 41. The ctear and unambiguous language of the statute is
retroactive

in operation and by apptying purposive interpretation Rule of

statutory construction, only one result is possibte, i.e., the
legislature

consciously enacted a retroactive statute to ensure sale

of plot'
and
apartment or building, real estate project is done in a efficient
real estate
transparent manner so that the interest of consumers in the
19(4) are
sector is protected by alt means and sections 13, 1B(1) and
att beneficiat provisions for safeguarding the
pecuniary interest of the

consumers/allottees. In the given circumstances, if the

Act is held
prospective then the adiudicatory mechanism Under Section 31 would
not be avaitabte to any of the atlottee for an on-going
proiect' Thus' it

rtr negates the contention of the promoters regarding the contractual

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 APPeal No'AT0060000031756-2019

retrospective applicability of
terms having an overriding effect over the
the Act, even on facts of this case'"

The Honble Apex Court has further held that:-

"54. From the scheme of the Act 2016, its application

isretroactiveincharacteranditcansafelybeobserued
that the projects atready completed or to which
the
comptetioncertificatehasbeengrantedarenotunder
itsfoldandtherefore,vestedoraccruedrights,ifany,
in no manner are affected' At the same time' it will
appty after getting the on-going projects and future
projects registered under Section 3 to prospectively
follow the mandate of the Act 2016''

project is registered
21. Therefore we are of the view that once
pafties existed
with MahaRERA all the rights and liabilities of the
purview
prior to the Act coming into force also come under the
and ambit of provisions of RERA Act 2016' Therefore
it would be
considering the peculiar circumstances of the case,
provisions of RERA
necessary to understand and evaluate the
Act 2016, which have a bearing on the issue at hand'
WHETHERTHEsocIETYISAPRoMoTERUNDER
SECTION z(ZK) OF RERA ACT
the real
zz. rtis to be noted that there are five major players in
estate development industry namely (i) promoter,
(ii) land
owner, (iii) allottee, (iv) real estate agent and
(v) competent
land owner'
authority. In the instant case admittedly society is
Therefore the seminal issue that emanates for our
of the
consideration is whether society falls in the definition
matter' It
w term 'promoter'. This issue goes to the root of the
decides the fate of rights of flat purchasers against
the society
buyers who
and also obligations of the society towards home
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 Appeal No.AT0060000031756-2019

(zk) defines
have purchased flats in sale component. Section 2
it covers
the term'promoter'. The definition is quite exhaustive,
every person who is associated with construction of the
building. The Section has got seven clauses covering the
(ii),
different category of promoters out of them only clauses
(iii)(b)and(iv)coverplots.Whereastheclauses(i),(iii)(a),
(iv), (v) and (vi) cover both apartments and buildings. It is clear
from the expression "causes to be constructed" in sub-clause
(i) and explanation to this clause and the words "as holder of
(v)
power of attorney for the owner of the land" in sub clause
covered'
and other provisions of the Act, that land owner is also
The core of the provision and purpose of the Act seems to
be

to cover all those who are involved in the development for

sale

or sale or both.
23. It is seen from the definition of promoter that land owner is
to be
covered by the definition of promoter. The words "causes
constructed" in the definition of promoter is capable of covering
the land owner also, in respect of construction of apartments
and buildings.
promoter the Hon'ble
24. While explaining the scope of definition of
Bombay High court in a case of wadhwa Group Housing
Private Ltd. vs. Mr. viiay choksi & Another second
Appeal (stamp) No.21842 of 2023 has held as under:
,,17, The proled'The Nest'has been registered as an ongoing

prolect under section 3 of RERA Act. To decide liability of

w Appetlant to refund amount paid for purchase of flat in the real

estate prolect, it would be necessary to determine whether

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 Appeal No.AT0060000031756-2019

Appettant falts in the definition of the term

'promoter'' Section

2(zk) of RERA defines the term "Promoter" thtts:

(zk) "promoter" means,-
(i) a person who construds or causes to be constructed
an independent buitding or a buitding consisting of
apartments, or converts an existing building or a part
thereof into apartments, for the purpose of selling all
or some of the apartments to other persons and

includes his assignees; or

(ii) a person who develops land into a prolect, whether or
not the person also constructs structures or any of the
plots, for the purpose of setting to other persons all or
some of the ptots in the said proiect, whether with or
without structures thereon; or
(iii) any development authority or any other public body in
resPect of allottees of-
(a) buitdings or apaftments, as the case may be'
constructed by such authority or body on lands
owned by them or placed at their disposal by the
Government; or
(b)ptotsownedbysuchauthorityorbodyorplaced
at their disposal by the Government;
(c)forthepurposeofsetlingallorsomeofthe
apartments or Plots,

or

w (iv) an apex state level co-operative housing finance

society and a primary co-operative housing society
which constructs apartments or buildings for its
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 Appeal No.AT0060000031756-2019

Members or in respect of the allottees of such

apartments or buildings; or
(v) any other person who ads himself as a builder,
colonizer, contractor, developer, estate developer or by
any other name or claims to be acting as the holder of
a power of attorney from the owner of the land on
which buitding or apartment is constructed or plot is
developed for sale; or
(vi) such other person who constructs any building or
apaftment for sale to the general public.
Explanation,- For the purpose of this clause, where the
person who constructs or converts a building into
apartments or develops a plot for sale and the person
who sells apartments or plots are different persons,
both of them shall be deemed to be the promoters and
shalt be jointly liable as such for the functions and
responsibilities specified, under this Act or the rules and
regulations made thereunder;

Thus, definition of the term 'Promoter' ttnder Section 2(zk) of

RERA is wide enough to include every person who is associated
with construction of the building such as builder, colonizer,
contractor, developer, estate developer or by any other name
or even the one who claims to be acting as the holder of
a power of attorney from the owner of the land, One of the
principat objectives of RERA is to bring transparency in real estate

w sector and to protect the interests of the consumers in the real

estate prolect. The term 'Promoter'has been so widely defined
that it viftuatly includes every person associated with construction

Page ]B137
 Appeal No.AT0050000031756-2019

of the buitding. Thus, even a person who is merely an investor in

the project atongwith the Promoter and who is entitled to benefit
in the real estate project is also covered by definition of the term
'Promotef In the present case, I need not delve deeper intO the
enquiry as to whether Appellant is covered by the expression
'Promoter'or not. White registering the project as ongoing prolect
under Section 3 of the RERA, Appetlant's name has been included
in the tist of Promoters, Therefore, Appellant cannot run away
from the fact that it is the promoter in respect of the project'The
Nest'. Explanation to Section 2(zk) makes all persons who
construct or convert buitding into apaftments or develop a plot for
sale, as well as a person who sells apartments or plots to be
promoters making them jointty tiabte as such for the functions and
responsibilities specified under the Ac| or the Rules and
Regulations made thereunder. Thus, a person who does not
actuatly construct or causes to be constructed a building but
merely takes part in the joint venture and sells flats, becomes a
promoter. Appettant admits that it is entitled to a share in the ioint

venture in the constructed area, which it is entitled to sell. Thus,

the Appellant is entitled to se// flats in the p@ect and accept
consideration for such sale. There is therefore no doubt to the
position that, both Appetlant as well as the second Respondent
are Promoters and are iointly liable in respect of the

responsibilities under the RERA and Rules and Regulations made

e{ thereunder.

19.1n my view therefore, mere fatting of flat in the share of the second
Respondent under the loint Development Agreement, would not
excuse the Appettant from the responsibilities and liabilities under

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 Appeal No.AT0060000031756-2019

the RERA, Rules and Regulations made thereunder qua that flat.
RERA does not demarcate or restrict liabilities ofdifferent
promoters in different areas. The liability is ioint for all
purposes under the Act, Rules and Regulations.

25. Normally, in the re-development project there can be hardly

cash consideration for rehab component. In other words there is
no cash contribution on the part of the members of the society
in construction of such building. The society executes a power
of attorney in favour of developer or by virtue of Development
Agreement the society authorizes the developer to construct
building/s of flats/ premises to be sold to outsiders. This amounts
to "causes to be constructed". A careful examination of definition
Of promoter reveals that term "promgter" has been so widely
defined that it virtually includes every person associated with
construction of building. Even a person who claims to be acting
as holder of power of attorney from the owner of the land is also
a promoter within the meaning of section z(zk) of RERA Act. It
is further Seen, even a person who is merely investor in the
project along with the promoter and who is entitled to benefit in
the real estate project is also covered by the definition of
promoter. In the present case society has invested its land by
authorizing developer to construct rehab component and sale
component, it means the society is deriving the benefit in the
subject project in the form of construction of rehab building to

w accommodate its members.

26. The obligations to obtain insurance in respect of title of the land

and building as a part of the real estate project (section
t6(txi)), to execute a registered conveyance deed in favour of
Page 20137
 Appeal No.AT006000003 17s6-2019

the allottee along with undivided proportionate title in the

common areas to the association of the allottees
or the
competent authority as the case may be (section 17) and
to

compensate the allottee in case of any loss caused to him

due

to defective title of the land (section 18 (2) cannot be

for
discharged unless land owner is also a promoter' Therefore
the foregoing reasons, we have come to the conclusion that
of
society being land owner is a "promoter" within the meaning
section z(zk) of RERA Act 2016'

27. There is one more reason as to why we have come

to the
conclusion that society is a "promoter". It is not in dispute
that

the Arbitrator has accorded permission to the society to

complete the project. Pursuant thereto society applied to
the

authority for registration of the project. The society has decided

to complete the project by itself meaning thereby the society
itself is acting as developer. clause (v) of section 2(zk)
of
RERA Act 2016 includes a person who acts himself
as

builder/ developer becomes promoter. The cumulative

effect of above discussion and relevant provisions of RERA

Act

2016 viz. sections 2(zk), 16(1xi), 17 and 1B(2) is that society

being land owner falls in the definition of the term "promoter".

oBLIGATION OF PROMOTER U/S. 15 OF RERA ACT

the
28. The society being promoter is bound to play certain role in

w redevelopment project. The society has to perform certain

obligations under the provisions of RERA Act, 2016. The society
cannot escape from the responsibilities and liabilities under the
RERA Act. It has been held by the Hon'ble Bombay High couft

Page 2t137
 Appeal No.AT0060000031756-2019

in a case of Wadhwa Group HouSing Private Ltd. Vs' Mr'

vijay choksi & Another second Appeal (stamp)
No.21842 of 2023, that RERA does not demarcate or restrict

liabilities of different promoters in different areas. The liability is

joint for all purposes under the Act, Rules and Regulations.

29. It is not in dispute that developer has terminated the

development agreement and the society has determined to
complete the project by itself. The society has taken over the
project from the developer M/s. Valdariya Construction. It means
that the society has stepped into the shoes of erstwhile
promoter/ developer and has applied for registration of the
project with real estate regulatory authority to comply with all
the pending obligations. Perusal of section 15(2) r/w definition
of promoter u/s. 2(zk) of RERA Act clearly indicates that the
society being promoter becomes liable to independently comply
with all pending obligations of the developer under the
provisions of RERA Act and Rules and Regulations therein and
as per the agreements for sale entered into between erstwhile
developer and the allottees. Section 15(2) of RERA Act reads as
under

15. Obligation of promoter in case of transfer of a real

estate project to a third PartY.
(Z) On the transfer or assignment being permitted by the allottees

w and the Authority under sub-section (1), the intending promoter shall
be required to independently comply with all the pending obligations
under the provisions of this Act or the rules and regulations made
thereunder, and the pending obligations as per the agreement for
sale entered into by the erstwhile promoter with the allottees.

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 Appeal No.AT006000003 1755-2019

Provided that any transfer or assignment permitted under

provisions of this section shall not result in extension of time
to the intending promoter to complete the real estate proiect
and he shalt be required to compty with all the pending
obtigations of the erstwhile promoter, and in case of defaul|
such intending promoter shall be liable to the consequences
of breach or delay, as the case may be, as provided under this
Act or the rules and regulations made thereunder."

The new developer is liable to independently comply with all

pending obligations of erstwhile developer. In our view, the
pending
appellant society is thus liable to discharge all statutory
obligations of the erstwhile developer M/s. Valdariya Construction
as per agreement for sale entered into under the provisions of
MOFA/RERA Act 2016. On examination of material on record
reveals that various rights are already accrued and crystalized in
favour of the allottees under agreements for sale which would not
come to an end even on termination of development agreement by
the developer or the society as the case may be'

sEcTroN 19(b) OF SPECTFTC RELTEF ACT

30. Section 19 of Specific Relief Act 1963 says that specific

performance of a contract may be enforced against either party

thereto or any other person claiming under him by a title arising
subsequently to the contract. section 19 (b) of Specific Relief Act
clarifies the position that even if the property, subject matter of
w agreement for sale, is sold to third Paf,il, their rights are also
subject to the enforcement of the agreement for sale. In view of
clause(b) of Section 19, the society, who stepped into the shoes

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 Appeal No.AT0060000031756-2019

of developer after the execution of the agreement for sale, can

be subjected to a decree of specific performance as the
agreement for sale can be enforced specifically against such
society. The equitable property rights created by an agreement
to sell bind the developer and other third person. By virtue of
agreement for sale various rights have already been accrued and
crystalized in favour of the allottees. Therefore we are of the
view that the allottees can enforce their agreements for sale
against the society as the society stepped into the shoes of
erstwhile develoPer.

31. Nodoubt society is not party to the agreements for sale entered
into between the developer and allottees. However, at the same
time it cannot be ignored that by virtue of the development
agreement and power of attorney the society had authorized the
developer to construct building or flats to sell the same to
prospective home buyers in open market to generate funds for
construction of rehab buildings. It means the society is ultimate
beneficiary of funds contributed by the allottees. The
agreements for sale create rights and interests of the allottees
in the subject project. These rights entitle the allottees to
enforce agreements for sale against the person who steps into
the shoes of developer. We would like to reiterate that society
has determined to complete the project itself. Considering the
peculiar circumstances of the case, we are of the view that the
allottees are entitled to enforce agreements for sale against the

w society.

The developer is agent of the society

(Section 226 of the Contract Act 1872).
Page 24137
 Appeal No.AT006000003 1756-2019

32. On the basis of redevelopment agreement dated L5.t2'2011 and

power of attorney dated 14.02.20L2 the society had appointed a
developer as its agent giving full authority to construct flats of sale
component and to sale the same to home buyers. A careful

examination of power of attorney dated L4.02.2012 more

particularly clause 19 reveals that the society has authorized the
developer to sell, transfer, assign and accept bookings, token
monies and advances from the prospective purchasers. Clause 19
stipulates as under.

"To sell, transfer, assign, accept bookings, token monies

and advances for the developer for paft of property i'e'

balance area avaitable after provision for existing
members/occupants of the said property in one or more
parb of such person or persons and to sell ownership basis
their paft of premises or give on lease basis and to allot
parking/garage as the said attorney may think fit and proper
for the purpose to enter into agreement to give valid

discharge for payment to receive sum, earnest money and/or

full consideration and to execute deed of transfer and other
assurances to party the registration thereof in all respects
including todging such documenb before the sub registrar
and admitting execution thereof and to comply with all
formalities to complete registration thereof and handover/
give possession thereof and effect transfer of the said
property in favor of prospective buyers and to give no
objection letters, documents for loan borowing, mortgage
of such premises from banks or other financial institutions or

w other persons and alt necessary documents and do all

necessary acts in that behalf".

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 Appeal No.4T006000003 1756-2019

Clause 19 of the power of attorney signifies that society has given

full authority to the developer to sell the flats from sale component
to prospective home buYers.

33. A close examination of development agreement dated

L5.LZ.ZOI1 reveals that clause 31 authorizes the developer to sell,
allot, transfer, assign, accept bookings, token monies and advances
for the developers part of the propefi. Clause 36 of the said
agreement provides that subject to providing flats, shops, garages
to its members the developer shall be at libefi to sell and/or allot
as per approved lay out/flats/shop/garage etc. in the building to any
person and to enter into any package deal or agreement at such
price and as such terms and conditions as the developer may deem
fit and may also form a Co-operative society or condominium or

limited company without making society responsible for any liability

incurred. This clause also gives full authority to developer to sell
flats, shops, garages etc. to the prospective purchasers. Apaft from
this, clauses 39 and 40 of the re-development agreement provide
that the proposed new building as also all the constructed poftions
will be the property of the society and flats therein shall be
allotted to the said old members as also the said new members or
any prospective purchasers, incoming members of the society
and agreeing to obey rules and bye laws of the society. It is
significant to note that clause 40 of the said re-development
agreement shows that society has agreed that the prospective
purchasers of the premises in the new building shall be inducted as

w member of the society after completion of necessary

required under the bye laws of the society and MCS Act, 1960.
formalities

Clause 40 of the re-development agreement stipulates that.

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 Appeal No.AT0060000031756-2019

"The orosoedive ourchasers of premises in the new

buildino shall be inducted as member of the societv
after completion of necessary formalities as reauired
under the bye laws of the societv and MCS Act 1960,
Such purchasers shall not be required to make any
payment to the society save and except entrance fees
and share capital, societv will issue share ceftificate in
favour of such purchasers after completing all the
formalities. In addition to the above each of the new
member shall pay amount to the developer as decided
and incorporated in the sale agreement to be executed
by the developer and new member as and by way of
their contribution towards maintenance, share capital
or meter charges, development charges etc,

34. On conjoint reading of the aforesaid clauses of the re-development

agreement and clause 19 of the power of attorney reveals that these
documents create relationship between society and developer as
principle and agent. The developer has acted as agent of the society
while entering into transaction with the allottees. Contracts entered
into by an agent on behalf of principle bind the principle as if made
by himself. Though the society is not party to agreements for sale
entered into between the developer and allottees but the effect of
the act of developer in terms of power of attorney is such that society,
who authorized the developer to perform such act, is bound by the
actions of the developer. Section 226 of Contract Ad LB72 reads as
under.

w 226. Enforcement and conseguences of agent's contracts.

Contracts entered into through an agent, and obligations arising from acts
done by an agent, may be enforced in the same manner, and will have

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 Appeal No.AT006000003 1756-2019

the same legal consequences, as if the contracts had been entered into
and the acts done by the principal in person.

Therefore we have no hesitation to hold that there is direct

contractual obligations between the allottees and society, and
they are bound to perform the obligations arising out of the
agreements for sale entered into between the allottees and
developer by virtue of power of attorney given and by reason of
section 226 of Contract Ad 1872.

35. A power of attorney is document of convenience. It is a document

which aids all kinds of transactions to be carried out by the agent
in the absence of the principle. Section 226 of Contract Act 1872
and section 2 of power of attorney Act make it abundantly clear
that principle is liable for the actions of his agent. Therefore we are
of the view that allottees can enforce their agreements for sale

uls.226 of the Contract Act LB72 against society.

THE ALLOTTEES PLAY ROLE OF FINANCER

36. The allottees play role of a financer in the project. The home
buyers used to invest their hard-earned money, money obtained
from loans or financial institutions with the betief that they will
be able to get a roof in the form of their apartments/ flats/units.
The Hon'ble Apex Court in a case of M/s.NEWTECH
PROMOTERS AND DEVELOPERS PVT. LTD. VERSUS
STATE OF UP & ORS. ETC. has held that:

w "The buyers borows money to pay for a house and

simultaneously plays the role of a financer as building prolects
collect money upfront and this puts the buyer in a very
vulnerable position- the weakest stakeholder with a high
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 Appeal No.4T006000003 1756-2019

financial exposure, The amendment to the Insolvency and

Bankruptcy Code, 2018 recognized the home buyers as financial
creditors and the present enactment is the most important
regulatory interuention in favour of the home buyers and it's had
an impact and with passage of time, has become a yardstick of
laying down minimum standards in the market."

37. In the instant case rehab building is constructed out of monies

contributed by the flat purchasers. It means the society is major
beneficiary of the funds contributed by the allottees. One of the
principle objectives of the RERA is to bring transparency in real
estate sector and to protect the interest of home buyers/
consumers in the real estate project. Considering the objectives
of the RERA it can be said that the allottees cannot be left at
lurch by the society under the garb of absence of privity of
contract between the society and flat purchasers. It has been
held by the Hon'ble Bombay High Court in a case Wadhwa
Group Housing Private Ltd. Vs. Mr. Vijay Choksi &
Another Second Appeal (Stamp) No.21842 of 2023.
"The Appellantb contention about absence of privity of
contract between it and the Complainant is totally
misplaced. Definition of the term 'promoter'under Section
2(zk) of the RERA would indicate that even persons/entities
with whom a flat purchaser does not enter into contract are
also covered by definition of the term 'promoter'.

w Therefore,

As obserued
it is not necessary that there has to be an
agreement between every Promoter and the flat purchaser.
abovq it is a matter of indoor
management between the Promoters and the flat
purchaser who is not supposed to know the

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 Appeal No.AT006000003 1756-2019

intriacies of the arrangements made betureen

several promoters amongst themselves, When a
claim is nised in resped of a real estate proiect by
a flat purchaser, all promoters become iointly liable
gua that flat purchaserc, irrespective of whether
there is privity of contract with each of the promoter
or not, This is the scheme of RERA and mere
absence of privity of contract with a particular
promoter does not relieve such promoter in respect
of the liabilities under RERA."

38. It is specific contention of the society that Clause 31 of

re-development agreement stipulates that society and its
office bearers shall have no privity of contract with the
flat purchasers from the developer. Therefore society is

not liable to discharge the obligations of developer

towards allottees. We do not find substance in the said
contention. We have already observed that society is a

promoter within the meaning of definition of Section 2(zk)

of RERA Act. At the cost of repetition we would like to
reiterate that RERA Act does not demarcate or restrict
liabilities of different promoters in different areas. The
liability of promoters is joint for all purposes under the
Act, Rules and Regulations. Since liability of a promoter is
the liability of all the co-promoters, an interse
arrangement between promoters to discharge liability of

w third person does not bind the third person unless the
third person is also a party to the inter-se arrangement
between the promoters. Besides in view of the ratio and
dictum laid down by the Hon'ble Bombay High Court as
above we are of the view that appellant society being
Page 30137
 Appeal No.AT0060000031756-2019

promoter cannot seek to escape the liability on specious

plea that there is no privity of contract between society

and the flat purchasers.

39. A careful examination of the impugned order reveals that

the learned Authority has issued two directions to the
society viz. (i) society has to join the complainants as its
members and (ii) society has to give possession of flats
to the complainants by obtaining Occupation Certificate.
It is specific contention of appellant society that there is
no privity of contract between the society and the flat
purchasers and therefore society is not liable to discharge

obligations of erstwhile promoter and these directions are

contrary to the provisions of law. We do not find
substance in the contention of the society. We have
already obserued that the society being land owner is a

promoter within the meaning of Section 2(zk) of RERA Act

2016. RERA does not demarcate or restrict liabilities of
different promoters in different areas. The liability is joint
for all purposes under the Act, Rules and Regulations.
This signifies that society is liable to discharge obligations
of co-promoters as per provisions of RERA Act 2016.
Besides, it is not in dispute that society has determined to
complete the project by itself. The society, thus, stepped
into the shoes of erstwhile developer and therefore as per

w provisions of Section 15 of RERA Act the society

obligated to discharge all statutory pending obligations of
is

erstwhile developer. Besides the agreements for sale

entered into between erstwhile developer and allottees

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 Appeal No.AT0060000031756-2019

create rights and interests of allottees in the subject

project. In view of Section t9(b) of Specific Relief Act
1963 the allottees can enforce performance of contract
against the society. Besides on the basis of development
agreement dated L5.L2.2011 and power of attorney
dated L4.02.2012 the society had appointed developer as
its agent with full authority to construct flats of sale
component to sell the same to home buyers. The
developer has acted as a agent of the society while
entering into transaction with allottees. The contract
entered into by agent on behalf of principle binds the
principle as if made by himself. Therefore we are of the
view that society is bound to perform the obligations
arising out of agreements of sale entered into between
the allottees and developer by virtue of power of attorney
given and by reason of section 226 of Contract Act 1872.

40. There is one more reason as to why we are of the view

that the impugned order does not warrant interference
with regard to the directions given by the Authority to
society. A careful examination of Clause 40 of
development agreement reveals that it stipulates that

"The prospective purchasers of premises in the new building shall

be inducted as memberh of the society after completion of
necessary formalities as required under the bye laws of the

w society and MG Aq 1960. Such purchasers shall not be

required to make any payment to the society save and
except entrance fees and share capital, society will issue
share certificate in favour of such purchasers after
completing all the formalities. In addition to the above each

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 Appeal No.AT0050000031755-2019

of the new member shall pay amount to the developer as

decided and incorporated in the sale agreement to be
executed by the developer and new member as and by way
of their contribution towards maintenancq share capital or
meter charges, development charges etc.

It means the directions given by the Authority are in

consonance with Clause 40 of development agreement
entered into between the society and the developer.

4t. It is specific contention of the complainant society that

transactions between the allottees and developer are
suspicious. These allottees have booked flats in the sale
component and posed that they have paid almost 950/o

amount towards consideration of the flats. Besides,

dates of agreements for sale of these allottees are the
same. The allottees have not produced their bank
statements to show that they have paid 95% of the
amount towards consideration of the flats to developer.
This signifies that the entire transaction between the
allottees and developer is sham and bogus. Per contra
R.S.Prabhu CA for allottees has submitted that
transactions between the developer and allottees are not
sham and bogus. All the payments have been made by
cheques only. He has invited our attentions to the
receipts issued by the developer in favour of allottees.

w considering rival contentions of the parties we are of the

view that there is initial burden on the allottees to show
that they have made payments to developer and the
transactions between them and developer are not sham

Page 33lgl
 Appeal No.AT0060000031756-2019

and bogus. The allottees have produced receipts on

record to strengthen their contentions that they have
made payments to developer. A careful examination of
receipts which are on page Nos.281, 282,283,284,285,
287, 2gg, 2gg, 290, zgL, 292, 294, 295, 296, 297, 2gg,
299,300, 301, 302, and 303 revealed that the allottees
have paid part consideration to the developer by
cheques. It means the allottees have discharged their
initial burden to prove that they have made payments to
the developer by cheques and transactions between
them and developer are not sham and bogus.
Considering the above contentions of the allottees and
peculiar circumstances of the case, it was expected of
society to produce some material on record to rebut the
above contentions of allottees. However, society has not
produced material on record to rebut the above
contentions of the allottees. In the absence of cogent
material on record it is difficult to digest that transactions
between the allottees and developer are sham and
bogus.

42. It is further contention of the society that by termination

letter dated 07.02,20L8, the developer undeftook the
liability of repayment of amount taken by the developer
from the home buyers. This itself is sufficient to show that
(*
society is in no way concerned with the transactions that
took place between the allottees and developer. The
allottees can enforce their agreements for sale only
against the developer and not against the society. we do

Page 34137
 Appeal No.AT006000003 1756-2019

not find substance in the said contention. We have

already observed that society being land owner is

promoter within the meaning of section z(zk) of RERA Act

20L6. The society stepped into the shoes of erstwhile
developer and therefore society is liable to discharge the
liabilities of developer. Section 18 of RERA Act spells out
the consequences if the promoter fails to complete or is

unable to give possession of an apartmentlplotl building

either in terms of agreement for sale or complete the
project by the date specified therein, the allottee/ home
buyer holds an unqualified right to seek interest on the
amount paid by him at such rate as may be prescribed in
this behalf. Section 18 gives two options to allottee viz.
(1) if the allottee decides to remain in the project, allottee
is entitled to seek interest on the amount paid by him at
such rate as may be prescribed in this behalf. (2) If
allottee wishes to withdraw from the project, allottee is

entitled to claim refund of amount with interest as well as

compensation. In the instant case the allottees have
decided to remain in the project, therefore we are of the
view that the undertaking given by the developer vide
termination letter does not help society to escape from
discharging its liability towards the flat purchasers. If the
allottees would have decided to withdraw from the project
certainly the developer is bound by the undertaking given

w by the
07.02.20L8.
developer vide termination letter dated

Page 35137
 Appeal No.AT006000003 1756-20 19

43. The facts of the cited cases by the appellant society are
different from the facts of the case in hand. Therefore,
citations are not applicable to the present case.

44. So far as imposition of penalty of Rs.15 lakh is concerned

we are of the view that the impugned order warrants
interference to that extent only. There is no violation of
Section 15 of RERA Act. The society being one of the
promoters is under obligation to complete the project. For
that society is not required to obtain consent of zlrd
allottees or permission from the Authority. It is not in
dispute that the society has decided to complete the
project by itself. There is no material on record to show
that the society intends to appoint new developer for
completion of the project. Under such circumstances, we
are of the view that there is no violation of Section 15 of
RERA Act 2016 by the society. Therefore we are of the
view that impugned order warrants interference to that
extent only. Consequently, we proceed to pass following
order.

ORDER

1. Appeal No. AT0060000000317561L9 is partly allowed.

2. Impugned order dated 6th August 20t9 passed in

Complaint No.CCO06000000056380/18 stands set

aside to the extent of direction to appellant society to

w pay penalty of Rs.15 lakh to MahaRERA as provided

u/s. 61 of RERA Act 2016 for violation of Section 15 of
RERA Act.

Page 36lll
 Appeal No.4T0050000031756-2019

3. Rest of the part of the impugned order dated 6th

August 20L9 is upheld.

4. Parties shall bear their own costs.
5. Copy of this order be communicated to respective
parties and MahaRERA as per provisions of Section
44(4) of RERA Act 2016.

ln,ai'r;,< rfu
(sH RTKANT M.DESH PANDE) (sHRrru[M R. JAGTAP)
vss

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