Geethanjali Aman Construction Case - RERA

The Real Estate (Regulation and Development) Act 2016 (RERA) came into effect from 1st May, 2016.

Purpose of RERA

• Regulation and promotion of real estate sector.
• Ensure sale of real estate project in an efficient and transparent manner.
• Protect the interest of consumers in the real estate sector.
• Establish an adjudicating mechanism for speedy dispute redressal.

Registration of project

RERA obligates every promoter of the project to make an application to the Regulatory Authority for registration of the project.

Projects which are exempted from the requirement of registration

No registration of the real estate project shall be required

• Where the area of land proposed to be developed does not exceed 500 square meters or the number of apartments proposed to be developed does not exceed 8 inclusive of all phases: [Section 3(2)(a)]

Provided that if the appropriate Government (ie State/UT) considers it necessary, it may, reduce the above threshold limit

• Where the promoter has received completion certificate for a real estate project prior to commencement of this Act:
• 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.

Geethanjali Aman Construction case

In the case M/s Geethanjali Aman Constructions (Appellant) vs Hrishikesh Ramesh Paranjpe (Respondents/Complainants), dated 10.07.2019 before the Maharashtra Real Estate Appellate Tribunal, Mumbai, (3 member bench), the crux of the case based on complaint filed by the Allottees was whether the word “or” used in section 3(2)(a) has to be read conjunctively or disjunctively.

Conjunctively means both the area of land and the number of apartments should be below the limit to be eligible for exemption.

Disjunctively means if either area of land or the numbers of apartments are below the limit, project is eligible for exemption.

In this case, the area of plot was 382 square meters (below limit) and the number of apartments are 22 flats 9 shops (above limit).

Observation and judgement of 2 out of 3 member bench in the above case

Their key observations are given below

• Needless to state that the need to interpret the provisions of law would arise only when there is ambiguity left. It is trite that in interpreting the statute if the words are unambiguous, the Court must give to the words that meaning and no question of construction of statute would arise in such a case.
• In the Bill XLVI of 2013 relating to enactment of the Act introduced by Rajya Sabha, the word 'or' was used in the then Sec. 3(a).
• The word used in 30th Report of Standing Committee of the Lok Sabha submitted in February 2014 was and/or.
• The word used in report of select committte of the Rajyasabha on July 30, 2015 was “or”
• The Bill introduced in 2015 in the Rajya Sabha retained the word 'or' in Section 3(2)(a) of the Bill.
•  It is clearly discernible that by retaining the word 'or', the legislature always intended to provide two contingencies where if either of the two is satisfied, the project is to be held eligible for exemption from registration. Had the legislature intended to apply both conditions collectively or conjunctively, the simple use of the word(s) 'and' or 'and/or' would have achieved the objective.
• The unambiguous language of clause (a) of Section 3(2) of the Act of 2016 makes it clear that "or" is to be read disjunctively and not conjunctively as conjunctive reading would make legislative intent redundant and would amount to changing the texture of the fabric which is not permissible in law.
• Order - Project is not registrable

Observation and judgement of 1 out of 3 member bench in the above case

Key observation are given below

• Exemption u/s 3(2)(a) will depend upon the nature of development. If it is development of land by dividing into plots, first condition of minimum area of 500 square meter shall apply for seeking exemption from registration and similarly if project consists of development of building then second condition of number of flats less than 8 shall apply for getting exemption from registration.
• Whether meaning of the word “or” is to be gathered from grammatical sense or statutory sense - Section 3(2)(a) is a statutory provision and hence meaning of the word “or” in this provision is to be gathered from statutory sense.
• The entire provision will have to be read in context of other provisions of the Act. For ascertaining the true meaning of the provision, whole Act must be read and not only that provision in isolation.
• The proviso empowers the Government to reduce the threshold. It shows the intention of legislature to bring maximum projects under mandate of registration.
• Both the conditions are not exclusive of each other but must be observed together is the intention of legislation.
• If only one condition is sufficient, promoters may commit mischief by making construction of large number of flats on area of land below the limit.
• Order - Project is registrable

Thus the order was pronounced with a 2:1 majority exempting the developer from registering the project and also set aside the penalty imposed on the firm.

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