Whether CIDCO Falls Under Definition Of Promoter For Town Development Activities? MahaREAT Answers

Background Facts

In October 2018, Maharashtra Chamber of Housing Industry (MCHI) filed complaint before the authority alleging CIDCO failure to register as a “Promoter” under Section 3 of RERA, 2016 after launching several scheme.

These schemes involved the allotment, sale, and disposal of land plots to MCHI members through tenders, advertisements, and marketing.

On 03.06.2019, authority disposed of the complaint by holding that the sale transactions by CIDCO involved immovable property where development permissions were still pending from the Competent Planning Authority. Therefore, these transactions cannot be considered as sales for plotted development under the definition of a Real Estate Project.

Further in Para 8 of order, authority held that if the Complainant's building projects on the plots bought from CIDCO need certain infrastructure (like roads or utilities) that CIDCO is supposed to provide, then the Complainant or their members can list CIDCO as a promoter (landowner) when they register their projects with MahaRERA.

Aggrieved by the Authority's order dated 03.06.2016, both parties filed appeals before the Tribunal. MCHI is seeking to quash, set aside or modify the Authority's order whereas CIDCO is seeking to set aside paragraph 8 of the order.

Issues before the Tribunal

1. Whether CIDCO falls under the definition of a Promoter for town development activities.

2. Whether those town development activities are required to be registered under RERA.
3. Whether the provisions of RERA apply to CIDCO which is a statutory government organization given its functions under the MRTP Act, 1966.

Observation and Direction by Tribunal

On Issue 1

Tribunal referred Section 2(t) and 2(zn) of RERA, 2016 which define development work and real estate project. Based on the statutory provisions, authority observed that CIDCO role falls under the definition of development work and its activities which includes transforming raw land into planned layout plots under the schemes falls under the definition of real estate projects.

Tribunal held that CIDCO is a promoter (Town Development) for its development activities which involve planning land into plots or sub-plots for the purpose of selling these plots after they have been properly subdivided with appropriate town planning.

On Issue 2

Tribunal observed that as per Section 3 of RERA, 2016, no promoter can advertise, market, sell, or invite people to purchase any plot in a real estate project without first registering the project with MahaRERA.

Therefore, CIDCO cannot sell, advertise, or market any land exceeding 500 square meters under schemes without prior registration with MahaRERA.

Tribunal also clarified that CIDCO must register before developing any land exceeding 500 square meters, regardless of whether the infrastructure is on-site or off-site.

On Issue 3

Tribunal observed that Objective and Reasons of RERA, 2016 and MRTP, 1966 don't conflict with each other. Also, in case there will be any conflict then RERA, 2016 being a central legislation will prevail over MRTP, 1966 which is enacted by State legislation.

Tribunal also observed that Section 89 clarifies that the provisions of RERA will take precedence over any conflicting laws, including the MRTP, 1966. This means that even though CIDCO is a statutory government organization, RERA applies to it, and its provisions have overriding authority in case of any conflict with other laws.

Case – MCHI Versus CIDCO A/W 1 another

Citation – Appeal No. U-18 Of 2019 A/W 1 another

Date of order – 18.10.2024