Application For Registration Of Real Estate Project Deemed To Be Approved If No Decision Taken By RERA In 30 Days: Allahabad High Court Grants Relief To L&T

The Allahabad High Court has held that the 30-day period prescribed under Section 5(2) of the Real Estate (Regulation and Development) Act, 2016 for deciding applications for registration of real estate projects is mandatory in nature as upon failure to accept or reject the application within 30 days, the project shall be deemed to be registered.

Section 4 of the Real Estate (Regulation and Development) Act, 2016 provides for applications for all real estate projects. Section 5 of the Act provides a 30 day period to the Authority to either accept the application for registration or reject it. Section 5(2) provides if the Authority fails to decide the application within a period of 30 days, the application shall be deemed to be approved and a registration ID and password must be provided to the applicant within 7 days after the expiry of the 30 day period.

The bench of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar held

“Section 5 (2) of the Act is clear that UPRERA has only two choices either allow the application for registration of the project within 30 days, or reject the same, but for any reason if the same is kept pending beyond the prescribed period of 30 days it would amount to a “deemed registration”. Hence, the application of the petitioner is deemed to have been registered after lapse of the mandatory period, since the same was not rejected, and it is mandatory on UPRERA to provide the registration number, Login ID and Password to the petitioner.”

Case Background

Petitioner- Larsen & Toubro Limited entered into an agreement with Jaiprakash Associates Limited (JAL) for development in “Jaypee Greens Wish Town”. JAL also executed an irrevocable power of attorney in favour of the petitioner. Petitioner intended to develop 4 Towers. Petitioner applied for registration of the first 2 towers on 02.06.2023 with UPRERA. However, UPRERA asked the petitioner to seek clarification from the Suraksha Consortium clarifying that the Project Land do not form part of the resolution plan of Suraksha Realtors Pvt. Limited and Lakshdeep Investments and Finance Private Limited.

Petitioner stated that it had rights over the project by registered agreements and JIL was not to be added as a 'Promoter' in the project. The application was rejected and UPRERA directed petitioner to apply again.

The Implementation and Monitoring Committee of JIL issued a letter to UPRERA clarifying that the petitioner is the promoter/developer of the Project and has all rights regarding the land. Petitioner reapplied for registration on 31.07.2023, however, UPRERA objected to the same. Meanwhile, petitioner also applied for registration of other 2 towers as well on 23.08.2023.

UPRERA asked the petitioner to add JIL as a Promoter, however, petitioner stated that there was no need of doing so as all rights regarding the property were assigned to L&T by various deeds. UPRERA, being unsatisfied, did not grant them registration for Towers 1&2.

Since both applications had been pending for more than 30 days, petitioner issued a letter stating that by virtue of Section 5(1) and 5(2) of the RERA Act, they were deemed to be approved and granted registration.

Due to some third party advertisement, UPRERA issued a notice stating that the petitioner had violated Section 3 of the Act as the project was not registered and could not be advertised. Petitioner was called to explain this else action would be taken against it. Petitioner challenged this notice before the High Court under Article 226 of the Constitution of India.

During the pendency of the writ petition, petitioner's application was rejected and the same was communicated to the petitioner. Accordingly, petitioner moved an amendment application challenging the rejection order.

High Court Verdict

Rejecting the objection as to the maintainability of the writ petition, the Court adjudicated the matter on merits.

The Court observed that the object of Real Estate Regulatory Authority established under the Real Estate (Regulation and Development) Act, 2016 was to ensure that “that the land on which the development was to be carried out has clear title, and is free from all encumbrances while registering a project, and whatever the promoter does, has to be transparently shown on the website of the Authority. The Authority has to ensure timely development of the project and in case the same is not done, the promoter can be penalised for the same.”

The Court observed that Section 2(zk)(i) of the Act defined 'promoter' as a person who constructs or causes to construct an independent building of apartments for being sold including a builder or a developer who has the power of attorney of the land on which the construction is to be carried out.

The Court held that the word 'or' was deliberately used in place of 'and' to not restrict the definition of promoter to the owner of the land and to include any person who is developing the land on the basis of power of attorney. It was held that owner need to be the 'promoter' of the land, and thus, on the basis of the power of attorney, petitioner was the 'promoter' of the land in question.

“The person who constructs and sells is the promoter even if he is carrying on the construction activities on someone else's land, provided that a valid agreement has to be there between the owner of land and the developer. Therefore, in our considered opinion, JIL would not fall in the category of promoter for the project.”

The Court held that the objection raised by UPRERA to include JIL as a promoter was not necessary in light of the above discussion. It was held that the application of the petitioner was in proper format as per Section 4(2) of the Act, and UPRERA could not ask for documents which were not mentioned as a requirement in the RERA Act.

Further, the Court relied on Bhavnagar University v. Palitana Sugar Mill (P) Ltd. and others and Sharif-Ud-Din vs. Abdul Gani Lone where the Apex Court held that though time frames prescribed for public functionaries, the same are directory in nature. However, it was held that if the consequence of inaction on the part of the authorities is mentioned then the action must be completed within the time prescribed as it becomes mandatory in nature.

“As per Section 5(2) of the Act, UPRERA had only two options to be exercised within thirty days,- (a) to grant registration (b) reject the application. As per the Act, it was mandatory for UPRERA to exercise one of these options within stipulated time of thirty days.”

The Court held that there no option available to UPRERA to keep the application pending on grounds of being defective. Once the 30 day period from the date of application had lapse, the Court held that it was mandatory for UPRERA to provide registration number, login ID and password to the petitioner. it was held that application could have been rejected on grounds of non-addition of JIL as Promoter, but could not have been kept pending after the mandatory 30 day period.

Observing that the deeming clause was introduced by the Legislature to cure ills which come from pending applications, the Court held that

“Since, the application of the petitioner was kept pending much beyond the period of thirty days, hence, as per Section 5(2) of the RERA Act, the project of the petitioner is deemed to have been registered and UPRERA is bound to provide the petitioner registration number, login Id and password to the applicant/petitioner for accessing the website of the Authority and to create his web page.”

Regarding the conduct of UPRERA, the Court recorded that even though an interim order was passed by the Court directing UPRERA not to take any decision on the application when adjournment was sought on behalf of it's counsels, it had proceeded to reject the applications of the petitioner. The Court observed that the conduct of UPRERA was not appreciable.

Refraining from making any adverse remarks against UPRERA, the Court allowed the writ petition and held that the project of the petitioner was deemed to approved and it was now beyond the jurisdiction of UPRERA to reject the application of L&T.

Case Title: Larsen & Toubro Limited v. State of U.P. and others [WRIT - C No. - 16616 of 2024]

Appearances: Shashi Nandan, Senior Counsel assisted by Raghuvansh Misra, Shivang, Ms. Saloni Kapadia, Devansh Misra, Anup Shukla, Asvani Tripathi and Shubam Yadav, Advocates for petitioner, Anil Tiwari, Senior Counsel assisted by Mohd. Afzal and Rahul Agarwal, Advocates for UPRERA and R.M. Upadhyay, Ms. Uttara Bahuguna, Ambrish Shukla, Additional Chief Standing Counsel and Fuzail Ahmad Ansari, Standing Counsel for State-respondent.

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