The High Court of Judicature at Allahabad, Lucknow Bench, has held that a real estate project where the developer only possesses leasehold rights and lacks the authority to sell units does not fall within the ambit of the Real Estate (Regulation and Development) Act, 2016. The Court clarified that the element of “sale” is a mandatory condition for a person to be classified as a “promoter” and for a development to be considered a “real estate project” under the Act.
Background
The case arose when M/s Maa Bhagwati Commercial Reality N Resorts LLP (the Respondent) applied for registration of its project ‘Samrajya’ with the U.P. Real Estate Regulatory Authority (RERA) on February 2, 2025. The project was being developed on land owned by a public charitable trust, ‘Udasin Sangat Rishi Aashram,’ which had leased the land to the Respondent for 29 years and 11 months.
U.P. RERA rejected the registration application on March 4, 2025, questioning the Trust’s authority to grant sub-leasing rights and noting the limited lease period. The Respondent challenged this before the Real Estate Appellate Tribunal (REAT), Lucknow, which allowed the appeal on September 25, 2025, directing RERA to grant the registration. U.P. RERA subsequently moved the High Court challenging the Tribunal’s order.
Arguments of the Parties
The Appellant (U.P. RERA) argued that the Respondent did not qualify as a “promoter” under Section 2(zk) of the Act because it could not sell the units and could only assign leasehold rights via sub-leases. They contended that under Section 17 of the Act, a promoter must execute a registered conveyance deed in favor of allottees, which was not possible here as the Respondent was merely a lessee.
The Respondent, while initially seeking registration, eventually filed a short counter-affidavit agreeing with the Authority’s stance that they were beyond the purview of the Act. They argued that since they lacked the right to sell and could only sub-lease, they were not “promoters” as defined under Section 2(zk) and thus should be absolved from the requirement of registration.
Court’s Analysis
Justice Syed Qamar Hasan Rizvi analyzed the definitions of “promoter” under Section 2(zk) and “real estate project” under Section 2(zn) of the 2016 Act. The Court observed:
“The purpose of selling is sine-qua-non for a person to be a promoter within the meaning of the Real Estate (Regulation and Development) Act, 2016, but the respondent, admittedly, does not have the right to sell the property.”
The Court further noted that a conjoint reading of the statutory provisions yields two mandatory conditions for the Act to apply:
- There must be development or construction activity.
- Such activity must be undertaken for the purpose of sale to allottees.
The Court cited the Supreme Court decisions in District Mining Officer vs. Tata Iron & Steel Co. (2001) and M/s Newtech Promoters and Developers vs. State of U.P. (2021) to emphasize that statutes must be interpreted according to the literal and true intention of the legislature.
The Bench remarked:
“A lessee, who does not sell units to prospective allottees, does not fall within the ambit of ‘promoter’. Further, as per Section 2 (zn), a ‘real estate project’ necessarily contemplates development for the purpose of sale.”
Decision
The High Court concluded that since the Respondent does not possess the legal authority to sell the plot, apartment, or building, the project does not attract the mandatory registration provisions of Section 5 of the Act.
The Court held that the Respondent is “neither obligated to seek registration nor it can be compelled to obtain registration.” Consequently, the Court disposed of the appeal, stating that U.P. RERA is under no obligation to provide a registration number or login ID. Furthermore, the Court directed the Authority to withdraw the prohibitory and restrictive clauses (Form-D) previously issued against the Respondent’s project.
Case Details:
- Case Title: U.P. Real Estate Regulatory Authority Thru. Secy. vs. M/S Maa Bhagwati Commercial Llp Reality N Resorts
- Case No.: RERA APPEAL No. 169 of 2025
- Bench: Justice Syed Qamar Hasan Rizvi
- Date: May 8, 2026
