In a notable judgment, the Allahabad High Court reaffirmed the significance of the deeming fiction under the Real Estate (Regulation and Development) Act, 2016 (RERA). The court ruled that if the Real Estate Regulatory Authority fails to decide on a project registration within the statutory period, the project will be deemed registered by law. The ruling came in a case involving the Uttar Pradesh Real Estate Regulatory Authority (UPRERA) and a developer who sought registration for a real estate project.
The bench, consisting of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar, clarified that the failure of the regulatory authority to act within the stipulated time leads to automatic registration under Section 5(2) of the RERA Act. The court observed, “If the authority fails to grant registration or reject the application within the specified period, the deeming fiction must prevail, and the project stands registered.”
Background of the Case
The case centered around a real estate development project for which the developer had applied for registration under the RERA Act. After submitting the required documents, the developer faced multiple delays from UPRERA. Despite fulfilling all the necessary requirements and responding to objections, the registration was not granted within the mandated 30-day period.
The developer argued that under Section 5(2) of the RERA Act, if the authority does not reject the application within 30 days, the registration is automatically deemed to have been granted. The developer contended that UPRERA had overstepped its jurisdiction by continuing to ask for clarifications and refusing to grant the registration even after the statutory period had elapsed.
Legal Issues Involved
1. Deeming Fiction Under Section 5(2) of the RERA Act: The main issue was whether the project should be automatically registered under the deeming provision of Section 5(2) if the authority does not act within the 30-day deadline. The petitioner argued that the automatic registration provision exists to prevent undue delays by regulatory authorities and to ensure transparency and accountability in real estate development.
2. Jurisdiction of UPRERA After the Expiration of the Statutory Period: The court was asked to determine if UPRERA could continue to request clarifications and reject applications after the 30-day period had lapsed.
3. UPRERA’s Actions Regarding Promoter Status: Another issue was UPRERA’s insistence that a third party, originally holding the land, should be included as a co-promoter of the project. The developer contended that they had validly acquired all rights for the project and did not require the landholder to be listed as a promoter.
Key Observations by the Court
The Allahabad High Court made several important observations regarding the functioning of RERA and its implications for both developers and homebuyers:
1. Deeming Fiction is Mandatory: The court emphasized that the deeming fiction under Section 5(2) of the RERA Act is not discretionary but mandatory. It is designed to prevent regulatory delays and ensure that real estate projects are not held up by procedural inefficiencies. The court stated, “Once the deeming provision comes into play, the authority has no jurisdiction to reject the application thereafter.”
2. UPRERA’s Delay in Action: The court took issue with UPRERA’s failure to adhere to the statutory timeline. Despite multiple requests for clarification, the authority did not act within the 30-day period, effectively triggering the deeming provision.
3. Clarification on Promoter Status: The court ruled that the developer did not need to include the previous landholder as a co-promoter. It clarified that the developer, having acquired all necessary rights, was the sole promoter of the project.
4. Judicial Precedents: The court relied on several precedents, including the Supreme Court judgment in Bhavnagar University v. Palitana Sugar Mill (P) Ltd., which established that when a public authority fails to act within the statutory period, the law’s deeming provision must take effect.
Court’s Decision
The court ruled in favour of the developer, holding that the registration for the project was deemed to have been granted when UPRERA failed to act within the 30-day period. It also directed UPRERA to provide the necessary registration details to the developer so that the project could proceed.
The court’s decision highlights the importance of adhering to statutory timelines under the RERA Act and reaffirms the protections afforded to developers against bureaucratic delays. The ruling ensures that regulatory authorities cannot indefinitely delay project approvals, which can impact both developers and homebuyers.
