A ppeo I in SC 100006 7 2/69 1 CommonOrder 10.07-2077

BEFORE THE MAHARASHTRA REAL ESTATE APPELLATETRIBUNAL, MUMBAI

AppealNo.ln

Complaint No.SGl 0000672ln

Complaint No.SCl 0000691

'l . M/s Geetanjali Aman Constructionshaving its principal place of businessat Utkarsh Apartment, 1512,1514,Sadashiv Peth, Near by

Renuka Swaroop School,Pune-41'l 030.

And also at 410, 4th Floor,San-Mahu Complex, 5 Bund GardenRoad, Camp, Pune-411 001.

2. Hussain PathanPartner of Geetanjali Aman Constructions,residing al 571, Dattawadi,Pune-4'l'l 030 ... Appellants/

Org.RespondentsVersus

1. Hrishikesh Ramesh ParanjPeresiding at 141,Shaniwar Peth,

Near Amruteshwar Mandir,Pune-411 030

2. Ramesh Vasant ParajPeresiding at 141,Shaniwar Peth,Near Amruteshwar [\4andir,

Pune-411 030

3. Balaji Shashikant Samudraresiding a|411021, Sadashiv Peth,

Avdhoot Society,Pune-411 030

,|,l

Appeol in SC1OOOO67 2/691

4. Swapna Balaji Samudraresiding at 411021, SadashivPeth, Avdhoot Society,Pune-411 030

Common Ofuet 10.07.2077

.. Respondents/Org. Complainants

Shri Mustafa Safiyuddin a/w lessica Rastogi, Advocates forAppellantsMs. Manasi Joshi, Advocate for Respondents

CORAM : INDIRAJAIN J. .CHAIRPERSONSUMANT KOLHE, MEMBER (J)S.S. SANDHU, MEMBER(A)

JUDGMENT

INDIRA JAIN (J) Ghairperson & S. S. SAN DHU (Member A)

PER S. S. SANDHU MEMBER (A)

This appeal is directed against the order dated 10th December,

2018 of Ld. Member and Adjudicating Officer, MahaRERA as modified

by order dated 11th March, 2019 pursuant to Review Application filed

by Appellant in Complaint Nos. SC10000672 & SC10000691.

2. The short controversy that arlses in this appeal revolves around

Clause (a) of Section 3(2) of the Real Estate Regulations and

Development Act, 2016 (for short, 'the Act). It is appropriate here to

reproduce the relevant part of the said Section for better

understanding and relating the same to the facts and circumstances

of the case in further account of this order'

2

DATE: 10th JULY,2019.

"Section 3(2). Notwithstanding anything contained in sub

section 1, no registration of the Real Estate project shall be

required:

(a) Where the area of land proposed to be developed does not

exceed five hundred square meters or the number of

apaftments proposed to be developed does not exceed

eight inclusive of all phases....."

4. On 6th December, 2018, Appellants received an email from the

Authority for hearing in respect of the said project on 10th December,

2018. During the hearing they came to know that the hearing was

pursuant to Complaints under caption by Respondents regarding

registration of their project. Appellants made oral submissions and

following order was passed by the Learned Member.

" The respondents shall register the project within three

Weeks from this order.3

)-/)

3. The facts submitted on record reveal that Appellants are

engaged in development and construction of real estate projects.

According to Appellants, they had commenced the construction of

project "Utkarsh Apartment" in Pune in the year 2013. On

commencement of the RERA w.e.f. 1st May, 2017, Appellants sought

guidance from MahaRERA (the Authority) on registrability of their

project by email dated 8th February, since the said project had an

area less than five hundred square meters but apartments more than

eight. However, there was no written reply or response from the

Authority despite persuasion. Appellants claim the officials in the

Authority advised them that their project is not required to be

registered.

The respondents shall pay penalty of Rs.30 Lacs under

Section 59 of the RERA,"

5. According to Appellants, they received the above order on 8th

January, 2019 by email. However, as there were errors in the above

order with regard to the area, estimated cost of the project etc.,

Appellants preferred Review Application on 4th February, 2019 on

following grounds:

(i) The Appellants were never served copy of complalnts as

falsely declared by Respondents. They became aware of

allegations in the complaints for the first time during

hearing on 10th December, 2018.

(il) Appellants were not given any opportunity to file their

reply to the complaints.

(lii) The area is wrongly mentioned in the order as 38259 sq.

mtrs. though the correct and duly ceftified area is 380.04

sq. mtrs. i.e. less than five hundred sq.mtrs. as orally

stated during the hearing.

(iv) Duly certified estimated cost of the project is Rs. 3.35

crore contrary to the cost erroneously mentioned as

Rs.10 crore approximately in the order.

(v) The project is exempted from registration U/Sec. 3(2) of

the Act since the area of the plot is 380 sq. mtrs and

therefore penalty of Rs 30 lacs is required to be cancelled.

6. Based on above grounds, the Appellants prayed for following

reliefs.

(i) To review the order dated 10th December, 2018 as the4

(ii)

(iii)

said project is exempted from registration under Sec. 3(2)

of the Act being area under the project less than 500 sq.

mtrs;

To hold that the project is not registrable under the Act.

To withdraw and cancel the penalty of Rs.30 lacs imposed

by the said order;

To cancel/withdraw the directions requiring to register

the project within three weeks from the date of order;

To stay operation of the order pending hearing and final

disposal of Review APPlication.

(iv)

(v)

7. After reminders to the Authority to fix an early date for hearing,

Review Application and the application filed by Respondents for taking

action for non-compliance of the order dated 10th December, 2018

were heard together by Ld. Member on 11.3.2019'

8. After hearing the parties, Learned Member held that project is

registrable and passed the following order on the same day'

"The Respondents shall register the project within two days

from this order. The amount of penalty shall be Rs'30 lakhs

only.

In case of the Respondent's failure to register the project as

directed, the Respondents are hereby restrained from

selling/transferring any part of the project and collecting any

money from the allottees till the project is registered'

In case, non-registration within the prescribed time limit, issue

5

notice to the Respondents under Section 7 of RERA to show

cause as to why MahaRERA should not take the project in its

control. The matter be kept before the Authority on 08.04.2019.

The representative of the Respondents has been directed to

remain present to collect the copy of the order' Hence, the copy

of the order be given to the representative of the Respondents

to act upon it.

The Respondents shall pay additional penalty of Rs.10,000/- per

day after 14.03.2019 under Section 59 of RERA till project is

registered. The order dated 10.12.2018 is rectified under Section

39 and the area of the plot is corrected to 382 sq'mtrs. and 22

flats and 9 shoPs".

g. Being aggrieved by the aforementioned orders dated 10th

December, 2018 as rectified by order dated 11th March, 2019, present

appeal has been filed on the following grounds:

-rl,

(l) misconstruing the provisions of Section 3(2) of the Act, the

project is erroneously held registrable as it had more than

8 tenements even though land to be developed was less

than five hundred sq. mtrs.;

(ii) Learned Member wrongly held the project liable for

registration by interpreting that both the conditions U/Sec.

3(2) are to be met cumulatively and not alternatively for

exempting the project from registration;

(iii) Learned Member erred in imposing a penalty of Rs.30 Lacs

for non-registration and directing Appellants to register the

project within 2 days failing which further penalty of6

Rs.10,000/- per day to be imposed until registration of the

project;

(iv) Appellants have been restrained from selling/transferring

any part of the project and collecting any monies from

allottees;

(v) There is no rational for estimating the penalty of Rs.30 Lacs

as 30lo of the wrongly estimated project cost of Rs.10/-

crore and for not reconsiderlng the same even after

submitting duly certified project cost of Rs.3.35 crore in

Review Application.

10. In relief, the Appellants sought to quash and set aside the

impugned order dated 10th December, 2018 as modified by order

dated 1lth March,2019.

1i. Heard the Learned Counsel ofthe parties at length.

12. In oral arguments, the learned Counsel of Appellants reiterated

the facts as mentioned hereinabove. He drew our attention to the twin

ingredients of Section 3(2Xa) on satisfaction either of which a project

shall be exempted from registration. At the cost of repetition, the

relevant provisions are again reproduced for the sake of convenience

as under:

" Section 3(2Xa) - Where the area of land proposed to be

developed does not exceed five hundred square meters or

the number of apadments proposed to be developed does

not exceed eight inclusive of all phases....."

7

13. The learned counsel for Appellants submitted that on plain

reading of the aforesaid provisions it is clear that the two

ingredients/conditions prescribed in the clause (a) for exempting

exemption to the projects from registration are mutually exclusive

due to the word "or" used therein. Therefore they are to be read and

considered alternatively and not conjunctively as is done by the

learned member while passing the impugned orders' He further

submitted that satisfaction of either of the conditions or ingredients

is only necessary for such exemptlon from registratlon'

L4. Further, the learned counsel referred to the conclusions drawn

by learned member in Para 3 of the order dated 11th March, 2019

reproduced as under:

"3. The learned advocate ofthe Respondents submits that since

the area of the plot is less than five hundred sq. mtrs' Project

does not require registratlon because the exemption is given to

the project having less than five hundred sq, mtrs or number of

apartments is below 8. Hence he submits that when one

ingredient regarding the area is satisfied, the project does not

require registration. I do not agree with him because it becomes

clear on plain reading of section that if the land below five

hundred sq. mtrs is to be developed, then it requires no

registration. Similarly, if the apartments not exceeding 8 are

being constructed, inclusive of all phases, then registration is

not required. The learned advocate admits that in approved

plan the number of tenements is 22 and there are nine shops'

Therefore, I do not accept the submissions of the learned

advocate ofthe Respondents that the project is exempted from

the registration." 8

,L

15. The Learned Counsel pointed out that in third and fourth

sentences of the above para of the impugned order the learned

member appears to have actually agreed with the view of Appellants

for disjunctive reading and application of individual conditions

provided in Clause (a). Accordingly he also seems opining by stating

separately that a project requlres no registration if it falls under either

of the two conditions. Impliedly therefore the project of Appellants

satisfying the condition of having less than 500 sq. mtrs. area was not

required to be registered. Yet a moment later, without assigning any

plausible reason he comes to a totally different and erroneous

conclusion by applying the said individual conditions conjunctively and

holds that the project of Appellants is liable to be registered as it had

22 tenements and nine shoPs.

16. To support and substantiate his contention, Learned Counsel

for Appellants relied on judgments in the cases of (i) Lavasa

Corporation Limited Vs Jitendra Jagdish Tulsiani [(2018 SCC

Online Bom 20741:[(2018) 5 AIR Bom R 553]: [(2018) 6 Bom

CR 172)l and (ii) Babu Manmohan Das Shah vs. Bishun Das

l(1967 AIR 643, 1967 SCR (1)836)l' He also submitted ceftain

Reports of Committees of the Lok Sabha, the Rajya Sabha and Draft

Bills prepared for processing the enactment of the Act to demonstrate

the legislative intent for exempting cedain projects from registration

on fulfillment of either of the conditions laid down in Clause (a) U/Sec'

3(2) of the Act. By reiterating his contentions as above, the learned

Counsel vehemently claimed that project of Appellants was not

required to be registered and the directions to registering the same

and imposition of penalties by learned member in the impugned

orders for non registration deserve to be quashed and set aside.

9

17. The Learned Counsel for Appellants also contended that the

penalty @ 3olo that appears to have been imposed assuming

erroneously the project cost as Rs.10 crore in the order dated 10th

December, 2018 is not rational and the same is unreasonable and

arbitrary too. He also argued that learned Member took no

cognizance of duly certified project cost of Rs.3.35 crore submitted in

Review Application and passed an erroneous order 11th March, 2019

that needs to be set aside.

18. On behalf of the Respondents, Learned Counsel supported the

impugned orders. She contended that both the conditions mentioned

in Clause (a) of Sec, 3(2) of the Act are required to be jointly complied

with to qualify for exemption from the registration. To buttress her

view, she submitted clarification at FAQ No.5 as downloaded from

MahaRERA website suggesting thereby that the Appellants'projects

requires registration. She also relied on the judgment of the Authority

of 17th October, 2018. She therefore emphasized that since there are

more than 8 flats in the Appellants' project, the same is required to

be registered U/Sec. 3 of RERA, 2016 and deserves no exemption.

19. After hearing the parties and considering the documents on

record, two points that arise for our consideration and adjudication

are

(i) Whether the project being executed by Appellants is

liable to be registered in terms of Clause (a) of

Sec.3(2) of the Act?

(ii) Whether Appellants are liable to comply with

directions for registration of the project and to pay

penalties imposed as per the impugned orders?10

-l{-

Appeol i n sc 1 000067 2 /6 91 CommonOrder 10.07-2077

We answer both the points in the negative for the reasons discussed

in the ensuing account.

2t. In the light of above observations and with a view to gauge the

legislative intent for using the word 'or' in the said clause we have

also perused the material submitted by the Appellants. It is seen -

(i) that 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) though the area and number of flats

proposed therein were different from today's enactment'11

20. As may be noted from above account, the principal question that

needs to be addressed in this appeal revolves around the interpretation

of word "or" used in clause (a) of Section 3(2) of RERA and its application

to the facts and circumstances of this case already detailed

comprehensively hereinabove. The crux is whether "or" has to be read

conjunctively or disjunctively. Needless to state that need to interpret

the provisions of law would arise only when there is ambiguity left or a

doubt is created in understanding the provisions. In our view in

understanding the provision of law what should be done when the words

are clear and unambiguous is to give the words that meaning which they

convey plainly, irrespective of the consequence. It is well settled law

that while interpreting a statute, efforts should be to give effect to each

and every word used by the Legislature keeping in view the legislative

intent. There cannot be two opinion that interpretative function of the

Court is to discover the true legislative intent. It is trite that in

interpreting the statute if the words are clear, plain, unambiguous and

reasonably susceptible to only one meaning, the Court must give to the

words that meaning and no question of construction of statute would

arise in such a case.

Appeol in 5C1.000O67 2/691 CommonOrder 10.07.2077

(ii)

(iii)

(iv)

the 30th Report of Standing Committee of the Lok Sabha

on the Bill for the Act was submitted in February 20t4.ltis seen from pages 24-25 of the Report that based on

suggestions from National Housing Bank (NHB) the

Committee after prolonged deliberations with Nodal

Ministry, had strongly recommended amendment to Clause

3 for extending applicability of the Bill "for residential

construction upto 100 sq. mtrs, and/or number ofapa*ments to be developed (not exceeding 3)

(emphasis supplied) instead of 1000 sq. mtrs (apartments

not exceeding 12 in number) as proposed in the Bill."

On July 30, 2015, the Select Committee of the Rajya Sabha

after good discussion on this issue submitted its Report

recommendlng no changes relating to the word 'or'except

the area and number of flats to be reduced for exemption.

Though there were recommendations, as noted above, to

use the words 'and/or' in the clause 3, it is seen that the

Bill introduced in 2015 in the Rajya Sabha retained the

word 'or' in Section 3(2)(a) of the Bill. Ultimately the Bill

No. XLVI-C of 2016 was passed by the Rajya Sabha in the

form of the Act as it exists today with the word 'or' in

Section 3(2)(a).

22. From the above proceedings, it is clearly discernible that by

retaining the word 'or' in the relevant clause, 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 the conditions

collectively or conjunctively, the simple use of the word(s) 'and' or

'and/or'would have achieved the objective.'t2

J

CommonOtdet 70.07.2017

23. Coming to the present controversy, it is not in dispute that

appellants commenced the construction of project'Utkarsh Apartments'

in Pune in the year 2013. The area of plot is 382 sq.mtrs. and project

consists of twenty two flats and nine shops. Allottees filed the complaint

against the appellants with MahaRERA alleging that promoters have not

registered the project though number of flats exceeds eight and thereby

violated the provisions of Section 3 of RER Act, 2016. Keeping in view

the settled law on interpretation of a statute and language of clause (a)

of Section 3(2) of the Act of 2016, we are of the firm view that on the

happening of any of the two contingencies il the area of land proposed

to be developed does not exceed 500 sq.mtrs or iil the number of

apartments proposed to be developed does not exceed eight incluslve

of all phases, project needs no registration under sub section (1) of

Section 3 of RER Act. 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.

24. The disjunctive reading of "or" in clause (a) of Section 3(2) of the

Act if applied to the facts of the present case, it is inevltable that the

total area of the plot being 382 sq.mtrs., project in question is out of the

purview of registration under the Act of 2016. Analysed from this view

point, it appears from his observations in 3rd and 4th sentences of Para

3 of the order dated 11th March 2019, that the learned member

understood and interpreted the law position correctly with regards to

use of the word 'or' between the two conditions for exemption of the

projectfrom registration if area is less than 500 sq. mtrs. or if there are

less than 8 apartments. However while concluding that the project of13

4

A ppea I i n SC 100006 7 2 /69 1

Appellants is registrable on the basis of apartments more than 8, it is

obvious that he gave a total miss to the word'or'as he failed to assign

any context or meaning to the word 'or' used in the said clause. This

appears to have led him to take a view contrary to what was intended

to by the legislature.

25. In view of the above discussion, we are in complete agreement

with interpretation by Appellants meaning thereby that once the

project meets one of the conditions that precedes or succeeds the

word 'or' in the said clause, their project is not registrable. However

we do flnd any merit in the view advanced by learned Counsel for

Respondent. Also her references to the FAQ published on the website

of MahaRERA and the orders passed by the Authority relating to the

controversy have no evidentiary value for giving any consideration

thereto. In conclusion, we find it difficult to accept the view taken by

learned Member while holding the Appellants' project as registrable

based on the erroneous interpretation of the provisions of Clause (a)

of Section 3(2) of the Act in the impugned orders. The said orders

dated 10th December, 2018 and 11th March, 2019 therefore deserve

to be quashed and set aside along with other directions relating to

requirement of registration of the project by Appellants and penalties

imposed for failure to do so.

26. Accordingly, we pass the following order:

-:ORDER:-

i] The impugned orders dated 10th December, 2018 and 11th

March, 2019 are quashed and set aside;

14

ii] The consequential effects of the said orders in terms ofdirections to register the project, penalties etc. are also setaside;

A ppeo I i n 5C1000067 2 /69 1 Common Oder 70.07.2077

No costs;

In view of the provisions of Section 44(4) of the Act of 2016,copy of the order shall be sent to the parties and to theLearned Member and Adjudicating Officer.

iiil

ivl

lrno*-larru:;.S. SAND

27. I have perused the draft judgment prepared by my learned

sister and brother. I am unable to agree with the conclusion and

reasons assigned for in the judgment. Important issue of

interpretation and meaning of Section 3(2)(a) of RER Act 2016 is

involved. I hold divergent view on the crucial point involved in the

matter. I consider it necessary to arrive at my conclusion with

reasons by expressing my views as the issue has far reaching

impact.

28. Appellants are the promoters. Respondents are the Allottees.

"Utkarsha Apaftment" is the project launched by the Promoters on

the plot located at Sadashiv Peth, Pune. Area of the plot is 382 sq.

meters. Project consists of 22 flats and 9 shops. Allottees lodged

the complaints against the Promoters with MahaRERA Authority.

They alleged that the Promoters have not registered the project

15

PER: SUMANT KOLHE MEMBER (J)

Admitted facts

CommonOrder 70.07.2017

with MahaRERA Authority though number of flats exceed eight and

they have violated Section 3 of RER Act 2016.

Decis on of Mah RERA

29. The Ld. Member of MahaRERA Authority heard both sides in

complaint No. SC 10000672 and 10000691 fited by Ailottees on

allegation of non-registration of the project and passed order on

10.12.2018 and directed the Promoters to register the project

within three weeks and to pay penalty of Rs.30,00,000/- under

Section 59 of RER Act.

32. Allottees made grievance of non-execution of the said order.

Promoters preferred Review Petition on 04.02.2019 against the said

order. The Ld. Member of MahaRERA Authority heard both sides

and passed the order on 11.03.2019 as under :-

ORDER

"The respondents shall register the project within two

days from date of this order. The amount of penalty

shall be Rs.30 lakhs only.

In case of the respondent's failure to register the

project as directed the respondents are hereby

restrained from selling/transferring any part of the

project and collecting any money from the allottees tilt

the project is registered.

In casg non-registration within the prescribed time

limit, issue notice to the respondents under Section 7 ofRERA to show cause as to why MahaRERA should not

16

Appeol in 5C1000067 2/691

\\

\e

take the project in its control. The matter be kept before

the authoritY on 08.04.2019.

The representative of the respondenb has been

directed to remain present to collect the copy of the

order. Hencq the copy of the order be given to the

representative of the respondents to act upon it'

The respondents shall pay additional penalty of

Rs.10,000/- per day after 14.03.2019 under Sedion 59

of RERA titt prolect is registered. The order dated

10.12.2018 is rectified under Section 39 and the area of

the ptot is corrected to 382 sq. mtrs., and 22 flats and

9 shoPs."

30. In theorderdated 10'12.2018, area ofthe plotwaswrongly

mentioned as 38259 sq. ft. and number of flats and shops were

wrongly mentioned as 30 and 10 respectively. This typographical

mistake was brought to the notice of Ld. Member of MahRERA

Authority by Promoters. The Ld. Member of MahaRERA Authority

rectified the said typographical mistake by showing correct area of

the plot as 382 sq. meters and correct number of flats and shops

as 22 and 9 respectively by passing order to that effect on

11.03.2019.

31. Order dated 10.12.2018 with modification as per order dt'

11.03.2019 directing Promoters to register project and to pay

penalty and to face consequences on failure to obey the order, is

assailed by Promoters in this Appeal'

17

Riva lClaims

32. Promoters have challenged propriety, correctness and legality

of the impugned order on the ground that project stands on the

plot of area of 382 sq. meters which does not exceed 500 sq'

meters and project falls within ambit of Section 3(2Xa) of RER Act,

2016 for exemption from registration. Allottees have made counter

attack that project consists of 22flats and 9 shops which exceeds

limit of 8 flats prescribed for exemption from registration under

Section 3(2Xa) of RER Act 2016. According to the Promoters, any

one of the conditions if satisfied, the project is not required to be

registered. According to Allottees both conditions must be satisfied

by the project to get exempted from registration' Thus, whether

condition of area of plot not exceeding 500 sq' meters and

condition of number of Plots not exceeding B are mutually exclusive

to each other and only one can be satisfied for exemption or both

conditions must be satisfied is the main controversy'

33. Now, I proceed to discuss the controversy'

Nature of develooment

Real Estate project is defined under Section 2(zn) of

RER Act. It means development of a building or building consisting

of apartments or conversion of existing building or part thereof into

apattments.

It also means development of land into plots or

apaftmentsasthecasemaybe,forpurposeofsellingallorsome

of the said apaftments or plots or building as case may be' As a

result,projectconsistsofdevelopmentofBuildingorland'18

{,

Whenever building is to be developed then condition of number of

flats not exceeding B will have to be observed for getting exemption

from registration.

Whenever land is to be developed, it may be plotted

development i.e. land is divided into number of plots for selling

them in project. If such plotted development is there in project,

then condition of area of land not exceeding 500 sq. meters (10

Gunthas) will have to be observed for getting exemption from

registration. Now, land may be developed by making construction

of building thereon. So, project consists of development of land by

construction of building. In this case, since construction of building

is involved in the project, the number of apartments should not

exceed 8 for getting exemption from registration.

Due care is also taken to see that if project is developed

into phases then construction of building in all phases will be

considered together for ascertaining maximum limit of B flats in

project for obtaining exemption from registration.

Thus, exemption under Section 3(2Xa) will depend

upon nature of development' If it is development of land by dividing

into plots first condition of minimum area of 500 sq. meters of land

shall apply for seeking exemption from registration and similarly if

project consists of development of building or land by construction

of building on land then second condition of number of flats less

than 8 shall apply for getting exemption from registration' So, every

project involving construction of number of flats not exceeding 8

shall be exempted irrespective of area of the land' Every project

19

\)

involving development of land having area not exceeding 500 sq'

meters into plots for sale shall be exempted.

Leqal interoretation and meanrnq

34. In view of this interpretation, both conditions as per Section

3(2Xa) are not mutually exclusive but both shall be satisfied for

seeking exemption of the project from registration.

Section 3(2)(a) of RER Act 2016 reads as under :-

"3(2) : Notwithstanding a nything contained in sub-section

(1) no registration of the real estate proled shall be

required :-

(a) : where the area of tand proposed to be developed

does not exceed five hundred square meters or

the number of apartments proposed to be

devetoped does not exceed eight inclusive of all

Phases:"

35. Ld. Member held that project must satisfy both conditions i'e'

area of plot not exceeding 500 sq. meters and number of flats not

exceeding B for getting exemption from registration as per section

3(2Xa) of RER Act. satisfaction of one condition is not sufficient to

exempt the project from registration'

PrinciPles and guidelines

36. Let us see what is the legal interpretation and true meaning

of Section 3(2Xa) of RER Act for exemption of project from the

registration. In view of word "OR" used in Section 3(2Xa) between

20

\A

Appeol i n 5C1000067 2/691

both conditions we have to see whether meaning of word "OR" in

Section 3(2Xa) is to be gathered from grammatical sense or

statutory sense. Section 3(2)(a) is statutory provislon and meaning

of the word "OR" in this provision is to be gathered from statutory

sense. Some principles and guidelines required to be followed for

asceftaining correct meaning of the provision are referred by their

Lordships of Hon'ble Bombay High Court in Case law of Neelkamat

Realtors Suburban Pvt. Ltd and Ors. (Writ Petition No. 2737

of 2Ot7) decided on 06.12.2017 (Hon'ble Chief Justice N.H. Patil

and R. G. Ketkar J. Bombay High Court).

I refer to para 158, 159 and 160 of the said Case Law.

"158. When the question arises as to themeaning of a ceftain provision in a statute, it is not onlylegitimate but proper to read that provision in itscontext. The context here means, the statute as awhole, the previous state of the law, other statutes inpari materia, the general scope of the statute and themischief that it was intended to remedy [as held in R.S.

Raghunath v. State of Karnataka, AIR 1992 SC 811. Thisstatement of the rule was later fully adopted by theConstitution Bench of the Apex Court in Union of Indiav. Elphinstone Spinning and Weaving Co. Ltd., (2001) 4SCC 139.

159. It is a rule now firmly established, [as heldin Philips India Ltd. v. Labour Court, (1985) 3 SCC 1031,

that the intention of the Legislature must be found byreading the statute as a whole. "The Court mustasceftain the intention of the Legislature by directing itsattention not merely to the clauses to be construed butto the entire statute; it must compare the clause withthe other parts of the law, and the setting in which theclause to be interpreted occurs."[as held in State ofW.B. v. Union of India, AIR 1963 SC ll}4tl.

21

CommonOrder 70.07.2077

qil

Appeol in SC10o0o67 2/691 CommonOtdet 70.07.2077

160. "One must have regard to the scheme ofthe fasciculus of the relevant rules or sections in orderto determine the true meaning of any one or more ofthem. An isolated consideration of a provision leads tothe risk of some other interrelated provision becoming

otiose or devoid of meaning." [as held in O.P. Singla v.

Union of India, (1984) 4 SCC 450.1"

Backqround of RER ACT

37. Now let us consider background of enacting RER Act, 2016.

Maharashtra Ownership Flat (Regulation of promotion of

construction, sale, management and transfer) Act, 1963 was in

force. However, there was no regulatory Authority and there was

no mandate to register the project. There was no statutory

protection to the Allottees and their interest was not safeguarded

by statutory provisions. Hence, in order to overcome shoft falls and

lacunas in MOFA and for development as well as regularisation of

real estate sector, new uniform RER Act in addition to MOFA is

enacted after long deliberations, discussions and after considering

suggestions and views of all Stake holders of Real Estate Sector.

Obiects

38. Objects spelt out from preamble of RERA are as under:-

i) To establish Real Estate Regulatory Authority for

regulation and promotion of Real Estate Sector.

ii) To ensure efficiency and transparency in sale of plot,

apaftment, building or Real Estate Sector.

iii) To safeguard the interest of the customers.

v

22

iv) To provide speedy adjudicating mechanism.

v) To complete the on-going project. [Neelkamal Realtors]

39. As per Section 3(1) of RER Act, without registration of project

Promoters shall not advertise, market, book, sale or offer for sale

or invite persons to purchase any plot, apartment or building in the

project.

Mandate of Reqistration

40. As per Section 3(2) notwithstanding anything contained in

sub-clause 1. no registration of the project shall be required'

a) Where area of the land proposed to be developed

does not exceed 500 sq. meters or number of

apartments proposed to be developed do not

exceed B inclusive of all Phases.

Provided that if the appropriate Government

considers it necessary, it may reduce the threshold

below five hundred square meters or eight

apartment, as the case may be inclusive of all

phases, for exemption from registration under this

Act,

b) Where the promoter has received completion

certificate for a real estate project prior to

commencement of this Act;

c) For the purpose of renovation or repair or re-

development which does not involve marketing,

advertising selling or new allotment of any

23

r^,b

apartment, plot or building, as the case may be,

under the real estate Project.

Explanation - For the purpose of this section, where the

real estate project is to be developed in phases, every

such phase shall be considered a stand alone real estate

project, and the promoter shall obtain registration

under this Act for each phase separately.

q[

Exception

4t. On careful perusal of Section 3 of RER Act, it is revealed

that every new project or ongoing project on the date of application

of RER Act, 2016 i.e. 01.05.2017 shall be registered with MahaRERA

Authority. There are three exceptions to this rule as given under

Section 3(2) of RER Act.

42. Exception (a) regarding minimum area of the plot or

minimum number of apartments; (b) regarding receiving of

completion certificate prior to commencement of the Act. Exception

(c ) regarding renovation or redevelopment or repair which does

not involve market, adveftising, selling or new allotment of any

plot, apaftment or building.

43. Whenever legal interpretation and true meaning of Section

3(2Xa) is to be gathered it must be borne in mind that it is an

exception to the rule. Therefore, scope of exception granting

exemption from registration cannot be widened and stretched to

the extent that such scope may defeat the very purpose of the Rule

of registration of the project. consequently, legal interpretation and

true meaning of the exception contemplated under Section 3(2Xa)

24

A ppe ol i n SC 1 000067 2/69 1 CommonOrder 70.07.2077

must be in spirit of and in support of Rule of registration and not in

derogation thereof.

44. The entire provision will have to be read in context of other

provisions of the Act. For ascertaining true meaning of the

provision, whole Act must be read and not only that provision in

isolation.

45,Theintentionoflegislatureinmakingregistrationmandatory

and compulsory for the new and ongoing projects clearly shows

that as far as possible all the projects are made compulsorily

registrable as per Section 3 of RER Act' However, every rule is

having exception, So, exception is carved out to exempt the small

project from registration. In order to determine concept of small

project, it is provided that if area of land to be developed is not

exceeding 500 sq. meters or number of flats not exceeding B

including all phases, then such project is exempted from

registration.

46.IntheexplanationasprovidedunderSection3ofRERAct'

where the project is to be developed in phases every such phase

shall be considered as stand alone real estate project and the

promoter shall obtain registration in each phase separately' Unless

the project is registered with MahaRERA Authority, Regulatory

Authority under RER Act may not be in a position to supervise'

monitor and control the project for achieving the objects of RER

Act. So, intention of legislature in framing exception as per clause

(a) for exemption of the project from registration on the point of

area of the plot or number of apaftments must be construed to

25

-Afi

satisfy both the conditions for obtaining the exemption from the

registration.

Mandate of Section 4 for Reoistratlm

47. Registration of project with Authority by making compliance

of mandatory requirement as per Section 4(a) to Section a(m) by

promoter is the basic and fundamental stage for commencing the

project by making adveftisement in public domain and soliciting

response from Allottees to purchase the flats. From this stage, on

due registration of project, Regulatory Authority stafts monitoring

the project and Promoter is under obligation to carry out the

development by adhering to the statutory provisions of RER Act

2016. The object of protecting interest of home buyers is required

to be checked from stage of booking of flat in registered project till

the project gets completion certificate from competent Authority.

The period between date of booking the flat and the date of getting

completion certiflcate of project is crucial and project is required to

be regulated by observing and following respective obligations and

rights by Promoters and Allottees as per provisions of RER Act

under control and supervision of Regulatory Authority in order to

complete the project successfully without diverting it into limbo.

Power of oovernment to reduce threshold

48. Appropriate Government is statutorily empowered to reduce

the threshold below 500 sq. meters or eight apaftments as the case

may be inclusive of all phases for exemption from registration of

project as per proviso of Section 3(2)(a) of RER Act.

26

'/u

Appeol in 5C1000O67 2/69 1 CommonOtder 70.07.2077

49. This proviso empowers the Government to reduce the

threshold and not to increase the threshold. It shows the intention

of legislature to bring maximum projects even below the above

mentioned threshold under mandate of registration so as toregulate such projects and to protect the interest of the Allottees

and also to help Promoters in completing the project. Appropriate

government is armed with such power to reduce the threshold only

with object of bringing maximum projects under purview ofMahaRERA Authority without exempting them from registration.

Ame dment of Rules of istratio fees

50. Recently Government of Maharashtra amended some of the

Rules framed under RER Act 2016 by reducing the registration fees

of the projects of plot development and building development.

Mandate of payment of minimum registraUon fees of Rs.50,000/-

is also amended by removing such mandate and making payment

of registration fees on basis of area of land and the rate of land per

square meter. lt is pertinent to note that the action initiated by

Government of Maharashtra in reducing the registration fees of theprojects is with a view to get registered their maximum projects with

Authority and to encourage the Promoters of projects particularly in

rural area to get governed by the provisions of RER Act, 2016.

Relevant information of Bill, recommendatio ofCom ittees

51. It we consider sailent features of RER Act Bill and suggestions

made by various stake holders as well as observations and

recommendations of the Standing Committee of the Lok Sabha and

27

\,t

Appeol in sC1000067 2/691 Connon Otder 1O.O7.2017

Select Committee of the Rajya Sabha it is revealed that though the

word "or" is used in between two conditions as per Section 3(2Xa)

of RER Act for exemption from registration, the Standing

Committee has used the word and/or whereas Select Committee

has used the word "and" while making recommendations on this

point.

52. The Bill excludes projects smaller than 1000 sq. meters area

or 12 apartments from its purview. The Standing Committee

observed that large number of small housing projects will escape

the purview of this law and therefore, the middle class allottees will

suffer. The Standing Committee strongly recommend that Clause 3

should be suitably amended thereby ensuring applicability of the

Bill on area of land proposed for residential construction up to 100

sq. meters and/or number of apaftments to be developed (not

exceeding 3 numbers) instead of 1000 sq. meters and apartments

not exceeding 12 in number as proposed in the Bill.

53. Consumers and Resident Welfare Association suggested that

there should not be any exemption to any project from the

registration as per provisions of this Bill in respect of area and

number of flats.

28

-$54. The Select Committee recommends that the area of the land

and number of flats to be exempted from registration should be

reduced and adequate powers in this regard may be provided to

the appropriate government. Thus, Standing Committee has

specifically used word 'and/or' in its recommendations whereas

Select Committee has used the word "and" in its recommendations

A ppe o I i n S C 1000OG 7 2 /69 1 CommonOrder 70.07.2017

in respect of lowering the limit of area and number of apaftments

for getting exemption from the registration.

55. Thus, it can be easily said from observations and

recommendations of various stake holders and Select Committee

and Standing Committee report that condition of area and condition

of number of flats for getting exemption from registration are not

mutually exclusive to each other but both must exist and not only

one to get the concession of exemption from the registration.

Meaninq of Section 3(2Xa) in con of other orov isions

and statute as a whole.

56. I reveft back to para 158 of Neelkamal Case Law. As per ratio

laid down in R.S. Raghunath Vs. State of Karnataka.

"When the question arises as to the meaning of a certain

provision in a statute, it is not only legitimate but proper to read

that provision in its context. The context here means, the statute

as a whole, the previous state of the law, other statutes in pari

materia, the general scope of the statute and the mischief that it

was intended to remedy."

57. Considering context of provision of Section 3(2)(a) for

exemption from registering the project on basis of minimum area

of land and minimum number of flats read together with other

provisions such as Section 3 of mandate for registration of the

project and mandatory requirements to be submitted in detail for

registration of the project as per Section 4 by the Promoter and

power of appropriate government to reduce minimum threshold of

area and number of flats and move of the Maharashtra Government

29

ttCI

Appeol in 5C1000067 2/691 ComnonOtdet 10.07.2017

Conclusion

58. In view of the above discussion, I am of the opinion that you

cannot read provlso of Section 3(2Xa) in isolation but it must be

read with other clauses and provisions laid down under RER Act in

order to determine the true meaning of the said clause i.e. 3(2Xa)

of RER Act. Though, provisions of section 3(2Xa) appears simple

for the purpose of reading the same, the true meaning of it cannot

be correctly gathered by ignoring the intention of legislature in

framing this clause which is to be read with context of other

provisions of the Act and with objects of the Act. Thus, considering

the object of RER Act to regulate and develop real estate sector, to

protect the interest of customers in respect of transactions of sale

30

.\,9

in reducing registration fees of project in order to cover maximum

number of projects for registration by encouraging the promoters,

I am of candid view that conditions of minimum area of land and

minimum number of flats are not exclusive of each other but both

must be observed together is the intention of legislation and such

interpretation is helpful to achieve the objects of RER Act 2016. IfSection 3(2Xa) is interpreted to mean that only one condition ifsatisfied is sufficient to get exemption from registration then

Promoter may commit mischief by making construction of large

number of flats on area of land below the requirement for

exemption from registration by launching separate and

independent project at different time having huge number of floors

consisting of large number of flats on the plot of land having area

less than 500 sq. meter in order to escape from clutches ofcompulsory registration of project under Section 4 of RER Act 2016.

Appeal in 5C10000672/691.

of flats in Real Estate Sector and to monitor the activities of

Promoters and Allottees in respect of such transactions and to

encourage Promoters to complete the projects in agreed time and

to fulfil the dream of home buyers to get their home, the clause of

exception i.e. Section 3(2Xa) must be interpreted and meaning of

the said clause must be gathered in such a manner that the objects

of RER Act should not be defeated and intention of legislature in

bringing maximum number of projects in Real Estate Sector under

registration with RERA Authority should not be ignored. Condition

of area of the plot and condition of number of flats for getting

exemption from the project are not mutually exclusive to each other

and both conditions must be satisfied at once for obtaining the

exemption from the registration.

Clarification so ht bv Promoters

59. I would like to refer mail dated 08.02.2018 which was sent

by Promoters to MahaRERA Authority for seeking the clarification

as to whether the project is registrable under provisions of RER Act

in view of exception as per Section 3(2Xa) of RER Act. Copy of E-

mail is produced on record by the Promoter. It shows that the

project is redevelopment scheme launched by the Promoter.

However, the project is not exempted from registration as per

clause 3(2Xc) as it involves marketing, adveftising selling or new

allotment of any flat or project. In the copy of mail it is seen that

Promoter has mentioned total area of flat as 382 sq. meters and

total number of tenements 29. I would like to note down the

clarification sought in the said mail by the Promoters from RER

Authority. It is as under :- "Do we have to register for RERA in the

31

Common Ordet 70.07.201.7

t^,b

A p pe o I i n S C100006 7 2 /69 1 Common Otdet 10.07.2017

above given case? Because as per MahaRERA laws if plot is under

500 sq. meters or B units or less for sale RERA Registration is not

compulsory so for clarification do I have to register or not ?"

60. The above mentioned clarification sought by the Promoter

clearly shows that the Promoter was aware about the clause of

exemption from registration of the project on the basis of minimum

area and minimum number of flats in such project. In fact Promoter

was doubtful as to whether project should be registered or not as

the area of the plot was only 382 sq. meters but number of flats

were 29 i.e. more than 8. First order came to be passed by learned

member of MahaRERA Authority on 10.12.2018 in the complaints

filed by present two Allottees and directed the Promoters to register

the project within three weeks and also pay the penalty. Thereafter,

while deciding Review Petition filed on 04.02.2019 by the

Promoters and grievance of non-compliance of first order as made

by Allottees order came to be passed by MahaRERA Authority

directing the Promoter to register the project wlthin 2 days. In para

5 of impugned order, the Ld. Member has observed that the

Promoters are ready to register the project within 2 days if so

directed. It appears that Promoters agreed to register the project

and accordingly the Ld. Member passed the order to register the

project within 2 days. Once, the Promoters agreed to register the

project within 2 days as revealed from para 5 of the impugned

order dated 11.03.2019, the Promoters cannot again challenge

such order. It is settled position of law that the observations made

by Ld. Member in lmpugned order on the point of consent of

Promoters to register the project within 2 days cannot be doubted

32

qf

Appeol in SC1O0OO67 2/691 CommonOtdet 10.07.2077

for any reason. The Hon'ble Apex Court laid down in (2004) 1O

S.C.C. 598 Ram Bali Vs. State of U.P. that whatever happened

in court and what transpired at the hearing in Court the statement

recorded in Judgment in respect of that, held as conclusive and

cannot be contradicted on affidavit or otherwise by other evidence.

Party believing them to be erroneously recorded should promptly

approach the Judge who made the record while a matter is still

fresh in their mind for necessary rectification that being remedy it

cannot be challenged in appeal. In view of the above discussion, I

am of the opinion that the word "or" as used in Section 3(2Xa) of

RER Act is to be treated as "and". Both conditions must be satisfied

together at once by the Promoters for seeking exemption from the

registration of the project.

61. As per impugned order Promoter is directed to pay the

penalty of Rs.30,00,000/- and failure to register proiect as directed,

promoter to pay additional penalty of Rs.10,000/- per day under

Section 59 of RER Act till the project is registered and Promoter is

restrained from selling and transferring any part of the project and

collecting money from the Allottees till the project is registered and

Promoter to show cause as to why MahaRERA should not take the

project under its control on failure of Promoter to register the same

as per order.

62. Order of penalty of Rs. 30 Lacs is passed in view of Section

59 of RER Act, 2016. Such a penalty may extend up to 10% of

estimated cost of real estate project as determined by the

Authority. There is no iota of evidence to show that estimated cost33

rA,/t

Order of PenalW

Appeol in SC1O0O067 2/691 CommonOrder 10.07.2077

of the Real Estate Project was determined by the Authority, In fact

the certificate issued by authorised CA of the project reveals that

estimated cost of the project is about 3 Crores 30 Lacs. The Ld.

Member awarded penalty of 30 Lacs on basis of submission of the

Promoters of estimated cost of Rs.10 Crores by imposing penalty

to the extent of 3% of the cost. If we consider extent of penalty

up to 10% of the estimated costs of the project as per Section 59

of RER Act 2016 and estimated cost of Rs.3 Crores 35 Lakhs as

certified by C.A. then Promoters are liable to pay penalty of

Rs.30.10 Lacs for not complying the order of registration of the

project. The Ld. Member has also imposed additional penalty of

Rs.10,000/- per day till the project is registered by the Promoter.

As per Section 59 (2) of RER Act, 2016 if the Promoter fails to

comply the order or continues to violate provision of Section 3, then

he shall be punishable with imprisonment for a term which may

extend up to 3 years or fine which may extend further up to 100/o

of estimated cost of real estate project or both. Thus, there is no

concept of awarding additional penalty under Section 59(2) of RER

Act.

Finaldecision

63. The impugned order directing promoter to register the

project and to pay penalty is legal, proper and correct. However,

determination of the penalty of Rs. 30,00,000/- is not correct.

Certificate of C.A. shows estimated cost of project approximately

Rs.3 Crores 34 Lacs. So, penalty of Rs.30.10 Lacs will be 10% of

estimated cost of the project. Now, additional penalty of

Rs.10,000/- per day is not contemplated under Section 59 of RER

34

q't

Ap pe al i n SC1 000067 2 /69 1 Conmon Ordet 10.07.2017

Act and not proper legal and correct. So to the extent of awarding

additional penalty to the promoter, the impugned order is not

proper/ legal and correct.

64. In the result following order is passed:

ORDER

b) Promoters shall register the project with

MahaRERA Authority in accordance with law

within one month from the date of this order.

c) Promoters shall pay penalty of Rs.30,10,000/- i.e.

10o/o of total estimated costs of the project as per

certificate of C.A. i.e. Rs.3 Crores and 35 Lakhs

approximately within one month from date of this

order.

35

\(

Appeal No. U-6 in Complaint No. SC 10000672 along

with Complaint No.SC 10000691 is paftly allowed as

under ;-

a) Impugned order dated 11,03.2019 passed by Ld.

Member of MahaRERA Authority in Complaint No.

SC t0000672 along with Complaint No.SC

10000691 is confirmed to the extent of

directing the Promoters to register the project and

to pay penalty.

d) Failure to register the project as directed above

may result in further action as contemplated

under the law against the promoters.

Appeol in 5C10O0O672/691 CommonOrder 70.07.2017

e) Part of impugned order to the extent of imposing

additional penalty of Rs.10,000/- per day till the

project is registered is set aside.

f) Part of impugned order restraining the Promoters

from selling, transferring any part of the project

and collecting money from the Allottees till the

project is registered is confirmed.

g) Part of the impugned order pertaining to issuance

of notice under Section 7 of RER Act to show

cause as to why MahaRERA should not take the

project in its control is confirmed.

h) No order as to costs.

i) Copy of the judgment be sent to the parties and

the Authority and the Adjudicating Officer as per

Section 44(4) of RER Act 2016.

(suM T KOLHE)

36

q[