L&T Receives Relief from Allahabad High Court: RERA to Consider Project Registration Approved if No Decision Within 30 Days
In a landmark decision, the Allahabad High Court has provided significant relief to L&T (Larsen & Toubro), ruling that if the Real Estate Regulatory Authority (RERA) fails to make a decision within 30 days regarding a real estate project’s registration application, the application should be considered approved. This ruling comes under Section 5(2) of the Real Estate (Regulation and Development) Act, 2016 (RERA Act), which stipulates a 30-day period for RERA to either approve or reject an application for project registration.
Context of the Case
The case revolves around the application of L&T for the registration of one of their real estate projects. L&T filed the application with the Uttar Pradesh Real Estate Regulatory Authority (UPRERA) but did not receive any decision or response from UPRERA within the stipulated 30-day timeframe. This led L&T to approach the Allahabad High Court, seeking relief and enforcement of the provisions of the RERA Act.
Section 5(2) of the RERA Act: Mandatory 30-Day Decision Period
According to Section 5(2) of the RERA Act, 2016, RERA is obligated to either accept or reject a real estate project registration application within 30 days of its submission. If the authority fails to do so, the application is automatically deemed approved, and the applicant must be provided with the necessary registration ID, login credentials, and password within seven days after the expiration of the 30-day period.
The division bench of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar ruled that the 30-day timeframe is not just directory but mandatory in nature. Therefore, once the 30-day period passes without a decision, the project is considered registered, and the regulatory authority must provide the necessary credentials for the developer to continue with the project.
Allahabad High Court’s Observations
In their ruling, the Allahabad High Court emphasized that under Section 5(2), UPRERA has only two options: either to accept or reject the project registration application within 30 days. If the authority fails to act within this period, the project is automatically registered. The court further stated that UPRERA is mandated to provide the registration ID, login ID, and password to the applicant after the lapse of the 30 days if no rejection has been communicated.
Rejecting the objections raised by UPRERA, the court highlighted that L&T’s application was complete in all respects, as per the RERA Act. The court criticized UPRERA’s failure to act within the mandatory timeframe and ruled that the authority could no longer reject the application after the stipulated 30 days had passed.
The Role of the “Deeming Clause” in the Ruling
The court’s ruling heavily relied on the “deeming clause” embedded in Section 5(2) of the RERA Act. The clause is intended to protect developers from the delays caused by the regulatory authority’s inaction. The court acknowledged that the legislature introduced this provision to prevent unnecessary delays in project approvals, which could harm developers and investors alike.
In this case, the court noted that L&T’s application had been pending for significantly longer than the prescribed 30-day period. Therefore, the court ruled that L&T’s project should be considered automatically registered under the RERA Act.
Implications for Developers and Real Estate Market
This ruling has far-reaching implications for the real estate sector, especially for developers dealing with delays in project approvals from RERA authorities. By affirming the mandatory nature of the 30-day decision period, the Allahabad High Court has set a precedent that could streamline the registration process for real estate projects across India.
The decision also underscores the importance of transparency and efficiency in the regulatory framework governing the real estate industry. Developers are now assured that if RERA fails to respond within the stipulated period, their project will not be left in limbo, thus reducing the financial and operational uncertainties often associated with such delays.
Role of the Promoter and Legal Definitions
In its ruling, the court also delved into the definition of a “promoter” under Section 2(zk)(i) of the RERA Act. According to the Act, a promoter is defined as a person who constructs or causes the construction of apartments for sale, which includes builders or developers holding a power of attorney for the land on which the construction is to take place.
The court observed that the definition of a promoter was not restricted solely to landowners, but also encompassed individuals or entities developing land through a valid power of attorney agreement. This broader interpretation of the term “promoter” was significant in the court’s decision, as it clarified that developers like L&T, operating under power of attorney agreements, were entitled to project registration under the RERA Act.
Court’s Criticism of UPRERA’s Conduct
The court did not shy away from criticizing UPRERA’s handling of L&T’s application. Even though an interim order had been passed by the court, instructing UPRERA not to make any decisions while L&T’s case was pending, the authority went ahead and rejected the application. The court found this conduct unacceptable, emphasizing that UPRERA had no legal grounds to reject the application after the 30-day period had elapsed.
The court further stated that UPRERA could not use procedural loopholes or administrative delays as a basis for withholding project registration. The authority’s conduct, as noted by the court, was not commendable, and it urged UPRERA to adhere to the mandatory provisions of the RERA Act.
Conclusion
The Allahabad High Court’s ruling in favor of L&T is a significant development for the Indian real estate sector. By affirming that a real estate project is deemed registered if RERA fails to act within 30 days, the court has provided much-needed clarity and relief for developers facing bureaucratic delays. This decision reinforces the mandatory nature of the RERA Act’s provisions, ensuring that regulatory authorities adhere to the timeframes established by law.
For developers, this ruling offers greater certainty in the project registration process and reduces the risks associated with prolonged administrative delays. As the real estate sector continues to evolve, the Allahabad High Court’s decision may serve as a vital precedent in ensuring that RERA operates efficiently and transparently, benefiting both developers and homebuyers alike.
