Consumer Connect: 'Apartment Buyers Can Take Over Lapsed Project,' Says Expert

Q. I have bought a flat in a project in Chembur, which is a redevelopment project and in lapsed condition. The extended project registration expired two years back. The builder is not updating project details, nor contacting the society. He does not have funds, and no work has been done on the site for the past four years. The society filed an arbitration proceeding against the builder mid-last year, but there has been little progress. In a redevelopment project with a development agreement between the society and the developer and the project which is lapsed at MahaRERA, does MahaRERA has the power, as per Sections 7 and 8, to revoke the registration of the project and remove the builder? Is the DA an obstruction for applying Sections 7 and 8? Does MahaRERA have power to transfer the project to the association of members once they approach with a plan after the project is lapsed and the builder is not taking any further action?

Anuja Gadkari, Chembur

A. You have asked three important questions and the short answers to them are, respectively, Yes, no, and yes. The first question, in short, is whether MahaRERA can revoke the registration for the re-development project under Section 7 & 8 of RERA? Section 7 empowers MahaRERA to revoke the registration granted under Section 5 if it is satisfied that the developer makes default in doing anything required by or under RERA Act, rules or regulations or the developer violates any of the terms or conditions of the approvals given by the competent authority like BMC, MHADA, SRA, etc, or if the developer is involved in any kind of unfair practice or irregularities.

MahaRERA can take this action of revocation on receipt of a complaint or on its own or on recommendation of the competent authority. For this purpose MahaRERA is required to give the developer at least 30 days’ notice in writing giving grounds on which it is proposed to revoke the registration. On receiving reply from the developer, if MahaRERA is satisfied about the default of RERA or violation of terms of the competent authority or adoption of unfair practice, it can revoke the registration granted earlier. In your case the registration has already lapsed, which makes a perfect case in law for revocation of the registration by MahaRERA.

As regards your second question, that if the DA is an obstruction for applying Sections 7 and 8? It is not. Please note: Registration with MahaRERA and existence of development agreement are two separate things. MahaRERA is empowered to revoke the registration it has granted but it cannot terminate the DA between the defaulting developer and the society. That is the prerogative of the society. Further, you will note that many developers register with MahaRERA only the ‘sale portion’ of the redevelopment project and do not register the rehab portion, whereas the DA confers rights of development of both rehab and sale portion. Hence, it will be necessary for the society to independently and validly terminate the DA. Sections 7 & 8 will not cause any obstruction. In fact, absence of termination will cause problems if the society and the new flat purchasers jointly want to appoint any new developer.

As regards your third question, whether MahaRERA has the power to transfer the project to the association of members once they approach with a plan after the project is lapsed, the answer is yes. Section 8 specifically says that in case of lapsed or revocation of registration of a project, the association of allottees shall have a first right of refusal for carrying out remaining unfinished work. However, it will be necessary for such association to satisfy MahaRERA authority that they have all necessary resources to complete the remaining work.

(Advocate Shirish V Deshpande, chairman, Mumbai Grahak Panchayat Email: shirish50@yahoo.com)

Published on: Monday, July 15, 2024, 10:18 AM IST