Maharashtra Real Estate Appellate Tribunal rules Trade Centre Building in Mumbai's BKC must register under RERA

In a landmark order that could impact around 700 buildings in Mumbai with partial Occupation Certificates (OCs), the Maharashtra Real Estate Appellate Tribunal (MREAT) has directed Mumbai-based real estate developer Wadhwa Constructions to register its commercial project, Trade Centre, with MahaRERA.

Located in Mumbai's most expensive commercial district, Bandra Kurla Complex (BKC), the project was granted a partial OC in 2008, which the tribunal termed an ongoing project.

The ruling comes 15 years after the completion of the Grade A commercial building. In its April 2 judgment, the tribunal clarified that even buildings with partial OCs must be registered with RERA, overturning a previous decision by MahaRERA that exempted them.

Additionally, the tribunal imposed a ₹5 lakh penalty on the developer and ordered the project to be registered with MahaRERA within 60 days. The Trade Centre building received a partial OC in October 2008.

According to media reports, over 20,000 buildings in Mumbai have full Occupation Certificates (OCs), and more than 700 buildings have partial OCs.

The issue dates back to May 2017, when the Real Estate (Regulation and Development) Act was enacted. Under this, MahaRERA mandated the registration of all new and ongoing projects to market and sell units.

More about the case

Over a decade ago, Wadhwa Constructions sold office spaces in a 10-story commercial building called Trade Centre in BKC. The project received a partial OC in September 2008 for the 3rd to 10th floors and in October 2008 for the ground floor and part of the first floor.

In February 2017, a society was formed, and the developer committed to securing the OC for the remaining portion of the first and second floors. However, as the developer allegedly failed to obtain the OC, The Trade Centre Premises Co. Society Ltd. filed a complaint with the Maharashtra Real Estate Regulatory Authority (MahaRERA), seeking a direction for the developer to hand over the full Occupation Certificate for the building.

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MahaRERA proceedings

The developer contested the complaint filed by the society with MahaRERA.

The developer argued it had not applied for MahaRERA registration because the project was completed according to the approved building plan long before introducing the Real Estate (Regulation and Development) Act of 2016. According to the developer, the building has been continuously occupied by society's members since its completion.

In November 2020, MahaRERA issued an order stating that it was clear the developer had physically completed the building before the commencement of the Act. As a result, the project had become an occupied building, and no directions could be issued to the developer to register the project as an ongoing project under the provisions of the Act.

MahaRERA order in favour of developer challenged in Tribunal

In response, the society challenged the MahaRERA order in the tribunal (MREAT), seeking its quashing and urging the tribunal to issue a ruling in the interest of justice based on the facts of the case.

The society argued before the tribunal that MahaRERA had erred in stating that registration was unnecessary once construction was complete. The society contended that registration under the Act is mandatory if a full Occupation Certificate has not been obtained.

"As such, registration under the Act is necessary if the full-occupation certificate has not been obtained. Section 3 of the Act specifically stipulates that a project would not be required to be registered only if it has been completed well before the date of commencement of the Act. Therefore, the building must be registered even if the respondent has obtained part OC to fulfil! Its legal obligations inter alia to secure full OC," the society informed the tribunal.

On the other hand, the developer attributed the inability to get full OC to a third party and argued that the project's registration under the Real Estate Regulatory Act was not warranted.

"Section 3 of the Act is not applicable in the instant appeal because it stipulates prior registration of the subject project under the Act only when there is no pending construction and/or sale in respect of the subject project," the developer argued.

The developer further argued that the unit purchasers have been in continuous possession, occupation, and use of their respective units since 2008. Therefore, the appellant (society) appeared to be taking undue advantage of the provisions of the Act by filing the complaint after a delay of 13 years, despite the construction being completed and the society of unit purchasers having already been duly formed. The developer claimed that the complaint was filed with the intent to harass the developer.

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Maharashtra Tribunal's order

After considering the discussions, the tribunal concluded that the subject building qualifies as an ongoing real estate project. Therefore, the respondent is statutorily and mandatorily required to register the project by applying within three months from the commencement of the Act, i.e., by May 1, 2017, under Sections 3 and 4 of the Act.

In its judgment, the tribunal stated that the developer is liable for penalties under Section 59 of the Act for failing to register and Section 60 for contravening Section 4.

The tribunal further noted that, despite being given multiple opportunities, the developer failed to provide a satisfactory explanation for not filing the application or registering the project.

The tribunal also ruled against MahaRERA, stating that it is also MahaRERA's statutory duty to ensure these compliances, whether by taking Suo Moto cognizance or otherwise, under the provisions of Section 34 of the Act.

Therefore, the tribunal added that MahaRERA's findings in para 6 of the impugned order “do not comply with the Act's provisions, suffer from infirmities, are legally unsustainable, and are liable to be modified.”

In light of the above, the tribunal issued an order directing the developer to register the project with MahaRERA within 60 days by applying the regulatory authority. Additionally, the tribunal imposed a penalty of ₹5 lakh on the developer, instructing the payment to be deposited within 60 days with the tribunal.

The tribunal also granted the society the liberty to raise its grievance regarding the non-receipt of the full Occupation/Completion Certificate for the subject building at an appropriate time before the competent authority.

In an email response to HT.com, Wadhwa Constructions said, "We are in the process of challenging the order. We remain committed to protecting the rights and interests of all stakeholders.”

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Impact of the MREAT order on other Mumbai Buildings

Legal experts have described MREAT's judgment as one that could have far-reaching implications for many buildings in Mumbai. Trupti Daphtary, an advocate and solicitor based in Mumbai, noted that the ruling could impact numerous buildings in the city that hold partial Occupation Certificates.

"It will be important to monitor the consequences of this ruling, especially if the developer decides to appeal to the Hon'ble Bombay High Court," Daphtary added.