Rajasthan RERA Holds RERA Act As Mandatory And Directs For Execution of Agreement For Sale For Property Sold By Auction By State Development Authorities
In a landmark decision, the Rajasthan Real Estate Regulatory Authority (‘RERA”) on September 22, 2020 has held that Section 13 of the Real Estate (Regulation and Development) Act, 2016 (“Act”) is mandatory in nature. A bench comprising of Chairman Shri N.C. Goel, Shri Shailendra Agarwal and Shri S.S. Sohata passed the judgment in the case of Vinod Agarwal V. Jaipur Development Authority and Another (RAJ-RERA-2020-3622).
The Authority directed the Respondents, Jaipur Development Authority and Jaipur Metro Rail Corporation, to execute an Agreement for Sale for a property sold jointly by auction. Pranjul Chopra, Advocate, appearing for the Petitioner argued that the project of the Respondents was registered with the Authority and therefore demand note of more than 10% of the sale consideration of plot raised by the Respondents without first executing and registering an agreement for sale was against Section 13 of the Act. Section 13 states that the promoter of a real estate project shall not accept amount of more than 10% of the cost of the plots as advance payment without first entering into a written agreement for sale and registering the same.
Jaipur Development Authority, was represented by CA.Mitesh Rathore, contended that it being a statutory development authority, is guided by the Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974 framed in that regard. It was further contended that the auction conditions did not stipulate any specific requirement for execution of agreement for sale and that the plot was auctioned on as-is-where-is basis. Furthermore, the Respondents had not committed for any development work to the auction purchasers.
The Petitioner countered by contending that the Act being a Central Legislation ought to prevail over the rules framed by the State Government. It was further contended that while registering with the Authority, the Respondents have promised development work in the application and advertising the RERA registration to prospective buyers indicated a promise for such developmental work.
The Rajasthan RERA concurred with the Petitioner submissions held that the respondents had submitted a draft agreement for sale at the time of application before the Authority and the auction had been conducted by announcing that the project has been registered with RERA.
“The said project was registered by RERA with clear commitment on the part of Respondent No.1 that it will abide by all the provisions of the Act and the rules and regulations made thereunder. Even a draft agreement was submitted as part of the application for registration The auction has been conducted by announcing that the project in question is a project registered with RERA and thereby informing and promising to the potential buyers that the provisions of the Act and the rules and regulations made thereunder would apply to this project and determine their relationship with Respondent No. 1 in respect of any plot purchased at the auction.
Section 13 (1) of the Act provides for an agreement for sale to be executed and registered before the promoter accepts amount exceeding 10 per cent of the total cost of the plot. This a mandatory requirement of the Act and cannot be dispensed or compromised with.”
The Authority further directed the Jaipur Development Authority to align its land disposal rules and terms and conditions of auction/allotment with the provisions of the Act.
Adv. Nipun Singhvi, RERA expert said that it is a welcome step and will bring discipline amongst State run entities. This will also ensure other authorities under State to follow suit and help the waiting allottees timely delivery.