The Maharashtra Real Estate Appellate Tribunal (MREAT) ruled against the City and Industrial Development Corporation (CIDCO) in a case filed by the Maharashtra Chamber of Housing Industry (MCHI), Raigad, concerning CIDCO's land sale practices. The Tribunal determined that CIDCO's land allotment schemes constitute real estate projects under the Real Estate (Regulation and Development) Act of 2016, requiring it to register as a promoter. The ruling reinforces the importance of compliance and transparency in land development practices, mandating that CIDCO adhere to the Act's provisions for current and future projects, ensuring protection for stakeholders and prospective buyers.
In the realm of real estate development, regulatory compliance is essential to safeguard the rights of all stakeholders involved. This principle was put to the test in a recent appeal heard by the Maharashtra Real Estate Appellate Tribunal (MREAT), filed by the Maharashtra Chamber of Housing Industry (MCHI), Raigad, against a decision made by the Maharashtra Real Estate Regulatory Authority (MahaRERA) in June 2019. The core of the dispute centered around land sale transactions conducted by the City and Industrial Development Corporation (CIDCO), and whether these transactions constituted a real estate project as defined by law, given that development permissions were still pending from the relevant planning authority.
The origin of the complaint dates back to October 2018 when MCHI raised concerns that CIDCO had failed to register as a project promoter before initiating a scheme for the allotment and sale of land plots through tenders. MCHI insisted that its members, as allottees, possessed rights under the Real Estate (Regulation and Development) Act of 2016, which designated CIDCO as a promoter within the legal framework.
After careful deliberation, the MREAT concluded that CIDCO's involvement in the scheme constituted development work as defined under Section 2(t) of the Real Estate Act. The Tribunal determined that the various development activities undertaken by CIDCO to transform raw land into approved layout plots qualified as real estate projects. Given that these activities were executed by a recognized planning and development authority, the selling or marketing of any or all of these plots established it as a legitimate real estate project.
Furthermore, the MREAT ruled that CIDCO indisputably held the designation of a promoter (Town Development) for its work, which involved subdividing land for sale. The Tribunal found the arguments presented by CIDCO's legal counsel to lack legal merit under Section 2(zk)(ii) of the Act, emphasizing that when the seller of the plots differs from the developer, both parties must be regarded as promoters under the law.
The ruling asserted that CIDCO must adhere to the provisions of the Real Estate (Regulation and Development) Act, converting its schemes-both past and future-into compliant, registered projects before proceeding with the sale of any plots. This obligation stands irrespective of whether the dealings align with the Maharashtra Regional and Town Planning Act (MRTP) or the Non-Agricultural Land Development Rules (NMDLR), and regardless of CIDCO's responsibilities in delivering on-site or off-site infrastructure.
The MREAT's ruling highlights the imperative for CIDCO to uphold the regulations set forth in the Real Estate (Regulation and Development) Act of 2016 and to formally register itself as a promoter for its town development schemes. This decision accentuates the importance of transparency and regulatory adherence in land sales and development practices, ultimately paving the way for better protection of stakeholders and prospective buyers under the law. The implications of this ruling may reverberate throughout the industry, fostering a climate of compliance and accountability that other developers may emulate to prevent encountering similar legal disputes, thereby contributing to a more structured and trustworthy real estate market in the region.
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