The Bombay High Court has broadened the definition of 'promoter' under the Real Estate (Regulatory and Development) Act (RERA), now including co-promoters. This groundbreaking ruling holds co-promoters jointly liable for refunds, alongside primary promoters, in cases of project delays, even if they haven't directly received funds from flat buyers. The verdict, delivered on February 26, has stirred the real estate industry, particularly impacting redevelopment projects in Mumbai. Stemming from an appeal filed by Wadhwa Group Housing Pvt Ltd, the decision clarifies the obligations of co-developers and investors, marking a significant legal precedent in RERA enforcement.
The Bombay High Court (HC) has expanded the definition of 'promoter' under the Real Estate (Regulatory and Development) Act (RERA), stating that it now encompasses co-promoters as well. This ruling implies that even individuals who have not directly received funds from flat buyers can be held jointly liable for refunds, along with interest, in case of project delays.
The HC's verdict, delivered on February 26, has sent shockwaves through the real estate industry, addressing a crucial legal question that has been closely monitored by many stakeholders. Legal experts suggest that this decision will have far-reaching implications, particularly for redevelopment projects in Mumbai.
The case arose from an appeal filed by Wadhwa Group Housing Pvt Ltd against a previous order by the RERA appellate tribunal in October 2022, which had held them responsible for refunding a flat buyer's payment. The buyer, Vijay Choksi, had sought a refund of Rs 1.2 crore from SSS Escatics, a co-developer in an SRA project in Andheri, after the project failed to meet its deadline in 2019.
Wadhwa Group Housing argued that since Choksi's payment was made to SSS Escatics and not directly to them, they should not be held liable for the refund. However, the HC rejected this argument, emphasizing that the definition of 'promoter' under RERA is broad enough to include not only those who directly receive payments from buyers but also those who benefit from the project as investors or co-developers.
Justice S V Marne, presiding over the case, focused on the legal issue of whether a promoter who has not received payments from allottees can still be held liable for refunds under RERA. The court's ruling clarifies that the manner in which funds are received by promoters is irrelevant in determining joint liability.
This landmark decision is expected to have significant implications for the real estate sector, particularly in clarifying the obligations of co-promoters and investors in construction projects under RERA regulations.
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