LI Network
Published on: December 10, 2023, 10:13 PM
The Kerala High Court has clarified the penalty imposition process under the Real Estate (Regulation and Development) Act, 2016, stating that penalties for non-registration are applicable only if the promoter fails to comply with the directive to register a project within 30 days.
Justice A Badharudeen, presiding over the case, emphasized the necessity for following the principles of natural justice when invoking power under Section 59(1) of the Act.
In a nuanced ruling, the court held that if the Real Estate Regulatory Authority deems a project ongoing and requiring registration under Section 3 of the Act, it should issue an order directing the promoter to register the project within one month.
In the event of non-compliance within the specified thirty days, the Authority should, in the same order, impose penalties and instruct the payment for failing to adhere to the registration directive.
The case, filed under Section 58 of the Real Estate (Regulation and Development) Act, 2016, involved Graceland Foundation challenging an order by the Real Estate Appellate Tribunal, Ernakulam.
The Tribunal’s decision stemmed from a directive issued by the Real Estate Regulatory Authority, urging the promoter to register the “Graceland” project. Graceland Foundation Residents Welfare Association also filed a similar appeal against the same order.
The regulatory authority initiated proceedings on its own, instructing the project’s promoter to register. The Appellate Tribunal, in its decision, granted partial relief by confirming the registration but setting aside the imposed penalty.
Legal questions were raised regarding the effective dates of Act provisions and the rationale behind ordering the registration of a project completed before the authority’s establishment.
The promoter argued that registration wasn’t required as the project had obtained a completion certificate and deemed occupancy certificate, while allottees challenged the validity of these documents.
In assessing the case, the court noted a lack of clarity regarding the compliance mode with the mandate of Section 59(1) of the Act by the Kerala Real Estate Authority. Section 59(1) stipulates that if the promoter fails to register the property, a penalty of up to 10% of the project cost can be imposed.
Highlighting Section 38 of the Act, the court emphasized the Authority’s power to impose penalties or interest for contraventions by promoters, allottees, and real estate agents. It also acknowledged the need for adherence to natural justice principles and the authority’s ability to regulate its own procedures.
The court concluded that the orders issued by the Kerala Real Estate Regulatory Authority and the Real Estate Appellate Tribunal did not align with the intent and spirit of the relevant provisions.
Consequently, the appeal was dismissed in the case titled “Graceland Foundation vs Kerala Real Estate Regulatory Authority & Ors.”
