Supreme Court Clarifies Role of Promoters in Real Estate Projects Under RERA

Supreme Court Clarifies Role of Promoters in Real Estate Projects Under RERA

Introduction

The Supreme Court of India has disposed of a special leave petition filed by the Uttar Pradesh Real Estate Regulatory Authority (UPRERA) challenging the Allahabad High Court’s decision. The High Court had held that Larsen and Toubro (L&T) is the sole promoter of a real estate project under the Real Estate (Regulation and Development) Act, 2016, and that the landowner need not be added as a co-promoter for registration. The Supreme Court declined to interfere with this decision, while leaving the broader interpretation of the law open for future consideration.

Factual Background

The dispute arose from a real estate project where L&T was the developer and the landowner was the original owner of the land. The agreements and letters between the landowner and L&T made it clear that L&T was solely responsible for construction, sale, and marketing of the project.

Procedural Background

UPRERA had issued a notice to L&T, which led to L&T filing a writ petition before the Allahabad High Court. The High Court held that L&T was the sole promoter of the project and that the project stood deemed registered under Section 5(2) of the RERA Act. It also reasoned that since UPRERA failed to decide the registration application within thirty days, deemed registration applied by law.

Issues

1. Whether L&T is the sole promoter of the real estate project?

2. Whether the landowner need not be added as a co-promoter for registration?

3. Whether the project stood deemed registered under Section 5(2) of the RERA Act?

4. Whether such relief could have been granted in a writ petition challenging only a UPRERA notice?

Contentions of the Parties

• UPRERA's Contention: UPRERA argued that the High Court’s interpretation of the term promoter in Section 2(zk) of the Act was incorrect, that the landowner should be added as a co-promoter, and that deemed registration could not be claimed in a writ petition.
• L&T's Contention: L&T argued that it was the sole promoter of the project and that the agreements and letters between the landowner and L&T supported its position.

Reasoning and Analysis

The bench, comprising Justice B.V. Nagarathna and Justice K.V. Viswanathan, held that the agreements and letters between the landowner and L&T made it clear that L&T was solely responsible for construction, sale, and marketing of the project. Based on these facts, the Court found no reason to interfere with the High Court’s grant of deemed sanction.

At the same time, the Supreme Court clarified that it was not laying down any general interpretation of Section 2(zk) (“promoter”) or Section 5(2) (“deemed sanction”), and that these issues remain open to be considered in suitable cases. It also observed that the High Court exercised its discretion under Article 226 of the Constitution to hear the writ petition on merits and issue a detailed judgment.

Implications

This judgment has significant implications for real estate developers and landowners in India. It clarifies that, on facts, a developer may be treated as the sole promoter if agreements clearly assign them exclusive responsibility. However, since the broader interpretation of “promoter” and “deemed sanction” is still left open, future cases may further refine the legal position.

Outcome

The Supreme Court disposed of the special leave petition, upholding the Allahabad High Court’s decision. It directed UPRERA to comply with the High Court’s directions within three weeks. Importantly, the Court limited its ruling to the facts of this case, without conclusively settling the interpretation of Sections 2(zk) and 5(2).

In this case L&T was represented by Mr. Gopal Subramanium, Senior Advocate, Dr. Abhishek Manu Singhvi, Senior Advocate, and Cyril Amarchand Mangaldas Team led by Mr. Indranil Deshmukh, Partner, Mr. Raunak Dhillon, Partner, Ms. Saloni Kapadia, Partner, Ms. Aishwarya Gupta, Principal Associate, Mr. Karan Gandhi, Senior Associate and Mr. Anchit Jasuja, Associate.