Emails Can Constitute Valid Written Consent For Project Alterations Under RERA: Karnataka REAT

The Karnataka Real Estate Appellate Tribunal (K-REAT) has recently held that authenticated email communications can constitute valid written consent for changes to a real estate project.

The consent must be from at least two-thirds of the allottees, as required under Section 14(2)(ii) of the Real Estate (Regulation and Development) Act, 2016.

A coram comprising Chairperson Justice J.M. Khazi and Judicial Member Santhosh Kumar Shetty N. held that the RERA Act and Rules do not prescribe a particular mode, such as a physical signature, for recording such consent.

The tribunal ruled, “Section 14(2)(ii) of the Act mandates only the previous consent in writing of not less than two-thirds of the Allottees and does not prescribe any particular mode for recording such consent. By virtue of sections 4 & 5 of the Information Technology Act, 2000, electronic records and electronic communications receive statutory recognition.”

The tribunal further held that authenticated emails can satisfy the written-consent requirement where the promoter establishes that the allottees voluntarily approved the proposed alterations.

“Consequently, where the promoter establishes that the concerned Allottees, through their authenticated email communications, voluntarily accorded their approval to the proposed alterations, such email communications constitute valid written consent for the purposes of Sec.14(2)(ii) of the Act.”, the tribunal ruled

The ruling arose from a dispute concerning Sobha Ltd.'s Sobha Sentosa residential project in Bengaluru. Homebuyers Abhishek Senapati and Avishruti Senapati alleged that the developer made unauthorised changes after they purchased their units.

The Bruhat Bengaluru Mahanagara Palike sanctioned the project on March 4, 2022. The allottees later alleged that Sobha replaced the French windows in bedrooms 2 and 3 with double-partition ventilator windows and changed features such as the Super Tree and Gazebo.

They approached Karnataka RERA seeking rectification of the changes, construction of a permanent home-office wall and registration of the agreement for sale. The authority partly allowed their complaint and directed Sobha to execute and register the agreement within 30 days.

Sobha challenged the registration direction before K-REAT, while the allottees filed a separate appeal seeking additional reliefs.

Before the tribunal, the allottees argued that consent obtained through emails or telephonic messages could not satisfy the requirement of written consent under the RERA Act

They contended that such communications amounted to a marketing survey or an informal expression of preference rather than the written consent required under Section 14.

They also alleged that the consent relied upon by Sobha was post-facto and could not cure the alleged violation retrospectively.

Sobha contended that the modifications followed a series of meetings, deliberations and email exchanges with purchasers. It submitted that 345 allottees responded approving the proposed changes, while 94 did not respond. Sobha construed 439 purchasers as having no objection, which it said amounted to 82% of the allottees.

The project comprised 533 allottees. The tribunal found that Sobha had obtained consent from more than the required two-thirds before implementing the modifications.

It also held that the fact that some individual allottees disputed having given consent did not, by itself, invalidate the consent obtained from the requisite statutory majority.

The tribunal rejected the contention that the consent was merely post-facto. It observed that the modifications were carried out after a series of deliberations, meetings, and representations from the allottees and after obtaining the consent of at least two-thirds of them.

The allottees had also sought relief relating to the home-office wall and other project features. The tribunal held that certain reliefs claimed in the appeal had not been sought or founded on pleadings before the authority and could not be raised for the first time in the appeal.

It consequently found that the allottees had failed to establish that the authority's refusal to grant the remaining reliefs was contrary to law or warranted interference.

On the separate issue of registration of the agreement for sale, Sobha argued that the agreement had been executed in 2022-23 and could not be presented for registration after the period prescribed under Section 23 of the Registration Act, 1908. It also submitted that it was ready and willing to execute and register the sale deed.

The tribunal accepted Sobha's challenge to the direction requiring registration of the agreement for sale. It noted that Section 23 requires documents, other than wills, to be presented for registration within four months of execution.

It observed, “It is thus clear that, in view of the statutory bar contained in section 23 of the Registration Act, the Promoter cannot compel the Sub-Registrar to register an Agreement to Sell, if it is presented beyond the period prescribed under the said Act.”

The tribunal also observed that an agreement for sale is merely an executory contract and does not itself create any right, title or interest in immovable property. A registered sale deed is the operative instrument for transferring title.

It therefore held that where the promoter is ready and willing to execute a registered sale deed conveying title, insisting on prior registration of the agreement for sale serves no substantive purpose.

The K-REAT allowed Sobha's appeal, set aside the direction requiring registration of the agreement for sale and dismissed the allottees' appeal seeking additional reliefs.

For Sobha Ltd.: Senior Advocate Vikram Huilgal, for Advocate Vinayaka S. Pandit.

For Karnataka RERA: Advocate K.V. Girish.

For Abhishek Senapati and Avishruti Senapati: Advocate Anil Kalgi.