Tamil Nadu RERA Holds JDA Disputes Outside RERA Jurisdiction, Rejects Bennett Property's Complaint

The Tamil Nadu Real Estate Regulatory Authority (TNRERA) on 15 July held that disputes arising from Joint Development Agreements (JDAs), their cancellation, business transfer arrangements and consequential construction agreements do not fall within its jurisdiction where they essentially concern commercial, monetary and development rights. Such disputes must be adjudicated by the Commercial Courts.

Adjudicating Officer Tmt. N. Uma Maheswari dismissed the complaint filed by Bennett Property Holdings Company Ltd. against PNB Techwaves Pvt. Ltd., PNB Exporters Pvt. Ltd., PNB Realty Ltd. and another company as not maintainable for want of jurisdiction. She observed:

“Even this construction agreement upon which the complainant relies is an outcome of a pure monetary transaction and any dispute arising out of the breaches are triable by the Commercial courts only and not this Forum. Entering upon into a construction agreement alone as a consequence of either a business contract or money transaction within the Companies is to be tried by the Commercial courts which are the exclusive courts to try such matters.”

The dispute arose from three Joint Development Agreements (JDAs) executed on 6 November 2012 between Bennett Property Holdings Company Ltd. and PNB Techwaves Pvt. Ltd., PNB Exporters Pvt. Ltd. and PNB Realty Ltd. for developing the Aura Boulevard, Aura Skyline and Aura Grande projects.

Bennett claimed that it paid substantial consideration under the JDAs and incurred around Rs. 10.50 crore towards obtaining statutory approvals. It further stated that it transferred its development business and related rights to its subsidiary, Artha Real Estate Corporation Ltd. (ARECL), under a Business Transfer Agreement dated 6 August 2014.

Following a slowdown in the real estate market, the parties cancelled the JDAs. Bennett claimed that the parties subsequently entered into a construction agreement on 27 February 2018, under which construction had to be completed within 48 months with a further 12 month grace period.

Alleging that the project remained incomplete even after 27 February 2023, Bennett approached TNRERA under Section 31 of the RERA Act (which allows an aggrieved person to file a complaint before the Regulatory Authority). Bennett contended that the construction agreement brought the dispute within the scope of the RERA Act.

The PNB companies opposed the complaint, arguing that the dispute arose from commercial arrangements involving development rights, financial settlements and contractual obligations between corporate entities. They contended that the Commercial Court was the appropriate forum to adjudicate the dispute.

The Authority accepted the objection and held that the nature of the dispute must be determined from the underlying transactions rather than the nomenclature of the construction agreement. It found that the construction agreement was only a consequence of the earlier JDAs, the Business Transfer Agreement and the parties' commercial settlement.

Further, it held that the timelines, payment obligations and allocation of built up and saleable areas under the agreements regulated commercial liabilities and development rights, rather than creating rights under the RERA Act. Moreover, the Authority held that Bennett sought to enforce commercial rights arising from contractual arrangements rather than statutory rights available under the RERA Act. Relying on an earlier decision of the Tamil Nadu Real Estate Appellate Tribunal, it reiterated that Section 31 could not be invoked in such circumstances.

It also held that the dispute related to sharing of percentage between the parties, which made the dispute purely commercial. It observed:

“On these backgrounds, this Forum finds that this complaint is not maintainable before this Forum only, for a single reason that there is a construction agreement in between the parties. More particularly a reading of the backgrounds filed by the complainant's side, there is a dispute about sharing of percentage, which is purely commercial.”

Accordingly, the TNRERA rejected the complaint as not maintainable and left the parties to pursue their remedies before the competent Commercial Court.

Appearances for complainant (M/s Bennett Property Holdings Company Ltd.): Tatva Legal, Chennai.