Builder Cannot Compel Registration Of Time-Barred Agreement For Sale: Karnataka REAT

The Karnataka Real Estate Appellate Tribunal has held that a promoter cannot require the Sub-Registrar to register an Agreement for Sale presented beyond the four-month period prescribed under Section 23 of the Registration Act, 1908.

A Bench of Chairperson Justice J.M. Khazi and Judicial Member Santhosh Kumar Shetty N observed, “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 ruling came in appeals filed by Sobha Ltd and two allottees of its Sobha Sentosa project in Bengaluru.

Sobha challenged Karnataka RERA's direction to execute and register the Agreement for Sale, while the allottees sought additional reliefs, including rectification of the windows.

The homebuyers alleged that Sobha made changes to the sanctioned plan after they booked their flat. They claimed that French windows in bedrooms 2 and 3 were replaced with double-partition ventilator windows.

They also alleged that features including the Super Tree and Gazebo were removed.

The allottees alleged that the promoter demanded payments before obtaining the Occupancy Certificate and failed to register the Agreement for Sale. Karnataka RERA partly allowed their complaint and directed registration within 30 days.

Sobha argued the 2022-23 agreement was time-barred under Section 23. The tribunal noted the allottees had paid only 9.81% and held they could not insist on registration under Section 13.

It also noted that the promoter was ready to execute and register the sale deed. An Agreement for Sale is an executory contract and does not by itself create any right, title, or interest in immovable property, the tribunal observed.

Since the promoter was ready to execute a registered sale deed transferring title, the tribunal held that insisting on registration of the earlier agreement would serve no substantive purpose.

Relying on the Karnataka High Court's ruling in K.S. Chennamma and Others v. Sri K.S. Maharudrappa, the tribunal held that a party cannot compel registration of a document presented after the statutory deadline.

It also held that authenticated emails can amount to written consent under Section 14(2)(ii) of RERA. In this case, more than two-thirds of the project's 533 allottees had consented to the changes.

It held that objections by some individual allottees did not, by themselves, invalidate the statutory majority consent.

The tribunal also held that certain reliefs sought by the allottees had not been raised before Karnataka RERA and could not be introduced for the first time in the appeal.

It found no ground to interfere with the authority's refusal to grant the remaining reliefs.

The tribunal allowed Sobha's appeal, set aside the direction to execute and register the Agreement for Sale, and dismissed the allottees' appeal seeking additional reliefs.