Maharashtra REAT Bars RERA Relief For Rehabilitation Flat Disputes In Redevelopment Projects

The Maharashtra Real Estate Appellate Tribunal (REAT) on 4 May held that existing housing society members cannot seek relief under the Real Estate (Regulation and Development) Act, 2016 in disputes relating to rehabilitation flats allotted in redevelopment projects, as such disputes arise from the development agreement executed between the society and the developer.

Members Shriram R. Jagtap (J) and Dr. Rajagopal Devara (A) dismissed an appeal filed by Sudhir Vitthal Mulay against Rui Universal Realties and clarified that in redevelopment projects, RERA applies only to the sale component and not to rehabilitation flats allotted to existing society members. The Tribunal observed:

“Accordingly, the transactions and contractual obligations are directly governed by the said development agreement. Any dispute arising therefrom must be enforced either individually or through the Society, in accordance with the terms of said development agreement. The said development agreement cannot be enforced under the provisions of RERA Act, 2016.”

The dispute arose from the redevelopment of Padmarekha CHS Ltd. at Kothrud, Pune. On 14 February 2019, the society executed a development agreement with Rui Universal Realties granting redevelopment rights over the property.

Under the agreement, Mulay received Flat No. 302 admeasuring 518.60 sq. ft. and one car parking space in lieu of his old premises. The agreement also gave him an option to purchase an additional 100 sq. ft. area at the rate of Rs. 10,250 per sq. ft.

Mulay paid Rs. 10,25,000 on 2 August 2021 towards the additional area. Rui Universal Realties refused to accept the payment, stating that Mulay had failed to exercise the option within one month from the project's RERA registration, as required under the development agreement.

Mulay then approached MahaRERA alleging violation of Sections 3 and 14(1)(2) of the Act. He argued that Rui Universal Realties had altered the sanctioned plan without his written consent, reduced the carpet area of the rehabilitation flat by removing a toilet and open terrace, and failed to complete formalities relating to the additional area.

On 4 July 2023, MahaRERA dismissed the complaint as not maintainable. Mulay challenged that order before the Appellate Tribunal.

Before the Tribunal, Mulay argued that the project fell within RERA because the developer sold flats to third parties and also sold additional area to existing members. Rui Universal Realties argued that Mulay belonged to the rehabilitation component of the project and that the development agreement governed the parties' relationship.

The Bench accepted the developer's submissions. It observed that RERA regulates direct sale transactions between promoters and flat purchasers and does not cover disputes arising from rehabilitation arrangements in redevelopment projects.

It held that Mulay derived his rights from the development agreement executed between the society and Rui Universal Realties and not from an independent agreement for sale. It therefore held that he did not qualify as an “allottee” under Section 2(d) of the Act.

Further, the Tribunal also found that Mulay had failed to exercise the option to purchase the additional area within the prescribed timeline. It therefore upheld Rui Universal Realties' decision to reject the delayed payment.

Accordingly, the REAT dismissed the appeal and upheld the MahaRERA order holding the complaint non-maintainable.

Appearances for petitioner (Sudhir Vitthal Mulay): Sudhir Vitthal Mulay, appearing in person.

Appearances for respondent (Rui Universal Realties): Advocate Nilesh Borate.