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Public authority not a promoter if it decides to sell raw land: MahaRERA order

A development authority can be made a promoter along with the builder in case it is mandated to develop off-site infrastructure around the plot, MahaRERA has ruled

Vandana Ramnani @vandanaramnani1

Maharashtra's housing regulatory authority has ruled that any transaction dealing with sale of an immovable property by a public authority where permission for development is yet to be given does not come under the definition of a real estate project. In short, the public authority is not a promoter if it decides to sell raw land.

While it is true that some development authorities have been responsible for delays in granting approvals and sanctions, which in turn have led to projects breaching timelines, in this particular case, the sale transaction effected by the City and Industrial Development Corporation (Cidco), cannot be treated as a sale for the purpose of plotted development which would then come under the definition of a real estate project, the MahaRERA order has ruled.

Only if the building development of the plots acquired by CIDCO are dependent on certain off site infrastructure that has to be provided by the authority then while registering their projects with MahaRERA, the complainant, in this case MCHI-Credai, can include CIDCO as a promoter or a land owner, the order had said.


Navi Mumbai builders who are members of CREDAI-MCHI (Raigad) had filed a complaint with MahaRera in which they had said that Cidco must be made a promoter under Rera because it is a public authority and MCHI members are allottees of plots owned by Cidco.

Rajesh Prajapati, PR Committee Chairman, CREDAI MCHI, said that Credai MCHI (Raigad) is exploring with the advocates whether this order of MahaRera to make Cidco co-promoter will be sufficient for protecting the interest of flat buyers. Many times it is seen that Cidco does not fulfill its obligations like provisioning for infrastructure and delays the project which negatively affects the flat buyers for which builders are held responsible.

"In case we get an opinion that flat buyers may not get relief, we may explore the option of going for an appeal against this order of MahaRera," he told Moneycontrol.

Girija Balakrishnan, a Mumbai-based advocate clarifies that on a mere sale of a plot, the original owner ceases to have any right or interest in the land parcel. The position would have been different if there was no transfer of title. In case there is no transfer of title then both the original owners and the developers would be treated as co-promoters.

However, the issues raised by MCHI warrant a debate. Delays in approvals and sanctions are the root cause for the malaise in the sector. This has led to a vicious circle that affects both the developer and the home buyer. We need transparency and time bound approvals to fix this issue, she added.

As per the RERA Act, a promoter is defined as a person who constructs or converts a building into apartments or develops a plot for sale.

Mere sale of raw land does not qualify an authority to be a promoter. Only if it does development work such as construction of roads, lays sewerage lines and then sells the developed plots, does it qualify under the definition of a promoter under RERA. Land is only the raw material, says Abhay Upadhayay, convenor, Fight for RERA.

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First Published on Jun 25, 2019 12:38 pm
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