# Air Force Naval Housing Board Air Force Station, New Delhi & Ors v. U.P. Real Estate Regulatory Authority Regional Office, G.B. Nagar & Anr

- **Citation:** (2022) 5 ILRA 920
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-04-12
- **Case number:** Rera Appeal No. 1 of 2022
- **Bench:** Rohit Ranjan Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/air-force-naval-housing-board-air-force-station-new-delhi-ors-v-u-p-real-estate-48611
- **Pages:** 25

## Headnote

(A) Civil Law - Real Estate (Regulation
and Development) Act, 2016 - Sections
2(zk) , 2(zg),4,4(2) ,4(2)(l)(D) ,43(5)
,44,58 & 84 - appeal - Uttar Pradesh Real
Estate
Regulatory
Authority
-
The
Societies Registration Act, 1860 - Section3
- Uttar Pradesh Real Estate (Regulation
and Development) Rules, 2016 - Rule 5 -
The
Real
Estate
(Regulation
and
Development) Bill, 2013 - Section 2(zf)
,38(5) , The Consumer Protection Act,
1986 - Section 2(m) ,The Real Estate
(Regulation and Development) Bill, 2015 -
Section 2(zk) - 'promoter' - The General
Clauses Act (10 of 1897) - Section 3(42) ,
The Income Tax Act (43 of 1961) - Section
2(31) , The Standards of Weights and
Measures Act, (60 of 1976) - Finance Act
(No.2) (21 of 1998) - Section 87 (k) ,
Competition Act, 2002 - Section 2(l) , The
Prevention
of
Money-Laundering
Act,
2002 - Section 2(s) - "person" -
appellants bound to comply the statutory
provision of Section 43(5) of the Act, 2016
- pre-deposit, as envisaged under Section
43(5) of Act, 2016, in no circumstances
can be said to be onerous, or in violation
of
Article
14
or
19(1)(g)
of
the
Constitution of India - law is settled as far
as mandatory compliance of Section 43(5)
of Act, 2016 is concerned in view of the
judgment of Apex Court in the case of M/s
Newtech Promoters and Developers Pvt.
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
921
Ltd. vs. State of U.P. and others.(Para -
78,79,81)

Appellants (welfare organization) formed society
- providing affordable houses to the serving and
retired Air Force and Naval personnel - on ''no
profit no loss' basis - under-subscription of
project - scheme diluted and flats are sold to
Army personnel, Coast Guard, Para military
personnel, Central and State Government
employees - delay in completion of project -
some allottees approached RERA - awarded
interest on their deposited amount - some
cases refund of deposited amount with interest
was awarded - Appeal filed before the Appellate
Tribunal under section 44 - appellant not
complied provisions of Section 43(5) of the Act,
2016 and not deposited the balance amount -
appeal dismissed - ground - non compliance of
Section 43(5) of the Act, 2016 & appellant not
being a promoter is not required to comply
condition of predeposit - hence the present
appeal.(Para -2,8,77)

HELD:-Appellants working in real estate
sector
and
their
project
having
been
registered after enforcement of Act, 2016,
comes under the purview of ''promoter', as
defined under Section 2(zk) of Act, 2016, and
necessary compliance of pre-deposit, as
enshrined under Section 43(5) of Act, 2016,
has to be made before the Tribunal before
entertainment of their appeal. No case for
interference is made out in the orders
impugned. (Para - 81,82 )

Appeal dismissed. (E-7)

List of Cases cited:-

## Text

_Characters 0–39,760 of 83,638. This is a partial read: ask again with offset=39760 for what follows._

920 INDIAN LAW REPORTS ALLAHABAD SERIES
charges or into the correctness of the
findings recorded by the disciplinary
authority or the appellate authority as the
case may be.

17. From the aforesaid legal
positions, it is clear that in some very rare
and exceptional cases the High Court can
quash a charge-sheet or show-cause
notice if it is found to be wholly without
jurisdiction or for some other reason if it
is wholly illegal. However, ordinarily the
High Court should not interfere in such a
matter.

18. In view of the aforesaid settled
legal positions of the Apex Court which
have been referred to above, this Court
does not find any illegality or infirmity in
the impugned charge-sheet dated 24th
August, 2021 passed by respondent no.4
so as to warrant any interference by this
Court in exercise of powers under Article
226 of the Constitution of India.

19. The present writ petition being
devoid of merits and is accordingly
dismissed.

20. However, it is provided that the
departmental inquiry be initiated against
the petitioner and brought to its logical
end, strictly in accordance with law, at
the earliest possible preferably within a
period of three months from the date of
production of a certified copy of this
order before the disciplinary authority.
----------
(2022)05ILR A920
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 12.04.2022

BEFORE

THE HON'BLE ROHIT RANJAN AGARWAL, J.
Rera Appeal No. 1 of 2022
connected with other cases

Air Force Naval Housing Board Air Force
Station, New Delhi & Ors. ...Petitioner
Versus
U.P. Real Estate Regulatory Authority
Regional Office, G.B. Nagar & Anr.
 ...Respondents

Counsel for the Petitioner:
Sri Ashish Kumar Singh, Sri Ajay Kumar
Singh

Counsel for the Respondents:
Sri Wasim Masood, Sri Nar Singh, Sri Anil
Tiwari

(A) Civil Law - Real Estate (Regulation
and Development) Act, 2016 - Sections
2(zk) , 2(zg),4,4(2) ,4(2)(l)(D) ,43(5)
,44,58 & 84 - appeal - Uttar Pradesh Real
Estate
Regulatory
Authority
-
The
Societies Registration Act, 1860 - Section3
- Uttar Pradesh Real Estate (Regulation
and Development) Rules, 2016 - Rule 5 -
The
Real
Estate
(Regulation
and
Development) Bill, 2013 - Section 2(zf)
,38(5) , The Consumer Protection Act,
1986 - Section 2(m) ,The Real Estate
(Regulation and Development) Bill, 2015 -
Section 2(zk) - 'promoter' - The General
Clauses Act (10 of 1897) - Section 3(42) ,
The Income Tax Act (43 of 1961) - Section
2(31) , The Standards of Weights and
Measures Act, (60 of 1976) - Finance Act
(No.2) (21 of 1998) - Section 87 (k) ,
Competition Act, 2002 - Section 2(l) , The
Prevention
of
Money-Laundering
Act,
2002 - Section 2(s) - "person" -
appellants bound to comply the statutory
provision of Section 43(5) of the Act, 2016
- pre-deposit, as envisaged under Section
43(5) of Act, 2016, in no circumstances
can be said to be onerous, or in violation
of
Article
14
or
19(1)(g)
of
the
Constitution of India - law is settled as far
as mandatory compliance of Section 43(5)
of Act, 2016 is concerned in view of the
judgment of Apex Court in the case of M/s
Newtech Promoters and Developers Pvt.
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
921
Ltd. vs. State of U.P. and others.(Para -
78,79,81)

Appellants (welfare organization) formed society
- providing affordable houses to the serving and
retired Air Force and Naval personnel - on ''no
profit no loss' basis - under-subscription of
project - scheme diluted and flats are sold to
Army personnel, Coast Guard, Para military
personnel, Central and State Government
employees - delay in completion of project -
some allottees approached RERA - awarded
interest on their deposited amount - some
cases refund of deposited amount with interest
was awarded - Appeal filed before the Appellate
Tribunal under section 44 - appellant not
complied provisions of Section 43(5) of the Act,
2016 and not deposited the balance amount -
appeal dismissed - ground - non compliance of
Section 43(5) of the Act, 2016 & appellant not
being a promoter is not required to comply
condition of predeposit - hence the present
appeal.(Para -2,8,77)

HELD:-Appellants working in real estate
sector
and
their
project
having
been
registered after enforcement of Act, 2016,
comes under the purview of ''promoter', as
defined under Section 2(zk) of Act, 2016, and
necessary compliance of pre-deposit, as
enshrined under Section 43(5) of Act, 2016,
has to be made before the Tribunal before
entertainment of their appeal. No case for
interference is made out in the orders
impugned. (Para - 81,82 )

Appeal dismissed. (E-7)

List of Cases cited:-

1. Neelkamal Realtors Suburban Pvt. Ltd. & anr.
Vs U.O.I. & ors., 2017 SCC OnLine Bom 9302

2. M/s Newtech Promoters & Developers Pvt.
Ltd. Vs St. of U.P. & ors., 2021 SCC OnLine SC
1044

3. Air Force N.H.B. Vs Mohit Anand, S.A.
Defective No.237 of 2019

4. Air Force N.H.B. Vs Satish Kumar Sharma ,
Appeal Defective No. 233 of 2020
(Delivered by Hon'ble Rohit Ranjan
Agarwal, J.)

1. This bunch of appeals filed under
Section 58 of Real Estate (Regulation and
Development)
Act,
2016
(hereinafter
referred to as "Act, 2016") assails the
orders passed by Uttar Pradesh Real Estate
Appellate Tribunal (hereinafter referred to
as "Appellate Tribunal") as well as order
passed by Uttar Pradesh Real Estate
Regulatory Authority (hereinafter referred
to as "Regulatory Authority") directing the
appellant to pay interest @ MCLR + 1 on
the amount paid by the allottee from
01.7.2012 till obtaining of CC/offer of
possession, whichever is later.

2. The present appeal has been
preferred on the ground that the appeal
filed before the Appellate Tribunal was
dismissed on the ground of non compliance
of Section 43(5) of the Act, 2016 and
appellant not being a promoter is not
required to comply condition of predeposit.

3. The present appeal was admitted by
this Court on 22.12.2021 on the following
question of law:

"Whether in the context of the
objects clause and the Memorandum of
Association of the present appellant and in
the context of the activities engaged by it,
the appellant is included in the meaning of
the word"Promoter" as defined under
Section 2(zk) of the U.P. Real Estate
(Regulation and Development) Act 2016 as
may enforce on the appellant the condition
of pre deposit the entire disputed amount
for the purpose of maintaining the appeal
under Section 43(5) of the Act against the
order dated 10.4.2019 passed by the Real
Estate Regulatory Authority."
922 INDIAN LAW REPORTS ALLAHABAD SERIES

4. Counsel for both the sides have
jointly agreed to argue the matter on the
question of law framed herein above, thus
with the consent of counsel for the parties,
all these connected appeals are being heard
and decided today. Leading appeal being
RERA Appeal No.1 of 2022 wherein
challenge has been made to the order dated
10.04.2019 passed by Regulatory Authority
and the order dated 28.02.2020 passed by
Appellate Tribunal.

5. Facts in brief are that the appellant
before this Court known as Air Force Naval
Housing Board (hereinafter referred to as
"AFNHB") is a welfare organization
formed with the efforts of Senior Officers
of Air Force and Navy with an object to
provide suitable and affordable houses to
the Air Force and Naval personnel on ''no
profit no loss' basis. The appellant formed a
Society by serving senior officers of Air
Force and Navy which was registered on
16.11.1979 under the Societies Registration
Act, 1860 (hereinafter referred to as "Act,
1860").
The
Board
of
Directors
is
comprised of serving officials of Air Force
and Indian Navy on the ex officio basis.
AFNHB, Meerut is a project launched in
the year 2008. The land was allotted by
Meerut Development Authority. Thereafter
lay out was approved and contract for civil
work for initial 5 towers were awarded on
05.05.2010. In the said project, 545 flats
was to be constructed.

6. Act, 2016 came into force from
01.05.2016 after receiving presidential
assent on 25.03.2016 and was made
applicable in the State of U.P. as well. On
the date of enforcement of the Act, 2016,
the project launched by the appellant was
going on, hence its registration under
proviso to Section 3 was mandatory and the
appellant registered the same with the
RERA on 15.08.2017.

7. According to appellant, out of 545
flats, 523 flats have been sold and 418
allottees have already taken possession.
Twenty-two flats are lying vacant. As there
was delay in completion of project, some of
the allottees approached RERA and were
awarded interest on their deposited amount
and in some cases refund of deposited
amount with interest was awarded. RERA
on 10.04.2019 on complaint being made by
the contesting respondents, who are the
allottees, passed following order :

"1. भवपक्षी को आदेभर्त भकया जाता
है भक वह जुलाई 2019 तक, यभद कोई देय
बकाया है, तो उसे प्राप् कर, कब्जा देना
सुभनभित करे और देय स्टाम्प र्ुल्क प्राप् कर
य भनट का पूंजीकरण कराना सुभनभित करें।

2.
भवपक्षी,
भर्कायतकताश
को
1.7.2012 (प्रत्येक भर्कायत कताशगण के
अनुबि के अनुसार) से ओ.सी./सी.सी. अथवा
कब्जा आफर भकये जाने, जो िी बाद में हो तक,
MCLR+1 प्रभतर्त ब्याज सभहत अदा करना
सुभनभित करें। साथ ही यह िी स्पष्ट भकया जाता
है भक ब्याज की यह धनराभर् अूंभतम िुगतान की
धनराभर् में समायोभजत की जायेगी। यभद ब्याज
की धनराभर् देय धनराभर् से अभधक है, तो वह
भनयमानुसार भर्कायतकताश को वापस की जाये।

3. भवपक्षी, भजन भर्कायतकताशगण के
टॉवर अप णश हैं, उन्हे भर्कायतकताशगण की
सहमभत से तैयार टॉवर में बुभकूंग भकये गये
क्षेत्रफल के नजदीक, बुभकूंग के समय तय दरोूं
पर य भनट उपलब्ध कराना सुभनभित करे।

4. भवपक्षी, यभद भर्कायतकताशगण को
जुलाई 2019 तक कब्जा देने में असफल रहते
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
923
हैं, तो भर्कायतकताशगण की धनराभर्, जमा
करने की भतभथ से वास्तभवक िुगतान की भतभथ
तक MCLR+1 प्रभतर्त की दर से ब्याज सभहत
दो भकस्तोूं में अदा करना सुभनभित करें। भवपक्षी
50 प्रभतर्त धनराभर् भदनाूंक 31.7.2019 से 45
भदन के अन्दर व र्ेष, 50 प्रभतर्त धनराभर्
भदनाूंक 31.3.2020 अथवा य भनट भवक्रय होने, जो
िी पहले हो, तक अदा करना सुभनभित करे।

5. आदेर् की एक एक प्रभत सम्बूंभधत
पत्रावभलयोूं पर रखी जाये एवूं इस आदेर् में
प्रभतपाभदत भसद्धान्त के अनुरूप धनराभर् व
ब्याज की प्रत्येक मामले में गणना की जायेगी।

6. इस आदेर् का उल्लूंघन उ०प्र०ि -
सम्पदा
(भवभनयमन
तथा
भवकास)
अभधभनयम,2016 की धारा-63 तथा अन्य सुसूंगत
प्राभवधानोूं के अन्तगशत दूंडनीय होगा। आदेर्
पोटशल पर अपलोड भकया जाये।"

8. Against the said order, appellant
filed appeal before Appellate Tribunal
under Section 44 of the Act, 2016.
Accordingly to appellant, they deposited
Rs.6,33,000/- on 24.10.2019. The Appellant
Tribunal on 24.10.2019 passed an order
taking on record the said amount and
further directed the appellant to file
calculation sheet for total compensation
amount certified by Chartered Accountant
and fixed 02.12.2019. On 28.01.2020, the
Appellate
Tribunal
recorded
its
dissatisfaction to the effect that appellant
has not complied provisions of Section
43(5) of the Act, 2016 and not deposited
the balance amount. As the balance amount
was
not
deposited,
the
appeal
was
dismissed on 28.02.2020 hence the present
appeal.

9. Sri Ashish Kumar Singh, learned
counsel appearing in all the connected
appeals filed by the same appellant
submitted that AFNHB is a welfare
organisation comprising of senior officers
of the Air Force and Navy for providing
affordable houses to the serving and retired
Air Force and Naval personnel on no profit
no loss basis. The Board of Management
comprises of officers of Air Force and
Navy as ex-officio members. According to
him, memorandum of Association describes
its object and welfare status of the appellant
Society. He further submitted that the
appellant liaises with Central and State
Government
authorities
for
acquiring
suitable area for developing housing
colonies. These housing projects are self
financed, which was developed on the
contribution made by the allottees. These
housing projects are developed for specific
class and not for general public to earn
profit. In case of under-subscription of the
project, the Board of Management has
power to dilute the scheme to Army, Coast
Guard, Para military personnel, central and
State Government employees so that the
project is not stalled in midway due to poor
subscription. However, according to him,
the Master Brochure of 2012 makes
provisions for meeting the expenditure on
the staff, Board and project office and 6%
project cost is charged which includes 1.5%
of reserve fund for the project.

10. According to him, the present
project, which was conceptualized and
initiated in the year 2008 was an ongoing
project
when
the
Act,
2016
was
implemented after the presidential assent in
the State, and the appellant got the same
registered with the RERA. Due to the delay
caused by the Contractor, the project was
delayed. According to Sri Singh, to
ascertain
real
meaning
of
the
term
''promoter', Section 2(zk) has to be read
with Section 4(2)(l)(D) of the Act, 2016.
924 INDIAN LAW REPORTS ALLAHABAD SERIES
The ''promoter' necessarily means the acts
to be done by a person or cause to be done
by him with the intent and purpose of
selling of flats/plots/houses, as the case
may be. According to him, from reading of
Section 4(2)(l)(D), it transpires that 70% of
the amount realized from real estate project
from the allottees is to be deposited in an
escrow account to cover the cost of
construction including cost of land with
stipulation that the same shall be used only
for that purpose.

11. The true intention of the aforesaid
Section finds support from reading of Rule
5 of Uttar Pradesh Real Estate (Regulation
and Development) Rules, 2016 (hereinafter
referred to as "Rules, 2016") framed by
virtue of exercise of power conferred under
Section 84 of Act, 2016.

12. According to him, the said
provision and rules only speaks about the
promoters spending the amount from
escrow account which would be to the tune
of total 70% of the collection right from the
procurement of land till the finish of
construction and does not speak anything
about rest 30% of the amount and its
utilisation by promoter. According to him,
the balance 30% of the amount and its
utilization by promoter is the profit enjoyed
by the promoter.

13. Thus, in the present scenario as
the appellant is an organisation running on
no profit no loss basis, there is no
generation of 30% of this amount, which is
enjoyed by the organisation as profit.
According to him, this provision was
introduced by the legislature to curb unjust
enrichment of the builder and reduce fraud
and delay alongwith to curb the high
transaction cost. He has placed reliance
upon the decision of Bombay High Court in
the case of Neelkamal Realtors Suburban
Pvt. Ltd. And Anr. vs. Union of India and
Ors. 2017 SCC OnLine Bom 9302.
According to him, the Court had held that
as the promoter has enjoyed 30% of the
amount, therefore, in case of any financial
liability, he is also under an obligation to
pay the awarded amount/ compensation/
interest from the said 30%.

14. He then contended that the
appellant do not have any such funds as per
Section 4(2)(l)(D) of the Act, 2016 read
with Rule 5 of Rules, 2016. According to
him, the appellant do not fall within the
definition of promoter as per Section 2(zk)
stricto senso as they do not have any profit
motive to the extent of 30% rather the
appellant board is a zero profit welfare
organisation.

15. According to him, the appellant
organisation
do
not
fall
within
the
definition of ''promoter' and thus provisions
contained under Section 43(5) of the Act,
2016 are not attracted and are not
applicable upon the appellant. He then
contended that the primary intention of the
legislature while enacting Act, 2016 was to
curb and put restriction on the unjust
enrichment of builders and colonizers.

16. Since appellant organisation do
not fall under the said categories of builders
or colonizer, they are not attracted under
the definition of promoter under Section
2(zk) of Act, 2016. He lastly contended that
the Act, 2016 takes into consideration for
registration of two types of project, one
after implementation of the Act, 2016 and
those which were ongoing when the Act
was implemented. In the case in hand, it
was ongoing project as such 70% of the
amount,
as
mandated
under
Section
4(2)(l)(D) of Act, 2016 was not deposited
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
925
as the project was in an advanced stage and
thus the Tribunal was wrong in rejecting
the appeal on the ground that mandatory
provisions of Section 43(5) of Act, 2016
was
not
complied
with.
In
fact,
Rs.6,33,000/- was deposited in the appeal
under consideration and flats amounting to
Rs.6.23 crores have already been kept as
security and further account of organisation
having 2.56 crores has already been
attached, the appeal should have been heard
on merits rather being dismissed on the
ground of non compliance of mandatory
deposit.

17. Sri Anil Tiwari, learned counsel
for the Regulatory Authority at the very
outset placed before the Court Real Estate
(Regulation and Development) Bill, 2013
(hereinafter referred to as "Bill, 2013") as it
was introduced in the Rajya Sabha. In
Section 2(zf) of the Bill, 2013 the word
''promoter' was defined. According to him,
when the bill was passed and enacted, the
words
"also
includes
a
buyer
who
purchases in bulk for resale" was removed.
Relevant definition of word ''promoter', as
defined in the bill is extracted as under :

"(zf) ''''promoter'' means,--

(i) a person who constructs or causes
to be constructed an independent building or a
building consisting of apartments, or converts
an existing building or a part thereof into
apartments, for the purpose of selling all or
some of the apartments to other persons and
includes his assignees and also includes a
buyer who purchases in bulk for resale; or

(ii) a person who develops a colony
for the purpose of selling to other persons all
or some of the plots, whether with or without
structures thereon; or

(iii) any development authority or
any other public body in respect of allottees
of--

(a) buildings or apartments, as the
case may be, constructed by such authority or
body on lands owned by them or placed at
their disposal by the Government; or

(b) plots owned by such authority
or body or placed at their disposal by the
Government, for the purpose of selling all or
some of the apartments or plots; or

(iv) an apex State level cooperative housing finance society and a
primary co-operative housing society which
constructs apartments or buildings for its
Members or in respect of the allottees of such
apartments or buildings; or

(v) any other person who acts
himself as a builder, colonizer, contractor,
developer, estate developer or by any other
name or claims to be acting as the holder of a
power of attorney from the owner of the land
on which the building or apartment is
constructed or colony is developed for sale;
or

(vi) such other person who
constructs any building or apartment for
sale to the general public.

Explanation.--For the purposes of
this
clause,
where
the
person
who
constructs or converts a building into
apartments or develops a colony for sale
and the persons who sells apartments or
plots are different persons, both of them
shall be deemed to be the promoters."

18. He then placed Section 38 of the
Bill, 2013, which was in regard to
926 INDIAN LAW REPORTS ALLAHABAD SERIES
provision of appeal before the Real Estate
Appellate Tribunal. Sub-section (5) of
Section 38 of the Bill, 2013 is extracted
hereas under :

"38.
(1)
The
appropriate
Government or the competent authority or
any person aggrieved by any direction or
order or decision of the Authority or the
adjudicating officer may prefer an appeal
to the Appellate Tribunal.

(2) Every appeal made under
sub-section (1) shall be preferred within a
period of sixty days from the date on which
a copy of the direction or order or decision
made by the Authority is received by the
appropriate Government or the competent
authority or the aggrieved person and it
shall be in such form, and accompanied by
such fee, as may be prescribed:

Provided
that
the
Appellate
Tribunal may entertain any appeal after the
expiry of sixty days if it is satisfied that
there was sufficient cause for not filing it
within that period.

(3) On receipt of an appeal under
sub-section (1), the Appellate Tribunal may
after giving the parties an opportunity of
being heard, pass such orders as it thinks fit.

(4) The Appellate Tribunal shall
send a copy of every order made by it to the
parties and to the Authority or the
adjudicating officer, as the case may be.

(5) The appeal preferred under
sub-section (1), shall be dealt with by it as
expeditiously as possible and endeavour
shall be made by it to dispose of the appeal
within a period of ninety days from the date
of receipt of appeal:

Provided that where any such
appeal could not be disposed of within the
said period of ninety days, the Appellate
Tribunal shall record its reasons in writing
for not disposing of the appeal within that
period.

(6) The Appellate Tribunal may,
for the purpose of examining the legality or
propriety or correctness of any order or
decision
of
the
Authority
or
the
adjudicating officer, on its own motion or
otherwise, call for the records relevant to
disposing of such appeal and make such
orders as it thinks fit."

19. Sri Tiwari then placed the
statement of object and reason, why the bill
was introduced by the Central Government.
The reason for introduction of the Bill,
2013 was that previously the real estate
sector was largely unregulated and only the
Consumer Protection Act, 1986 took care
of the buyers. The said Act was not
adequate to address all concerns of buyers
and promoters in the sector. The statement
of object and reasons, as stated in the Bill,
2013 is extracted hereas under:

"The real estate sector plays a
catalytic role in fulfilling the need and
demand for housing and infrastructure in
the country. While this sector has grown
significantly in recent years, it has been
largely unregulated, with absence of
professionalism and standardisation and
lack of adequate consumer protection.
Though the Consumer Protection Act, 1986
is available as a forum to the buyers in the
real estate market, the recourse is only
curative and is not adequate to address all
the concerns of buyers and promoters in
that sector. The lack of standardisation has
been a constraint to the healthy and orderly
growth of industry. Therefore, the need for
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
927
regulating the sector has been emphasised
in various forums.

2. In view of the above, it
becomes necessary to have a Central
legislation,
namely,
the
Real
Estate
(Regulation and Development) Bill, 2013 in
the
interests
of
effective
consumer
protection, uniformity and standardisation
of business practices and transactions in
the real estate sector. The proposed Bill
provides for the establishment of the Real
Estate Regulatory Authority (the Authority)
for regulation and promotion of real estate
sector and to ensure sale of plot, apartment
or building, as the case may be, in an
efficient and transparent manner and to
protect the interest of consumers in real
estate sector and establish the Real Estate
Appellate Tribunal to hear appeals from the
decisions, directions or orders of the
Authority.

3. The proposed Bill will ensure
greater accountability towards consumers,
and significantly reduce frauds and delays
as also the current high transaction costs.
It attempts to balance the interests of
consumers and promoters by imposing
certain responsibilities on both. It seeks to
establish symmetry of information between
the promoter and purchaser, transparency
of contractual conditions, set minimum
standards of accountability and a fasttrack
dispute
resolution
mechanism.
The
proposed Bill will induct professionalism
and standardisation in the sector, thus
paving the way for accelerated growth and
investments in the long run."

20. He then placed the draft report of
the Standing Committee of the Lok Sabha
dated 12th February, 2014 on the Real
Estate (Regulation and Development) Bill,
2013 which states that as the demand for
housing has increased manifold, taking
advantage of situation, the private players
have taken over the real estate sector with
no concern for the consumers. Though
availability of loan both through private
and public banks have become easier, the
high rate of interest and the higher EMI has
posed additional financial burden on the
people with the largely unregulated Real
Estate and Housing Sector. Consequently,
the consumers are unable to procure
complete
information
or
enforce
accountability
against
builders
and
developers in the absence of an effective
mechanism in place. Thus, it was felt badly
for establishing an oversight mechanism to
enforce accountability of Real Estate Sector
and providing adjudication machinery for
speedy dispute redressal.

21. The draft report further provides
that the Bill impose an obligation upon the
promoter not to book, sell or offer for sale,
or invite persons to purchase any plot,
apartment or building, as the case may be,
in
any
real
estate
project
without
registering the real estate project with the
Authority. In the Bill, it was provided that
where the area of land proposed to be
developed exceeds one thousand square
meters or number of apartments proposed
to be developed exceed twelve, registration
of project is compulsory. Further, the bill
provided to impose an obligation upon the
promoter to impose liability to pay such
compensation to the allottees, in the
manner as provided under the proposed
legislation, in case he fails to discharge any
obligations imposed on him under the
proposed legislation. The Bill further
provided for punishment and penalty for
contravention of the provisions of the
proposed
legislation
and
for
non
compliance of orders of Authority or
Appellate Tribunal.
928 INDIAN LAW REPORTS ALLAHABAD SERIES

22. He then invited the attention of
the Court to the Draft Committee report on
the bill, which states that the Committee
had sought public opinion through a press
release
and
analysed
the
memoranda/suggestions
received
from
various stakeholders/experts such as CII,
FICCI and Associations working in the
field of real estate on various provisions of
the Bill. He then placed Chapter II of the
Draft
Report
of
the
Parliamentary
Committee
wherein
the
Ministry
of
Housing and Urban Poverty Alleviation
submitted a reply and requested for
reconsidering the deletion of the words "in
a real estate project" in the definition of
"real
estate
agent".
The
Committee
recorded that such a deletion was desirable
as it would enable to regulate the role of
estate agents in case of sale of secondary
market properties also. Chapter III of the
Draft Parliamentary Committee report
states that small projects have been
exempted from the purview of Bill where
the area of the land is less than 1000 sq
meter or where a building does not have
more than 12 flats. An apprehension has
been raised that large number of small
housing projects will escape the purview of
this law on inquiry about the apprehension,
the Ministry of Urban Housing and Poverty
Alleviation submitted that, initial draft of
the Bill had earlier provided for registration
of properties above 4000 sq.m. only.
However, on suggestions and consultation
with stakeholders, it was modified to
provide for 1000 sq.m. or 12 apartments.

23. The Parliamentary Committee
further noted the requirement of the
promoter for enclosing certain documents
with the application for registering the
project. The Committee took note of the
fact that Builder/Developer initially invests
huge amount for procuring the land either
by purchase or development. Moreover,
huge amount are being paid towards
payment of fees to the authorities for
sanctioning and other statutory clearances.
Hence, instead of restricting 30% of
amounts to be used, the clause amended to
50% or more. Ministry of Urban Housing
and Poverty alleviation suggested that limit
of 70% is only indicative to cover "the cost
of construction" and the percentage can
further be reduced by the State/UT
Government through a notification.

24. The Committee further noted on
the reply furnished by the Ministry that
30% of project cost includes land and
approval cost and the developer/promoter
shall be allowed to withdraw 30% upfront
as it may already have been incurred by
him towards land cost, relevant approval
etc. Cities such as Delhi and Mumbai, the
land costs could be much higher in
comparison to smaller cities. Hence,
flexibility has been given to the States to
determine the percentage of project cost.

25. Sri Tiwari then placed before the
Court the report of Select Committee on the
Bill, 2013 wherein the deliberations and
general observation of the Committee are
recorded. He tried to impress upon the fact
that when the bill was introduced, a series
of deliberations had taken place with
different stakeholders, which were divided
into 5 categories. The relevant extract of
the report of the Select Committee is
extracted hereas under :

"5. The Select Committee as per
its decision taken in its first meeting on the
12th
June,
2015
visited
Kolkata,
Bengaluru, Mumbai and Shimla with a
view to have wider consultations with
various stakeholders on the provisions on
the Bill. The Committee also interacted
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
929
with various stakeholders in Delhi. For the
sake of convenience, the stakeholders were
divided into following five categories:-

(i)
Consumers
and
Resident
Welfare Associations;

(ii) Promoters/Builders and Real
Estate Agents;

(iii) Banks and other financial
institutions including RBI and NHB ;

(iv)
Representatives
of
State
Government concerned with real estate /
housing
including
Development
Authorities;

(v) Legal firms, NGOs and
others."

26.

According
to
him,
the
Government while introducing the Bill had
tried to take suggestion from people across
the Board who were in some way or the
other related or linked to the Real Estate
Sector.

27. In regard to Clause 38 of the Bill,
the observation and recommendation of the
Committee was that while filing an appeal
against an order of penalty, imposed by the
authority before the Appellate Tribunal, the
promoter was required to deposit 30%
amount and other liabilities. Relevant
recommendation is extracted hereas under :

"The Committee recommends
that the promoter, while preferring an
appeal to the Appellate Tribunal, should
deposit with the Tribunal at least 30% of
the penalty amount and other liabilities,
if any, imposed on it by Authority so that
the realization of the penalty imposed on
the promoter is not delayed for a long
time."

28. Sri Tiwari then placed the
amendments and omission suggested by
the Select Committee to the Real Estate
(Regulation and Development) Bill, 2015
(hereinafter referred to as "Bill of 2015").
According to him the term ''promoter'
was defined in Section 2(zk) of the Bill
of 2015 wherein the Select Committee
indicated its amendment and omission.
Relevant definition is extracted hereas
under:

"(zk) "promoter" means,--

(i) a person who constructs or
causes to be constructed an independent
building or a building consisting of
apartments, or converts an existing
building
or
a
part
thereof
into
apartments, for the purpose of selling all
or some of the apartments to other
persons and includes his assignees (***);
or

(ii) a person who develops (***)
land into a project, whether or not the
person also constructs structures on any
of the plots, for the purpose of selling to
other persons all or some of the plots in
the said project, whether with or without
structures thereon; and

(iii) any development authority
or any other public body in respect of
allottes of--

(a) buildings or apartments, as
the case may be, constructed by such
authority or body on lands owned by them
or placed at their disposal by the
Government; and
930 INDIAN LAW REPORTS ALLAHABAD SERIES

(b) plots owned by such authority
or body or placed at their disposal by the
Government,

for the purpose of selling all or
some of the apartments or plots, or

(iv) an apex State level cooperative housing finance society and a
primary cooperative housing society which
constructs apartments or buildings for its
Members or in respect of the allottees of
such apartments or buildings; or

(v) any other person who acts
himself as a builder, colonizer, contractor,
developer, estate developer or by an other
name or claims to be acting as the holder
of a power of attorney from the owner of
the land on which the building or
apartment is constructed or (***) plot is
developed for sale; and

(vi) such other persons who
constructs any building or apartment for
sale to the general public.

Explanation:--For the purposes of
this clause, where the person who constructs
or converts a building into apartments or
develops a (***) plot for sale and the persons
who sells apartments or plots are different
persons, both of them shall be deemed to be
the promoters and shall be jointly liable as
such for the functions and responsibilities
specified under this Act or the rules and
regulations made thereunder."

29. According to Sri Tiwari, after great
consultation and deliberation, Parliament
enacted Act No.16 of 2016 wherein the word
''promoter' has been defined in Section 2(zk) is
a person who constructs or causes to be
constructed an independent building or a
building consisting of apartments, or converts
an existing building or a part thereof into
apartments, for the purpose of selling all or
some part of the apartments to other persons
and includes his assignees. It also includes a
person who develops land into a project,
whether or not the person constructs structures
on any plots, for the purpose of selling to other
persons all or some plots in the said project.
The definition is extracted hereas under :

"(zk) "promoter" means,--

(i) a person who constructs or
causes to be constructed an independent
building
or
a
building
consisting
of
apartments, or converts an existing building or
a part thereof into apartments, for the purpose
of selling all or some of the apartments to
other persons and includes his assignees; or

(ii) a person who develops land into
a project, whether or not the person also
constructs structures on any of the plots, for
the purpose of selling to other persons all or
some of the plots in the said project, whether
with or without structures thereon; or

(iii) any development authority or
any other public body in respect of allottees of-
-

(a) buildings or apartments, as the
case may be, constructed by such authority or
body on lands owned by them or placed at
their disposal by the Government; or

(b) plots owned by such authority
or body or placed at their disposal by the
Government, for the purpose of selling all
or some of the apartments or plots; or

(iv) an apex State level cooperative housing finance society and a
5 All. Air Force Naval Housing Board Air Force Station, New Delhi & Ors. Vs. U.P. Real Estate
 Regulatory Authority Regional Officer, G.B. Nagar & Anr.
931
primary
co-operative
housing
society
which constructs apartments or buildings
for its Members or in respect of the
allottees of such apartments or buildings;
or

(v) any other person who acts
himself as a builder, coloniser, contractor,
developer, estate developer or by any other
name or claims to be acting as the holder
of a power of attorney from the owner of
the land on which the building or
apartment is constructed or plot is
developed for sale; or

(vi) such other person who
constructs any building or apartment for
sale to the general public.

Explanation.--For the purposes of
this
clause,
where
the
person
who
constructs or converts a building into
apartments or develops a plot for sale and
the person who sells apartments or plots
are different person, both of them shall be
deemed to be the promoters and shall be
jointly liable as such for the functions and
responsibilities specified under this Act or
the
rules
and
regulations
made
thereunder;"

30. Further Section 2(n) defines "real
estate project", which is extracted hereas
under :

"(zn) "real estate project" means
the development of a building or a building
consisting of apartments, or converting an
existing building or a part thereof into
apartments, or the development of land into
plots or apartments, as the case may be, for
the purpose of selling all or some of the
said apartments or plots or building, as the
case may be, and includes the common
areas,
the
development
works,
all
improvements and structures thereon, and
all easement, rights and appurtenances
belonging thereto."

31. According to him, reading of
definition ''promoter' with ''real estate
project' would mean that any person
developing a building or a building
consisting of apartments, or converting an
existing building or a part thereof into
apartments, or development of land into
plots or apartments, as the case may be, for
the purpose of selling all or some of said
apartments or plots or building, as the case
may be, by any person would include a
promoter developing a real state project.

32. Section 3 takes care of registration
of real estate project with the Authority.
Proviso
to
Section
3
provides
for
registration of ongoing projects on the date
commencement of the Act, 2016.

33. Thus, the Act takes care of both
types of project which are launched
subsequent to the enactment of Act, 2016
and those which are already ongoing,
leaving no room for any person carrying
out the activity of development of land,
constructing of apartments or building, as
defined under the Act, 2016 but not to
register the same.

34. Thus, the appellants before the Court
have launched the project in the year 2008 for
constructing apartments for its members and
their project having been registered under
proviso to Section 3 are covered in the
definition of ''promoter', which leaves no room
for any organization or association to claim
that it is out of the purview of the Act. Once
the project is registered, no promoter can
escape the provisions of the Act.
932 INDIAN LAW REPORTS ALLAHABAD SERIES

35. Further, Section 4(2)(l)(D) is a
provision to safeguard the money of the
allottees who have deposited the money
with the promoter, and it provides the
mechanism and manner in which the
money shall be used by a promoter.

36. According to him, the deposit of
70% amount in an escrow account does not
mean that 30% of the remaining amount is
the profit of the promoter. It has been only
been provided to put a safeguard on the
deposits of home buyers so that money
collected is used for purchase of land,
construction and necessary clearance fees
to be deposited with authorities. Nowhere
was the intention of the legislature to say
that 70% was the cost of project and 30%
was the profit amount of a promoter.

37.