RERA Jurisdiction Over Completed Projects With Pending Defect Liability Period: A Comprehensive Legal Analysis

RERA Jurisdiction Over Completed Projects With Pending Defect Liability Period: A Comprehensive Legal Analysis

The question of whether the Real Estate (Regulation and Development) Authority (RERA) has jurisdiction over completed projects with pending defect liability periods presents a nuanced legal position. Based on authoritative judicial precedents and statutory interpretation, RERA generally does not have jurisdiction over projects that have already received completion certificates, even if the 5-year defect liability period under Section 14(3) of the RERA Act, 2016 is still ongoing. However, Section 14(3) creates a specific statutory obligation on promoters for a 5-year defect liability period from the date of handing over possession, which survives even after project completion.¹

LEGAL FRAMEWORK UNDER RERA ACT, 2016

I.                Registration Requirements and Ongoing Projects

Section 3(1) of the RERA Act, 2016 mandates that no promoter shall advertise, market, book, sell or offer for sale any plot, apartment or building without registering the real estate project with RERA. The first proviso to Section 3(1) specifically states that projects which are ongoing on the date of commencement of the Act and for which completion certificates have not been issued must be registered within three months.²

The Supreme Court in M/s. Newtech Promoters and Developers Pvt. Ltd. v. State of UP & Ors. unequivocally held that "all ongoing projects that commence prior to the Act and in respect to which completion certificate has not been issued are covered under the Act". The Court further clarified that "the projects already completed or to which the completion certificate has been granted are not under its fold".³

II.            Definition of Completion Certificate vs. Occupancy Certificate

A critical distinction exists between completion certificate and occupancy certificate:

• Section 2(q) - "Completion Certificate" means the completion certificate, or such other certificate by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications.⁴
• Section 2(zf) - "Occupancy Certificate" means the occupancy certificate, or such other certificate by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws.⁵

The Supreme Court in Newtech Promoters clarified that the intent of the Act hinges on whether or not a project has received a completion certificate on the date of commencement of the Act, not merely an occupancy certificate.

III.           Section 14(3): Defect Liability Period

Section 14(3) of the RERA Act provides a crucial obligation that extends beyond project completion:

"In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter's failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act."⁶

This provision creates a statutory defect liability period of 5 years from the date of handing over possession, not from the date of completion certificate.⁷

JUDICIAL INTERPRETATION

1. Supreme Court Position on Retroactive Application

In the landmark judgment of M/s. Newtech Promoters and Developers Pvt. Ltd. v. State of UP & Ors., the Supreme Court held that:

• The RERA Act is retroactive in character, not retrospective.
• "From the scheme of the Act 2016, its application is retroactive in character and it can safely be observed that the projects already completed or to which the completion certificate has been granted are not under its fold and therefore, vested or accrued rights, if any, in no manner are affected."
• The Act applies to ongoing projects to prospectively follow the mandate of the Act after getting them registered under Section 3.

2. Karnataka RERA Decision: Lack of Jurisdiction Over Completed Projects

The Karnataka Real Estate Regulatory Authority in Creative Elegance Apartments Owners Association v. Creative Environs Builders & Developers (India) Private Limited (Complaint No: 00563/2023) explicitly held that:

• RERA does not have jurisdiction over projects that have obtained occupancy certificates and where completion certificates have been issued.⁸
• The Authority rejected a homebuyers' association complaint seeking completion of pending work, stating that the project having obtained occupancy certificate on July 14, 2017 (more than 6 years before filing of complaint), would not fall under the definition of an "ongoing project".⁹
• Furthermore, the Authority held that the defect liability period of 5 years stipulated under Section 14(3) of RERA had also expired, thus denying jurisdiction.¹⁰

The Karnataka High Court in M/s Cambian Technologies Private Ltd. vs. Karnataka Real Estate Regulatory Authority (Writ Petition No. 18843/2022) held that projects already completed or those with a granted completion certificate do not fall under the jurisdiction of RERA. ¹¹

3. Definition of "Ongoing Project"

Various State RERA Rules define "ongoing project" with specific exclusions. For instance, the Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016 defines "Ongoing project" under Rule 2(h) as:

"a project where development is going on and for which completion certificate has not been issued but excludes such projects which fulfil any of the following criteria on the date of notification of these rules: where services have been handed over to the Local Authority for maintenance; where common areas and facilities have been handed over to the Association for the Residents' Welfare Association for maintenance; where all development work have been completed and sale/lease deeds of sixty percent of the apartment/houses/plots have been executed; where all development works have been completed and application has been filed with the competent authority for issue of completion certificate."¹²

ANALYSIS: JURISDICTION OVER DEFECT LIABILITY CLAIMS

A.    Distinction Between Project Jurisdiction and Defect Liability Obligations

The legal position reveals an important distinction:

1. General RERA Jurisdiction: Once a completion certificate is issued, the project is no longer under RERA's regulatory jurisdiction for matters relating to project completion, possession, refunds, or general compliance.¹³
2. Defect Liability Obligations under Section 14(3): This creates a specific statutory obligation on promoters that runs for 5 years from the date of handing over possession, independent of whether the project has received completion certificate.¹⁴

B.    Jurisdictional Overlap and Remedy Options

For completed projects with pending defect liability periods, homebuyers face a jurisdictional challenge:

1. RERA Authority Jurisdiction: Sections 18 and 19 vest jurisdiction with RERA for refund of amounts and interest. Section 31 provides for filing complaints before RERA. However, these provisions apply primarily to ongoing projects.
2. Adjudicating Officer Jurisdiction: Section 71 carves out the jurisdiction of the adjudicating officer to adjudge compensation under Sections 12, 14, 18 and 19 after holding inquiry.
3. Section 14(3) Claims: The provision empowers allottees to receive "appropriate compensation in the manner as provided under this Act" for defect liability breaches.

C.    The Jurisdictional Conundrum

The legal position creates a conundrum:

1. If RERA has no jurisdiction over completed projects (projects with completion certificates), can it entertain complaints under Section 14(3) for defects discovered within 5 years?¹⁵
2. Section 14(3) is part of Chapter III of the Act titled "Functions and Duties of Promoters" and creates obligations that extend 5 years from possession.¹⁶
3. The defect liability obligation under Section 14(3) survives project completion but the forum for enforcement becomes unclear once completion certificate is issued.¹⁷

D.    Practical Approach Adopted by RERA Authorities

Different state RERA authorities have adopted varying approaches:

Restrictive Approach (Karnataka RERA): The Karnataka RERA in the Creative Elegance Apartments case took a strict view that once completion certificate is issued and the 5-year defect liability period expires, RERA has no jurisdiction.¹⁸

Liberal Approach (Some Other States): Some RERA authorities have entertained Section 14(3) claims even for completed projects, reasoning that the statutory defect liability obligation survives completion.¹⁹

ALTERNATIVE REMEDIES

1. Consumer Protection Act

In Imperia Structures Ltd. v. Anil Patni (2020) 10 SCC 783, the Supreme Court held that remedies under the Consumer Protection Act are additional remedies and the availability of an alternate remedy under RERA is no bar to filing complaints under the Consumer Protection Act.²⁰

In Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor it has been further clarified that "Section 79 of the RERA Act does not in any way bar the Commission or Forum under the provisions of the CP Act to entertain any complaint."[21]

2. Civil Courts

Section 79 of the RERA Act provides that the Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force. This preserves the jurisdiction of civil courts for claims arising from breach of contractual obligations, including defect liability.²²

EXCEPTIONS AND NUANCES

1. Projects with Occupancy Certificate but No Completion Certificate

There may be situations where a project has received occupancy certificates for individual units but has not obtained a completion certificate for the entire project. In such cases:

• The project remains an "ongoing project" under RERA.²³
• RERA retains jurisdiction over the project.
• Complaints under Section 14(3) can be entertained.

2. Computation of 5-Year Period

The 5-year defect liability period under Section 14(3) runs from "the date of handing over possession", not from:

• Date of allotment letter
• Date of agreement for sale
• Date of occupancy certificate
• Date of completion certificate

This means that even if a completion certificate is issued, the defect liability period continues to run for individual allottees based on when they actually took possession.

3. Structural Defects vs. Other Defects

Section 14(3) covers:

• Structural defects
• Defects in workmanship
• Defects in quality
• Defects in provision of services
• Any other obligations of the promoter as per the agreement for sale

All these categories of defects are covered within the 5-year period, creating comprehensive protection for allottees.²⁴

4. Projects Completed Before RERA Came Into Force

For projects where completion certificates were obtained before May 1, 2016 (when RERA came into force):

• These projects are completely outside RERA's jurisdiction.
• The defect liability provisions of Section 14(3) do not apply.
• Allottees must rely on contractual remedies, Consumer Protection Act, or civil courts.

RECENT DEVELOPMENTS

1. Trend Towards Narrow Interpretation of Jurisdiction

Recent orders from various state RERA authorities show a trend towards taking a narrow view of jurisdiction over completed projects. The emphasis is on the "completion certificate" as the decisive factor determining RERA's jurisdiction.²⁵

2. Emphasis on Alternative Remedies

RERA authorities are increasingly directing allottees to approach Consumer Forums or civil courts for defect liability claims in completed projects, citing lack of jurisdiction.

3. Calls for Clarification

Legal commentators and practitioners have called for legislative clarification on whether Section 14(3) defect liability obligations can be enforced through RERA after completion certificates are issued.²⁶

CONCLUSION

The interplay between project completion, RERA jurisdiction, and defect liability obligations remains an evolving area of real estate law in India. Until definitive judicial or legislative clarification emerges, homebuyers and promoters must navigate this complex terrain with careful consideration of all available remedies and forums.

Footnotes

^{1 [2021] 9 S.C.R. 909, M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. v. STATE OF UP & ORS. ETC.}

^{2 ibid.}

^{3 Supra at 1.}

^{4  THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016}

^{5  ibid.}

^{6  Supra at 1.}

^{7 COMPLAINT NO. 315/2024/TGRERA, Ketrish Landmark Flat Owners Mutually Aided Cooperative Maintenance Society Ltd. versus M/s. Ketrish Developers.}

^{8  COMPLAINT NO. 00563/2023, Creative Elegance Apartments Owners Association v. Creative Environs Builders & Developers (India) Private Limited}

^{9  ibid.}

^{10 Supra at 8.}

^{11 Writ Petition No. 18843 of 2022, M/s Cambian Technologies Private Ltd. vs. Karnataka Real Estate Regulatory Authority}

^{12 Uttar Pradesh Real Estate (Regulation and Development) Rules, 2016}

^{13 Supra at 1.}

^{14 Supra at 1.}

^{15 Karnataka RERA Rejects Homebuyers Association's Complaint Seeking Completion Of Pending Work, Cites Lack Of Jurisdiction, Live Law, Oct 3, 2024, https://www.livelaw.in/consumer-cases/karnataka-rera-rejects-homebuyers-associations-complaint-seeking-completion-of-pending-work-cites-lack-of-jurisdiction-271420}

^{16  Supra at 4.}

^{17 Tamil Nadu Real Estate (Regulation and Development) Rules, 2017}

^{18 Supra at 15.}

^{19 Supra at 7.}

^{20 Imperia Structures Ltd. v. Anil Patni (2020) 10 SCC 783}

^{21 [2022] 5 S.C.R. 590, EXPERION DEVELOPERS PVT. LTD. v. SUSHMA ASHOK SHIROOR}

^{22 Ibid.}

^{23 Supra at 1.}

^{24 Defect Liability Period under RERA, Sept 08, 2018, TaxGuru, Defect Liability Period Under RERA}

^{25 Supra at 15.}

^{26 RECORDS OF DISCUSSION OF THE THIRD REGIONAL WORKSHOP (NORTHERN REGION) OF REAL ESTATE (REGULATION AND DEVELOPMENT) ACT- ‘RERA, ROD of Third Regional Workshop on RERA(3).pdf}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.