Kerala High Court P.V. Nidhish vs Sivaprakash on 30 August, 2024, if completion certificate recd . before RERA commencement, the project is not liable to be registered in RERA

                 

IN THE HIGH COURT OF KERALA AT ERNAKULAM

 

PRESENT

 

THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM

 

FRIDAY, THE 30TH DAY OF AUGUST 2024 / 8TH BHADRA, 1946

 

MSA NO. 14 OF 2024

 

AGAINST THE ORDER DATED 11.06.2024 IN REFA NO.28 OF 2023 OF KERALA

 

REAL ESTATE APPELLATE TRIBUNAL, ERNAKULAM

 

 

APPELLANTS/ADDL.RESPONDENTS 2 AND 3/LEGAL HEIRS OF 1ST RESPONDENT:

 

1        P.V. NIDHISH

AGED 54 YEARS

S/O. P.V. CHANDRAN, MANAGING PARTNER OF M/S P.V.S. BUILDERS

AND DEVELOPERS, KTC BUILDING, IN YMCA ROAD, CALICUT,

RESIDING AT KERALA KALA, AZHACHAVATTOM, POST MANKAVU,

KOZHIKODE, PIN – 673001

 

2        P.V. HEMALATHA,

AGED 80 YEARS

W/O. P.V. CHANDRAN, PARTNER, PVS BUILDERS, KTC BUILDINGS,

YMCA ROAD, KOZHIKODE, RESIDING AT KERALA KALA,

AZHACHAVATTOM, POST MANKAVU, KOZHIKODE, PIN – 673001

 

 

BY ADVS.

BIJU ABRAHAM

B.G.BHASKAR

 

 

 

 

RESPONDENT/APPELLANT/COMPLAINANT:

 

SIVAPRAKASH

AGED 64 YEARS

S/O. KRISHNAN, PRESIDENT, THE ORCHID GARDEN APARTMENT OWNERS

ASSOCIATION, RESIDING AT G4, C BLOCK, ORCHID GARDENS, P.V.S.

PARK, GOVINDAPURAM P.O., KUTHIRAVATTAM, KOZHIKODE, PIN –

673016

 

 

BY ADVS.

V.V.SURENDRAN

MSA No. 14 of 2024

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P.A.HARISH(K/000392/1991)

DONA PAUL(K/001661/2018)

 

 

 

THIS MISC. SECOND APPEAL HAVING BEEN FINALLY HEARD ON 07.08.2024,

THE COURT ON 30.08.2024 DELIVERED THE FOLLOWING:

MSA No. 14 of 2024

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2024:KER:65599

 

CR

 

 

JUDGMENT

1. The appellants are the legal heirs of the respondent in Complaint No.17/2020 of the Kerala Real Estate Regulatory Authority (‘the K-RERA’ for short).
2. The complainant is the Apartment Owners Association of the project of the respondent by name ‘Orchid Garden-PVS Park’ located at Govindapuram, Kozhikode. The Complainant/Association sought direction to the respondent to execute a registered conveyance deed in favour of the Association with respect to the undivided proportionate title in the common area in accordance with the Rules and to direct the respondent to handover all the relevant original documents in connection with the entire apartments.

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3. The main grievance of the complainant is that the project of the respondent consisted of four blocks namely, A, B, C, and D, having a total number of 64 flats in a total area of 167 cents, that the common area for the above four blocks is included in the 167 cents, but the respondent used only 126 cents for the said blocks and common area and the balance 41 cents are in the possession of the respondent and the respondent is trying to make new construction therein without handing over possession of the common area and without delivering the documents such as Building Permit, Sanctioned Plan, Deeds, Occupancy Certificate, NOC from Pollution Control Board to the complainant.
4. The respondent opposed the prayers in the complaint stating that the complaint is filed under the mistaken impression that the entire 167 cents of land owned by 2024:KER:65599 the respondent is intended for construction of the four blocks that have been built by the respondent; that, in fact, the total land was intended for construction of five blocks as can be seen from the approved plan and permit issued by the local authority; that 41 cents situated at the southern extremity is proposed for future development; that the allottees of units in the four constructed block have no right over the 41 cents which is not the part of the site of their blocks. The complainant has only the right of usage over all the common areas excluding 41 cents demarcated in the approved plan intended for future development.
5. When the complaint was pending enquiry, the K-RERA by its order dt 5.03.2020 prima facie found that the project in question is registrable under Section 3of the Real Estate (Regulation and Development) Act, 2016 (‘the RERA’ for Short) and thereupon directed the 2024:KER:65599 respondent to file an application for registration within two weeks from the date of order. The respondent filed a Statement dt. 19.03.2020 stating that the project is not an ongoing one but a finished project before coming into force of the RERA and that, therefore, the respondent is not liable for registration. The respondent was directed to produce the original Occupancy Certificate which he claimed to have obtained in the year 2009. On 16.10.2020, the respondent filed an Affidavit before the K-RERA affirming that the Occupancy Certificate was issued 12 years ago and, hence, he is not in possession of the same. The K-RERA marked the copies of the Occupancy Certificates produced by the respondent as Exts.B5 to B8. The K-RERA directed the Secretary Kozhikode Corporation to submit a Report declaring the date of issue of all the Occupancy Certificates with regard to 2024:KER:65599 four blocks of the project. The Secretary of the Kozhikode Corporation submitted Ext.X1 Report dt 06.01.2020 stating that the Corporation does not have the file relating to the Occupancy Certificates with regard to the Project. After hearing both sides and taking the evidence into consideration, the K-RERA by its order dt 15.11.2021 found that the complaint is not maintainable as the project is not an ongoing project, since the apartments were transferred to the allottees, numbered in their names and property tax was assessed and collected long before coming into force of the RERA. However, the K-RERA granted a relief in favour of the complainant that the members of the complainant in the four blocks are entitled to enjoy common amenities and facilities in the building and appurtenant land in the entire 167 cents subject to the similar rights of the flat owners.

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6. Against the said order of the K-RERA, the complainant filed an appeal as REFA No. 9/2022 and the respondent filed an appeal as REFA No. 53/2021 before the Real Estate Appellate Tribunal (‘the Tribunal’ for short). The Tribunal, by common order dt 24.05.2022, remanded the matter back to K-RERA to reconsider the following issues afresh.
7. Whether the projects in question are ongoing projects as contemplated underS. 3of the RERA along with Rule 3 of the 2018 Rules made thereunder?
8. Whether the original sanctioned plan with permits contained a provision for future development of 41 cents in the total area of 167 cents submitted for sanction?
9. Whether 41 cents left out as future development area really falls part of the 2024:KER:65599 project in question as contended by the complainant?
10. Any other matter which is relevant and appropriate for a just decision on the issues set out in the complaint?
11. After the remand, the K-RERA marked Exts.B12 and B13 on the side of the respondent, which are the copy of the Service Plan dt 21.12.2005 approved by Kozhikode Municipal Corporation and copy of the Interrogatories submitted by the respondent to the Secretary, Kozhikode Municipal Corporation through I.A No. 137/2022. Ext.X2 letter dt 11.11.2022 from the Secretary, Kozhikode Municipal Corporation was marked in which the Secretary furnished the answers to the interrogatories.
12. The K-RERA again dismissed the complaint as per order dt 20.02.2023 finding that the project is not an 2024:KER:65599 ongoing one and the same is not liable for registration under Section 3of the RERA.
13. The complainant filed REFA No.28/2023 before the Tribuanl challenging the order dt. 20.02.2023 of K- RERA. During the pendency of the appeal, the respondent died, and the additional respondents 2 and 3 were impleaded in the appeal as the legal heirs of the original respondent.
14. During the pendency of REFA No.28/2023, the complainant filed I.A No. 158/2023 for appointing an Advocate Commissioner along with an Expert Civil Engineer for the purpose of ascertaining the facts to show that the project is not complete in its construction. The Tribunal allowed the said Application as per Order dated 03.10.2023 appointing the Advocate Commissioner and Expert Civil Engineer. The respondent challenged the said Order dt 03.10.2023 2024:KER:65599 before this Court by filing MSA No. 31/2023. This Court dismissed MSA No. 31/2023 by order dt 13.11.2023 finding that the Tribunal has power to appoint an Advocate Commissioner in the appeal. The Report of the Advocate Commissioner is marked as Ext.C1, the report of the Expert Civil Engineer is marked as Ext.C2 and the Sketches appended to Ext.C2 are marked as Ext.C2(a) to C2(e).
15. The Tribunal allowed REFA No. 28/2023 as per order dt. 11.06.2024 setting aside the order of the K-RERA dt. 20.02.2023 remanding the matter back to the K- RERA with the Reports and Sketches submitted by the Commission to take a fresh decision on the following matters.
16. The K-RERA must come to a definite finding regarding the occupancy certificate and its date of issue.

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2. The K-RERA shall give opportunity to the respondent to let in convincing evidence on the material issues.
3. If necessary, on application, the K-RERA can call for files from the Kozhikode Municipal Corporation regarding the occupancy certificate or to examine the Secretary of the Kozhikode Municipal Corporation to prove the fact of issuance of occupancy certificate and its dates.
4. The K-RERA shall give opportunity to the complainant to examine the Advocate Commissioner and the Expert Engineer appointed by the Tribunal. The Commissioner and Expert Engineer shall be examined and the reports and sketches shall be marked in the same chronological order before the K-RERA as well.

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5. The respondent shall be given an opportunity to cross-examine the Advocate Commissioner and Expert Engineer.
6. The K-RERA shall legally decide whether the reports and oral evidence of the Commissioner and Expert Engineer can be acceded and acted upon to find whether the project is an ongoing one or not.
7. The K-RERA is further directed to take a final decision as directed above, within a period of three months from the date on which a copy of the order is received. The case record shall be transmitted immediately to K-RERA along with Exts.C1, C2 and C2(a) to C2(e) marked in the appeal.
8. It is the remand order dt 11.06.2024 passed by the Tribunal which is challenged in this appeal.

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13. When this Miscellaneous Second Appeal came up for admission, the learned counsel for the appellant Mr.B.G.Bhasker submitted that the appellant is aggrieved by the decision of the Tribunal in Point No.ii. In Point No.ii, the Tribunal considered whether the Commission Reports and Sketches can be accepted in evidence. The Tribunal found that the Commissioner and Expert Engineer were appointed by the Tribunal since the complainant has got a genuine case that the project is not finished. On the basis of such finding the Tribunal directed the K-RERA to examine the Advocate Commissioner and Expert to mark the Reports and Sketches and to decide whether the reports and oral evidence of the Commissioner and the Expert can be acted upon to find whether the project is an ongoing one or not. In view of the said submission of the counsel for the appellant and taking note of the fact that the 2024:KER:65599 impugned order is only a remand order this Court issued notice before admission to the respondent in the appeal for disposing this appeal expeditiously.
14. The respondent appeared and filed a Counter Affidavit opposing the prayers in the appeal.
15. I heard the learned counsel for the appellant Mr.B.G.Bhasker and the learned counsel for the respondent Mr.P.A Harish.
16. The counsel for the appellant argued that in view of Proviso toS.3(1)of the RERA, the Commission Report, Expert Report and Sketches are not relevant to decide whether the project in question is an ongoing project on the date of commencement of RERA. He argued that S.3(2) makes it clear that no registration of the real estate project has been required where the promoter has received the Completion Certificate for the real estate project prior to the commencement of the RERA.

2024:KER:65599 According to the counsel, the Tribunal set aside the order of the K-RERA on technical grounds. The Tribunal found that Ext.B5 to B8 Occupancy certificates are not reliable since two of them are undated and the other two have overwriting in its dates. Though Ext.X2 Reply to the interrogatories clearly reveals that the project was completed, apartments were transferred to the allottees, buildings were numbered in the name of the respective allottees, property taxes were paid before the commencement of the RERA, the Tribunal refused to accept Ext.X2 holding that the procedure adopted by the K-RERA in accepting and acting upon Ext.X2 answers to the interrogatories is not legal. Counsel argued that the project was completed in the year 2012 and the complaint was filed in the year 2020 and it is highly impractical to direct the respondent to do an almost 2024:KER:65599 impossible act to produce the Occupancy Certificate for the same. The records clearly prove that the apartments in the project were numbered which could be done only after getting Occupancy Certificate. Counsel contended that the remand of the Tribunal directing consideration of the Commission Report, Expert Report and Sketches would widen the scope of the complaint directing consideration of the defects pointed out in the Reports, by the K-RERA. When the RERA expressly provides that the K-RERA will not have any jurisdiction in cases where Occupancy Certificate had been issued for a project before 01.05.2017, the Tribunal cannot circumvent that clear provision and direct the K-RERA to consider whether there are any defects in the construction which is beyond the scope of jurisdiction of the K-RERA under RERA.

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17. The counsel for the respondent/complainant submitted that there is nothing illegal in the remand order. The Commission Report, Expert Report and Sketches are reliable pieces of evidence before the K-RERA. The challenge against the order allowing commission application by the Tribunal was dismissed by this Court by order dt. 13.011.2023 in MSA No. 31/2023. The respondent did not choose to challenge the said order as such the said order of this Court has become final. In view of the said fact, the respondent cannot raise any objection with regard to the Commission Report and Expert Report. The Commission Reports prove that the project is not complete even on the date of inspection. The Counsel invited my attention to the pleadings in the Rejoinder filed by the Complainant that the respondent has not provided all the amenities in the project; that there are several defects in the 2024:KER:65599 construction and that the complainant is legally entitled to amend the prayers, if necessary, before the K-RERA.
18. The counsel for the appellant cited the decision of the Hon’ble Supreme Court in Newtech Prom oters and Developers P.Ltd. V. State of U P and others [2021 SCC online SC 1044] and contended that in view of the Proviso toS.3(1)of the RERA the promoter needs to make an application for registration only if both the conditions in the Proviso are satisfied. According to him, since the word ‘and’ is used between the first condition and the second condition, it must be read as conjunctive and not disjunctive. The first condition is that the project shall be ongoing on the date of commencement of the Act and the second condition is that the Completion Certificate has not been issued. Counsel cited the decision of this Court in Graceland 2024:KER:65599 Foundation v. K erala Real Estate Regulatory Authority [2023 (7) K HC 551] in support of the very same contention. Counsel cited the decisions of this Court in Sheela N. v. K ollam Municipal Corporation and another [2017 (5) K HC 553] and B aiju M. v. Secretary, K ozhikode Municipal Corporation [2023 (6) K HC 72] to substantiate the legal proposition that the liability to pay property tax would arise only from the issuance of Occupancy Certificate. The Counsel cited the decision of this Court in Siji Jacob v. Ultim a builders and Developers P. Ltd. [2023 K HC Online 9214] to substantiate the legal proposition that non providing of assured amenities is not a ground to treat that the project is an ongoing project and that on issuance of Occupancy Certificate, the project could not be treated as an ongoing project. He cited the decision of the Hon’ble 2024:KER:65599 Supreme Court in Union of India and another v. Suhrid Geigy Ltd. [1997 (11) SCC 657] to substantiate the proposition that when the word ‘and’ is used between two conditions it mandates fulfilment of both the conditions. In sum and substance, the argument of the counsel for the appellant is that the remand order should have been limited to the verification of the issuance of Occupancy Certificates since Exts.B5 to B8 Occupancy Certificates were doubted by the Tribunal. The direction to consider the Commission Reports and Sketches by the K-RERA is illegal unsustainable and the same is liable to be set aside.
19. On considering the rival contentions, the question that emerges for consideration is with respect to the interpretation of Proviso to Section 3 (1)and Section 2024:KER:65599 3(2)(b) of the RERA. The following substantial questions of law are formulated in this regard.
20. Is the receipt of the Completion Certificate by Promoter before commencement of RERA alone is sufficient to avoid registration of the Real Estate Project under Section 3of the RERA?
21. Whether the Chairperson of the Tribunal acted illegally holding in the concurring order that Occupancy Certificate cannot be decisive if the building was not complete as on the relevant date with all the required amenities and facilities?
22. A Completion Certificate, as defined under Section 2

(q), is the Certificate that the project is completed as 2024:KER:65599 per the approved Plan and Permit. It is well settled that a Completion Certificate, as defined under Section 2(q) of the Act, is the Occupancy Certificate issued by the Local authorities in Kerala.

21. It is clear from the Proviso to Section 3(1)of the RERA that in the case of a project existing as on the date of commencement of the Act, i.e; as on 01.05.2017, the promoter needs to register the real estate project with the Authority only if both the limbs of the said provision are attracted. Both the limbs are to be read conjunctively and not disjunctively. As rightly pointed out by the counsel for the appellant that the word used is ‘and’ and not ‘or’ in between both the limbs.
22. Proviso to Section 3 (1)of the RERA mandates the Promoter to register a real estate project if the Project is ongoing on the date of commencement of the RERA and for which the Completion Certificate has not been 2024:KER:65599 issued. On a plain reading of this provision, the issuance of a Completion Certificate need not be before the date of commencement of the RERA. Section 3 (2)

(b) of RERA, provides that no registration of the real estate project shall be required where the promoter has received the Completion Certificate for the real estate project prior to the commencement of RERA. What is relevant under Proviso to Section 3 (1) is the date of completion of the project. What is relevant under Section 3 (2) (b) is the date of receipt of Completion Certificate.

23. On a conjoined reading of Proviso to Sub Section (1) and Clause (b) of Sub Section (2) makes it abundantly clear that what is relevant and material is the date of issuance of the Completion Certificate. A Completion Certificate issued by the Local Authority certifies that the building is constructed as per the approved Plan 2024:KER:65599 and Permit. If anybody is aggrieved by the Completion Certificate, it is for him to challenge the Completion Certificate through proper remedies available under law. The legality of the Completion Certificate is not a matter for the K-RERA to consider. The legislative intention is clear. The project should be complete as on the date of commencement of the Act in order to take it out from the purview of registration. The Completion Certificate is a conclusive proof for completion of the project as far as the RERA is concerned. When it is proved that the Completion Certificate is received by the promoter before the date of commencement of the RERA, the project is not liable to be registered. In such case, further enquiry as to whether a project is ongoing or not is unwarranted.
24. The question of verification whether the project is an ongoing one or not arises under Section 3only in the 2024:KER:65599 absence of Occupancy Certificates. Even if the original Occupancy Certificate received by the Promoter is not available, the promoter is free to produce other evidences to the satisfaction of the Authority to prove that Occupancy Certificate is issued before the date of commencement of the Act or that the project was not an ongoing project as on the date of commencement of the RERA to avoid registration under Section 3.
25. It is a case where the genuineness of Exts.B5 to B8 Occupancy Certificates is doubted by the Tribunal. Though Ext.X2 reveals that the Occupancy Certificates were issued much prior to the date of commencement of the RERA, the Tribunal refused to act upon the same holding that the procedure of procuring the Interrogatories was not proper. As on today, the existence and the date of issuance of Occupancy Certificates are not proved by the 2024:KER:65599 appellant/respondent. It could not be assumed that the existence of Occupancy Certificates and dates of issuance of the Occupancy Certificates would be proved by the appellant/respondent before the K- RERA. If the respondent could not prove the existence of Occupancy Certificates and dates of issuance of the Occupancy Certificates, the Commission Report, Expert Report and Sketches are definitely material pieces of evidence to decide whether the project was an ongoing one or not as on the date of commencement of the RERA.
26. Bearing in mind the above legal propositions, if the directions of the Tribunal are analysed, there is nothing wrong in the directions of the Tribunal. The purpose of the Commission Report, Expert Report & Sketches and the evidence of the Commissioner and the Expert is clearly discernible from the direction No.(f) in the 2024:KER:65599 impugned Order, “The K-RERA shall legally decide whether the reports and oral evidence of the Commissioner and Expert Engineer can be acceded and acted upon to find whether the project is an ongoing one or not.” The only further direction which is to be made is that the K-RERA needs to consider the Commission Report, Expert Report & Sketches and the evidence of the Commissioner and the Expert only if the existence and the dates of issuance of Occupancy Certificates are not proved by the appellant/respondent.
27. Nevertheless, certain finding in the Concurring Order rendered by the Chairperson of the Tribunal requires interference. In the concurring judgment, the Tribunal refused to accept the submission of the learned counsel for the appellant that Occupancy Certificate is a decisive and conclusive material even if there is 2024:KER:65599 evidence to prove otherwise that the building was not in fact complete as on the relevant date with all the required facilities and amenities and entered a finding that when there is clear and acceptable material to disprove the case of the promoter or to prove that the building or project was not in fact complete as on the relevant date with all the required facilities and amenities to make it habitable, much value cannot be attached the Occupancy Certificate, and such Certificate cannot be decisive in deciding the material issue. This finding runs counter to the provisions under Proviso to Sub Section (1) and Clause (b) of Sub Section (2) of Section 3of the RERA and accordingly the same is set aside.
28. The apprehension of the Counsel for the appellant that the Commission Report, Expert Report & Sketches and the evidence of the Commissioner and the Expert 2024:KER:65599 would be used for widening the scope of the complaint is unfounded. If the Commission Report, Expert Report & Sketches and the evidence of the Commissioner and the Expert are used for any other purpose, the appellant can very well object the same before the K- RERA citing the pleadings available in the complaint and the sustainability of the same is a matter to be considered by the original authority namely, the K- RERA. It is highly improper for the higher courts to issue pre-emptive directions to the subordinate courts.
29. The substantial questions of law formulated in this appeal are answered in the affirmative and in favour of the appellants.
30. In the result, this Appeal is allowed in part without costs, modifying the Order of the Tribunal by adding a further direction that the K-RERA needs to consider the Commission Report, Expert Report & Sketches and the 2024:KER:65599 evidence of the Commissioner and the Expert only if the existence and the dates of issuance of Occupancy Certificates are not proved by the appellant/respondent and setting aside the aforesaid finding in the Concurring Order.