Registration Exemptions to ‘Ongoing Project’: Case of Executive overreach

[2021] 131 taxmann.com 239 (Article)

The Real Estate (Regulation and Development) Act, 20161, still in its nascent years, remains a subject of much discussion and debate since its enactment. It came to be enacted primarily with the objective of bringing transparency and accountability in the real estate sector. The law has many structural legal issues pending before various Hon’ble High Courts and the Hon’ble Supreme Court including the constitution of a single-member bench and adjudicatory powers of the Authority vis-à-vis the Adjudicating Officer, to name a few. This article deals with one such issue, being the power of the appropriate Government to grant exemption to ‘ongoing projects’ from registration under section 3 of the said Act, 2016.
Section 3 of the said Act, 2016 deals with registration of the real estate projects with their concerned Real Estate Regulatory Authority. Imperatively, proviso to sub-section (1) of the said Section states that projects that are ongoing on the date of commencement of the said Act, 2016 and for which completion certificate has not been issued shall be liable for registration within a period of 3 months from the date of commencement of the said Act, 2016. Such projects would be registered with the concerned Authority as ‘ongoing projects’. Sub-section (2) provides 3 exemptions from registration to certain real estate projects.

First is to such ongoing projects which occupy less than 500 square meters as an area of land proposed to be developed or have less than 8 units proposed to be developed, inclusive of all phases.

Second, where the promoter of such project has already obtained a completion certificate prior to commencement of the said Act, 2016.

The third exemption applies to projects which are developed for repairs and renovation not involving marketing, advertising, selling, or new allotment of any apartment, plot, or building in such project. It is pertinent to note here that exemption from registration is provided only in the aforementioned cases and all other real estate projects not falling under sub-section (2) ought to be registered under the said Act, 2016. The limited discretion available to any State Government as per proviso to Section 3(2) (a) of the said Act, 2016 is to reduce the threshold for registration below 500 square meters and 8 units. What follows is a corollary is that the said Act, 2016 does not empower the State Government to increase such threshold over the limit prescribed. Thus, limited exemptions are provided under the said Act, 2016 to projects from registration as ongoing projects.

The State of Rajasthan notified Rajasthan Real Estate (Regulation and Development) Rules, 2017[hereinafter ‘said Rules, 2017’] on 1-5-2017, exercising power to frame rules granted under section 84 of the said Act, 2016. Section 84 provides the appropriate Government power to frame rules for carrying out the provisions of the said Act. Here again, under section 84, the limited power available to a state government is to make rules consistent with the provisions of the said Act, 2016. The State of Rajasthan, under Explanation to Rule 4 of the said Rules, 2017, provides as many as 7 (seven) exemptions to projects from registration as ‘ongoing projects’ under section 3.

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