Landmark Judgment Clarifies Real Estate Projects Without Sale Rights Are Beyond RERA's Scope
In a significant judgment delivered by the Allahabad High Court on May 8, 2026, presided over by Justice Syed Qamar Hasan Rizvi, the court ruled that real estate projects involving leasehold property without the right to sell are not subject to the registration requirements under the Real Estate (Regulation and Development) Act, 2016 (RERA). The judgment arises from the appeal filed by the U.P. Real Estate Regulatory Authority against the directive of the Real Estate Appellate Tribunal, Lucknow, which ordered the registration of a project by M/s Maa Bhagwati Commercial Reality N Resorts LLP.
The court examined whether a real estate project could be developed and registered on leasehold land for 29 years and 11 months, without the authority to sell units. The court concluded that the absence of a sale component excludes such projects from the definition of "real estate project" under RERA, which is explicitly intended for projects aimed at selling units to allottees.
The court's decision reinforces the interpretation of statutory provisions, emphasizing that statutory language must be construed as per its clear and unambiguous terms. Justice Rizvi highlighted that legislative intent is to regulate projects intended for sale, and any activity lacking a sale component does not attract RERA's provisions.
The ruling clarifies that the requirement for legal title or authentication of title under Section 4(2)(l)(A) of RERA does not apply to leaseholders without selling rights. Consequently, M/s Maa Bhagwati Commercial Reality N Resorts LLP, as a lessee without the authority to sell, cannot be classified as a "promoter" and is exempt from registration under RERA.
The judgment sets a precedent for similar leasehold projects, providing clarity on the scope of RERA's applicability and ensuring that projects without the intent to sell are not unnecessarily burdened with registration requirements. The U.P. Real Estate Regulatory Authority has been directed to retract prohibitory clauses and restrictions against the respondent's project, thereby allowing the project to proceed without RERA registration.
Bottom line:-
Real estate projects involving leasehold property for a limited term without the right to sell do not fall under the purview of the Real Estate (Regulation and Development) Act, 2016 and are not obligated to seek registration under the Act.
Statutory provision(s): Sections 2(zk), 2(zn), 4(2)(l)(A), 5 of the Real Estate (Regulation and Development) Act, 2016
