In a significant ruling, the Madras High Court has affirmed the jurisdiction of RERA authorities to probe financial aspects of promoters in ongoing real estate projects despite NCLT dismissals.
In a landmark decision, the Madras High Court has reinforced the powers of the Tamil Nadu Real Estate Regulatory Authority (TNRERA) to investigate financial irregularities in real estate projects, upholding the authority's jurisdiction under the Real Estate (Regulation and Development) Act, 2016 (RERA). The case, involving appellant Vandana Parvez against IVR Hotels and Resorts Ltd., centered on whether TNRERA had the authority to address financial dealings in a project deemed "ongoing" under RERA despite claims of completion.
The court dismissed appeals by IVR Hotels, which challenged the classification of their project as ongoing, affirming the TNREAT's decision that the project was still active due to incomplete works. The judgment clarified that once an appeal is withdrawn, the findings in favor of the other party become binding and cannot be re-litigated.
Key points from the judgment include the affirmation of TNRERA's power to investigate financial dealings of promoters as part of their broad jurisdiction under Sections 35, 36, and 37 of the RERA Act. This includes the authority to look into financial irregularities to ensure compliance with the Act's provisions aimed at protecting homebuyers.
The court also addressed procedural aspects, emphasizing that RERA proceedings are not bound by strict civil procedural laws, allowing for a more flexible approach to justice. This stance supports homebuyers' rights to pursue claims of financial mismanagement and irregularities against developers.
Furthermore, the judgment dismissed the notion that previous dismissals by the National Company Law Tribunal (NCLT) barred TNRERA from investigating financial dealings. The court highlighted that the NCLT's dismissal was based on jurisdictional grounds, not on the merits of financial allegations.
The court remanded the case back to TNRERA for a fresh hearing, instructing the authority to consider all aspects of the complaint, including financial irregularities, and to facilitate mediation if possible. This ruling sets a precedent for homebuyers seeking redressal for financial grievances and reinforces the RERA framework's intent to regulate the real estate sector effectively.
Bottom line:-
Real Estate (Regulation and Development) Act, 2016 - The project was deemed an "ongoing project" under the RERA Act despite completion certificate claims. Authorities under RERA are empowered to probe financial dealings of promoters and investors.
Statutory provision(s): Real Estate (Regulation and Development) Act, 2016 Sections 3, 4, 11, 13, 14, 18, 35, 36, 37, 38, 89, Indian Penal Code Sections 172, 177, 191, 192, 193, 196, 199, 200, 209, Criminal Procedure Code Sections 191, 340.
Vandana Parvez v. IVR Hotels And Resorts Ltd., (Madras)(DB) : Law Finder Doc id # 2886461
