HC: Co-promoter also liable to pay refund in flat delayed

Bombay HC has held that the term ‘promoter’ covers a co-promoter even if he hasn’t got money from flat buyers and is jointly liable under Real Estate (Regulatory and Development) Act (Rera) to refund the amount, with interest, for delays.

It said under the 2016 Act, which came into effect in 2017, ‘promoter’ has “been so widely defined that it virtually includes every person associated with construction of the building”, and it is not necessary that there has to be an agreement between every promoter and a flat buyer.

“Even a person who is merely an investor (along with promoter) in the project” and benefits from it falls within the ambit of ‘promoter’, it said while hearing an appeal by Wadhwa Group Housing Pvt Ltd against an Oct 2022 order of Rera appellate tribunal that had fastened it with the refund liability.

HC’s Feb 26 order has stirred real estate industry, said lawyers, as it answers a substantial question of law that many were tracking. It has ramifications for many redevelopment projects in the city, said legal experts.

Justice S V Marne focused on a legal issue – whether a promoter who has not received any payment from an allottee can be made liable for giving refund with interest under Section 18 of Rera. Wadhwa Group Housing had challenged joint liability on it as a co-promoter for having joined in as co-developer in an SRA project in Andheri.