Bombay High Court Rules Co Promoters Liable for Refunds in Delayed Flat Deliveries

Bombay High Court Rules Co-Promoters Liable for Refunds in Delayed Flat Deliveries

The Bombay High Court’s ruling regarding the interpretation of the term ‘promoter’ within the framework of the Real Estate (Regulatory and Development) Act (RERA) signifies a significant legal decision in real estate regulation. 

The ruling establishes that a co-promoter can be considered a ‘promoter’ under RERA, irrespective of whether they have received funds from flat buyers.

The court clarified that under RERA, the term ‘promoter’ includes co-promoters, regardless of whether they have received money directly from flat buyers. 

This means that anyone involved in the construction process can be held responsible for delays and refunds, as outlined by RERA.

This decision has major implications for the real estate industry, especially in Mumbai’s redevelopment projects. It means that even investors who benefit from a project alongside the main promoter can be considered promoters and held accountable under RERA.

The case involved Wadhwa Group Housing Pvt Ltd, challenging its joint liability as a co-promoter in a redevelopment project in Andheri, Mumbai. 

Despite not receiving payments from buyers directly, Wadhwa Group Housing was held responsible for refunding a portion of a buyer’s payment.

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The court addressed whether a co-promoter, who hadn’t received payments from flat buyers, could still be held liable for refunds with interest under Section 18 of RERA. The ruling clarified that the source of funds doesn’t matter; the involvement in the project matters.

This ruling sets a precedent for greater accountability and transparency in real estate dealings. It emphasizes the importance of adhering to RERA regulations and ensures better protection for homebuyers.

In essence, the Bombay High Court’s decision expands the scope of liability under RERA, making all parties involved in a project accountable for delays and refunds, irrespective of direct financial transactions with buyers.