Tenants Are Now Promoters?

The Maharashtra Real Estate Regulatory Authority (“RERA Authority“) in the case of Kunal Parmar Vs. Amex Residency vide its final order dated 9th August, 2018 has upheld the ruling held in the case of Milan Narendra Patkar Vs. Ruparel Estates India Pvt. Ltd (disposed of on 22nd March, 2018) wherein the issue of maintainability of a complaint under Section 18 of the Real Estate (Regulation and Development) Act, 2016 (“Act“) by tenants for non-receipt of rent from the developer was decided and it was inter-alia held that such tenants are “Promoters” under section 2(zk) of the Act.


Kunal Parmar (“Complainant“) being one of the tenants of Rambhia House surrendered his tenanted premises held in the building like other tenants for redevelopment of new building in place of the old one. The Complainant contended that one Amex Residency (“Promoter“) had agreed to provide the Complainant (i) permanent alternate accommodation in lieu of his surrendered tenanted premises and (ii) rent till handing over possession of the new premises. The Complainant’s advocate submitted that the Promoter has failed pay the rent as agreed. It was further contented that the complaint was maintainable under the provisions of the Act since the Complainant was an “allottee” in terms of the Act. However, the Promoter’s advocate submitted that the Complainant could not be considered to be an allottee and that there was no violation or contravention of any provisions of the Act thus rendering the complaint not maintainable.


RERA Authority after taking into account the aforesaid circumstances, observed that (i) in lieu of the Complainant surrendering his tenanted premises, the Complainant was going to get permanent alternate accommodation on ownership basis in new building and is hence  also an equity holder and (ii) the Promoter was permitted to sell the remaining constructed portion (free sale component) after accommodating the existing owners and tenants in the rehab building for raising funds for the construction of the new building. 


The RERA Authority whilst dismissing the complaint has held that (i) since the owners and tenants including the Complainant have collectively taken the decision to cause the building to be constructed (i.e. the new building and the rehab building), they would fall within the purview of the definition of “Promoter” under the Act and (ii) the RERA Authority cannot entertain any dispute lying between promoters inter se.


In our view, while a complaint by tenants for non-receipt of rent from the Promoter may not maintainable under Section 18 of the Act, terming of the existing tenants as “Promoter” under the Act does not seem to be entirely palatable.

A developer by availing development rights, takes control of the construction of building(s) after obtaining requisite approvals from statutory authorities. A tenant neither has control over any construction activity nor is the tenant entitled to and/or deriving any monetary benefits including selling any apartment and/or area to any other person. A tenant is only entitled to the area being allotted to him/her in lieu of surrendering his/her existing premises. Therefore, terming such tenants as ‘Promoters’ may lead to an interpretation that such tenants are thrust with the responsibilities of “Promoters” under the Act, seems to be grossly unfair.

Be that as it may, none of the aforesaid orders mandate any of the tenants in such a redevelopment scheme to cause themselves to be registered as Promoter(s).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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