Appeal No. 2 of 2018, Marg Properties Limited v. T.M. Arunachalam
The Tamil Nadu Real Estate Appellate Tribunal, covering Tamil Nadu, Puducherry and the Andaman and Nicobar Islands, delivered Appeal No. 2 of 2018 on 13 November 2018 in a dispute between Marg Properties Limited and T.M. Arunachalam concerning an apartment in the Marg Swarnabhoomi Special Economic Zone. The Tribunal held that describing the arrangement as a 99 year lease did not exclude it from the Real Estate Regulation and Development Act, 2016, because its terms were substantially similar to a sale and the definition of allottee included leasehold rights.
What the appeal concerns
Appeal No. 2 of 2018 before the Tamil Nadu Real Estate Appellate Tribunal arose from a complaint about Flat No. 307 in G Block of the Utsav project at Marg Swarnabhoomi. Marg Properties Limited challenged directions issued by the Chairperson of the Tamil Nadu Real Estate Regulatory Authority following a complaint by T.M. Arunachalam and his wife, Mrs. Padmapriya Arun.
The buyers sought refund of Rs.14,26,367, interest and damages. They said possession had been delayed and raised concerns about apartments being provided to people outside the Special Economic Zone.
Regulatory Authority directions under challenge
The Tamil Nadu Real Estate Regulatory Authority recorded that only part of the 14 block project had been completed. It directed Marg Properties Limited to:
- Furnish a structural stability certificate.
- Obtain consent from the complainant within two weeks.
- Register the unfinished project as an ongoing project under the Real Estate Regulation and Development Act, 2016.
Marg Properties Limited argued that the project was structurally complete because columns, beams and slabs had been erected. It also argued that the transaction was a lease rather than a sale, that money remained payable by the allottee, and that the project therefore did not require registration.
Tribunal's findings on the lease
The Tamil Nadu Real Estate Appellate Tribunal rejected the argument that a lease could not create an allottee under the Real Estate Regulation and Development Act, 2016. Its reasons included:
- The lease ran for 99 years and provided automatic renewal for another 99 years without rent.
- The consideration was an upfront, one time payment rather than monthly or annual rent.
- The allottee had paid nearly 90 per cent of the total amount.
- The allottee was responsible for property tax, utilities, maintenance charges and insurance.
- The agreement gave rights over the apartment and common areas.
The Tribunal considered these features substantially similar to a sale. It also stated that the statutory definition of allottee included property allotted, sold as freehold or leasehold, or otherwise transferred by a promoter.
Who may be affected
Appeal No. 2 of 2018 is relevant to promoters and apartment occupants using long term lease structures, particularly where a single upfront amount is paid. Calling an agreement a lease does not by itself prevent the occupant from being treated as an allottee under the Real Estate Regulation and Development Act, 2016.
This summary is generated from the source document to help you find what is relevant. The PDF above is authoritative. For advice on your own property, use LandLens One or speak to a qualified professional.
Common questions
Does a 99 year apartment lease fall outside the Real Estate Regulation and Development Act, 2016?
Not on that ground alone. The Tamil Nadu Real Estate Appellate Tribunal found that this 99 year lease, with automatic renewal and an upfront payment, was substantially similar to a sale and could create an allottee.
Why did the Tribunal treat the Marg Swarnabhoomi agreement like a sale?
The agreement required a one time upfront payment, placed property tax and other continuing charges on the lessee, and provided a 99 year term followed by automatic renewal for another 99 years without rent.
What had the Tamil Nadu Real Estate Regulatory Authority directed the promoter to do?
The Authority directed Marg Properties Limited to provide a structural stability certificate, obtain the complainant's consent within two weeks and register the unfinished project as an ongoing project.
Did the Tribunal decide whether people outside the Special Economic Zone could obtain these apartments?
The supplied text records the complainant's concern about transactions with people outside the Special Economic Zone, but it does not provide a Tribunal finding on that issue.
