Introduction

The case of Subashini Thulasiram, Rep. By Her Power Agent E. Jayalakshmi v. SPR & Rg Constructions Pvt. Ltd. is a significant judicial decision delivered by Justice N. Kirubakaran of the Madras High Court on September 15, 2020. This case addresses critical issues surrounding the enforcement of the Real Estate (Regulation and Development) Act, 2016 (RERA) in the Chennai Metropolitan area, specifically focusing on the obligations of real estate developers in obtaining necessary approvals and clearances before project commencement.

The appellant, representing the purchaser, challenged the decision of the Tamil Nadu Real Estate Appellate Tribunal, which had reversed the earlier order of the Real Estate Regulatory Authority (RERA). The core contention revolves around whether SPR & Rg Constructions Pvt. Ltd., the developer, could claim exemption from RERA registration based on regional rules, despite alleged violations of environmental clearances and delay in obtaining completion certificates.

Summary of the Judgment

The appellant purchased a flat in the "Osian Chlorophyll" project from SPR & Rg Constructions in November 2012, with an agreement for possession within 36 months. However, possession was delayed due to the developer's failure to obtain necessary environmental clearances and completion certificates. The appellant sought compensation for these delays and violations.

The Adjudicating Officer initially deemed the complaint maintainable, rejecting the developer's preliminary objections regarding exemption under Rule 2(h)(ii) of the Tamil Nadu Real Estate (Regulation and Development) Rules, 2017. The Appellate Tribunal upheld RERA’s authority, finding that the developer's application for completion certificate post the commencement of RERA did not exempt the project from RERA's provisions.

However, the Madras High Court overturned the Tribunal's decision, holding that SPR & Rg Constructions failed to comply with RERA requirements by not obtaining prior environmental clearances. The court emphasized that the developer's reliance on regional rules did not override the central provisions of RERA, thereby classifying the project as ongoing and subjecting it to RERA regulations.

Analysis

Precedents Cited

The judgment references two pivotal Supreme Court cases to reinforce its stance:

• Ramesh Mehta v. Sanwal Chand Singhvi (2004) 5 SCC 409: Established the supremacy of the parent Act over subordinate rules, ensuring that any rule contrary to the Act is invalid.
• Global Energy Ltd. v. Central Electricity Regulation Commission (2009) 15 SCC 570: Reinforced that subordinate legislation cannot contradict the primary legislation, emphasizing judicial oversight in such matters.

These precedents underpin the court's decision that RERA's central provisions take precedence over regional rules, ensuring uniformity and adherence to national standards in real estate regulation.

Legal Reasoning

The court's legal reasoning is anchored on several key points:

• Supremacy of RERA Act: RERA, as a central legislation, overrides any regional rules that attempt to circumvent its provisions. The Tamil Nadu RERA Rules' exemption clause was rendered invalid as it conflicted with the RERA Act.
• Completion Certificate Compliance: The developer applied for the completion certificate only after RERA commenced, and crucially, without prior environmental clearance, rendering the application defective.
• Environmental Clearance Violation: Initiating construction without mandatory environmental clearance violates core environmental regulations, making the entire project illegal irrespective of later clearances.
• Inapplicability of Regional Rules: Rule 2(h)(ii) of the Tamil Nadu RERA Rules, 2017, which the developer relied upon, was found to be in contravention of the RERA Act, thereby nullifying any claimed exemptions.

The court meticulously dissected the timeline and procedural lapses of the developer, emphasizing that ethical and legal compliance is non-negotiable, ensuring purchaser protection and environmental sustainability.

Impact

This judgment has profound implications for the real estate sector:

• Strengthening RERA's Authority: Reinforces the central authority of RERA over regional rules, ensuring uniform application of real estate regulations across India.
• Enhanced Consumer Protection: Empowers purchasers to seek redressal against developers failing to comply with mandatory approvals, fostering transparency and accountability.
• Environmental Compliance: Highlights the non-negotiable nature of environmental clearances in real estate projects, aligning development with sustainable practices.
• Developer Accountability: Discourages unethical practices by developers, such as unauthorized construction and misrepresentation, by ensuring stringent legal repercussions.

Future real estate projects must ensure comprehensive compliance with RERA and environmental regulations from inception, mitigating legal risks and promoting orderly urban development.

Complex Concepts Simplified

Real Estate Regulatory Authority (RERA)

RERA is a central legislation enacted to regulate the real estate sector, ensuring transparency, accountability, and protection of consumer interests. It mandates developers to register their projects, disclose all necessary details, and adhere to project timelines and specifications.

Completion Certificate

A completion certificate is an official document issued by the competent authority confirming that a real estate project has been developed according to the approved plans and specifications. It signifies that the project is ready for occupation and sale.

Environmental Clearance Certificate

This certificate is mandatory before commencing any construction project, ensuring that the project complies with environmental regulations and does not harm the ecosystem. It is a safeguard against environmentally detrimental developments.

Ongoing Project

Under RERA, an ongoing project is one that has commenced but has not yet received a completion certificate. Such projects must be registered with RERA, subjecting them to its regulatory framework.

Conclusion

The Madras High Court's judgment in Subashini Thulasiram v. SPR & Rg Constructions Pvt. Ltd. serves as a pivotal reinforcement of RERA's central authority over regional regulations. By invalidating the developer's reliance on conflicting local rules, the court has upheld the integrity of national real estate standards, ensuring that consumer rights and environmental safeguards remain paramount. This decision not only empowers purchasers to hold developers accountable but also sets a clear precedent for stringent compliance, fostering a transparent and ethical real estate market.