Authored By E. Suhail Ahmed
Partner |Trialbase|Advocates
To understand what is deemed to be completion of a real estate project it is necessary to understand all the other related terms governing the development of project. The definitions of development, development works, internal development works and external development works under The Real Estate (Regulation and Development ) Act 2016 (ACT) would become relevant to understand what amounts to completion of development works in a real estate project. It would also become necessary to understand the definitions of completion certificate, occupancy certificate, development works, internal & external development works in Section 2 of the Act.
The definitions of the terms referred above read as follows:
2(q) “completion certificate” means the completion certificate, or such othercertificate, by whatever name called, issued by the competent authority certifying that the real estate project has been development according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws;
2(zf) “occupancy certificate” means the occupancy certificate, or such other certificate by whatever name called issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity;
2(s) “development” with its grammatical variations and cognate expressions, means carrying out the development of immovable property, engineering or other operations in, on, over or under the land or the making of any material change in any immovable property or land and includes re-development;
2(t) “development works” means the external development works and internal development works on immovable property;
2(w) “external development works” includes roads and road systems landscaping, water supply, sewage and drainage systems, electricity supply transformer, sub-station, solid waste management and disposal or any other work which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the local laws;
2(zb) “internal development works” means roads, footpaths, water supply, sewers, drains, parks, tree planting, street lighting, provision for community buildings and for treatment and disposal of sewage and sullage water, solid waste management and disposal water conservation, energy management, fire protection and fire safety requirements, social infrastructure such as educational health and other public amenities or any other work in a project for its benefit, as per sanctioned plans;
From the above definitions it can be made out that development would mean carrying out the development of immovable property, engineering or other operations in, on, over and under the land or making of any material change in any immovable property or land and includes re-development. Development works as defined includes both external and internal development works on immovable property. Internal development works as defined under the Act can be broadly classified as such development works which are required to be carried out within theproject land in accordance with the sanctioned plans, in effect all such works which are required to be carried out as per the plans sanctioned for a real estate project can be said to be internal development works. External development works would mean all such additional works that are required to be executed either within or outside the project land for the benefit of the project and these works would include roads and road systems, landscaping, water supply, sewerage and drainage systems, electric supply transformer, substation, solid waste management and disposal or any other work. In order to say that the development works in the project have been completed it would thus become necessary for both external and internal development works in a project to have been completed by the Promoter.
In the light of the above, it is also necessary to understand the meaning of Completion Certificate and Occupancy Certificate as defined under the Act.
Completion certificate as defined under the Act means the Completion Certificate or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plans. The process of issuance of the sanctions of building plans or layout plans is governed by the respective statutes of the States. In certain states there is a process of issuance of a completion certificate in respect of buildings constructed and subsequently the Occupancy Certificate is issued, at the same time in certain other states completion certificate is not issued by any authority but it is obtained from an architect and submitted to the authority, which then proceeds to issue the Occupancy Certificate. This being relevant to development of buildings, in case of developments of residential layouts by carving out plots, again the practices followed by different states are varied and for the purpose of determining that the development work is completed, the certificates that can be relied upon by a Promoter to say that the development work is completed are the final NA order, Release Order releasing 100% of plots for sale, sanction of the final layout plan, etc.,
Occupancy certificate as defined under the act means a certificate issued by the competent authority permitting occupation of any building, which has promising for civic infrastructure such as water, sanitation and electricity. The definition of the Occupancy Certificate as provided in the act translates to obtaining of the Occupancy Certificate in respect of a building under the relevant municipal laws with the building having provision for water, sanitation and electricity. The provision of water, sanitation and electricity being available at the tiem of the Occupancy Certificate being issued may be again relevant in certain states and not relevant in others. Firstly for the reason that, in certain states and in certain regions within such states the practice of issuance of occupancy certificate is itself not prevalent. Secondly, for the reason that, in certain states water, sanitation and electricity connections are given only after a Promoter obtains the occupancy certificate for the building. For the aforesaid reasons, it can be said that obtaining of an occupancy certificate would be relevant to establish the fact that the development work in respect of the building which forms part of a project has been completed however it cannot be deemed that for the purpose of reporting completion of development work in the project under RERA, merely obtaining a completion certificate or occupancy certificate would be sufficient.
In order to determine whether the development work in a project has been completed, it is necessary to ascertain whether all the development works in the project have been completed which include both the external development works and internal development works in the project. In other words only once all the development works in the project have been completed and the completion/occupancy certificate has been obtained, the Project/building has provision for water, sanitation and electricity, it can be said that the development work of a project has the completed. The other test that can be applied to report completion of development work in the project is, while the compliance of quarterly updates is being completed, as against all the fields with respect to the stage of development work being carried out in a project are reported as 100 % completed, it could be said that the development work is completed, provided that what is reported is the actual development works that are as per the Plans and as promised to the Allottees as well.
COMPLETION IN CASE OF PHASED DEVELOPMENT:
Section 3 of the Act provides that where the real estate project is to be developed in phases, every such says shall be considered a stand-alone real estate project and the Promoter shall obtain registration under this Act for each phase separately. Thus the Act provides for registering project in different phases. While applying the criteria as explained above in order to report completion of a real estate project, in case of phased development, what becomes important is what is promised to the Allottees in the project, viz., phase of the Project. Take for instance a real estate project for construction of apartment building’s consisting of 3 Towers is taken up in 3 Phases. The club-house/community Centre which is also proposed to be constructed in the project is promised to be delivered to the Allottees along with all the other amenities and facilities in Phase 1 of the project, in other words at the time of handing over of apartments in the 1st Tower, it is necessary that the development of the club-house/community Centre and all other amenities and facilities that are promised to be delivered to the allottees along with Phase 1 of the project should be completed in order for the Project (Phase 1)to be deemed to have been completed under the Act. Unless, it has been expressly disclosed to the Allottees that the club-house/community centre and all other amenities and facilities will not be delivered along with Phase1 and would be delivered upon completion of the last Phase of development, in which case, the completion of development work of the apartment building/s in the 1stphase of the project, obtaining of occupancy Certificate along with making provision for water, sanitation and electricity, would suffice to say that the development of the particular phase has been completed.
Case law:
The Haryana Real Estate Regulatory Authority in Ms. Simmi Sikka Vs Emaar MGF Lan Limited, in Compliant No. 07/2018,while deciding the question whether the project in question is to be considered as an ongoing project under the Act and is required to be registered,has held that for a project to be said to have been completed it is necessary that both external and internal development works are completed and the completion/occupancy certificate is obtained.
DISCLAIMERS:
- This article is published only for information/reference only and cannot be used as a legal opinion and
- It is recommended that the Promoter seeks assistance of the Professionals in case of any specific queries, clarifications with respect to completion of a real estate project.
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