The "Mumbai Dreams- Olympia C D" project, which is in Mumbai's Mulund West,
had apartments available for the complainants who had placed reservations.
Lucrative Properties Private Limited, a division of Shapoorji Pallonji Private
Limited ("SPPL"), was given the job of Development Manager for this project,
which was created by Nirmal Developers.
When they made their reservations, the complainants believed that SPPL would
supervise the building of the aforementioned Project and that excavation work
might start within three months. However, no construction operations were
started from the booking date till January 2019.
Due to SPPL's designation as a Promoter under Section 2(zk) of RERA, the
complainants asserted that Nirmal Developers, Dharmesh Jain, and SPPL should be
held accountable for refunding money. They further argued that the Development
Manager's conduct in the cited Project matched the requirements for a Promoter
as stated in Section 2(zk)(i), (v), and (vi) of RERA.
The Development Manager, on the other hand, argued that the Development
Management Agreement with Nirmal Developers explicitly outlined the
responsibilities of Promoters and Development Manager. The DMA limited the
Development Manager's duties to supporting project management, planning,
oversight, and leveraging their brand name in exchange for predetermined
The Promoters were listed as "other professionals" on MahaRERA's website at the
time the DMA was signed, having sold a sizable section of the Project's
residential area. The DMA stated that the Promoters were fully accountable for
all obligations to unit buyers, including paying back the complainants'
Due to delays in possession and project completion, the complainants sought
refunds from MahaRERA under Section 12 of RERA.
Shri B.D. Kapadnis, Member-ll, MahaRERA.
Council On Behalf Of Parties:
Adv. Mr. Harshad Bhadbhade at Sr. No. I.
C.A. Mr. Ashwin Shah at Sr. No. 2 &3.
Adv. Mr. Rajeshwar Deshmukh at Sr No. 4.
Ms. Vaishali Mohite for Nirmal.
Adv. Mr. Aftab Diamondwala for Shapoorii Pallonji
The fundamental question was whether the Development Manager, who had been
appointed pursuant to the Development Management Agreement and held the
exclusive selling rights, should be regarded as a "promoter" for purposes of
Section 2(zk) of the Real Estate (Regulation and Development Act (RERA) or not.
Contentions Of The Parties:
Arguments of the Complainants: According to the Complainants, the Development
Manager's participation in the Project met all of the requirements for a
promoter as stated in Sections 2(zk)(i), (v), and (vi) of RERA, including the
explanation that is included in the section.
Additionally, they asserted that they were misled into thinking the Project's
Development Manager would be in charge of overseeing its development and
completion. They argued that the Development Manager and the Promoters should
both be responsible for paying back the cash and interest.
Arguments made by the development manager: The development manager argued that
the Development Management Agreement (DMA) between them constituted a distinct
division of labour between the Promoters and development manager. The
Development Manager's duties were confined to assisting in project management,
planning, and supervision and exploiting their brand name for predetermined
Following the Promoters' sale of a sizable chunk of the residential area of the
Project and their designation as "other professionals" on the Project's website,
the DMA was signed. It was also contended that, in accordance with the DMA, the
Promoters were the only parties accountable for all RERA-related
responsibilities towards unit buyers, including refunds. The Promoters had
obtained the monies provided by the Complainants.
Provisions Of Statutes Mentioned:
Section 2(zk) of the Real Estate (Regulation and Development) Act (RERA).
Findings of the Court The DMA's rights and obligations for the Development
Manager were highlighted by the court in multiple provisions, including the
exclusive development management rights, brand name use for marketing, customer
management operations, and administration of various Project components.
Under Section 2(zk)(vi) of RERA, which creates joint liability for both parties
involved in creating, converting, and selling flats or buildings, the Court
recommended that both the Promoters and the Development Manager should be held
jointly accountable. Additionally, the Court suggested making the Development
Manager's name a Promoter on the Project's website.
The Court further determined that the Promoters and Development Manager should
jointly refund the monies owed to the complainants, as well as simple interest
at a rate of 9% per year from the dates of receipt until the refund is made.
MahaRERA's Justification: MahaRERA's conclusion was based on an analysis of the
DMA's clauses to determine the extent of the Development Manager's duties in
compared to those of the Promoters. Referring to the explanation included with
Section 2(zk)(vi) of RERA, which provides shared accountability for both
categories of promoters, they said that section was the relevant one.
Based on the Development Manager's control over project operations and use of
the brand name, MahaRERA came to the conclusion that their behaviour was
consistent with that of a promoter under Section 2(zk) of RERA.
Case Analysis/ Observation:
The relationship between development managers and promoters under RERA would be
significantly impacted by this MahaRERA ruling. In order to avoid the notion
that a development manager is a de facto promoter, it emphasises the
significance of carefully crafting agreements and communicating.
The case also serves as a reminder that even if a builder carries the title of
development manager, they cannot avoid the liabilities attached to that position
if they effectively fulfil the duties of a promoter under RERA.
The learning outcomes from the judgment can be understood by these examples as
they explain the situations under which a development manager becomes a promotor.
- A developer (A) hires a development manager (B) to manage the day-to-day
activities and operations of a real estate project. A buyer (C) purchases a
unit in the project. C files a case against A and B, alleging that the
project is not being developed as promised. The court finds that B is
essentially acting as the promoter of the project, as B is responsible for
making decisions about the project and managing its day-to-day operations.
As a result, the court holds B liable as the promoter of the project. If a
development manager is hired by the promoter and manages the day-to-day
activities and operations of a real estate project, the court may hold the
development manager liable as the promoter.
- The buyer (3) files a case against the developer (1) and the development
manager (2), alleging that the project is not being developed as promised.
The court finds that the development manager has control over the project,
which includes having the powers to make decisions about the project such as
approving of changes to the plan or the budget. As a result, the court holds
the development manager accountable as the promoter of the project. If a
development manager has control over a real estate project, the court may
hold the development manager liable as the promoter.
- In this scenario, Jack is the promoter of the real estate project. He
hires Zack to act as his agent in developing the project. This means that
Zack is responsible for carrying out Jack's wishes and for representing Jack
to the buyer. The buyer (Mac) has filed a case against Jack, alleging that
the project is not being developed as promised. The court will need to
determine whether Zack was acting as Jack's agent when he made the
representations to the buyer.
If the court finds that Zack was acting as Jack's agent, then the court may
hold Zack liable as if he were the promoter of the project. The court will
consider the following factors in determining whether Zack was acting as
Jack's agent: Whether Zack was authorized by Jack to make the
representations to the buyer. Whether Zack was acting in the interests of
Jack when he made the representations to the buyer.
Whether Zack was paid by Jack for making the representations to the buyer.
If the court finds that Zack was acting as Jack's agent, then the court may
hold Zack liable as if he were the promoter of the project. This is because
Zack is essentially taking on the role of the promoter and is responsible
for representing the promoter to the buyer.
- Jane (the developer) hires Kane (the development manager) to manage the
day-to-day activities and operations of a real estate project. Jade (the
buyer) purchases a unit in the project. Jade files a case against Jane and
Kane, alleging that the project is not being developed as promised.
The court finds that Kane does not have control over the project, is not
involved in the day-to-day activities, and is not responsible for the
marketing of the project. As a result, the court holds that Kane is not
liable as the promoter of the project. If a development manager does not
have control over a real estate project, is not involved in the day-to-day
activities, and is not responsible for the marketing of the project, then
the court will not hold the development manager liable as the promoter.