Haryana RERA reaffirms statutory boundaries, mentions what falls beyond its scope of jurisdiction

In what may be described as reiteration of its jurisdiction limits, the Haryana Real Estate Regulatory Authority (H-RERA), Gurugram, has clarified that disputes arising out of commercial leasing arrangements fall outside the regulatory scope of the Real Estate (Regulation and Development) Act, 2016.The matter concerned a commercial unit booked as a restaurant space on the second floor of the project. An Agreement for Sale was executed in August 2019, and the Occupation Certificate was obtained on September 28, 2020. Then, on October 3, 2020, an offer of constructive possession was made. The unit was subsequently leased to a gym and fitness center, and the lease was later terminated.The allottee agreed not to claim rent for the gym's operation.

However, differences later arose regarding rental expectations and related commercial aspects, leading to a complaint seeking inquiry and penal action under the Act.While adjudicating the matter, the Authority elaborated on the concept of constructive possession, a model frequently adopted in commercial real estate projects.In such arrangements, the builder and allottee agree that upon completion of the project and receipt of the Occupation Certificate, possession is deemed handed over, though physical possession may not be taken by the allottee.

Instead, the developer may retain leasing rights in accordance with agreed terms and lease the unit to a tenant of its choosing, with the allottee receiving rental benefits as contractually agreed. The Authority observed that constructive possession in the present case was offered only after the Occupation Certificate was obtained and in terms of the Agreement for Sale.Examining the contractual provisions and documents on record, H-RERA noted that the Agreement governed the rights and obligations of the parties and permitted leasing arrangements as per agreed modalities.

The grievance primarily concerned leasing terms, rental value expectations, and commercial considerations. The Authority emphasized that RERA is intended to regulate obligations relating to development, delivery, and compliance under the Act, and does not extend to adjudicating purely commercial lease transactions negotiated between parties.The order establishes a distinct boundary in the commercial real estate sector, where lease transactions frequently serve as the primary mode of occupation.

The Authority observed that commercial leasing operates on negotiated commercial terms rather than on the premise of consumer vulnerability, which underpins the enactment of RERA. In view of this distinction, invoking RERA in disputes concerning lease arrangements was held to be legally untenable.Finding no violation of statutory obligations under Section 11(4)(a) of the Act and no ground for penal action, the Authority dismissed the complaint, reiterating that remedies for leasing disputes lie outside the regulatory framework of the Real Estate (Regulation and Development) Act, 2016. With inputs from ANI