Madhya Pradesh high court sets aside RERA order for improperly stamped real estate project registration application

In a recent judgment, the Madhya Pradesh High Court at Indore overturned an order issued by the Real Estate Regulatory Authority (RERA). The RERA had dismissed a real estate company’s application for project registration under the Real Estate (Regulation and Development) Act, 2016, citing improper stamping of the development agreement. The court held that instead of dismissing the application, RERA should have referred the document to the Registrar of Stamps for impounding.

Accrual Realities, a real estate company, had entered into a development agreement named “24 Carat Extn.” with landowners for a joint venture project. After completing the necessary formalities, Accrual Realities submitted an application for project registration under Section 4 of the Real Estate (Regulation and Development) Act, 2016. However, RERA rejected the application, stating that the agreement executed on February 11, 2021, was not adequately stamped. RERA claimed that the stamp duty payable was Rs.22,40,333/-, whereas Accrual Realities had paid only Rs.12,45,630/-. Dissatisfied with RERA’s decision, Accrual Realities approached the High Court through a writ petition.

Justice Vivek Rusia, the single judge hearing the case, examined RERA’s order and observed that if RERA found the agreement to be improperly stamped, its duty was to refer the document to the Registrar of Stamps for impounding, rather than outrightly dismissing the application for registration. The court emphasized that RERA had the authority, under the Indian Stamps Act, to impound inadequately stamped documents.

The State of Madhya Pradesh and the Inspector General, Department of Stamps and Registration, filed their respective replies to the petition. They concurred that if any authority discovered an instrument to be improperly stamped, they could impound it under the Indian Stamps Act.

Based on the above considerations, the High Court set aside RERA’s order dated April 19, 2022, and remanded the matter back to RERA for fresh consideration. The court directed RERA to address the issue of stamp duty payment after granting an opportunity to Accrual Realities to present their case. If necessary, RERA was instructed to obtain a report from the Registrar or Sub Registrar of Stamps. Additionally, if any stamp duty deficiency was identified, the court ordered that Accrual Realities be given an opportunity to rectify the shortfall. The court set a time frame of 45 days for RERA to complete the entire process.

The Madhya Pradesh High Court’s decision, in this case, highlights the importance of following due process in matters of stamp duty and registration under the Real Estate (Regulation and Development) Act, 2016. The court’s ruling emphasizes that when an authority such as RERA determines that an agreement is improperly stamped, it should refer the document to the Registrar of Stamps for impounding, rather than dismissing the application outright. This decision ensures that proper stamp duty is paid and provides an opportunity for rectification if any deficiency is found. It establishes a fair and transparent process for the registration of real estate projects, safeguarding the interests of all parties involved