Judicial Determination of ‘Promoter’ Status under RERA

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 04.08.2026

Judicial Determination of ‘Promoter’ Status under RERA

The Punjab and Haryana High Court’s decision in Saera Auto India Pvt. Ltd. vs. Sunil Yadav & Others (RERA Appeal No. 52 of 2022) provides crucial clarity on the definition of a “Promoter” under the Real Estate (Regulation and Development) Act, 2016 (RERA). This article analyzes the judgment, its background, and its implications for landowners, contractors, and homebuyers.

Background of the Case

Saera Auto India Pvt. Ltd. (the appellant) owned a parcel of land allotted by the Haryana State Industrial Infrastructure and Development Corporation Limited (HSIIDC) for a group housing project. The company engaged M/s Asian Developers Limited (the contractor) to construct a multi-storeyed building, primarily for the welfare of its employees. However, the contractor began selling apartments to third parties, leading to disputes and complaints from allottees.

Key Legal Question

The central issue before the High Court was:

Does a landowner who engages a contractor to construct, market, and sell apartments qualify as a “Promoter” under Section 2(zk) of RERA?

Arguments Presented

• Appellant’s Stand: Saera Auto argued that as the landowner, it merely engaged a contractor for construction and did not authorize the sale of apartments. The company claimed it had no role in marketing or selling the flats and thus should not be considered a “Promoter” under RERA.
• Respondents’ Stand: The allottees and regulatory authorities contended that the landowner’s agreements with the contractor explicitly allowed the contractor to sell and allot flats. They argued that both the landowner and contractor acted as promoters and should be jointly liable for the obligations under RERA.

Examination of Agreements and Conduct

The Court examined the Memorandum of Understanding (MoU) and agreements between Saera Auto and the contractor. Key clauses revealed:

• The contractor had the right to sell and allot flats to buyers.
• The landowner had no role in the sale process but was required to execute transfer deeds for buyers.
• The landowner assisted the contractor in obtaining loans and provided necessary authorizations, including a power of attorney.

Despite later claims of ignorance, the landowner did not take concrete action when informed about the contractor’s sales activities, only sending letters without substantive follow-up.

Legal Reasoning and Interpretation

Section 2(zk) of RERA defines “Promoter” broadly, including:

• Anyone who constructs or causes to be constructed a building for sale.
• Anyone who develops land into a project for sale.
• Any person who acts as a builder, colonizer, contractor, developer, or by any other name.

Explanation: If the person constructing and the person selling are different, both are deemed promoters and are jointly liable.

The Court emphasized that statutory definitions must be interpreted precisely. The object of RERA is to protect homebuyers and ensure accountability in real estate projects. Allowing landowners to escape liability by delegating construction and sales to contractors would defeat the Act’s purpose.

Judgment and Outcome

The High Court held that:

• The landowner, by authorizing the contractor to construct and sell apartments, falls within the definition of “Promoter” under RERA.
• Both the landowner and contractor are jointly and severally liable for refunding amounts to allottees with interest, as directed by the Real Estate Regulatory Authority.
• The appeal by Saera Auto was dismissed.

Implications of the Judgment

For Landowners

• Merely engaging a contractor does not absolve a landowner from RERA obligations if the project is for sale to the public.
• Landowners must ensure compliance with RERA, even if sales are handled by a third party.

For Contractors/Developers

• Contractors authorized to sell apartments are also considered promoters and share liability.

For Homebuyers

• The judgment strengthens buyer protection by ensuring all responsible parties are accountable under RERA.

Conclusion

The Saera Auto judgment reinforces the expansive definition of “Promoter” under RERA. Landowners cannot avoid liability by distancing themselves from sales activities if they have authorized or facilitated such transactions.

This decision upholds the spirit of RERA, ensuring greater transparency and protection for homebuyers in real estate projects.

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Source: Punjab & Haryana High court

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