The new Real Estate Regulation bill does not explicitly cover commercial property and instead mentions residential flats in several places. Has it been deliberately left out, or is it covered by implication? Experts have differing views

Does the draft Real Estate (Regulation and Development) Bill cover commercial property? Although most media discussions seem to assume that commercial property is excluded, it may not be so simple.  On 12^th June, two of the best-known experts in real estate rules—Parimal Shroff and Pranay Vakil—discussed the issue at the Moneylife Foundation event on the bill and concluded that it may not be easy to claim that commercial property is excluded unless emphatically stated by the act, as and when it is finally cleared by parliament and signed by the president.

Pranay Vakil, founder chairman of Praron Consultancy and former chairman of Knight Frank India, said that the draft bill of 2011 does not include commercial development. However, there was a second draft in 2012, which was circulated to industry associations for discussion. This updated draft bill of 2012 was also not in the public domain, although the government claims that the realty regulator is meant to benefit ordinary persons.  Moneylife uploaded the 2012 draft bill for the first time (click here - on 13th June.

Parimal Shroff, one of India’s leading experts in realty law said that it is too early to draw any conclusions since the final bill cleared by the Cabinet is not yet released to the public. But he believes that the bill covers every aspect of property transactions including the sale of land. According to him this bill includes immovable property of any kind such as plots, land, premises and residential premises, including ‘colonisers’. “It covers for the first time comprehensively and uniformly anything you do with immovable property—from small projects to townships.”

This would seem to be the case based on an interpretation of how a promoter has been defined. The definition of promoter as per Section 2 (zc) says the regulation would include “any development authority or any other public body in respect of allottees and also any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land.” There is no explicit mention that development would only mean residential projects. Also, the Bill uses generic terms like builder and coloniser. Clearly, in a building where the ground floor is meant for commercial use and is an integrated part of the building, the ‘promoter’ ought to stand for the entire project including the commercial part. The same applies for a township where there are commercial buildings, apart from residential ones.

According to Mr Vakil, several chambers of industry, in their representations, had asked the government why the bill was limiting itself to residential development. The whole issue will get cleared when the bill is publicly put up by the ministry.
 

Read more about the Real Estate Regulation Bill:
 

• A bulk allottee or buyer will also be considered as a promoter causing confusion

• The humungous job of monitoring 30,000 crore sq ft of construction planned

• Registration of brokers: Huge challenges ahead

• Moneylife Foundation event on decoding the realty regulator

• Here is the Real Estate Bill, kept hidden from public
• Centre and states may collude on parallel laws, cost