IBC 2016 RPs and RERA: Promoter Status and Liability

While there's no simple "yes" or "no" answer, here's a breakdown of why a Resolution Professional (RP) is generally not considered a ‘Promoter’ under Section 43(5) of RERA, along with important nuances:

Understanding the Roles

• Promoter (under RERA): An individual or entity that develops and sells real estate projects. They initiate, plan, and execute the project, bearing the primary responsibility for its completion and compliance with RERA.
• Resolution Professional (under IBC): Appointed under the Insolvency and Bankruptcy Code (IBC) to manage the affairs of a company undergoing insolvency resolution. Their main goal is to revive the company or maximize asset value for creditors.

Why RP is usually NOT a Promoter under RERA

1. Temporary Role: The RP's role is temporary, focused on the insolvency resolution process. They are not intended to be the long-term developer or owner of the project.
2. Limited Scope: The RP's primary duty is to manage the corporate debtor's assets and liabilities, which may include real estate projects. Their actions are governed by the IBC, not primarily by RERA.
3. No Intention to Develop: The RP's main objective is not to develop and sell real estate. They might complete ongoing projects to maximize value, but they don't typically initiate new projects.

Section 43(5) of RERA

This section deals with the liability of the promoter in case of structural defects or deficiencies in the project. Since the RP is not the original promoter and their role is temporary, they are generally not held liable under this section for defects caused by the previous management.

Important Nuances

• RP Completing Projects: If the RP takes significant steps to complete a stalled project and assumes responsibilities similar to a promoter, they might be subject to certain RERA obligations, but not necessarily be termed a "promoter."

• Court Decisions: Specific cases and court interpretations can further clarify the RP's role and liabilities under RERA.

In Conclusion

While an RP might have some responsibilities related to real estate projects during the insolvency process, they are generally not considered a "promoter" under RERA, especially for the purposes of Section 43(5). Their role is primarily governed by the IBC, with the aim of resolving insolvency, not acting as a traditional real estate developer.

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