IT Park Constructed For Monthly Rental Is Not A ‘Real Estate Project’ Under RERA; Tenant Under Monthly Lease Is Not An ‘Allottee’: Madras High Court The Court held that RERA Registration is mandated only when a project is developed with an intention to sell and not when the developer retains the ownership and merely leases out the property on a monthly basis. CASE DETAILS Case Title Delphina Consultants LLP v. The Tamil Nadu Real Estate Regulatory Authority & Ors. Case No. WP No. 13561 of 2022 Bench Justice Krishnan Ramasamy Date of Order 13 March 2026 Result Petition Allowed; TNRERA Order Set Aside

IT Park Constructed For Monthly Rental Is Not A ‘Real Estate Project’ Under RERA; Tenant Under Monthly Lease Is Not An ‘Allottee’: Madras High Court
The Court held that RERA Registration is mandated only when a project is developed with an intention to sell and not when the developer retains the ownership and merely leases out the property on a monthly basis.
CASE DETAILS
Case Title Delphina Consultants LLP v. The Tamil Nadu Real Estate Regulatory Authority & Ors.
Case No. WP No. 13561 of 2022
Bench Justice Krishnan Ramasamy
Date of Order 13 March 2026
Result Petition Allowed; TNRERA Order Set
Aside
The Madras High Court has held that a building developed exclusively for leasing out on a monthly rental basis does not constitute a “real estate project” under the Real Estate (Regulation and Development) Act, 2016 (RERA), and is not required to be registered with the Tamil Nadu Real Estate Regulatory Authority (TNRERA). The Court further clarified that a lessee paying monthly rent is not an “allottee” under the Act and that it arises only in the context of a perpetual lease or a sale.
Parties’ Submissions
Counsel for the petitioner argued that RERA registration is triggered only when a project is developed with an intent to sell and not where the developer retains full ownership and leases the premises on a monthly basis. Since the petitioner was not selling the building and intended only to earn rental income, Sections 3 and 4 of RERA had no application.
The Additional Government Pleader for TNRERA and the Sub Registrar countered that the project attracted Section 3(1)(2)(a) of RERA like any other real estate project and was required to be registered. CMDA distanced itself from the dispute, clarifying that its role was confined to approving building plans and ensuring regulatory compliance.
Issues Framed by the Court
1. Whether the petitioner’s project falls under the definition of “Real Estate Project” under RERA, 2016?
2. Whether the lessee of the petitioner falls within the definition of “allottee” under
RERA?
3. Whether the petitioner is required to register its project with TNRERA?
Court’s Analysis
With regard to the first issue, the Court examined Section 2(zn) of RERA, which defines a “real estate project” as the development of a building or land for the purpose of selling apartments, plots or buildings. Since the petitioner constructed the IT Park exclusively to lease it on a monthly basis and not to sell it and held that the project fell outside this definition and was not liable for registration under Sections 3 or 4 of the Act.
As for the second issue, the Court then turned to Section 2(d) of RERA, which defines “allottee” to cover persons to whom a property has been allotted, sold or transferred but which expressly excludes a person to whom a property is given on rent. Hon’ble Mr. Justice Krishnan Ramasamy observed that,
“The question of sale of leasehold property arises only if the person has acquired the property under a perpetual lease — otherwise, it would be considered as normal leasehold property or rental property, and the lessee shall not be considered as an ‘allottee’ under Section 2(d) of RERA. ”
The Court clarified the boundary between a leaseholder who qualifies as an allottee and one who does not:
a. A person who acquires property under a perpetual lease is considered as an allottee, since such a person holds functions similar to that of an owner.
b. A person who pays monthly rent is not to be considered as an allottee, as the possession is temporary and terminable and the owner retains absolute title at all times.
On a perusal of the lease deed, the Court found it beyond doubt that the petitioner had leased out the IT Park on a monthly rent basis for five years, retaining absolute ownership throughout. Accordingly, the lessee was held to fall outside the definition of “allottee.”
Having resolved the first two issues in the petitioner’s favour, the Court concluded that the petitioner’s project did not qualify as a real estate project and its lessees were not allottees. Therefore, there is no obligation to register with TNRERA, and the impugned order was held to be legally unsustainable.