The Punjab and Haryana high court has made it clear that a proprietary concern and the proprietor are one and the same and that they cannot be treated as separate juristic entities.
With this, the Haryana Real Estate Regulatory Authority (HRERA) can charge an equal amount from those registering themselves as real estate agents as an individual or a proprietary firm.
Earlier, the HRERA had a provision of charging Rs 25,000 from an individual proprietor registering as a real estate agent under HRERA and Rs 2.5 lakh for ‘other than individual’ – those registering themselves as proprietary firms.
There was a difference in the amount charged for renewal of licence – Rs 5,000 for an individual and Rs 50,000 for ‘other than individual.’
“The proprietary concern derives its identity and individuality from the proprietor and subsumes itself in the proprietor. Segregation of the two is incomprehensible in law when it comes to determining their rights and liabilities and legal fiction regards them as one.
They would thus fall under the definition of an individual. Consequently, the petitioners as sole proprietors cannot be treated as an entity ‘other than individual’ when the registration as a real estate agent is in the name of the proprietary concerned,” the HC clarified. Justice Vinod S Bhardwaj passed these orders while allowing a plea filed by the Association of Property Professionals and others.
The question that arose for consideration in the petition was whether the proprietorship concern is a juristic entity separate and distinct from the proprietor and thus liable to pay the charges applicable to the category “other than individuals” instead of the category of “individuals” under the RERA Act.
The petitioners were individuals engaged in the business of real estate i.e. introducing prospective buyers and sellers to each other for negotiation in relation to the sale and purchase of real estate property. The petitioners, called real estate agents, are sole proprietors carrying on their work as individuals under the name of their respective sole proprietorship concerns. The petitioners have collectively formed an association of certified realtors of India to enable its members to conduct their business with professional competence and to provide ethical real estate services.
The statute makes it obligatory for agents to register themselves with the HRERA. The term “real estate agent” is defined in the said Act. The counsel for the petitioners, advocate Vaibhav Jain, argued that the fee notified for the category “other than individual” has been illegally claimed from them. He submitted that a sole proprietorship has no existence beyond the “individual” and does not have any separate juristic entity separate from the individual.
“The proprietary concern is only the business name in which the proprietor carries on the business. Hence, any reference to the sole proprietorship concern means and includes the sole proprietor thereof, who is an individual, and vice versa,” he submitted.