December 07, 2017
In a major move yesterday, the Bombay High Court has upheld the constitutional validity of RERA [Real Estate (Regulation and Development) Act, 2016]. A Bench of Justices Naresh Patil and Rajesh Ketkar held that RERA has adequate mechanism, which balances the rights and obligations of the promoter, real estate agent and the allottee.
The case taken up by the Bombay High Court comprised of a batch of petitions whereby the Petitioners (comprising of Builders) in the case had challenged the legality and constitutional validity of certain provisions of RERA as being violative of Articles 14, 19(1)(g), 20 and 300-A of the Constitution of India.
Builders’ Contention- In the case, the Builders had challenged some of the intrinsic provisions of RERA like, regulating the transactions of ongoing projects and compelling promoters of such projects to get the project registered under RERA from the date of notification of the provisions of Sections 3 to 19 of the Act.
Registration of ongoing projects- The Petitioner contended that under the RERA, “the ongoing project” has been defined under Section 3 as the project where development is going on and for which completion certificate has not been issued. It was submitted that it would be illegal, unreasonable, arbitrary and unconstitutional to compel the promoters of the ongoing projects to register their projects under RERA by applying provisions of RERA retrospectively.
Petitioners submitted that the proviso to Section 3(1) needs to be declared as illegal and unconstitutional as the RERA has failed to provide reasonable, fair and transparent mechanism to balance the rights and liabilities of the promoters and allottees.
Extension of registration of project under Section 6- In this context the Petitioners submitted that, regarding extension of registration, the learned counsel submitted that though the promoter has been given a liberty to declare the tenure during which the project will be completed while getting the project registered, the extension of registration granted under Section 5 by the authority is restricted to a period of one year which is unreasonable and an arbitrary provision which fails to take into consideration circumstances which are beyond the control of the promoter while carrying out the developmental work. The Petitioner prayed that extension of registration under Section 6 shall not be restricted only to the force majure circumstances provided under the proviso to Section 6 but the authority under the Act shall be given discretion to consider application made by the promoter for extension of the registration in respect of the circumstances due to which the project could not be completed.
The Supreme Court in the case rendered a lengthy judgment wherein it has delved into the legislative intent behind formulation of the provisions in the Act. The core verdict passed by the Bench in the case is enumerated below:
- That the provisions of RERA are prospective in nature. The penalty under Sections 18, 38, 59, 60, 61, 63 and 64 is to be levied on account of contravention of provisions of RERA, prospectively and not retrospectively. These provisions, therefore, cannot be said to be violative of Articles 14, 19(1)(g), 20(1) and 300-A of the Constitution of India.
- That challenge to constitutional validity of first proviso to Section 3(1), Section 3(2)(a), explanation to Section 3, Section 4(2)(l)(C), Section 4(2)(l)(D), Section 5(3) and the first proviso to Section 6, Sections 7, 8, 18, 22, 38, 40, 59, 60, 61, 63, 64 of the Real Estate (Regulation and Development) Act, 2016 fails. These provisions are held to be constitutional, valid and legal.
- Qualification as member of the Appellate Tribunal- one of the qualifications for appointment of Member of Appellate Tribunal prescribed in Section 46(1)(b) as, “or has been a member of the Indian Legal Service and has held the post of Additional Secretary of that service or any equivalent post,” has been struck down by the Court and the Court has held that that two member Bench of the Tribunal shall always consist of a Judicial Member and that in the constitution of the Tribunal, majority of the members shall always be judicial members.