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SUPREME COURT OF INDIA
UDAY UMESH LALIT, AJAY RASTOGI, ANIRUDDHA BOSE, JJ.
M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. - APPELLANTS
VERSUS
STATE OF U.P. & ORS. ETC. - RESPONDENTS
CIVIL APPEAL NO(S). 6745-6749 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 3711-3715 OF 2021) WITH CIVIL APPEAL NO(S). 6750 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 14733 OF 2020), CIVIL APPEAL NO(S). 6751 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 2647 OF 2021), CIVIL APPEAL NO(S). 6752 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 3185 OF 2021), CIVIL APPEAL NO(S). 6753 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 3426 OF 2021), CIVIL APPEAL NO(S). 6754 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 6199 OF 2021), CIVIL APPEAL NO(S). 6755 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 6671 OF 2021) CIVIL APPEAL NO(S). 6756 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 6711 OF 2021), CIVIL APPEAL NO(S). 6757 OF 2021 (ARISING OUT OF SLP(CIVIL) NO(S). 1670 OF 2021)
DECIDED ON : 11-11-2021
(A) Real Estate(Regulation and Development) Act, 2016 – Section 3 – Whether Act 2016 is retrospective or retroactive in its operation and what will be its legal consequence if tested on anvil of Constitution of India – Legislative intent is to make the Act applicable not only to projects which were yet to commence after the Act became operational but also to bring under its fold ongoing projects and to protect from its inception inter se rights of stake holders, including allottees/home buyers, promoters and real estate agents while imposing certain duties and responsibilities on each of them and to regulate, administer and supervise unregulated real estate sector within fold of real estate authority – Clear and unambiguous language of statute is retroactive in operation and by applying purposive interpretation rule of statutory construction, only one result is possible, i.e., legislature consciously enacted a retroactive statute to ensure sale of plot, apartment or building, real estate project is done in an efficient and transparent manner so that interest of consumers in real estate sector is protected by all means – Sections 13, 18(1) and 19(4) are all beneficial provisions for safeguarding pecuniary interest of consumers/allottees – If the Act is held prospective then adjudicatory mechanism under Section 31 would not be available to any of allottee for an ongoing project – First proviso to Section 3(1) is not in any manner violative of Articles 14 and 19(1)(g) of Constitution of India – Parliament is always competent to enact any law affecting antecedent events under its fold within parameters of law – From scheme of Act 2016, its application is retroactive in character and projects already completed or to which the completion certificate has been granted are not under its fold and vested or accrued rights, if any, in no manner are affected – At the same time, it will apply after getting ongoing projects and future projects registered under Section 3 to prospectively follow mandate of Act 2016 – Legislative power to make law with prospective/retrospective effect is well recognized and it would not be permissible for appellants/promoters to say that they have any vested right in dealing with completion of project by leaving allottees in lurch, in a helpless and miserable condition that at least may not be acceptable within four corners of law. (Paras 37, 41, 42, 45, 47 and 54)
(B) Interpretation of Statute – Retroactive Statute – Statute is not retrospective merely because it affects existing rights or its retrospection because a part of requisites for its action is drawn from a time antecedent to its passing, at the same time, retroactive statute means a statute which creates a new obligation on transactions or considerations already passed or destroys or impairs vested rights – Merely because enactment as prayed is made retroactive in its operation, it cannot be said to be either violative of Articles 14 or 19(1)(g) of Constitution of India. (Paras 45 and 51)
(C) Real Estate(Regulation and Development) Act, 2016 – Sections 12, 14, 18 and 19 read with Section 71 – Uttar Pradesh Real Estate(Regulation and Development) Rules, 2016 – Rules 33(1) and 34(1) – Flat-Buyers Agreement – Direction to refund principal amount to allottees(Respondents) along with interest – Legislature in its wisdom has made a specific provision delineating power to be exercised by regulatory authority/adjudicating officer – “Refund of the amount” and “compensation” are two distinct components which allottee or person aggrieved is entitled to claim if promoter has not been able to hand over possession with a nature of enquiry and mechanism provided under the Act – Scope and functions of adjudicating officer are only for “adjudging compensation” under Sections 12, 14, 18 and 19 of Act – There is a complete delineation of jurisdiction vested with regulatory authority and adjudicating officer – If there is any breach or violation of provisions of Sections 12, 14, 18 and 19 of Act by promoter, such a complaint straightaway has to be filed before regulatory authority – What is being referable to adjudicating officer is for adjudging compensation, as reflected under Section 71 of Act and accordingly rules and regulations have been framed by authority for streamlining complaints which are made by aggrieved person either on account of violation of provisions of Sections 12, 14, 18 and 19 or for adjudging compensation and there appears no question of any inconsistency being made, in given circumstances, either by regulatory authority or adjudicating officer – Although the Act indicates distinct expressions like ‘refund’, ‘interest’, ‘penalty’ and ‘compensation’, when it comes to refund of amount, and interest on refund amount, or directing payment of interest for delayed delivery of possession, or penalty and interest thereon, it is regulatory authority which has power to examine and determine outcome of a complaint – At the same time, when it comes to a question of seeking relief of adjudging compensation and interest thereon under Sections 12, 14, 18 and 19, adjudicating officer exclusively has power to determine, keeping in view collective reading of Section 71 read with Section 72 of Act – If adjudication under Sections 12, 14, 18 and 19 other than compensation as envisaged, if extended to adjudicating officer, it may intend to expand ambit and scope of powers and functions of adjudicating officer under Section 71 and that would be against mandate of Act 2016 – To safeguard interests of parties, on being decided by regulatory authority/adjudicating officer, it is always subject to appeal before Tribunal under Section 43(5) provided condition of pre-deposit being complied with can be further challenged in appeal before High Court under Section 58 of Act and, thus, legislature has put reasonable restriction and safeguards at all stages. (Paras 75, 79, 81, 82 and 86)
(D) Interpretation of Statute – Rule of Literal Construction – When words of statute are clear, plain and unambiguous, Courts are bound to give effect to that meaning regardless of its consequence – It is always advisable to interpret legislative wisdom in literary sense as being intended by legislature and Courts are not supposed to embark upon an inquiry and find out a solution in substituting legislative wisdom which is always to be avoided – Court should read the section in literal sense and cannot rewrite it to suit its convenience; nor does any canon of construction permit court to read the section in such a manner as to render it to some extent otiose – If plain interpretation does not fulfil mandate and object of Act, Apex Court has to interpret law in consonance with spirit and purpose of statute. (Paras 85, 115 and 140)
(E) Real Estate(Regulation and Development) Act, 2016 – Section 81 – Delegation of power to hear complaints – Section 81 of Act 2016 empowers authority, by general or special order in writing, to delegate its powers to any member of authority, subject to conditions as may be specified in the order, such of powers and functions under the Act – What has been excluded is power to make regulations under Section 85, rest of powers exercised by authority can always be delegated to any of its members for expeditious disposal of applications/complaints including complaints filed under Section 31 of Act and exercise of such power by a general and special order to its members is always permissible under provisions of Act – If delegation is made at any point of time which is in contravention to scheme of Act or is not going to serve the purpose and object with which power to delegate has been mandated under Section 81 of Act, it is always open for judicial review – However, power to be exercised by adjudicating officer who has been appointed by authority in consultation with appropriate Government under Section 71 of Act, such powers are non-delegable to any of its members or officers in exercise of power under Section 81 of Act. (Paras 112, 115, 116 and 118)
(F) Real Estate(Regulation and Development) Act, 2016 – Section 43(5) – Whether condition of pre-deposit under proviso to Section 43(5) of Act for entertaining substantive right of appeal is sustainable in law – Promoters and allottees are distinctly identifiable, separate class of persons having been differently and separately dealt with under various provisions of Act – Obligation cast upon promoter of pre-deposit under Section 43(5) of the Act, being a class in itself, and promoters who are in receipt of money which is being claimed by home buyers/allottees for refund and determined in first place by competent authority, if legislature in its wisdom intended to ensure that money once determined by authority be saved if appeal is to be preferred at instance of promoter after due compliance of pre-deposit as envisaged under Section 43(5) of Act, in no circumstance can be said to be onerous or in violation of Articles 14 or 19(1)(g) of Constitution of India – Intention of legislature appears to be to ensure that rights of decree holder (Successful Party) is to be protected and only genuine bona fide appeals are to be entertained. (Paras 125, 130 and 137)
(G) Real Estate(Regulation and Development) Act, 2016 – Section 43(5) – Whether authority has power to issue recovery certificate for recovery of principal amount under Section 40(1) of Act – Taking into consideration the scheme of the Act what is to be returned to allottee is his own life savings with interest on computed/quantified by authority becomes recoverable and such arrear becomes enforceable in law--Amount which has been determined and refundable to allottees/home buyers either by authority or adjudicating officer in terms of order is recoverable within ambit of Section 40(1) of Act. (Para 141)
Facts of the case:
Present batch of appeals are filed at the instance of promoter/real estate developer assailing the common issues and certain provisions of The Real Estate(Regulation and Development) Act, 2016, The Uttar Pradesh Real Estate(Regulation and Development) Rules, 2016 and functioning of Uttar Pradesh Real Estate Regulatory Authority, although being decided by separate orders by High Court of Allahabad, since the self-same questions are involved with the consent are being decided by the present judgment.
Questions for consideration in the present batch of appeals are:-
Whether Act 2016 is retrospective or retroactive in its operation and what will be its legal consequence if tested on anvil of the Constitution of India?
2. Whether the authority has jurisdiction to direct return/refund of the amount to the allottee under Sections 12, 14, 18 and 19 of 18 the Act or the jurisdiction exclusively lies with the adjudicating officer under Section 71 of the Act?
3. Whether Section 81 of the Act authorizes the authority to delegate its powers to a single member of the authority to hear complaints instituted under Section 31 of the Act?
4. Whether condition of pre-deposit under proviso to Section 43(5) of the Act for entertaining substantive right of appeal is sustainable in law?
5. Whether authority has power to issue recovery certificate for recovery of principal amount under Section 40(1) of Act?
Findings of Court:
If any of the appellant intends to prefer appeal before the Appellate Tribunal against the order of authority, it may be open for him to challenge within 30 days from today provided the appellant(s) comply with the condition of pre-deposit as contemplated under the proviso to Section 43(5) of the Act which may be decided by the Tribunal on its own merits in accordance with law.
Result : Appeals disposed of.
Certainly. Based on the provided legal document, here are the key points:
The Real Estate (Regulation and Development) Act, 2016 is intended to be applicable retroactively, covering ongoing projects that commenced prior to the enactment, especially those without a completion certificate, to ensure transparency, accountability, and protection of consumer interests (!) (!) (!) (!) (!) .
The Act aims to regulate the real estate sector comprehensively, including registration of projects, adherence to sanctioned plans, and establishing mechanisms for dispute resolution, with specific provisions for refund, compensation, and interest in cases of delay or default by promoters (!) (!) (!) (!) (!) (!) (!) (!) .
The rights of allottees to seek refund, along with interest and compensation, are unconditional and primarily governed by Sections 18 and 19 of the Act, which specify that if a promoter fails to deliver possession or complete the project, the allottee is entitled to a refund on demand, with interest and compensation, without the need for prior adjudication (!) (!) (!) (!) (!) .
The powers to adjudicate disputes related to refunds are vested with the regulatory authority, whereas the adjudicating officer is specifically empowered to determine compensation, interest, and penalties under Sections 71 and 72 of the Act (!) (!) (!) (!) .
Complaints regarding violations or defaults can be filed either with the authority or directly with the adjudicating officer, depending on the nature of the relief sought—refund claims are to be filed with the authority, while compensation claims are to be filed with the adjudicating officer (!) (!) (!) .
The authority has the power to delegate its functions, including hearing complaints, to its members, particularly to a single member, via specific orders under Section 81, provided such delegation is within the framework of the Act and regulations (!) (!) (!) (!) .
The procedure for filing appeals before the Appellate Tribunal requires pre-deposit of a specified percentage of the amount involved—30% of penalties or the total amount payable to the allottee, including interest and compensation, to ensure the genuineness of appeals and to safeguard the interests of all parties (!) (!) (!) (!) (!) .
The condition of pre-deposit is justified as a reasonable safeguard to prevent frivolous appeals, protect the rights of the allottees, and ensure that the promoter's right to appeal does not undermine the enforcement of refunds and other obligations under the Act (!) (!) (!) (!) .
The authority also has the power to issue recovery certificates for the enforcement of refunds, interest, penalties, and compensation, which can be recovered as arrears of land revenue, aligning with the purpose of ensuring speedy recovery of amounts due to allottees (!) (!) (!) .
The scheme of the Act clearly delineates the roles and powers of the authority and the adjudicating officer, emphasizing that refunds and interest are primarily to be processed by the authority, while compensation and penalties are to be adjudicated by the officer, with mechanisms for appeals and review in place (!) (!) (!) (!) (!) .
Delegation of powers to a single member for specific functions, including refunds, is permissible under the Act, provided it is done through proper orders and within the statutory framework, ensuring expeditious disposal of complaints without infringing on the core judicial functions of the authority (!) (!) (!) .
The Act's provisions are designed to balance the rights of consumers and promoters, with clear distinctions in procedures, rights, and remedies, and include safeguards such as pre-deposit conditions to prevent abuse and ensure genuine dispute resolution (!) (!) (!) .
The legal framework supports the view that retrospective application of the Act to ongoing projects is valid, especially to protect consumer interests, and that vested rights are not adversely affected where projects are completed or have received certificates prior to the Act’s commencement (!) (!) (!) (!) (!) .
The provisions for dispute resolution, refunds, and penalties are structured to ensure timely and effective enforcement, with specific mechanisms for appeals, review, and recovery, all within the statutory powers delegated to the respective authorities and officers (!) (!) (!) (!) (!) .
Overall, the legal provisions aim to create a transparent, accountable, and consumer-friendly regulatory environment for the real estate sector, with well-defined roles, powers, and procedural safeguards for all stakeholders involved (!) (!) (!) (!) (!) .
Please let me know if you require further elaboration or specific legal advice regarding any of these points.
JUDGMENT :
Rastogi, J.
1. Leave granted.
2. The present batch of appeals are filed at the instance of promoter/real estate developer assailing the common issues and certain provisions of The Real Estate(Regulation and Development) Act, 2016(hereinafter being referred to as “the Act”), The Uttar Pradesh Real Estate(Regulation and Development) Rules, 2016 (hereinafter referred to as “the Rules”) and the functioning of the Uttar Pradesh Real Estate Regulatory Authority (hereinafter referred to as “the Authority”), although being decided by separate orders by the High Court of Allahabad, since the selfsame questions are involved with the consent are being decided by the present judgment.
3. The respondents herein are the allottees/home buyers who have made their substantial investment from their hard earned savings under the belief that the promotor/real estate developer will hand over possession of the unit in terms of home buyer’s agreement but their bonafide belief stood shaken when the promotors failed to hand over possession of a unit/plot/building in terms of the agreement and complaints were instituted by the home buyers for refund of the investment made along with interest under Section 31 of the Act.
4. The impugned orders came to be passed by the single member of the authority on the complaint instituted at the instance of the home buyers/allottees after hearing the parties with the direction to refund the principal amount along with interest(MCLR + 1%) as prescribed by the State Government under the Act. In the ordinary course of business, the order passed by the authority is appealable under Section 43(5) of the Act provided the statutory compliance of pre-deposit being made under proviso to Section 43(5) before the Appellate Tribunal but the promoter/real estate developers approached the High Court by filing a writ petition under Articles 226 and 227 of the Constitution questioning the order passed by the authority holding it to be without jurisdiction as it has been passed by a single member of the authority who according to the appellants holds no jurisdiction to pass such orders of refund of the amount as contemplated under Section 18 of the Act and have also challenged the condition of pre-deposit as envisaged under proviso to Section 43(5) of the Act for filing of a statutory appeal and raised certain ancillary questions for consideration in writ jurisdiction of the High Court of Allahabad. Being aggrieved by the orders passed by the High Court dismissing their writ petitions, the present batch of appeals have been preferred at the instance of the promoters/real estate developers.
5. Before adverting to the legal submissions made before us, we consider it appropriate to take a bird’s eye view of the scheme of the Act 2016 which may be apposite for proper appreciation of the submissions made by the parties.
Object and Reasons of the Act 2016
6. Over the past two decades, with the growth of population and the attraction of the people to shift towards urbanization, the demand for housing increased manifold. Government also introduced various housing schemes to cope with the increasing demand but the experience shows that demands of the housing sector could not be meted out by the Government at its own level for various reasons to meet the requirement, the private players entered into the real estate sector in meeting out the rising demand of housing. Though availability of loans, both from public and private banks, become easier, still the High rate of interest and the EMI has posed additional financial burden on the people.
7. At the given time, the real estate and housing sector was largely unregulated and the consequence was that consumers were unable to procure complete information for enforced accountability towards builders and developers in the absence of an effective mechanism in place. Though, The Consumer Prot
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