real estate

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Anup Thakur (Presiding Member), held that a person who purchases a fully constructed real estate property (a Villa in the present case) with eyes wide open, cannot subsequently claim what all was offered in the original brochure.

Gist of the Case

In the instant matter, appellants case was that the complainant was an individual who had bought and moved into his villa in April, 2013 with his eyes wide open, under a specific agreement.

In light of the above, complainants could not file and maintain a consumer complaint qua the common items/concerns of all the other residents of the project.

Senior Counsel for the Appellants raised the following issues:

(i) Whether after having taken possession of the Villa, it was permissible to raise grievances regarding defects, given that the complainants had purchased an already constructed villa and had thus done so with their eyes wide open;

(ii) Whether the complainant, being one individual occupying one villa from out of 97 villas and 47 apartments in a housing complex could seek reliefs affecting all other residents, through an individual consumer complaint;

(iii) a sub-issue was whether the State Commission could have granted both reliefs which were, in fact, sought as an alternative to each other.

Analysis and Decision

Bench stated that complainant’s grievance qua the clubhouse as being only for the exclusive use of the residents of the villa, to the exclusive of all others, cannot stand. As per the agreement referred above, the complainant was provided with the facility of a clubhouse and he had paid a fee for it, in a similar manner, others including the apartment owners had also paid a fee for the use of the clubhouse.

Therefore, the Commission was unable to understand regarding how the complainant, in his individual capacity was claiming exclusiveness of the clubhouse only for the residents of the villa.

With regarding making demands by referring to the brochure, Commission answered the complainant that as far as the complainant was concerned, he visited the site, the villa, liked what he saw, signed an agreement, and was given possession of that, within a few months. The complainant clearly did all this with his eyes wide open. It was therefore not for him to now refer to what all had been promised in the brochure(s) and start making demands based on that.

Bench on perusal of the record opined that the instant appeal against the impugned order of the State Commission deserved consideration and could be partly allowed.

State Commission’s Order

Firstly the OP was directed to pay a consolidated amount of Rs 2 Lakh as compensation for the defects and deficiencies in the construction. The said order was evidence-based and for the said reason it is to be upheld.

Bench in view of the above considered it just that the amount of Rs 2 lakh be paid with simple interest of 6% per annum.

Bench however did not agree with the rest of the State Commission’s Order viz.

  • restraining OP from extending the clubhouse facilities to others,
  • directing the OPs to construct 6’ feet high boundary wall on the fourth remaining side of the campus
  • directing the OPs to construct 30’ X 40’ CC road at the entrance and in the entire campus.

Commission expressed that there was nothing in the complaint petition to show that there was even a claim that all other villa residents were of the same view. Indeed, if this had been the case, the complainant would have then filed a joint complaint or have come through the Association of villa owners.

Bench appreciated that the complainants had signed the agreement, after applying their mind to the aspects of community living in a villa in a project which had 96 other villas and that they were not the original allottees; rather, they came in January 2013, saw the villa, were satisfied with what they saw and were told, and then, with eyes wide open, signed the agreement.

The agreement in itself clearly spelt out that it would alone henceforth govern the relationship between the complainant and the OP.

Clause 4 of the agreement made the above aspect abundantly clear:

“4. The purchaser has applied for allotment of Villa No. 17 in the above said scheme “Manglam’s Arpan” and the seller has agreed to allot to the purchaser Villa/Shop in the said Scheme on the following terms & conditions. All other agreements and/or arrangements or letters, assurances written, oral or implied hereto, sales brochures, newspapers advertisements, etc. before made and which are in any way contradictory to or inconsistent with this agreement shall have no effect. The sellers hereby agrees to sell Purchaser hereby agrees to purchase on terms &conditions mentioned in this Agreement.”

Bench concluded that the complainants in light of the agreement could not have laid any claim to what was promised in the brochure. Along with this, the Commission added that the complainant could not have certainly claimed anything of behalf of themselves as well as on behalf of other residents and that too since December 2012, when they were nowhere in the picture.

A narrative which goes beyond what falls in the domain of the individual complainant can still have relevance but confined strictly to what directly affects the complainant, not beyond that.

The commission while partly allowing the appeal, laid down the following directions:

(i) order of the State Commission in para 19 (a), directing the OPs to pay to the complainants a consolidated amount of Rs 2 lakh as compensation for defects and deficiencies in construction, is upheld;

(ii) This amount of Rs.2 lakh shall carry interest @ 6% p.a. from the date of the impugned order of the State Commission, till the date of actual payment;

(iii) Rest of the order of the State Commission relating to common facilities and costs is set aside.

[Manglam Build-Developers Ltd. v. Aviral Mathur, 2021 SCC OnLine NCDRC 15, decided on 12-01-2021]

Advocates who represented the parties:

For the Appellant: Sukumar Pattjoshi, Sr. Adv. with Sunil Mund, Advocate

For the Respondent: Debesh Panda, Advocate with Naman Maheshwari, Advocate

Op EdsOP. ED.

The Benami Transactions (Prohibition) Act, 1988 (Original Act) was enacted in the year 1988 with the object of prohibiting benami transactions. A benami transaction in simple terms refers to a transaction where a person actually purchasing a property does not do so in his own name, and does so in the name of another person, who is merely a “name lender” or a “benamidar”. Such person who pays consideration is commonly referred to as the “beneficial owner”.

The Original Act contained a mere 9 sections, including the power of acquisition of such benami property by an appropriate authority and also powers to prosecute offenders. Although the Original Act empowered the Central Government to make rules under Section 8, no such rules were ever framed. Therefore, the Original Act was widely regarded as a “toothless” legislation, which though empowered the State to confiscate properties, was rarely used and most importantly, no procedure, rules or mechanism were prescribed to give effect to the provisions of the Original Act.

With the change of dispensation in Parliament, the then Finance Minister, Late Mr. Arun Jaitley, sought to “give teeth to” this “toothless” legislation by introducing the Benami Transactions (Prohibition) Amendment Act, 2016. The Amendment was passed into law and came into force on 1-11-2016. The amended legislation was rechristened as the Prohibition of Benami Property Transactions Act, 1988 (New Act) and sought to amend the Original Act by adding as many as 72 sections and proper Rules for the effective implementation of the New Act.

But why did the Government opt for amending the Original Act instead of enacting a fresh legislation? The reason is not far to see, and was explained by Late Mr. Jaitley in Parliament in answer to a question where he categorically stated that:

Anybody will know that a law can be made retrospective, but under Article 20 of the Constitution of India, penal laws cannot be made retrospective. The simple answer to the question why we did not bring a new law is that a new law would have meant giving immunity to everybody from the penal provisions during the period 1988 to 2016 and giving a 28-year immunity would not have been in larger public interest, particularly if large amounts of unaccounted black money have been used to transact those transactions.”

But the question which arises is whether such a course is legally permissible? Can the legislature do something indirectly which it could not have done directly? The answer in my view is that such a course could not have adopted, especially given the strict provisions of the New Act, which have the effect of not only depriving a person of his property but also of initiation of criminal prosecution against a person found guilty under the New Act.

The Supreme Court has repeatedly held that amendment to a statute can be implemented retrospectively, however, such retrospective amendment cannot defeat the substantive rights of a party. It is well recognised that generally amendments to procedural laws may be retrospective, but when substantive rights of parties are affected, can such laws be implemented retrospectively?

The New Act was notified vide Notification No. 98 of 2016 dated 25-10-2016, which appointed the 1st day of November, 2016 as the date on which the provisions shall come into force.

Section 1(3) Remains Untouched

Interestingly, the New Act keeps Section 1(3) of the Original Act untouched, which provided that:

(3) The provisions of Sections 3, 5 and 8 shall come into force at once, and the remaining provisions of this Act shall be deemed to have come into force on the 19th day of May, 1988.

The aforesaid date of 19-5-1988 relates to the coming into force of the Presidential Ordinance whereas the date of 5-9-1988 relates to the date when the Original Act was brought into force. It is for this reason that Section 1(3) reads that Sections 3, 5 and 8 shall come into force at once.

In the New Act, Section 1(3) has been retained in its original form even though there are substantial amendments to Sections 3, 5 and 8. The said provision creates an anomalous situation with the use of the words “shall come into force at once”. What date does this relate to is something that requires deep consideration particularly in view of the substantive amendments brought about to the aforesaid sections. A literal reading of the words “shall come into force at once” lends credence to the interpretation that the amendments to the said section shall be effective only post 1-11-2016, thus making the provision prospective in its operation.

Substantive Amendments in the New Act

Substantive changes have been made to various provisions of the Original Act, and there is no doubt that such amendments are not mere procedural amendments. In fact, substantive changes affecting the vital rights of persons have been made to the New Act, thus warranting a prospective operation. Some of these substantive changes are:

  • Section 2(9) of the New Act expands the definition of “benami transaction” and brings within its fold certain transactions, which were hitherto not considered benami. This certainly qualifies as a substantive change of the scope and operation of the New Act.
  • Section 3 of the New Act seeks to make a distinction between transactions entered into prior to the New Act, by providing for a lesser punishment under Section 3(2) for past acts and a higher punishment under Chapter VII of the New Act for acts done after 1-11-2016. Such cases are covered by Section 3(3) of the New Act. This also leads us to the inevitable conclusion that the applicability of the new regime and punishment thereunder is only prospective.
  • Section 5 read with Chapter IV of the New Act provide for attachment, adjudication and confiscation of the properties under the New Act. Under the Original Act, though the provision for confiscation was present, however, the same was to be undertaken in terms of the procedure and rules prescribed. It is an admitted position that no rules were ever framed or brought into force for the said purpose.
  • Thus, even though the substantive provision for confiscation was present under the Original Act, the absence of rules framed thereunder would certainly militate against the prescription of the detailed procedure now laid down (and rules framed) under the New Act. This, some may argue, is directly contrary to Article 20 of the Constitution of India as Section 5 (without rules) of the Original Act was the “law in force” for transactions prior to 1-11-2016.
  • Even Chapter IV of the New Act tends to disturb various vested rights of persons, as it gives the Initiating Officer under the New Act the power to provisionally attach properties even before adjudication proceedings.
  • Various levels of the adjudication have been introduced under the New Act, which never existed earlier. Though these changes may be termed as “procedural”, the fact remains that creating layers of appeals, which were non-existent earlier, certainly represents substantive amendment affecting vested rights of parties.
  • Chapter VII of the New Act prescribes penalties, which were non-existent under the Original Act. These penalties cannot by any stretch of imagination be applied retrospectively, and any such misadventure would fall foul of Article 20 of the Constitution of India, 1950.

Interpretation by the High Courts

The question of whether the amendments brought about in the form of the New Act are to be applied prospectively or retrospectively have vexed various High Courts throughout the country. So far there is unanimity of judicial opinion (barring one) that the provisions of the New Act are to be applied prospectively. In Joseph Isharat v. Rozy Nishikant Gaikwad 1 , the Bombay High Court held:

  1. 7. What is crucial here is, in the first place, whether the change effected by the legislature in the Benami Act is a matter of procedure or is it a matter of substantial rights between the parties. If it is merely a procedural law, then, of course, procedure applicable as on the date of hearing may be relevant. If, on the other hand, it is a matter of substantive rights, then prima facie it will only have a prospective application unless the amended law speaks in a language “which expressly or by clear intention, takes in even pending matters”. Short of such intendment, the law shall be applied prospectively and not retrospectively.
  2. As held by the Supreme Court in R. Rajagopal Reddy v. Padmini Chandrasekharan[2], Section 4 of the Benami Act, or for that matter, the Benami Act as a whole, creates substantive rights in favour of benamidars and destroys substantive rights of real owners who are parties to such transaction and for whom new liabilities are created.…These observations clearly hold the field even as regards the present amendment to the Benami Act. The amendments introduced by the legislature affect substantive rights of the parties and must be applied prospectively.

In Mangathai Ammal v. Rajeshwari[3]  Supreme Court observed as follows:

  1. 42. It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction (Prohibition) Act, 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. By Benami Amendment Act, 2016, Section 3(2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted. It is the case on behalf of the respondents that therefore in view of omission of Section 3(2) of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. Aforesaid cannot be accepted. As held by this Court in Binapani Paul Pratima Ghosh[4] the Benami Transaction Act would not be applicable retrospectively.

In Niharika Jain v. Union of India[5], the Rajasthan High Court observed:

  1. 93. … this Court has no hesitation to hold that the Benami Amendment Act, 2016, amending the Principal Benami Act, 1988, enacted w.e.f. 1-11-2016 i.e. the date determined by the Central Government in its wisdom for its enforcement; cannot have retrospective effect.
  2. 94. It is made clear that this Court has neither examined nor commented upon merits of the writ applications but has considered only the larger question of retrospective applicability of the Benami Amendment Act, 2016 amending the original Benami Act of 1988. Thus, the authority concerned would examine each case on its own merits keeping in view the fact that amended provisions introduced and the amendments enacted and made enforceable w.e.f. 1-11-2016; would be prospective and not retrospective.

The Calcutta High Court in Ganpati Delcom (P) Ltd. v. Union of India[6], held as under:

In Canbank Financial Services Ltd. v. Custodian[7], the Supreme Court specifically held in para 67 that the said Act of 1988 had not been made workable as no rules under Section 8 of the said Act for acquisition of benami property had been framed. These two cases were also cited by Mr Khaitan. Section 6(c) of the General Clauses Act, 1897 is most important. It lays down that repeal of an enactment, which necessarily includes an amendment, would not affect “any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed”, unless a different intention is expressed by the legislature. Without question, the omission on the part of the Government to frame rules under Section 8 of the 1988 Act rendered it a dead letter and wholly inoperative. Assuming that the appellant had entered into a benami transaction in 2011, no action could be taken by the Central Government, in the absence of enabling procedural rules. It is well within the right of the appellant to contend that the Central Government had waived its rights. It could also contend that no criminal action could be initiated on the ground of limitation. Now, these rights which had accrued to the appellant could not, in the absence of an express provision be extinguished by the amending Act of 2016. In other words, applying the definition of benami property and benami transaction the Central Government could not, on the basis of the 2016 Amendment allege contravention and start the prosecution in respect of a transaction in 2011.

However, taking a contrary view, the Chhattisgarh High Court in Tulsiram v. ACIT[8] , held as follows: 

  1. 20. … It can also not to be said that provisions of the Amended Act of 2016 could not have been made applicable in respect of properties, which were acquired prior to 1-11-2016. The whole Act of 1988 as it stands today inclusive of the amended provisions brought into force from 1-11-2016 onwards applies irrespective of the period of purchase of the alleged benami property. Amended Act of 2016 does not have an existence by itself. Without the provisions of the Act of 1988, the amended provisions of 2016 has no relevance and the amended provisions are only laying down the proceedings to be adopted in a proceeding drawn under the Act of 1988 and the penalties to be imposed in each of the cases taking into consideration the period of purchase of benami property.

Conclusion

The amendments made by way of the New Act, in my view, are clearly substantive and not procedural in nature, and hence cannot be applied retrospectively. The New Act expands the scope of the law, casts a negative burden/onus on a person to prove that a property is not “benami property”, creates disabilities such as immediate attachment and subsequent confiscation and most importantly attracts criminal action. All these aspects lead to the inescapable conclusion that the New Act cannot and should not be applied retrospectively.

The golden words of the Supreme Court in CIT v. Vatika Township (P) Ltd.[9]  that “The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of the day in force and not tomorrow’s backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset”, are clearly applicable to the present situation.

The views taken by the various High Courts as highlighted above correctly lay down this position of law, and now all eyes will be on the Supreme Court to take a final view on this issue – once and for all. Till then the confusion remains.

[†] Practising Advocate, Delhi High Court.

[1]  2017 SCC OnLine Bom 10006

[2] (1995) 2 SCC 630 .

[3] 2019 SCC OnLine SC 717

[4] (2007) 6 SCC 100.

[5] 2019 SCC OnLine Raj 1640 

[6] 2019 SCC OnLine Cal 8679 : (2020) 421 ITR 483 

[7] (2004) 8 SCC 355

[8]  2019 SCC OnLine Chh 140

[9] (2015) 1 SCC 1, 21, para 28 ,

Case BriefsSupreme Court

Supreme Court: The 3-Judge Bench of Dr Dhananjaya Y Chandrachud, Indu Malhotra and Indira Banerjee, JJ., observed that

“Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement.”

Judgment passed by the National Consumer Disputes Redressal Commission is in Challenge

Appellant-Developer challenged the decision of NCDRC wherein refund of the amounts deposited by the Apartment Buyers was directed on account of inordinate delay in completing the construction and obtaining the Occupation Certificate.

Issues for Consideration:

  • Determination of the date from which the 42 months period for handing over possession is to be calculated under Clause 13.3, whether it would be from the date of issuance of the Fire NOC as contended by the Developer; or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers;
  • Whether the terms of the Apartment Buyer‘s Agreement were one-sided, and the Apartment Buyers would not be bound by the same;
  • Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986;
  • Whether on account of the inordinate delay in handing over possession, the Apartment Buyers were entitled to terminate the agreement, and claim a refund of the amounts deposited with interest.

Analysis

Bench made a pointwise analysis of the instant matter wherein in the first issue, the point of controversy was whether the 42 months’ period is to be calculated from the date when the Fire NOC was granted by the authority concerned as contended by the Developer; or, the date on which the Building Plans were approved as contended by the Apartment Buyers.

In accordance with Section 15 of the Haryana Fire Safety Act, 2009, it is mandatory for a Builder/Developer to obtain the approval of the Fire Fighting Scheme conforming to the National Building Code of India, and obtain a ‘No objection Certificate’ before the commencement of construction.

Clause 13.3 of the Apartment Buyer’s Agreement provides that the 42 months’ period has to be calculated from the date of approval of Building Plans and/or fulfilment of the pre-conditions imposed thereunder.

Bench opined that it was a mandatory requirement under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before the commencement of construction activity. The said requirement was stipulated in the sanctioned Building Plans, as also in the Environment Clearance.

 The 42 months‘ period in Clause 13.3. of the Agreement for handing over possession of the apartments would be required to be computed from the date on which Fire NOC was issued, and not from the date of the Building Plans being sanctioned.

In the instant matter, there was a delay of approximately 7 months in obtaining the fire NOC by Developer.

♦ Whether the terms of the Apartment Buyer’s Agreement are one-sided?

Court observed on perusal of the clauses mentioned in the Agreement that the said clauses were wholly one-sided terms of the Agreement Buyer’s Agreement, which were entirely loaded in favour of the Developer and against the allottee at every step.

For the said issue, Court held that the terms of the Apartment Buyer‘s Agreement are oppressive and wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986.

Incorporation of one-sided and unreasonable clauses in the Apartment Buyer’s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act.

♦ Whether primacy to be given to RERA over the Consumer Protection Act?

Bench expressed that this Court has upheld the applicability of provisions of Consumer Protection Act as an additional remedy, despite the existence of remedies under special statutes, including the Arbitration and Conciliation Act, 1996.

In the decision of  Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, it was held that the remedy under the Consumer Protection Act, 1986 is confined to the Complaint filed by a Consumer as defined by the Act, for defects and deficiency caused by the service provider.

In a recent decision of this Court in Imperia Structures Ltd. v. Anil Patni, (2020) 10 SCC 783, it was held that remedies under the Consumer Protection Act were in addition to the remedies available under special statutes. The absence of a bar under Section 79 of the RERA Act to the initiation of proceedings before a fora which is not a civil court, read with Section 88 of the RERA Act makes the position clear. Section 18 of the RERA Act specifies that the remedies are “without prejudice to any other remedy available”.

♦ Whether the Apartment Buyers are entitled to terminate the Agreement or refund of the amount deposited with Delay Compensation?

Answering this issue, the Court categorised the buyer/allottees into two categories:

  • Apartment Buyers whose allotments fall in Phase 1 of the project comprised in Towers A6 to A10, B1 to B4, and C3 to C7, where the Developer has been granted occupation certificate, and offer of possession has been made
  • Apartment Buyers whose allotments fall in Phase 2 of the project, where the allotments are in Towers A1 to A5, B5 to B8, C8 to C11, where the Occupation Certificate has not been granted so far.

For category 1, it was held that such allottees (barring an exception) were obligated to take possession of the apartments, since the construction was completed, and possession offered on 28-06-2019, after the issuance of Occupation Certificate on 31-05-2019. The Developer is however obligated to pay Delay Compensation for the period of delay which has occurred from  27-11-2018 till the date of the offer of possession was made to the allottees.

So far category 2 is concerned, it was held that such allottees are entitled to refund of entire amount deposited by them, along with compensation and interest.

In view of the above discussion, civil appeals were disposed of. [Ireo Grace Realtech (P) Ltd. v. Abhishek Khanna, 2021 SCC OnLine SC 14, decided on 11-01-2021]

Case BriefsSupreme Court

Supreme Court: The bench of UU Lalit and Vineet Saran, JJ has held that the Real Estate (Regulation and Development) Act, 2016 (RERA Act) does not bar the initiation of proceedings by allottees against the builders under the Consumer Protection Act, 1986.

“It is true that some special authorities are created under the RERA Act for the regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, we must go by the purport of Section 18 of the RERA Act. Since it gives a right “without prejudice to any other remedy available’, in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79.”

Background of the Case

The said decision of the Court came in the matter relating of delay in handing over the possession of flats to buyers by the developer. The apartments were booked by the Complainants in 2011-2012 and the Builder Buyer Agreements were entered into in November, 2013. As promised, the construction should have been completed in 42 months. The period had expired well before the Project was registered under the provisions of the RERA Act. Even after four years there were no signs of the Project getting completed and hence, a complaint was filed by the Buyers.

RERA Act vis-à-vis CP Act: Statutory Analysis

The Court discussed the following provisions for the purpose of deciding the case at hand:

  • Section 79 of the RERA Act bars jurisdiction of a Civil Court to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the RERA Act to determine.
  • Section 88 specifies that the provisions of the RERA Act would be in addition to and not in derogation of the provisions of any other law.
  • Section 89 provides that the provisions of the RERA Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

The Court noticed that an allottee placed in circumstances similar to that of the Complainants, could have initiated following proceedings before the RERA Act came into force.

A) If he satisfied the requirements of being a “consumer” under the CP Act, he could have initiated proceedings under the CP Act in addition to normal civil remedies.

B) However, if he did not fulfil the requirements of being a “consumer”, he could initiate and avail only normal civil remedies.

C) If the agreement with the developer or the builder provided for arbitration:-

i) in cases covered under Clause ‘B’ hereinabove, he could initiate or could be called upon to invoke the remedies in arbitration.

ii) in cases covered under Clause ‘A’ hereinabove, in accordance with law laid down in Emaar MGF Ltd v. Aftab Singh, (2019) 12 SCC 751, he could still choose to proceed under the CP Act.

The Court noticed that on plain reading of Section 79 of the RERA Act, an allottee described in category (B) stated hereinabove, would stand barred from invoking the jurisdiction of a Civil Court.

“The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving under Section 88 of the RERA Act, make the position quite clear.”

To answer the question whether the Commission or Forum under the CP Act is a civil court or not, the Court referred to the decision in Malay Kumar Ganguli v. Dr. Sukumar Mukherjee, (2009) 9 SCC 221 , where it was held,

“The proceedings before the National Commission are although judicial proceedings, but at the same time it is not a civil court within the meaning of the provisions of the Code of Civil Procedure. It may have all the trappings of the civil court but yet it cannot be called a civil court.”

Hence, Section 79 of the RERA Act does not in any way bar the Commission or Forum under the provisions of the CP Act to entertain any complaint.

The Court further discussed the proviso to Section 71(1) of the RERA Act which entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. It noticed,

“The proviso thus gives a right or an option to the concerned complainant but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant.”

It was held that insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. Further, Section 18 itself specifies that the remedy under said Section is “without prejudice to any other remedy available”.

“Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act.”

[Imperia Structures v. Anil Patni,  2020 SCC OnLine SC 894, decided on 02.11.2020]

Case BriefsHigh Courts

Bombay High Court: A Division Bench of Dipankar Datta, CJ and M.S. Karnik, J., disposed of a matter wherein the orders of Maharashtra Real Estate Regulatory Authority were in challenge.

Orders passed by Maharashtra Real Estate Regulatory Authority on 2nd April, 2020 and 18th May, 2020 have been challenged in the present public interest litigation at the instance of a citizen for the benefit of home buyers.

Petitioner submits that the impugned orders suspend certain provisions of the Real Estate (Regulation and Development) Act, 2016 and are arbitrary and illegal.

Real Estate (Regulation and Development) Act, 2016 is a complete code in itself dealing with regulation and promotion of the real estate sector, protection of the interests of the consumers and establishment of adjudicatory mechanism for speedy dispute redressal.

Section 44 of the said Act provides a remedy of appeal to any person against any direction or order or decision of the RERA before an Appellate Tribunal.

In the above view of the matter, home buyers for whose benefit the petitioner has instituted present PIL are not left without a remedy. If indeed any home buyer is aggrieved by the order or direction of the respondent no 1, he/she/it is free to approach the appellate forum.

Thus, Court disposed of the present PIL. [Sagar Sarjerao Nikam v. Maharashtra Real Estate Regulatory Authority, 2020 SCC OnLine Bom 728 , decided on 26-06-2020]

Also Read:

MAHARera declared COVID-19 impacted period from March, 15 to September 14 as force majeure under the provisions of Real Estate (Regulation and Development) Act. 

Business NewsHot Off The PressNews

Centre for Mediation and Conciliation

CMC WEBINAR

REBUILDING SPACES 

Expert Discussion on Way Forward for Construction, Real Estate & Infrastructure

Moderator

  • Sumit Banerjee, Chief Mentor — CMC

Mr Sumit Banerjee is Chairman of the Board of Directors, of ASAPP Global Infomedia Pvt Ltd. Earlier, he held the position of MD and CEO, ACC Limited, India’s then largest cement company.

He has been recognized for his work through many awards and laurels, like The Corporate Citizen of the Year by CNBC TV18, etc.

Panelsits:

  • Sarosh Zaiwalla, Founder, Zaiwalla & Co. Solicitors

Mr Sarosh Zaiwalla has been involved in over 1200 International Energy. Maritime and Construction Arbitrations with clients including President of India. People’s Republic of China and Iranian Government.

He was a member of the International Court of Arbitration of the ICC, Paris (1990-2002) and was awarded with Annual National Law Day, 2002 by the Indian Prime Minister.

  • Vikas Lakhani, CoFounder, InstaOffice

Mr. Vikas Lakhani is one of the founders of InstaOffice, one of the leading brands of serviced offices and coworking spaces in the country. Previously, he has worked as Vice-President in the investment banking division of Copal Partners (a Moody’s Group Company) and earlier at Credit Suisse, London.

Vikas is the recipient of the french governments prestigious Egide Eiffel Scholarship, HEC scholarship and All India National Scholarship of CBSE.

 

  • Sanjay Mathur, Chief Special Initiative Officer, UltraTech Cement Ltd.

Mr. Sanjay Mathur is a seasoned professional with over 39 years of experience. He is currently a Consultant and Chief special Initiative Officer with UtraTech Cement Limited which is a part of Aditya Birla Group.

He has previously served as CEO of Star Cement, and headed the International operations of UtlraTech in the Middle East. He is a recipient of various National Awards & a widely travelled professional.

 

 

  • Sanjeev Gupta, Vice President & Project Director, Larsen & Toubro Limited

Mr. Sanjeev Gupta is  Civil Engineering Graduate from NIT: Trichy, and holds a 36 years of experience in various construction projects, most notably the Airports Terminal 3 at IGI, New Delhi and expansion of Bengaluru Airport.

He is currently the Project Director for a $1.1 billion Freight Corridor Corporation that is being funded by JICA (Japan International Cooperation Agency).

Details:

Topic: Rebuilding Spaces – Expert Discussions on Way Forward for Construction, Real Estate & Infrastructure

Date: Saturday, 25th April 2020

Time: 5 to 6 pm IST.

Register for the webinar here: REGISTRATION LINK

Hot Off The PressNews

Centre for Mediation and Conciliation

CMC WEBINAR

REBUILDING SPACES

Expert Discussion on Way Forward for Construction, Real Estate & Infrastructure.

Panelists:

  • Sumit Banerjee, Chief Mentor — CMC

Mr Sumit Banerjee is Chairman of the Board of Directors, of ASAPP Global Infomedia Pvt Ltd. Earlier, he held the position of MD and CEO, ACC Limited, India’s then largest cement company.

He has been recognized for his work through many awards and laurels, like The Corporate Citizen of the Year by CNBC TV18, etc.

  • Sarosh Zaiwalla, Founder, Zaiwalla & Co. Solicitors

Mr Sarosh Zaiwalla has been involved in over 1200 International Energy. Maritime and Construction Arbitrations with clients including President of India. People’s Republic of China and Iranian Government.

He was a member of the International Court of Arbitration of the ICC, Paris (1990-2002) and was awarded with Annual National Law Day, 2002 by the Indian Prime Minister.

  • Vikas Lakhani, CoFounder, InstaOffice

Mr. Vikas Lakhani is one of the founders of InstaOffice, one of the leading brands of serviced offices and coworking spaces in the country.

Previously, he has worked as Vice-President in the investment banking division of Copal Partners (a Moody’s Group Company) and earlier at Credit Suisse, London.

Vikas is the recipient of the french governments prestigious Egide Eiffel Scholarship, HEC scholarship and All India National Scholarship of CBSE.

Details:

Topic: Rebuilding Spaces – Expert Discussions on Way Forward for Construction, Real Estate & Infrastructure.
Date: Saturday, 25th April 2020
Time: 5 to 6 pm IST.

Register for the webinar here: REGISTRATION LINK

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): A two-member bench comprising of Justice S.J. Mukhopadhaya, Chairperson and Justice A.I.S. Cheema, Member (Judicial) allowed an appeal filed against the order of National Company Law Tribunal, New Delhi whereby appellant’s application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was dismissed.

The appellant was an allottee of a residential apartment in Earth Gracia developed by the respondent Credit Debtor  — Earth Gracia Buildcon (P) Ltd. The Adjudicating Authority (NCLT) dismissed the said application on the ground that disbursement made by the appellant did not come within the meaning of financial debt. Aggrieved thereby, the appellant filed the instant appeal.

The Appellate Tribunal noted that the allotment letter from the respondent showed that a residential apartment in the proposed group housing complex, Earth Gracia, had been allotted in favour of the appellant, wherein provision of assured return had also been shown. The Appellate Tribunal followed its earlier decision in Nikhil Mehta and Sons v. AMR Infrastructure Ltd., Company Appeal (AT) (Insolvency) No. 7 of 2017, dated 21-7-2017, wherein it was held that allottees of residential units are also financial creditors. Subsequently, by the Insolvency and Bankruptcy Code (Amendment) Act, 2018, an explanation was inserted in Section 5(8)(f) as per which, any amount raised from an allottee under a real estate project shall be deemed to be an amount having the commercial effect of a borrowing. Therefore, after the amendment, the allottees of real estate project have been treated as financial creditors. In light of the above, the Appellate Tribunal allowed the appeal, set aside the order impugned and directed NCLT to admit appellant’s application and initiate the Corporate Insolvency Resolution Process. [Rajendra Kumar Saxena v. Earth Gracia Buildcon (P) Ltd., 2018 SCC OnLine NCLAT 711, Order dated 11-09-2018]

Statutes/Bills/Ordinances

The Union Cabinet approved the Real Estate (Regulation and Development) Bill 2015, as reported by the Select Committee of Rajya Sabha. The Bill will now be placed before the Parliament for consideration and passing. The Bill seeks to protect the interest of consumers, promote fair play in real estate transactions and to ensure timely execution of projects. It aims at restoring confidence of the consumers in the real sector; by institutionalizing transparency and accountability in real estate and housing transactions which will further enable the sector to access capital and financial markets.

The Bill provides uniform regulatory environment to ensure speedy adjudication of disputes and orderly growth of the real estate sector. It will boost domestic and foreign investment in the Real Estate sector and help achieve the objective of Government of India to provide ‘Housing for All’ by enhanced private participation. The Bill mandates disclosure by promoters to the customers through registration of real estate projects as well as real estate agents with the Real Estate Regulatory Authority.

The Salient features of the Bill are:

  1. Applicable to both commercial and residential real estate projects.
  2. Establishment of ‘Real Estate Regulatory Authority’ in States/UTs to regulate real estate transactions.
  3. Registration of real estate projects and real estate agents with the Authority.
  4. Mandatory disclosure of all registered projects, including details of the promoter, project, layout plan, land status, approvals, agreements along with details of real estate agents, contractors, architect, structural engineer etc.
  5. Deposit of specified amount in a separate bank account to cover the construction cost of the project for timely completion of the project.
  6. Establishment of fast track dispute resolution mechanisms for settlement of disputes through adjudicating officers and Appellate Tribunal.
  7. Civil courts jurisdiction prohibited from taking up matters defined in Bill, however, consumer court allowed to hear real estate matters.
  8. Promoters barred from changing plans and design without consent of consumers.
  9. Provision of Appropriate Government to make rules for the matters specified in the Bill, and the Regulatory Authority to make necessary regulations.                                                                                                                                                                                                                                                                                                                                              -Press Information Bureau