TMI Blog2017 (12) TMI 1580X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. One of the qualifications for appointment of a Judicial Member 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," is severed and struck down - In the constitution of the Tribunal, majority of the members shall always be judicial members. Prayer dismissed. - Writ Petition No. 2737 of 2017 (Writ Petition Lodging No. 2010 of 2017), 2711, 2255, 2708, 2727, 2256, 2730, Chamber Summons No. 224 of 2017, 223, 306 of 2017 - - - Dated:- 6-12-2017 - N.H. Patil And R.G. Ketkar, JJ. For the Appellant: Aspi Chinoy, Senior Counsel, Mohd. Himayutullah, Rujuta Patil and Niyathi Kalra i/b. Negandhi Shah Himayatullah For the Respondents: Anil C. Singh, Additional Solicitor General, Amogh Singh, Kapil Moye, Vijay Killedar, Vaibhav Sugdare, Aditya Thakkar, D.P. Singh, Indrayani Deshmukh, Geetika Gandhi, V.T. Kalyan, Sandesh Patil, Nagendra Goel and Tamanna Naik JUDGMENT N.H. Patil, J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions of the learned counsel accordingly. Though in Writ Petition Nos. 2711 and 2256 of 2017 validity of certain Rules of the Maharashtra Rules of 2017 was challenged but during the course of arguments none of the learned counsel advanced submissions regarding challenge to the Rules. Therefore, We would not deal with the challenge to the Rules framed under the RERA by the State of Maharashtra. 5. The RERA was enacted by the Parliament as Act 16 of 2016 in the year 2016. Some of the provisions of the RERA came into force on a date prescribed by the Central Government under the notification published in the official gazette. Different dates were appointed for different provisions of the RERA. By Notification No. S.O. 1544 (E) :, dated 26-4-2016, the Central Government appointed 1st day of May 2016 as a date on which some of provisions of the RERA came into force, namely, Sections 2, 20 to 39, 41 to 58, 17 to 78 and 81 to 92. By Notification No. S. O. 1216 :, dated 19-4-2017 some more provisions of the RERA came into force, namely, Sections 3 to 19, 40, 59 to 70 and 79, 80 w.e.f. 1st May, 2017. 6. The statement of objects and reasons of the RERA, in paras 1, 2 and 3, reads a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable by the promoter or the allottee, as the case may be; Explanation.- For the purpose of this clause - (i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default; (ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and the interest payable by the allottee to the promoter shall be from the date the allottee defaults in payment to the promoter till the date it is paid; (zh) planning area means a planning area or a development area or a local planning area or a regional development plan area, by whatever name called, or any other area specified as such by the appropriate Government or any competent authority and includes any area designated by the appropriate Government or the competent authority to be a planning area for future planned development, under the law relating to Town and Country Planning for the time being in force and as revised from time to time; (zi) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto; 8. It is necessary to refer to some of the provisions of the RERA : Section 3. Prior registration of real estate project with Real Estate Regulatory Authority - (1) No promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act: Provided that projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act: Provided further that it the Authority thinks necessary, in the interest of allotte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose: Provided that the promoter shall withdrawn the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project: Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project: Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilised for that project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project. Explanation. - For the purpose of this clause, the term scheduled bank means a bank included in the Second Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the expression force majeure shall mean a case of war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting the regular development of the real estate project. Section 7. Revocation of registration.-(1) The Authority may, on receipt of a complaint or suo motu in this behalf or on the recommendation of the competent authority, revoke the registration granted under section 5, after being satisfied that - (a) the promoter makes default in doing anything required by or under this Act or the rules or the regulations made thereunder; (b) the promoter violates any of the terms or conditions of the approval given by the competent authority; (c) the promoter is involved in any kind of unfair practice or irregularities. Explanation. - For the purposes of this clause, the term unfair practice means a practice which, for the purpose of promoting the sale or development of any real estate project adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:- (A) the practice of making any statement, whether in writing or the visible representation which, - (i) falsely represents that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the carrying out of the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority: Provided that no direction, decision or order of the Authority under this section shall take effect until the expiry of the period of appeal provided under the provisions of this Act. Provided further that in case of revocation of registration of a project under this Act, the association of allottees shall have the first right of refusal for carrying out of the remaining development works. Section 18. Return of amount and compensation. - (1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,- (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government or any equivalent post in the State Government or Central Government. Section 43. Establishment of Real Estate Appellate Tribunal. - (1) The appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification, establish an Appellate Tribunal to be known as the ____ (name of the State/Union territory) Real Estate Appellate Tribunal. (2) The appropriate Government may, if it deems necessary, establish one or more benches of the Appellate Tribunal, for various jurisdictions, in the State or Union territory, as the case may be. (3) Every bench of the Appellate Tribunal shall consist of at least one Judicial Member and one Administrative or Technical Member. (4) The appropriate Government of two or more States or Union territories may, if it deems fit, establish one single Appellate Tribunal: Provided that, until the establishment of an Appellate Tribunal under this section, the appropriate Government shall designate, by order, any Appellate Tribunal Functioning under any law for the time being in force, to be the Appellate Tribunal to hear appeals under the Act: Provided further that after the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atters; and (c) in the case of Technical or Administrative Member, he is a person who is well-versed in the field of urban development, housing, real estate development, infrastructure, economics, planning, law, commerce, accountancy, industry, management, public affairs or administration and possesses experience of at-least twenty years in the field or who has held the post in the Central Government, or a State Government equivalent to the post of Additional Secretary to the Government of India or an equivalent post in the Central Government or an equivalent post in the State Government. (2) The Chairperson of the Appellate Tribunal shall be appointed by the appropriate Government in consultation with the Chief Justice of High Court or his nominee. (3) The judicial Members and Technical or Administrative Members of the Appellate Tribunal shall be appointed by the appropriate Government on the recommendations of a Section Committee consisting of the Chief Justice of the High Court or his nominee, the Secretary of the Department handling Housing and the Law Secretary and in such manner as may be prescribed. 9. It is informed that various States had framed Rules in exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RERA retrospectively. The learned counsel submits that if the application of RERA is not considered to be retrospective then it is certainly retro-active in nature when it comes to making certain provisions of RERA applicable to the ongoing projects. Even while making the application of certain provisions of RERA retro-active in nature, the RERA fails to take into account the past agreements entered into between the promoters and the allottees and the rights and liabilities arising and flowing from such agreements. The provisions which affect the transactions entered into by the promoter in respect of ongoing projects are contrary to enactments like the Contract Act and the Transfer of Property Act. There is no transparency in respect of the provisions relating to the ongoing project, carrying out of remaining development work. It was submitted that petitioners are not against the interest of allottees in regulating the sale and purchase of the immoveable property during the real estate transactions. But, while doing so, the Parliament ought to have struck proper and reasonable balance by taking care of the interest of the promoters, developers, builders. In the view of the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the proviso to Section 6 be declared as illegal, unreasonable, unconstitutional and contrary to the spirit of the provisions of Articles 14, 19(1)(g) and 20 of the Constitution. 16. In the alternative, the counsel submitted that such a provision could be held to be directory and not mandatory so that the authority constituted under the RERA could deal with the individual cases based on the facts and circumstances brought before it. 17. Provisions of Section 8 refers to obligation of authority consequent upon lapse or on revocation of registration. The learned Senior counsel Mr. Chinoy submitted that the said provision is unreasonable and adversely affects rights of the promoters. It is contrary to the contractual rights established between the promoters and the allottees under agreements executed by them prior to registration of the project under RERA. The provisions are vague in nature, lacks clarity and its implementation would lead to further complications in getting the project completed. In that sense, the counsel submitted that it is not in the interest of the allottees too. 18. The learned counsel by referring to provisions of Section 18 submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant facts and circumstances. (23) With regard to the second point also we do not think that the learned Judges have approached the question from the proper stand point. There is undoubtedly a presumption in favour of the constitutionality of a legislation. But when the enactment on the face of it is found to violate a fundamental right guaranteed under article 19(1)(g) of the Constitution, it must be held to be invalid unless those who support the legislation can bring it within the purview of the exception laid down in clause (6) of the article. If the respondents do not place any materials before the Court to establish that the legislation comes within the permissible limits of clause (6), it is surely not for the appellants to prove negatively that the legislation was not reasonable and was not conducive to the welfare of the community......... (b) In the case of Ritesh Agarwal and anr. v. Securities and Exchange Board of India and ors. [(2008) 8 SCC 205], the Apex Court, in para 25 observed thus:- 25. The question as to whether the provisions of the FUTP Regulations are attracted in this case may now be examined. The FUTP Regulations came into force for the first ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Where the act or omission did constitute an offence when committed, no penalty is to be imposed which is heavier than the one applicable at that time. Willes J. in Phillips v. Eyre [1870] LR 6 QB 1, observed as follows: .........contrary to the general principle that legislation by which the conduct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transactions carried on upon the faith of the then existing law. 17. It cannot be gainsaid that a new offence has been created by the Amending Act of 1988 from April 1, 1989. There was no law in force at the time when the accused issued the cheques that if any cheque is issued in discharge of a debt or liability and is dishonoured by non-payment and the drawer does not pay within 15 days of receipt of the notice of such dishonour, he will be deemed to have committed an offence. The accused is, therefore, entitled to the protection of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act applies to a person, who took employment on 1st January 2014, the Act is prospective. Insofar as the Act applies to a person, who had taken employment before 1st January 2014, the Act is retroactive. (e) In the case of Prakash and ors. v. Phulavati and ors. [(2016) 2 SCC 36], in para 19, the Apex Court observed thus:- 19. Interpretation of a provision depends on the text and the context. Normal rule is to read the words of a statute in ordinary sense. In case of ambiguity, rational meaning has to be given. In case of apparent conflict, harmonious meaning to advance the object and intention of legislature has to be given. (f) In the case of State of Andhra Pradesh and ors. v. CH. Gandhi [(2013) 5 SCC 111], the Apex Court in pars 45 and 49 observed thus:- 45. Before we proceed to scan the Rule position, we would like to refer to certain authorities rendered in the context of clause (1) of Article 20 of the Constitution. We are absolutely conscious that there are certain authorities of this Court wherein it has been laid down that Article 20(1) of the Constitution is not applicable to civil consequences but only to criminal offences. However, by way of analogy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest is to be paid till handing over of possession to the allottee, even if the registration of the promoter is revoked and is not in-charge of the project in carrying out the development work. There is no mechanism provided under the provisions of Sections 6 and 8 for redressal of grievances of the promoter. In that sense, both the provisions are unworkable and the proviso to Section 6 and the provisions of Section 8 are thus unreasonable and unconstitutional. 21. The learned counsel while challenging the validity of Section 18, submitted that the provisions of Section 18(1)(a) have been given retrospective effect and are arbitrary. Its breach is punishable. The penal provisions are also unreasonable and unconstitutional as a person cannot be punished for the act done by him prior to enacting the penal provision. The learned counsel submitted that the provisions are contrary to Article 20 of the Constitution. 22. The learned Senior Counsel submitted that provisions of Sections 6 and 7 contemplate lapsing of registration, revocation of registration. This would result in taking over of the project by the RERA authority under Section 8 thereof. The provisions of Section 8 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 18(1)(a) operates retrospectively and imposes a penalty in that behalf. There is a constitutional bar to recover such a penalty in respect of the offences committed prior to RERA coming into force. It is submitted that provisions of Section 4 of the RERA are in fact in conflict with the provisions of Sections 4(2)(l)(C) in respect of ongoing projects. If the RERA provides for an extension of time to complete the real estate project then by necessary corollary, the RERA must accordingly also provide for an extension of the date for handing over possession of the flats. 24. In respect of Section 18(1)(b), the learned counsel submitted that it is plainly and totally ultra vires Article 19(1)(g) of the Constitution and cannot be saved under Article 19(6) of the Constitution. In view of authority exercising powers under Sections 7 and 8, money deposited in the account which is 70% of the amount recovered from the allottees is also taken over by RERA authority and is no longer in the possession and control of the promoter. 25. If the money recovered from the flat purchaser is deposited in the account and the said money is taken over by RERA Authority, it is highly unreasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding acquisition and taking possession of private property for public purpose. It does not require payment of market value or indemnification to the owner of the property expropriated. Payment of market value in lieu of acquired property is not a condition precedent or sine qua non for acquisition. It must be clearly understood that the acquisition and payment of amount are part of the same scheme and they cannot be separated. It is true that the adequacy of compensation cannot be questioned in a court of law, but at the same time the compensation cannot be illusory. 82. A distinction and difference has been drawn between the concept of 'no compensation' and the concept of 'nil compensation'. As mandated by Article 300A, a person can be deprived of his property but in a just, fair and reasonable manner. In an appropriate case the Court may find 'nil compensation' also justified and fair if it is found that the State has undertaken to take over the liability and also has assured to compensate in a just and fair manner. But the situation would be totally different if it is a case of 'no compensation' at all. (b) In the case of K.T. Plantation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y arbitrary; a law which could not be reasonably expected to emanate from an authority delegated with the law making power. In Indian Express Newspapers (Bombay) Pvt. Ltd. v. Union of India, this Court said that a piece of subordinate legislation does not carry the same degree of immunity which is enjoyed by a statute passed by a competent legislature. A subordinate legislation may be questioned under Article 14 on the ground that it is unreasonable; unreasonable not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary . Drawing a comparison between the law in England and in India, the Court further observed that in England the Judges would say, Parliament never intended the authority to make such Rules; they are unreasonable and ultra vires . In India, arbitrariness is not a separate ground since it will come within the embargo of Article 14 of the Constitution. But subordinate legislation must be so arbitrary that it could not be said to be in conformity with the statute or that it offends Article 14 of the Constitution. 46. Under Article 19(6) of the Constitution, the State has to conform to two separate and independent tests if it is to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uster, be as a result of intelligent care and deliberation, that is, the choice of a course which reason dictates. Any arbitrary invasion of a fundamental right cannot be said to contain this quality. A proper balance between the freedoms guaranteed and the control permitted under Article 19(6) must be struck in all cases before the impugned law can be said to be a reasonable restriction in the public interest. 53. The other string to the bow of this argument is that the Impugned Regulation would be worked in such a manner that the service provider would be liable to pay only when it is found that it is at fault. This again falls foul of constitutional doctrine. In Collector of Customs v. Nathella Sampathu Chetty, this Court held: (SCR pp. 825-26: AIR p. 332, para 33) The possibility of abuse of a statute otherwise valid does not impart to it any element of invalidity. The converse must also follow that a statute which is otherwise invalid as being unreasonable cannot be saved by its being administered in a reasonable manner. The constitutional validity of the statute would have to be determined on the basis of its provisions and on the ambit of its operation as reasonably c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits. ......... (e) In the case of Delhi Transport Corporation v. D.T.C. Mazdoor Congress and ors. [1991 Supp (1) Supreme Court Cases 600], in para 125, the Supreme Court observed asunder : 125. I am conscious that clear intention as indicated in a legislation cannot be permitted to be defeated by means of construction. It has been said that if the legislature has manifested a clear intention to exercise an unlimited power, it is impermissible to read down the amplitude of that power so as to make it limited. I do not agree. Our legislatures are limited by the Constitutional inhibitions and it is time, in my opinion, that we should read their Acts and enactments with the attribute that they know their limits and could not have intended to violate the Constitution. It is true that where there are clear, unambiguous and positive terms of a legislation, the Court should be loath to read down. It should proceed with a straight-forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner constructed 504 residential flats, 60 row-houses, 20 separate bungalows and 360 small tenements. According to the sanctioned plan, the construction was carried out, which came to be completed by the month of March, 2012. Around 80% members of the society got possession of the flats and they are residing there since 2012. It is submitted that 96 flats, 55 bungalows and 194 small tenements are vacant and are ready for allotment to its members. It is the petitioner's case that after inspection, a completion certificate was issued from the Architect which was forwarded to the Building Engineer of Nagpur Municipal Corporation stating therein that the construction was carried out in accordance with the sanctioned plan. The petitioner - society had already applied to the Building Engineer of the Corporation on 27/3/2012 to arrange for inspection and permission for occupation of the building. However, till date no communication has been received by the petitioner. In this context, the learned counsel submits that under the provisions of Section 263 of the Maharashtra Municipal Corporation Act, 1949 the occupation certificate is deemed to have been granted. Therefore, the project un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1)(b) of RERA, which are already quoted above. The learned Senior Counsel submitted that there is no provision in law to appoint a judicial member as one of the member of the authority constituted under Chapter V of the RERA. The counsel narrated functions to be carried out by the authority under Chapter V. By referring to various other provisions of the RERA, it was submitted that the 'authority' would carry judicial scrutiny of the matters coming before it and would take decisions on the conflicting claims of the parties by looking into the material brought before it. It was submitted that under the provisions of Section 44 of the RERA, appeal is prescribed against the order passed by the authority to Appellate Tribunal. The composition of Appellate Tribunal is prescribed under Section 45, which mandates that the Appellate Tribunal shall consist of a Chairperson and not less than two whole time Members of which one shall be a Judicial Member and other shall be a Technical or Administrative Member. The counsel submitted that the explanation to Section 45 refers to definition of a Judicial Member as defined under Section 46. Section 46(1)(b) refers to definition of a Jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd adversely affect the independence of the judiciary. (d) The legislature can reorganise the jurisdictions of judicial tribunals. For example, it can provide that a specified category of cases tried by a higher court can be tried by a lower court or vice versa (a standard example is the variation of pecuniary limits of the courts). Similarly while constituting tribunals, the legislature can prescribe the qualifications/eligibility criteria. The same is however subject to judicial review. If the court in exercise of judicial review is of the view that such tribunalisation would adversely affect the independence of the judiciary or the standards of the judiciary, the court may interfere to preserve the independence and standards of the judiciary. Such an exercise will be part of the checks and balances measures to maintain the separation of powers and to prevent any encroachment, intentional or unintentional, by either the legislature or by the executive. 30. The learned counsel has also raised challenge to the Selection Committee and its constitution under Section 22 as bad in law and against the principles settled in the case of Madras Bar Association (Supra). SUBMISSION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral Mr. Anil Singh, who submitted that the object and purpose in enacting RERA needs to be closely and carefully examined and considered while appreciating the submissions of the contesting parties. Since last few years it was felt by the Government and other agencies that there must be a regulatory authority in the field of real estate development. The Union Government, the various State Governments received number of representations from various organizations, including the consumer organization for enacting a law regulating and developing the real estate sector. The learned ASG had taken us through various provisions of RERA and has replied to the issues raised by the petitioners. The learned ASG referred to the provisions of MOFA while dealing with the provisions of the RERA. REPLY TO CHALLENGE TO SECTION 3 : 34. The learned ASG submitted that provisions of Section 3 are reasonable and have been made in the larger public interest. As regards the provisions of Section 3, 4(2)(l)(C)(D), the learned ASG submits that if a promoter furnishes account showing that he had spent 70% of the amount realized from the allottees on the subject project, he need not deposit 70% of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ense the promoter is not debarred from carrying out the development work. The authority is conferred with wide powers under the RERA with a sole object and purpose to complete the remaining development work and hand over possession to the allottees within a prescribed time schedule. 37. The learned ASG submits that there are sufficient safeguards in case the registration is revoked under the provisions of Section 7. The promoter is provided with a forum to approach the Tribunal and ultimately to High Court. Right of judicial review of the decisions taken by the authority is made available under the RERA. Therefore, the submissions advanced that the promoter is left with no other choice but to face the consequences on expiry of the period/tenure declared by him is baseless and without any foundation. 38. The learned ASG submitted that after lapse or revocation of the registration, the authority will take necessary steps to complete the remaining work and after the project is completed, the project again could be handed over to the same promoter, who can deal with the project accordingly by selling the apartments and dealing with the project as agreed between him and the allott ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HALLENGE TO SECTION 22 : 40. The learned ASG submitted that the provisions of Section 22 are legal and constitutionally valid. There are many statutory authorities under several Acts which are discharging judicial functions without there being a judicial member. The learned ASG referred to provisions of the Securities and Exchange Board of India Act, 1992 (for short SEBI Act ) and provisions of Section 11(3) of MOFA. The learned ASG specifically referred to provisions of Section 15(1), 15M, 15T, 15Y, 15Z of the SEBI Act. A further reference was made to the provisions of Section 48 of the Prevention of Money-Laundering Act, 2002, Sections 58-A and 146 of the Representation of the People Act, 1951, Sections 3 and 8 of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 and Sections 40 and 44 of the Maharashtra Rent Control Act, 1999. 41. The learned ASG submitted that in the case of Madras Bar Association (Supra), in respect of challenge raised to creation of National Company Law Tribunal (NCLT), the Apex Court does not lay down general proposition that the bureaucrats like Additional Secretary cannot discharge judicial function. REPLY TO CHALLENGE TO SECTION ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the law as the ongoing project is neither complete nor settled. The Act provides for imposition of penalties for violations of the provisions of the Act only subsequent to 1st May, 2017, as section 3 was notified for commencement with effect from 1st May, 2017. 10. Without prejudice to the above, assuming whilst denying that the Petitions are found to be maintainable, even then, it is submitted that several of the challenges raised in the petitions are academic and there are no material facts pleaded to show how certain provisions of RERA are attracted and hence, the challenges raised are purely academic at this stage. 15. A quick look at the following factors in the process of enactment of the RERA legislation is necessitated in order to understand that the legislation is a well thought, debated and deliberated one:- (i) The erstwhile Ministry of Housing Urban Poverty Alleviation (now Ministry of Housing Urban Affairs) had sought an opinion from the Ministry of Law Justice, Government of India on the competence of Parliament to enact the Real Estate (Regulation and Development) Bill. The Department of Legal Affairs, Ministry of Law Justice, Government o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promoters/builders, consumers/resident welfare associations, banking/financial institutions, representatives of State Governments, law firms/legal experts and other independent experts in the field of real estate. (x) The Select Committee also invited public comments through a press communique vide which 273 memoranda were received. It also heard the erstwhile Ministry of Housing Urban Poverty Alleviation (now Ministry of Housing Urban Affairs), Ministry of Law Justice, Reserve Bank of India amongst others. (xi) The Select Committee tabled its report along with the Real Estate (Regulation and Development) Bill of 2015 on 30th July, 2015 in the Rajya Sabha. (xii) The Real Estate (Regulation and Development) Bill, 2015, as reported by the Select Committee, was approved by the Union Cabinet on 9th December, 2015. (xiii) The Real Estate (Regulation and Development) Bill, 2015 was listed for consideration and for the purpose of passing in Rajya Sabha on 22nd and 23rd December, 2015, but could not be taken up. (xiv) RERA was passed by Rajya Sabha on 10th March, 2016 and by the Lok Sabha on 15th March, 2016. (xv) The Real Estate (Regulation and Development) Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned provision in a legislation is compatible with the fundamental rights or the constitutional provisions (substantive judicial review) or it falls foul of the federal distribution of powers (procedural judicial review). If it is not found to be so, no further exercise is needed as challenge would fail. On the other hand, if it is found that Legislature lacks competence as the subject legislated was not within the powers assigned in the List in Schedule VII, no further enquiry is needed and such a law is to be declared as ultra vires the Constitution. However, while undertaking substantive judicial review, if it is found that the impugned provision appears to be violative of fundamental rights or other constitutional rights, the Court reaches the second stage of review. At this second phase of enquiry, the Court is supposed to undertake the exercise as to whether the impugned provision can still be saved by reading it down so as to bring it in conformity with the constitutional provisions. If that is not achievable then the enquiry enters the third stage. If the offending portion of the statute is severable, it is severed and the Court strikes down the impugned provision declar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Andhra Pradesh and ors. v. P. Laxmi Devi (Smt.) [(2008) 4 SCC 720], the Supreme Court in paras 55, 56 and 57 observed as under : 55. In Keshvananda Bharati v. State of Kerala (vide AIR para 1547) Khanna J. observed: (SCC p.821, para 1535) 1535. In exercising the power of judicial review, the Courts cannot be oblivious of the practical needs of the government. The door has to be left open for trial and error. 56. In our opinion adjudication must be done within the system of historically validated restraints and conscious minimization of the judges personal preferences. The Court must not invalidate a statute lightly, for, as observed above, invalidation of a statute made by the legislature elected by the people is a grave step. As observed by this Court in State of Bihar v. Kameshwar Singh : (AIR p. 274, para 52) 52....... The legislature is the best judge of what is good for the community, by whose suffrage it comes into existence . 57. In our opinion, the Court should, therefore, ordinarily defer to the wisdom of the legislature unless it enacts a law about which there can be no manner of doubt about its unconstitutionality. (d) In the case of Modern Dent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the restrictions. (6) There must be a direct and proximate nexus or reasonable connection between the restrictions imposed and the object sought to be achieved. If there is a direct nexus between the restrictions, and the object of the Act, then a strong presumption in favour the constitutionality of the Act will naturally arise. 89. With the advent of globalization and liberalization, though the market economy is restored, at the same time, it is also felt that market economies should not exist in pure form. Some regulation of the various industries is required rather than allowing self-regulation by market forces. This intervention through regulatory bodies, particularly in pricing, is considered necessary for the welfare of the society and the economists point out that such regulatory economy does not rob the character of a market economy which still remains a market economy. Justification for regulatory bodies even in such industries managed by private sector lies in the welfare of people. Regulatory measures are felt necessary to promote basic well-being for individuals in need. It is because of this reason that we find Regulatory bodies in all vital industries like, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Edition: Vol. 37A page 224/225, defines a 'retrospective' or retroactive law as one which takes away or impairs vested or accrued rights acquired under existing laws. A retroactive law takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past. (f) In the case of Marida Chemicals Ltd., etc. v. Union of India and ors. [AIR 2004 SC 2371], the Supreme Court in para 72 observes as under : 72. Shri Soli J. Sorabjee, learned Attorney General submits that basically there is a presumption in favour of the Constitutionality of an enactment and unless it is found that a provision enacted results in palpably arbitrary consequences, courts refrain from declaring the law invalid as legislated by the legislature. In support of this contention, he has relied upon a decision of this Court reported in (1981) 4 SCC 675, R.K. Garg V. Union of India. He has particularly drawn our attention to the following passage : The first rule is that there is always a presumption in favour of the Constitutionality of a statute.... This rule is based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. (h) In the case of K.B. Nagpur, M.D. (Ayurvedic) v. Union of India [(2012) 4 SCC 483], the Supreme Court in para 21, observed as under: 21. From the above discussion, it is clear that question of constitutionality of a provision is a matter which the courts would venture to examine only for valid, proper and sustainable grounds. We do not see that the provisions of S. 7 of the Act, or any part thereof, suffer from any legal infirmity, excessive legislative power or violate any legal right of any person, including the petitioner, much less a constitutional right. Keeping the principle of strict necessity in mind, the courts do not venture to examine the Constitutional validity of a provision and even strike down such provisions, if they are constitutional and a Court does so only if the situation created by such legislation is irremediable or unredeemable. None of these circumstances exist in the present case. (i) In the case of Shayara Bano v. Union of India and ors. (Ministry of Women and Child Development Secretary and ors.) [(2017) 9 SCC 1], the Supreme Court, observed as under : 99. However, in State of Bihar v. Bihar Distillery Ltd., SCC at para 22, in State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posit of 70% of the amount by the promoter while getting the project registered. He refers to the Rules framed by the State Government and submitted that similar interpretation is put up by the Union while framing the Rules. The RERA aims at protecting larger interest of lacs of allottees who are waiting for getting their possession and are helpless in getting speedy remedy to their endless problems. 49. The learned AG places reliance on the judgment in the case of Seaford Court Estates Ltd. v. Asher [1948] A.C. 291, King's Bench Division, observed thus: ...... Whenever a statute comes up for consideration it must be remembered that it is not within human powers to foresee the manifold sets of facts which may arise, and, even if it were, it is not possible to provide for them in terms free from all ambiguity. The English language is not an instrument of mathematical precession. Our literature would be much the poorer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticized...... 50. The learned AG also placed reliance on the judgment in the case of Indian Handicrafts Emporium and ors. v. Union of India and ors. [(2003) 7 SCC 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 1 of the Fourteenth Amendment (against deprivation of life, liberty or property without due process of law) . The learned another author proceeding to quote from the decision in Atlantic Coast Line R. Co. v. Goldsboro (1913) 232 US 548, continues: In the words of the Court : It is settled that neither the contract clause nor the due process clause has the effect of overriding the power of the State to establish all regulations that are reasonably necessary to secure the health, safety, good order, comfort, or general welfare of the community'-in- short, its police power. And what is reasonably necessary' for these purposes is today a question ultimately for the Supreme Court; and the present disposition of the Court is to put the burden of proof upon any person who challenges State action as not reasonably necessary. adding: Till after the Civil War the principal source from which cases stemmed challenging the validity of State legislation, the 'obligation of contracts' clause is today of negligible importance, and might well be stricken from the Constitution. For most practical purposes, in fact, it has been. (Vide Constitution and what it means toda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion put upon it. Hence, where alternative constructions are possible, the law must be so construed as to preserve its validity. 4. The power cannot be extended to permit the Court to pass upon the question of the expediency or wisdom of particular legislation. 5. The motives of the legislature in passing particular statutes cannot be made the subject of judicial examination. 6. The power may be exercise only in actual litigation since under Art. II of the Constitution the judicial power extends only to cases controversies . This means that there must be a real controversy between parties having opposing interests, that one who contests the validity of a statute must show that substantial interests of his own will be adversely affected by its enforcement. The federal courts will not decide moot cases (i.e. they will not decide what the law would be on a hypothetical state of facts) nor will they render advisory opinions in cases where an abstract determination of the constitutionality of a statute is sought. Only in one case Nashville v. Wallace, (1933) 288 U S 249, a declaratory judgment was given on the assumption, regardless of form, that an actual justic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued required registration. Under the said provision, the projects which are already completed are not affected. No vested or accrued rights are being affected by the RERA. The obligations imposed by RERA applied prospectively i.e. after the commencement of RERA. The counsel has referred to para 69 of the affidavit-in-reply filed by the Union of India in support of the submissions, wherein it was averred that promoter is entitled to provide new timelines for project completion. The obligations imposed and consequences for breach of such obligations under RERA are all prospective in their operation. It is not made applicable to past acts which have been completed. It merely relied on continuing acts, although their commencement was antecedent in point of time. Therefore, only a part of the requisites for action under RERA are antecedent to the coming into force of RERA. 56. By referring to the judgment cited by the petitioners in the case of Badrinarayan Shankar Bhandari (Supra), the learned counsel submitted that since the operation of RERA applies to ongoing projects, the decision cited by the petitioners do not appear to be applicable or relevant. 57. It was submitted that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RA for payment of interest are reasonable restrictions and are also in furtherance of the public interest. PRESENCE OF A JUDICIAL MEMBER ON THE AUTHORITY AND THE TRIBUNAL: 62. The learned Senior Counsel submitted that there is no requirement of Judicial Member merely because Authority may exercise quasi-judicial powers. Reliance is placed by the petitioners on the judgment of the Supreme Court in the case of Madras Bar Association (Supra). In respect of the said judgment, the learned counsel submits that the said judgment does not pertain to all authorities that carry out quasi-judicial functions, but only to those authorities/tribunals to which any existing jurisdiction of courts is transferred and that takes over its functions in that regard. The said judgment is not applicable to the facts of the present case as no existing jurisdiction of courts has been transferred to the RERA Authority; its functions are simply quasi-judicial. APPELLATE TRIBUNAL : 63. The learned Senior Counsel referred to Sections 45 and 46 of RERA. The RERA requires one of the Members of the RERA Appellate Tribunal to be a Judicial Member. Hence, there is no need to decide whether the powers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature has the power to make laws with retrospective effect. Even assuming that RERA operates retrospectively, the same would not render it unconstitutional, unless the retrospectivity is shown to be excessive or harsh and injuriously affects a substantial or vested rights. 66. The learned Senior Counsel Mr. Khambata submitted that RERA is a curative or remedial law. The Supreme Court has clarified that public interest is relevant consideration in determining the constitutional validity of retrospective legislation. The RERA was enacted in public interest. PENALTY : 67. The learned counsel referred to Sections 4(2)(l)(D), Sections 12, 14(3), 18(1)(2)(3), 40, 59, 60, 61, 62, 63, 65, 67, 59(2), 64, 66 and 68 of RERA. By referring to these provisions and the settled principles and the case laws, the counsel submitted that these provisions prescribed that certain penalties are made applicable on the failure to discharge obligation by promoter under RERA. These provisions are made in the larger public interest and only on the failure of the promoter, such penalties could be imposed in given facts and situation of the case by the concerned authority. 68. The learned Senior ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This principle has now been recognised by our Constitution and established as a Constitutional restriction on legislative power. 7. There are, however, statutes which create no new punishment, but authorise some action based on past conduct. To such statutes, if expressed in language showing retrospective operation, the principle is not applied. As Lord Coleridge, C. J., observed during the course of arguments in Rex v. Birthwhistle Etc. JJ. (1889) 58 L.J. MC. 158: Scores of Acts are retrospective, and may without express words be taken to be retrospective, since they are passed to supply a cure to an existing evil. Indeed, in that case which arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act was held retrospective without express words. It was said: It was intended to cure an existing evil and to afford to married women a remedy for desertion, whether such desertion took place before the passing of the Act or not. (c) In the case of Vijay v. State of Maharashtra and ors. [(2006) 6 SCC 289], the Supreme Court in para 12 observes as under : 12. The appellant was elected in terms of the provisions of a statute. The right to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt held that three requisites were necessary in order that the act of an administrative body be characterized as quasi-judicial : (i) There must be legal authority; (ii) This authority must be to determine questions affecting the rights of subjects; and, (iii) There must be a duty to act judicially. Applying the aforesaid tests, it was held that the Central Government's power of review under Rule 54 was quasi-judicial in that there is legal authority to determine questions affecting the rights of subjects and the duty to act judicially which involves a hearing and a decision on the merits of the case. (e) In the case of S. Manoharan v. The Deputy Registrar, Central Administrative Tribunal, Principal Bench, New Delhi [2015-2-L.W. 343], the Division Bench of Madras High Court, in para 43, observed as under: 43. If we carefully analyse the scheme of Section 5(4)(d) of the Administrative Tribunals Act, 1985 and the Proviso thereunder, in the context of Section 4(4)(c) and the Proviso thereunder of the National Green Tribunal Act, 2010, in the backdrop of the development of law from S.P. Sampath Kumar to L. Chandra Kumar to R. Gandhi to Madras Bar Association, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has in long line of cases followed the aforesaid statement of law. (g) In the case of Hamdard Dawakhana (WAKF) Lal Kuan, Delhi and anr. v. Union of India and ors. [(1960) 2 SCR 671], in para 26, the Supreme Court has observed as under : 26. It was next contended that the Act was not in the interest of the general public as it could not be said that the mention of the names of diseases or instructions as to the use of particular medicines for those diseases was not in the interest of the general public. Besides, it would prevent the medicines being brought to the notice of the practising medical practitioners or distributing agencies. It would also prevent a properly worded advertisement suggesting cure of diseases to people who for the sake of prestige and other understandably valid reasons do not like to confide to any person the nature of their diseases and that it would prevent medical relief in a country where such relief is notoriously inadequate. We have already set out the purpose and scope of the Act, the conditions in which it was passed and the evils it seeks to cure. If the object is to prevent self-medication or self treatment, as it appears to be then the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with the general law of the land and the agreement. (iv) Over the years, the English and Indian Courts have acted on the assumption that where the agreement does not prohibit and a party to the reference makes a claim for interest, the arbitrator must have the power to award interest pendente lite. Thawardas has not been followed in the later decisions of this Court. It has been explained and distinguished on the basis that in that case there was no claim for interest but only a claim for unliquidated damages. It has been said repeatedly that observations in the said judgment were not intended to lay down any such absolute or universal rule as they appear to, on first impression. Until Jena's case almost all the Courts in the country had upheld the power of the arbitrator to award interest pendente lite. Continuity and certainty is a highly desirable feature of law. (v) Interest pendente lite is not a matter of substantive law, like interest for the period anterior to reference (pre-reference period). For doing complete justice between the parties, such power has always been inferred. (i) In the case of Jyoti Pershad v. Administrator for the Union Territory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble at all or liable in a lessor degree to tax, under such conditions that the interest on the securities is the income of this second person. A common form of the process is the sale of securities-cum-interest with a simultaneous contract to purchase them ex-interest. Where foreign securities are concerned this second person may be a foreigner resident abroad entitled to claim exemption from the tax on the interest. More often a financial concern in India is utilised whose computation of profits includes the results of realising securities, so that the concern can profitably offer bond- washing facilities to the owner of securities bearing fixed interest where the owner himself is not liable to taxation on the realisation of the securities. (k) In the case of R.S. Nayak v. A.R. Antulay [(1984) 2 SCC 183], the Supreme Court, in para 34, observed as under : 34. Approaching the matter from this angle, the Constitution Bench looked into the proceedings of the Constituent Assembly and The Framing of India's Constitution; A Study' by B. Shiva Rao. It was however urged that before affirmatively saying that in Bidap's case this Court has finally laid to rest this con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or this purpose . And in support of this statement of law, a number of cases were relied upon by the learned Law Lord. It may also be mentioned that Per Curiam it was held that where there is an ambiguity in a statute, the court may have regard to the Report of a Committee presented to Parliament containing proposals for legislation which resulted in the enactment of the statute, in order to determine the mischief which the statute was intended to remedy . Though the unanimous view was that the report of a committee presented to Parliament preceding the statute could be seen for finding out the then state of the law and the mischief required to be remedied, it must be stated that the majority were of the opinion that report could not be looked at to ascertain the intention of Parliament. The minority (per Lord Dilporne and Lord Simon) were of the opinion that when a draft bill was enacted in a statute without any alteration, Parliament clearly manifested its intention to accept committee's recommendation which would imply that Parliament's intention was to do what committee wanted to achieve by its recommendations. A reference to Halsbury's Laws of England, Fourth E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o construction. In this connection, it would be advantageous to refer to a passage from Crawford on Statutory Construction (page 388). It reads as under: The judicial opinion on this point is certainly not quite uniform and there are American decisions to the effect that the general history of a statute and the various steps leading upto an enactment including amendments or modifications of the original bill and reports of Legislative Committees can be looked at for ascertaining the intention of the legislature where it is in doubt but they hold definitely that the legislative history is inadmissible when there is no obscurity in the meaning of the statute . In United States v. St. Paul M.M. Rly. Co. it is observed that the reports of a committee, including the bill as introduced, changes 'made in the frame of the bill in the course of its passage and the statement made by the committee chairman incharge of it, stand upon a different footing, and may be resorted to under proper qualifications'. The objection therefore of Mr. Singhvi to our looking into the history of the evolution of the section with all its clauses, the Reports of Mudiman Committee and K Santhanam C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cure existing evils. The requirement to register ongoing projects under the proviso to section 3(1) is not retrospective, is legal, valid and not arbitrary. It constitutes a reasonable restriction as contemplated by Article 19(6) of the Constitution of India. SECTION 4(2)(l)(C) : 71. It is clarified on behalf of the Union of India that this declaration of period within which a promoter undertakes to complete a project under RERA in the case of ongoing projects is independent of the date that may have been stipulated under existing agreements for sale. The authority has the discretion either to grant or reject registration and, therefore, must be regarded as having discretion to reject a period put forward by the promoter that is manifestly unreasonable. This position is supported by the fact that Section 5(1) of the RERA contemplates a hearing being afforded to an applicant before an application is registered. SECTION 4(2)(l)(D) : 72. A plain reading of Section 4(2)(l)(D) indicates that in the case of ongoing projects 70% of the amount already collected prior to registration, if any, and which has not been expended on costs of construction and land is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of provision is to recompense an allottee for depriving him the use of the funds paid by him. The RERA does not provide any particular rate of interest to be applied and does not levy penal interest at all, and only provides for interest and compensation. Assuming that Section 18 operates retroactively/retrospectively, the Parliament is empowered to enact such a provision having regard to the prevalent situation, including, inter alia, the unequal bargaining power between an allottee and a promoter in the normal course. It was submitted that Section 18, even if it is regarded as being retrospective/retroactive, is still within the legislative powers of the Parliament. ARTICLES 19 (1)(g) AND 20 : 76. The learned Senior Counsel submitted that laws have to be tested in the ordinary course and not in extraordinary situations. Chapter VIII of RERA deals with Offences, Penalties and Adjudication. Neither sections contemplate imprisonment for past acts before the RERA became effective. Sections 59 and 64 provide for imprisonment in certain cases. Article 20 can, therefore, have no application if the promoter contravenes a provision of an existing law post registration. RERA AUTHO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrect. (b) In the case of Dr. Indramani Pyarelal Gupta and ors. v. W.R. Natu and ors. [AIR 1963 SC 274], the Supreme Court in para 26 and 27, observed as under : 26. If he was wrong in his argument that the byelaw on its proper construction did not affect subsisting contracts such as these of the Appellants, Mr. Pathak's further submission was that the impugned bye-law was invalid and ultra vires of the Act because it purported to operate retrospectively affecting vested rights under contracts which were subsisting on the day on which the bye-law came into force. 27. Mr. Pathak invited our attention to a passage in Craies' Statute Law, 5th Ed. p. 366 reading: Sometimes a statute, although not intended to be retrospective, will in fact have a retrospective operation. For instance if two persons enter into a contract, and afterwards a statute is passed which, as Cockburn, C. J., said in Duke of Devonshire v. Barrow, etc., Co. (1877) 2 Q. B. D. 286 at p. 289) engrafts an enactment upon existing contracts' and thus operates so as to produce a result which is something quite different from the original intention of the contracting parties, such statute has, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that a Jew, before sitting in the House of Commons, must use the words on the true faith of a Christian, prescribed in the oath of abjuration of 6 Geo. 3, c.53, because any person, refusing to take the same oath when tendered by two justices, would, under the 1 Geo. 1, st.2, c.13, be deemed to be a popish recusant, and would be liable to penalties as such; and to enforce these provisions against a Jew, it was said, would be the merest tyranny. But Baron Parke thus replied to this argument: - If in the vast majority of possible cases in all of ordinary occurrence the law is in no degree inconsistent or unreasonable construed according to its plain words, it seems to me to be an untenable proposition, and unsupported by authority, to say that the construction may be varied in every case, because there is one possible but highly improbably one in which the law would operate with great severity, and against our own notions of justice. The utmost that can be reasonably contended is, that it should be varied in that particular case, so as to obviate that injustice no further. (e) In the case of Shiv Dutt Rai Fateh Chand and ors. v. Union of India and anr. [(1983) 3 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 7, 8, 18, 22, 46 and provisions under Chapter VIII of RERA. 81. We find broadly three grounds on which the petitioners have challenged the various provisions of RERA, namely, (i) retrospective/retroactive application of certain provisions, (ii) unreasonable restrictions placed by certain provisions contrary to Article 19(1)(g) and violation of Article 14 of the Constitution of India and (iii) absence of a Judicial Member in the Authority constituted under Section 22 and definition of the Judicial Member as defined under Section 46 of RERA. 82. The Union of India in its affidavit-in-reply submitted that a Writ Petition was filed in the Supreme Court of India by one Sanrakshak - The Protector v. Union of India Ors. being Writ Petition (L) No. 112 of 2007, praying, inter alia, for framing national guidelines in respect of issuance of advertisements by developers, to require them to mandatorily provide all concerned documents so that the claims in the advertisements could be counter-checked to prevent innocent flat purchasers from being defrauded. It is averred in the reply that the Supreme Court, during the course of hearing of the said writ petition was apprised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the opinion expressed by various ministries, reports of Standing Committee and Select Committee. 84. RERA relates to the development of buildings/projects and sale of flats therein. The statute does not interfere with any ownership rights of the owner or developer of the property. RERA regulates the development of real estate project in respect of constructions which are not complete wherein occupation certificate had not been obtained on the date of commencement of provisions of RERA. ANALYSIS OF CHALLENGE TO VALIDITY OF CERTAIN PROVISIONS : SECTION 3 : 85. Section 3 of RERA prevents the promoter to advertise, market, book, sell or offer for sale, or invite persons to purchase unit in the real estate project without getting registration under RERA. First proviso to Section 3(1) mandates that ongoing project on the date of commencement of RERA, of which completion certificate had not been issued, are covered under the provisions of RERA and such promoter shall make an application to the authority for registration of the project. 86. On behalf of the petitioners it was submitted that registration of ongoing project under RERA would be contrary to the contractual rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he real estate sector, development work/obligations of promoter and the allottee. Therefore, the Parliament considered it to pass a central law on the subject. During the course of hearing, it was brought to notice that in the State of Maharashtra a law i.e. MOFA on the subject has been in operation. But MOFA provisions are not akin to regulatory provisions of RERA. 87. The important provisions like Sections 3 to 19, 40, 59 to 70 and 79 to 80 were notified for operation from 1/5/2017. RERA law was enacted in the year 2016. The Central Government did not make any haste to implement these provisions at one and the same time, but the provisions were made applicable thoughtfully and phase-wise. Considering the scheme of RERA, object and purpose for which it is enacted in the larger public interest, we do not find that challenge on the ground that it violates rights of the petitioners under Articles 14 and 19(1)(g) stand to reason. Merely because sale and purchase agreement was entered into by the promoter prior to coming into force of RERA does not make the application of enactment retrospective in nature. The RERA was passed because it was felt that several promoters had defaulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iefs here and there and wait for the outcome of the same for indefinite period. The public interest at large is one of the relevant consideration in determining the constitutional validity of retrospective legislation. 90. The provisions of Section 3(2) states that notwithstanding anything contained in sub-section (1), no registration of the real estate project shall be required in cases falling under Clauses (a), (b) and (c). The RERA takes care of exclusion of certain projects/constructions which will not be governed under RERA. 91. We, therefore, hold that challenge made to first proviso to Section 3(1) as contrary to Articles 14 and 19(1)(g), is merit-less and the contentions raised in that behalf are negatived. SECTIONS 4, 5(3) : 92. Section 4 of RERA deals with application for registration of real estate projects. This provision states that every promoter shall make an application to the Authority for registration of the real estate project in such form, manner, within such time and accompanied by such fee as may be prescribed. Section 4(2) prescribes requirement of necessary documents and information along with the application. A long list of documents is mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promoter shall not be entitled to divert the said fund for the benefit of other project or for utilization as per desire of the promoter. Such practices have been curbed under the scheme of RERA and one of such move is to introduce such provision wherein one is bound to deposit 70% amount collected from the allottees to be invested on the project. This is again a legislation in the larger public interest of the consumer and allottee. We do not find any arbitrariness in this provision. 95. It was submitted that, (a) there is no guidance prescribed in respect of deposit of 70% of the amount realized from the allottees. In a given case, the said amount could have been invested or spent on the project by the promoter; (b) it is possible that promoter would have invested or spent 50% of the amount out of 70% on the said project; (c) it is possible that the allottees fail to deposit according to the terms of the agreement or the promoter could not receive 70% of the amount from the allottees; (d) it is possible in a given case that allottees are at fault in not contributing their share with the promoter and due to their default the promoter is unable to collect the amount. Various sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of the authority. There is no restriction upon the right of the promoter. The money is to be deposited for ensuring that it is utilized for the purpose of project and not misused. 98. The provisions of Section 4(2)(l)(C)(D) states that 70% of amount realized for the real estate project from the allottees to be deposited in a separate account, which means that 30% of the amount realized shall remain with the promoter/developer, which would be to the benefit of the promoter. In that way, the provision balances rights of promoter and the allottee. 99. In respect of Rules to be framed under RERA, the learned counsel appearing for the Union of India submitted that out of 35 States and Union Territories, Rules have not been notified by 9 States. Remaining 26 States and Union Territories have already notified the Rules. 15 Stats/Union Territories make it mandatory to account for 70% of past collections for ongoing projects and deposit the money which was not spent on the project. 9 States do not provide for any express provision for deposit of past collections. Only 2 States i.e. State of Maharashtra and Gujarat provide for deposit of amounts to be realized from the allottees. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsiders necessary, which shall, in aggregate, not exceed a period of one year. The authority is bound to provide hearing to the parties while dealing with an application for extension. The learned Senior Counsel appearing for the petitioners submitted that this provision restricts the freedom of trade and business and mandates that promoter shall complete the real estate project under whatever circumstances and in case they fail to complete during the period prescribed in the initial declaration under Section 4(2)(l)(C), then the maximum period of one year could be provided by the authority to complete the project. The learned counsel submitted that such a provision does not take into consideration practical difficulties of the promoter. According to the petitioners there could be a situation which is beyond the control of the promoter to complete the project. For example, due to non supply of raw material, due to unavailability of labour, due to stoppage of work for reasons beyond the control of the promoter, due to non cooperation of the allottees, due to orders passed by the court or other forum injuncting or staying the construction work. The scheme of RERA does not have any an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e inbuilt under the scheme of the RERA itself. 107. The provisions of Section 7 refers to revocation of registration. Section 7(1) empowers the authority to revoke registration granted under Section 5, if the promoter had made defaults in doing anything required by or under RERA, Rules and Regulations, violates any of the terms and conditions of approval given by the competent authority or if the promoter is involved in any kind of unfair practice or irregularities. Explanation to Section 7(1) defines the term unfair practice , which means, (a) false representation in respect of the services provided by the promoter, (b) false representation in respect of approval or affiliation which the promoter does not have and (c) if the promoter makes misleading representation concerning the services. The registration could also be cancelled if the promoter indulges in any fraudulent practices. This provision confers wide powers on the authority to regulate conduct of the promoter and in a deserving case cancel the registration. It is obligatory on the part of the authority to issue a notice for reaching satisfaction as to whether a case is made out for taking action under Section 7. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermined by the authority concerned. There is rider in the first proviso prescribed under Section 8, which states that no direction, decision or order of the authority under this section shall take effect until the expiry of the period of appeal provided under the provisions of RERA. We are of the view that a proper construction of the provisions would mean that even in case of lapsing of or on revocation of registration, the authority shall not mechanically terminate the registration of the promoter or injunct him to act as a promoter, but in the facts of a case would take necessary steps in the interest of allottees permitting the promoter to carry on the remaining development work. We would observe that in case the promoter fails to complete the project in the prescribed time declared by him or the extended time under Section 6, then it shall not mean that the only outcome would be to oust the promoter from the project. 109. In case the promoter establishes and the authority is convinced that there were compelling circumstances and reasons for the promoter in failing to complete the project during the stipulated time, the authority shall have to examine as to whether there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he project is held-up due to court orders or injunction and if such situation arise, time consumed in the litigation be excluded from consideration of period of one year under Section 6. We find that such a interpretation will frustrate the object and purpose of the RERA. It is possible that a tendency would develop to ask for extension for indefinite period by creating some or the other ground. We are of the view that the framers of the RERA did not expect this situation to arise. 112. The learned counsel appearing for the petitioners submitted that in case the project could not be completed for no fault of the promoter inspite of getting aggregate extension under Section 6, the promoter would be ousted from the project and it would not be known as to what will happen to the project, the property which is owned by the promoter. A promoter cannot be divested from his property by a retrospective legislation according to the learned counsel. We do not find the submissions to be totally merit-less, but will have to find an answer under the given scheme of the RERA to cover such eventuality. It is to be noted that the consequence of lapse or revocation of registration is that till r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on failure, the remaining development work is controlled by the authority. In that sense, there is no divesting of rights in the property from the promoter to the authority. It is not vesting of rights, neither there is expropriation as alleged on behalf of the petitioners. The property of the promoter is neither confiscated nor acquired in that sense. Under the provisions of Section 7(3), the authority is empowered to continue the registration of the project without revoking it on such further terms and conditions as it thinks fit in the interest of allottees. Section 6 refers to extension of period of registration for an aggregate period of one year only. Provisions of Section 7(4) prescribes steps to be taken by the authority upon revocation of the registration. Even under this provision, the promoter's interests are protected. The authority shall debar the promoter from accessing its website in relation to that project. The remaining development works are to be carried out in accordance with the provisions of Section 8. The authority would then direct the bank to freeze the account of the promoter in relation to the subject project which could be de-freezed at a proper s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted time frame is achieved. If the authority does not find any deliberate lapses on the part of the promoters and in case the authority is convinced that there are exceptional circumstances compelling in nature which prevented the promoter to complete the development work, then it shall be necessary for the authority to continue the same promoter under its directions. The authority dealing with such contingencies, if any, would deal with the relevant issues after hearing allottees/associations of allottees and other stakeholders, if any. It is expected that the authority would prescribe brief reasons while passing orders in this regard. As to how the authority will act in furtherance of the provisions and the powers conferred on it, is required to be seen as and when such situation arises in a given facts and circumstances of a case. It would not be advisable to imagine, invent and apprehend certain situations at this stage. 116. Section 8 seeks to ensure completion of an obligation of a promoter and does not result in expropriation and/or ouster and is not penal in operation. 117. Having a careful scrutiny of the relevant provisions of the RERA, its object and scheme and con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. The learned counsel submitted that legislature cannot enact a law which would affect past contractual rights of the parties, which would involve application of provisions of the Contract Act, Transfer of Property Act etc. Section 18(1)(a) stipulates that the promoter is bound to pay interest from the date of agreement for sale entered into between the promoter and the allottee prior to registration under RERA till the handing over of possession. In case the allottee wishes to withdraw from the project, he shall be paid with interest at such rate as may be prescribed in this behalf, including compensation, in the manner as provided under this Act. In case the allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession at such rate as may be prescribed. The learned counsel submitted that the provisions are arbitrary in nature and contrary to Articles 14 and 19(1)(g). The past obligation of the promoter with the allottee cannot be taken into consideration when the project gets registered under Section 3 and when new time-line is prescribed. In case the project is not complete, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the extended one, then the allottee shall reasonably expect some compensation from the promoter till the handing over of possession. In case the promoter defies to pay the compensation, then the same would amount to unjust enrichment by the promoter of the hard earned money of the allottees which he utilized. Such provisions are necessary to be incorporated because it was noticed by the Select Committee and the Standing Committee of the Parliament that huge sums of money collected from the allottees were not utilized fully for the project or the amounts collected from the allottees were diverted to other sectors than the concerned project. We do not notice any constitutional impropriety or legal infirmity or unreasonableness in incorporating these provisions under the RERA. Under Section 17, the promoter is entitled to execute a registered conveyance deed in favour of the allottee. After obtaining occupancy certificate and handing over physical possession to the allottee, it shall be the responsibility of the promoter to hand over necessary documents also. Section 19 figures under Chapter IV (Rights and Duties of Allottees). The provisions of Section 19 prescribe that the allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew rule of law is applied to an act or transaction in the process of completion...... The foundation of these concepts is the distinction between completed and pending transactions.... (T.C. Hartley, The Foundations of European Community Law 129 (1981). 'Retrospective- Looking back; contemplating what is past. Having operation from a past time. 'Retrospective' is somewhat ambiguous and that good deal of confusion has been caused by the fact that it is used in more senses than one. In general however the Courts regard as retrospective any statute which operates on cases or facts coming into existence before its commencement in the sense that it affects even if for the future only the character or consequences of transactions previously entered into or of other past conduct. Thus, a statute is not retrospective merely because it affects existing rights; nor is it retrospective merely because a part of the requisite for its action is drawn from a time and antecedents to its passing. (Vol.44 Halsbury's Laws of England, Fourth Edition, Page 8 of 10 page 570 para 921). 122. We have already discussed that above stated provisions of the RERA are not retrospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders by moulding reliefs by granting interest, compensation to the allottees, and issuing directions for timely completion of project, transit accommodation during completion of project, so on and so forth. Under RERA now this function is assigned to the authority, tribunal. An appeal lies to the High Court. Under one umbrella, under one regulation and one law all the issues are tried to be resolved. Provisions of Section 71 refers to power to adjudicate. A District Judge is conferred with the power to adjudicate compensation under Sections 12, 14, 18 and 19. A promoter could very well put up his case before the adjudicator who deals with the issues in the light of the fact situation of each case. Therefore, there should not be any apprehension that mechanically compensation would be awarded against a promoter on failure to complete the development work. The proviso to Section 71(1) provides that any person whose complaint in respect of matters covered under Sections 12, 14, 18 and 19 if pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission, established under Section 9 of the Consumer Protec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her stakeholders before adjudicating claim for compensation. The orders are subject to judicial review by higher forum. Therefore, promoter should not have apprehension that they would be remediless or there is no scope under the scheme of the RERA for consideration of their claim. 126. The another plea raised is as to why a promoter shall pay interest for the past contractual rights, in case of failure to complete the project after registration under RERA, till the possession is handed over. Under the scheme of the RERA it is clear by now that a promoter has to self assess and declare time period during which he would complete the project. But in case, inspite of making genuine efforts, a promoter fails to complete the project, then the concerned authorities, adjudicators, forums, tribunals would certainly look into genuine cases and mould their reliefs accordingly. We do not find that on that count the provisions of Section 18(1)(a) are to be declared as contrary and violative of Articles 14 and 19(1)(g). Considering the scheme of the RERA and the provisions of Section 18(1)(b), we are of the view that the same are not contrary to Articles 14 and 19(1)(g) of the Constitution. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . RERA is enacted to protect the interest of consumer in the real estate sector. It was enacted in the public interest. SECTIONS 22 AND 46 : 129. The learned Senior Counsel Dr. Tulzapurkar appearing for the petitioners submitted that the Authority and the Tribunal ought to have a Judicial Member on its panel. Even the constitution of Selection Committee for selecting Members of Authority was defective. Reliance was placed on the judgment of the Supreme Court in Union of India v. R. Gandhi, President, Madras Bar Association (Supra). The learned counsel submitted that in view of the settled principles of law by the Apex Court, the provisions of Sections 22 and 46 be held to be unconstitutional. Section 21 refers to composition of Authority. The Authority shall consist of a Chairperson and not less than two whole time Members to be appointed by the appropriate Government. Section 22 refers to qualifications of Chairperson and Members of Authority. The Chairperson and other Members of the Authority shall be appointed by the appropriate Government on the recommendations of a Selection Committee consisting of the Chief Justice of the High Court or his nominee; the Secretary of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a lis to act judicially and the decision of the authority is quasi-judicial. If an authority had the power to do any act that prejudicially affects a person and the authority is required by the statute to act in a judicial manner, even in absence of two parties and a lis; will be a quasi-judicial act (National Securities Depository Limited v. Securities and Exchange Board of India (Supra) (paras 11 and 19). 133. In the submissions of the learned Senior Counsel Mr. Khambata there is no requirement of judicial member merely because authority may exercise quasi judicial powers. It is not a requirement of law that in all cases where an authority discharges quasi judicial functions, it must have judicial member as one of its members. It was sought to be contended by the learned counsel Mr. Khambata that petitioners' reliance on the judgment of Madras Bar Association (Supra) was misplaced for the following reasons: (a) The Supreme Court was considering the case of a National Company Law Tribunal to which the company jurisdiction previously vested in the High Court was transferred: (b) The Apex Court, in this regard, observed in para 120 as under: As NCLT takes over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ember of Indian Legal Service who had held the post of Additional Secretary on that service or any equivalent post. The learned Senior Counsel Dr. Tulzapurkar submitted that this portion of the provision could be severed and be declared as illegal and contrary to the judgment of the Apex Court in the case of Madras Bar Association (Supra). The provision is contrary to the express provision of Section 45, which mandates that the Appellate Tribunal shall consist of a Chairperson and not less than two whole time Members of which one shall be a judicial member. 136. We find that submissions advanced by the learned Senior Counsel Dr. Tulzapurkar deserve consideration. On behalf of the UOI, it was submitted that merely because the nomenclature used is Judicial Member would not mean that the said member must have a judicial background. A judicial member for the purposes of RERA must be held to be a person as defined under Section 46. We do not accept this interpretation placed by the learned ASG Mr. Singh. 137. In view of mandate of Section 45, the nature of functioning of the Tribunal, it is mandatory to have a judicial member on the Tribunal. The learned ASG Mr. Singh submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. It is very likely that in a given case it may not appoint a judicial member, who has been a Judge, as one of the members on the Tribunal. This would defeat the purpose of establishing the Tribunal. We are of the view that the entire Section 46 need not be struck down as portion of the definition relating to member of Indian Legal Service could be severed. 139. We, therefore, hold that a Member of an Indian Legal Service holding post of Additional Secretary of that service or an equivalent post, shall not be entitled to be considered for appointment as a Judicial Member on the Appellate Tribunal. To that limited extent we hold that provisions of Section 46(1)(b) to be contrary to Section 45 of RERA, Article 14 and the principles set down by the Apex Court in the case of Madras Bar Association (Supra). 140. The learned counsel appearing for the petitioners submitted that Sections 18(1), 18(2), 18(3), 40, 59, 60, 61, 63 and 64 refer to penalties to be imposed, operate retrospectively. It was submitted that for non compliance of contractual obligations prior to registration of RERA, penal law cannot be retrospectively made applicable. The promoter will be adversely affected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e project are taken note of under the penal provisions. The authority concerned would be dealing with cases coming before it in respect of projects registered under RERA. Therefore, the Parliament was competent enough to enact provisions under Chapter VIII of RERA. The challenge raised by the petitioners to the penal provisions under Chapter VIII is merit-less. We have discussed above the judgments cited in respect of retrospective application of law and considering the scheme of the RERA which was enacted in the larger public interest, we do not find that the provisions referred in above para retrospectively penalize the act done by a person prior to registration under RERA. Therefore, we hold that these provisions are not contrary to Article 14, 19(1)(g) and 20 of the Constitution of India. 142. Chapter IX of RERA refers to finance, accounts, audits and reports. Section 73 refers to grants and loans by Central Government. Section 76 refers to crediting sums realized by way of penalties to Consolidated Fund of India or State account. This would indicate that the penalties imposed are to be deposited in the Consolidated Funds of India or State and not to be paid to a party co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arayan Shankar Bhandari v. Omprakash Shankar Bhandari (Supra) relates to interpretation of the 2005 Amendment to Section 6 of the Hindu Succession Act, 1956 and does not consider whether retroactive legislation is constitutional or not. The distinction between retrospective and retroactive legislation was made for the purposes of interpretation and not to draw any distinction between retrospective and retroactive legislation from the perspective of constitutionality. The Apex Court in the case of State of Bombay v. Vishnu Ramchandra (Supra) concluded that the fact that part of the requisites for operation of the statute were drawn from a time antecedent to its passing did not make the statute retrospective, so long as the action was taken after the Act came into force. In the case of Prakash and ors. v. Phulavati and ors.(Supra), in para 19, the Apex Court stated as under :- 19. Interpretation of a provision depends on the text and the context. Normal rule is to read the words of a statute in ordinary sense. In case of ambiguity, rational meaning has to be given. In case of apparent conflict, harmonious meaning to advance the object and intention of legislature has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the larger public interest occupying the field of regulatory nature which was absent in this country so far.The learned counsel cited the judgment in the case of Delhi Transport Corp. v. D.T.C. Mazdoor Congress and ors. (Supra). The learned counsel cited this Judgment to express that the authority would exercise unlimited power. Under the scheme of RERA, we do not find that authority has unlimited powers to exercise. The orders passed by the authority are amenable to jurisdiction of Tribunal which would be manned by judicial members. It is informed that the Maharashtra State constituted authority having a judicial member on it. The orders passed by the Tribunal are amenable to judicial review before the High Court under Section 58 of RERA. Therefore, the apprehension expressed on behalf of the petitioners that the authority and Tribunal would exercise uncontrolled/undefined power is baseless and cannot be accepted. In the case of Kesavananda Bharati v. State of Kerala [AIR 1973 SC 1461], the Apex Court observed as follows : 1535. In exercising the power of judicial review, the courts cannot be oblivious of the practical needs of the Government. The door has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shayara Bano v. Union of India and ors. (Supra), the Apex Court in para 99 observed that, Judgment in the case of State of A.P. v. McDowell and co. [(1996) 3 SCC 709] was read as being an absolute bar to the use of arbitrariness as a tool to strike down legislation under Article 14. As has been noted by us earlier in this Judgment, McDowell itself is per incuriam, not having noticed several judgments of Benches of equal or higher strength, its reasoning even otherwise being flawed. The judgments, following McDowell are, therefore, no longer good law . 148. We perused the report of the Standing Committee. The Standing Committee on Urban Development (2013-2014) submitted its draft report in respect of the Real Estate (Regulation and Development) Bill, 2013 (Thirtieth Report to Fifteenth Lok Sabha). Paras 1 and 2 of Chapter - I titled as Background read as under :- 1. Over the past few decades, the demand for housing has increased manifold. In spite of Government's efforts through various schemes, it has not been able to cope up with the increasing demands. Taking advantage of the situation, the private players have taken over the real estate sector with no concern for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Select Committee reads as under : 3. The Committee held 17 sittings in all. Out of these, 8 sittings were held outside Delhi and remaining were held in Delhi. The Committee heard 445 witnesses in all at different places representing different categories/groups of stake holders i.e., representatives of consumers/Residents Welfare Associations, promoters/builders, banking/financial institutions (finances), representatives from Housing Departments of all States and Union Territories and law firms and other independent experts in the field of real estate. The list of witnesses examined is placed as Annexure -I of the Report. 4. The Committee had its first meeting held on the 12th May, 2015 wherein the Committee decided to issue a Press Communique inviting suggestions/views from organizations and public at large. The Committee also decided to undertake visits to Kolkata, Bengaluru, Mumbai and Shimla with a view to interact with various stakeholders in different parts of the country. As per the decision of the Committee, a Press Communique was issued on 2nd June 2015. The Committee in all received 273 Memoranda. The list of individuals/organizations who submitted Memoranda b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... House that there is unsold housing stock of over 10 lakh houses in major cities on account of increase in prices due to cost and time overruns and dwindling investor confidence. 151. We have perused Real Estate License Law, New York Department of State, which prescribes Rules and Regulations for license to be granted for real estate brokers, agents, salespersons. A provision refers to revocation and suspension of licenses. A provision is prescribed for powers and duties of the State real estate board which is established within the Department of State. We have also perused the provisions of real estate commission of the State of Washington which regulates real estate brokers and managing brokers. The said law provides for adjudicative proceeding. We have even perused the provisions of Australian law on the subject, namely, Property, Stock and Business Agents Act, 2002. Said Act refers to complaints, power to suspend license, inquiries and investigation, taking of disciplinary action, recovery of monetary penalty, powers of authorized officer, offences of persons etc. From the material placed on record during the course of hearing, we could realize that a very large numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretational aspects of some of the provisions with a balanced approach so as to advance the object and purpose of RERA. The constitutional challenge to the provisions was based on academic interpretation of law. The practical implementation of these provisions will have to be seen and observed as and when cases would be dealt with by the Authorities, Tribunals and the High Courts. 154. We are conscious of the fact that actual implementation of RERA needs to be closely monitored in years to come. RERA is not a law relating to only regulatory control over the promoter but its object is to develop the real estate sector, particularly, the incomplete projects across the country. The problems are enormous and it is time to take a step forward to fulfill the dream of the Father of the Nation - Mahatma Gandhi to wipe every tear from every eye. R.G. Ketkar, J. 155. I have perused the draft judgment prepared by my esteemed brother and I entirely agree with the conclusions drawn by him, but since the approach in arriving at a conclusion is as important as the conclusion itself, and particularly in matters involving vital constitutional issues having a far-reaching impact on funda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 139. 159. It is a rule now firmly established, [as held in Philips India Ltd. v. Labour Court, (1985) 3 SCC 103], that the intention of the Legislature must be found by reading the statute as a whole. The rule is referred to as an elementary rule by Viscount Simonds,; a compelling rule by Lord Somervell of Harrow [as held in AG v. HRH Prince Ernest Augustus, (1957) 1 ALL ER 49]; and a settled rule by B.K. Mukherjee, J. [as held in Poppatlal Shah v. State of Madras, AIR 1953 SC 274]. Said Lord Davey: Every clause of a statute should be construed with reference to the context and other clauses of the Act, so as, as far as possible, to make a consistent enactment of the whole statute or series of statutes relating to the subject-matter [as held in Canada Sugar Refining Co. v. R, (1898) AC 735]. It is spoken of construction ex visceribus actus. [as held in Newspapers Ltd. v. Industrial Tribunal, U.P. AIR 1957 SC 532]. It is the most natural and genuine exposition of a statute , laid down Lord Coke to construe one part of a statute by another part of the same statute, for that best ex-presseth the meaning of the makers. [as held in Punjab Beverages Pvt. Ltd. v. Suresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olved and appointed to cure the disease of the commonwealth, and th - The true reason of the remedy; and then the office of all the judges is always to make such construction as shall suppress the mischief, and advance the remedy, and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico. 163. A law may be unconstitutional on a number of grounds, such as, : (i) Contravention of any fundamental right, specified in Part III of the Constitution. (Ref. Under Article 143: Special Reference No. 1 of 1964, In re AIR 1965 SC 745 (145): 1965(1) SCR 413) (ii) Legislating on a subject which is not assigned to the relevant legislature by the distribution of powers made by the 7th Sch., read with the connected articles. (Ref. Special Reference No. 1 of 1964, In re AIR 1965 SC 745 : (1965) 1 SCR 413) (iii) Contravention of any of the mandatory provisions of the Constitution which impose limitations upon the powers of a Legislature, e.g., Article 301. (Ref. Atiabari Tea Co. v. State of Assam, AIR 1961 SC 232) (iv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a Legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the Court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. 165. In the case of N.K. Bajpai v. Union of India and another, (2012) 4 SCC 653, the appellants had challenged vires of Section 129(6) of the Customs Act, 1962 which stipulates that on demitting office as member of the Customs, Excise and Service Tax Appellate Tribunal (for short, 'CESTAT') a person shall not be entitled to appear before CESTAT, on the ground that it is violative of fundamental rights guaranteed under Articles 14, 19(1)(g) and 21 of the Constitution of India. In paragraph-12, the Apex Court held that ......... Firstly, the challenger must show that the restriction imposed, at least prima fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ..... 168. Reference was further made to paragraph-15 of State of Madras v. V.G. Row: AIR 1952 SC 196: 1952 Cri LJ 966, where it was observed that ....It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. 169. In paragraph-19 of the same decision it was observed that The expression 'in the interest of general public' is of wide import comprehending public order, public health, public security, morals, economic welfare of the community and the objects mentioned in Part IV of the Constitution. ..... 170. In paragraph-20 it was observed that The tests of reasonableness have to be viewed in the context of the issues which faced the legislature. In the construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to 52 and 55 read thus : 38. This is a very important question because invalidating an Act of the Legislature is a grave step and should never be lightly taken. As observed by the American Jurist Alexander Bickel judicial review is a counter majoritarian force in our system, since when the Supreme Court declares unconstitutional a legislative Act or the act of an elected executive, it thus thwarts the will of the representatives of the people; it exercises control, not on behalf of the prevailing majority, but against it. (See A. Bickel's 'The Least Dangerous Branch'). 39. The Court is, therefore, faced with a grave problem. On the one hand, it is well settled since Marbury v. Madison (supra) that the Constitution is the fundamental law of the land and must prevail over the ordinary statute in case of conflict, on the other hand the Court must not seek an unnecessary confrontation with the legislature, particularly since the legislature consists of representatives democratically elected by the people. 40. The Court must always remember that invalidating a statute is a grave step, and must therefore be taken in very rare and exceptional circumstances. 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the Court thinks it unwise or undesirable. Thayer traced these views far back in American history, finding, for example, that as early as 1811 the Chief Justice of Pennsylvania had concluded: For weighty reasons, it has been assumed as a principle in constitutional construction by the Supreme Court of the United States, by this Court, and every other Court of reputation in the United States, that an Act of the legislature is not to be declared void unless the violation of the Constitution is so manifest as to leave no room for reasonable doubt vide Commonwealth ex. Rel. O'Hara v. Smith 4 Binn. 117 (Pg.1811). 43. Thus, according to Prof. Thayer, a Court can declare a statute to be unconstitutional not merely because it is possible to hold this view, but only when that is the only possible view not open to rational question. In other words, the Court can declare a statute to be unconstitutional only when there can be no manner of doubt that it is flagrantly unconstitutional, and there is no way of avoiding such decision. The philosophy behind this view is that there is broad separation of powers under the Constitution, and the three organs of the State the legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry effort to uphold the constitutional validity of a statute, even if that requires giving a strained construction or narrowing down its scope vide Mark Netto v. Government of Kerala and others: AIR 1979 SC 83 (para 6). Also, it is none of the concern of the Court whether the legislation in its opinion is wise or unwise. 47. In a dissenting judgment in Bartels v. Iowa 262 US 404 (1923), Holmes J. while dealing with a State statute requiring the use of English as the medium of instruction in the public schools (which the majority of the Court held to be invalid) observed, I think I appreciate the objection to the law but it appears to me to present a question upon which men reasonably might differ and therefore I am unable to say that the Constitution of the United States prevents the experiment being tried . 48. The Court certainly has the power to decide about the constitutional validity of a statute. However, as observed by Frankfurter, J. in West Virginia v. Barnette,: 319 U.S. 624 (1943), since this power prevents the full play of the democratic process it is vital that it should be exercised with rigorous self restraint. 49. In this connection we may quote from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aroused? A third cluster of questions involves the competence of the Supreme Court as a legislative body. Can any nine men master the complexities of every phase of American life which, as the post 1961 cases suggest, is now the Court's province? Are any nine men wise enough and good enough to wield such power over the lives of millions? Are courts institutionally equipped for such burdens? Unlike legislatures, they are not representative bodies reflecting a wide range of social interest. Lacking a professional staff of trained investigators, they must rely for data almost exclusively upon the partisan advocates who appear before them. Inadequate or misleading information invites unsound decisions. If courts are to rely upon social science data as facts, they must recognize that such data are often tentative at best, subject to varying interpretations, and questionable on methodological grounds. Moreover, since social science findings and conclusions are likely to change with continuing research, they may require a system of ongoing policy reviews as new or better data become available. Is the judiciary capable of performing this function of supervision and adjustment tradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices and institutions to meet changing social and economic needs. ... To stay experimentation in things social and economic is a grave responsibility. Denial of the right to experiment may be fraught with serious consequences to the Nation. 55. In Keshvananda Bharati v. State of Kerala,: AIR 1973 SC 1461 (vide para 1547) Khanna J. observed: 1535. In exercising the power of judicial review, the Courts cannot be oblivious of the practical needs of the government. The door has to be left open for trial and error. 173. In the case of Saghir Ahmad and another v. State of U.P. and others,: AIR 1954 SC 728, the Constitution Bench of Apex Court was considering the validity of U.P. State Road Transport Act (2 of 1951) which became law on and from 10.2.1951. In paragraph-14, the Apex Court noted that the legislation has excluded all private bus owners from the field of transport business from plying motor vehicles on the Buland-Shahr-Delhi route. Prima facie it was an infraction of the provisions of Article 19(1)(g) of the Constitution and the question was whether this invasion by the Legislature of the fundamental right can be justified under the provisions of clause (6) of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of the restriction, extent of restriction and other relevant factors. The Court has to try to strike a just balance between the fundamental rights and the larger interest of the society. The Court interferes with a statute if it clearly violates the fundamental rights. The Court proceeds on the footing that the legislature understands the needs of the people. The Constitution is primarily for the common man. While examining whether the impugned provisions of the statute and rules amount to reasonable restrictions and are brought out in the interest of the general public, the exercise that is required to be undertaken is the balancing of fundamental right to carry on occupation on the one hand and the restrictions imposed on the other hand. This is what is known as doctrine of proportionality . Article 19(1)(g) guarantees fundamental rights on one hand and at the same time empowers the State to impose reasonable restrictions on those freedoms in public interest. This notion accepts the modern constitutional theory that the constitutional rights are related. This relativity means that a constitutional licence to limit those rights is granted where such a limitation will be j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ight, on the rest, the purpose of the legislation, the object sought to be achieved, and the consequence that may flow from the adoption of one in preference to the other possible interpretation. 178. In paragraph-101, paragraph-231 of Kehar Singh v. State (Delhi Admn.), :(1988) 3 SCC 609 was extracted which is to the following effect: 231. During the last several years, the 'golden rule' has been given a go-by. We now look for the intention of the legislature or the 'purpose' of the statute. first, we examine the words of the statute. If the words are precise and cover the situation on hand, we do not go further. We expound those words in the natural and ordinary sense of the words. But, if the words are ambiguous, uncertain or any doubt arises as to the terms employed, we deem it as our paramount duty to put upon the language of the legislature rational meaning. We then examine every word, every section and every provision. We examine the act as a whole. We examine the necessity which gave rise to the Act. We look at the mischiefs which the legislature intended to redress. We look at the whole situation and not just one-to-on relation. We will not consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to entity or persons responsible and/or liable for delivering on several projects that were advertised and in respect of which amounts had been collected from individual purchasers. What was promised in advertisements/broachers, such as amenities, specifications of premises etc. was without any basis, often without plans having been sanctioned, and was far from what was finally delivered. Amounts collected from purchasers were either being diverted to other projects, or were not used towards development at all, and the developer would often be left with no funds to finish the project despite having collected funds from the purchasers. For a variety of reasons including lack of funds, projects were stalled and never completed and individual purchasers who had invested their life-savings or had borrowed money on interest, were left in the lurch on account of these stalled projects. Individual purchasers were often left with no choice but to take illegal possession of premises offered to them under the guise of fit-outs etc., and without the developer having obtained an occupation/completion certificate, which in turn would be on account of a range of different acts of omission and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of India (CREDAI), National Real Estate Development Council (NAREDCO) and other associations working in the field of real estate, on various provisions of the Bill. 185. The Standing Committee also had the briefing of the representatives of the erstwhile Ministry of Housing Urban Poverty Alleviation (now Ministry of Housing Urban Affairs), Ministry of Finance, Reserve Bank of India, National Housing Bank, Ministry of Consumer Affairs, Ministry of Law and Justice (Department of Legal Affairs and Legislative Department), State Bank of India and other banks. The Committee also heard views of NGOs working in the field of real estate and sought clarifications on various issues. 186. On 13.2.2014, the report of the Standing Committee was tabled in Rajya Sabha. On 17.2.2014 said report was tabled in Lok Sabha. The Union Cabinet approved the official amendment to the said bill on 7.4.2015 based on the recommendations of the Committee of Urban Development and stake holders suggestions. On 6.5.2015 said Bill and Official Amendment, 2015 were referred to the Select Committee of Rajya Sabha for examination and submission of report. The Select Committee had 17 sittings, out of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mity and standardisation of business practices and transactions in the real estate sector. The proposed Bill provides for the establishment of the Real Estate Regulatory Authority (the Authority) for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority. 3. The proposed Bill will ensure greater accountability towards consumers, and significantly reduce frauds and delays as also the current high transaction costs. It attempts to balance the interests of consumers and promoters by imposing certain responsibilities on both. It seeks to establish symmetry of information between the promoter and purchaser, transparency of contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism. The proposed Bill will induct professionalism and standardisation in the sector, thus paving the way for accelerated growth and investments in the long run. 4. The Real ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for adjudging compensation under sections 12, 14, 18 and 19 of the proposed legislation; (j) to make provision for punishment and penalties for contravention of the provisions of the proposed legislation and for non-compliance of orders of Authority or Appellate Tribunal; (k) to empower the appropriate Government to supersede the Authority on certain circumstances specified in the proposed legislation; (l) to empower the appropriate Government to issue directions to the Authority and obtain reports and returns from it. 5. The Notes on clauses explain in detail the various provisions contained in the Real Estate (Regulation and Development) Bill, 2013. 6. The Bill seeks to achieve the above objectives. 188. The preamble of RERA reads thus: An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with the apartment, if any [as per clause (h)]; the number and areas of garage for sale in the project [as per clause (i)]; a declaration supported by an affidavit, which shall be signed by the promoter or any person, authorised by the promoter stating (A) that he has a legal title to the land on which the development is proposed along with legally valid documents with authentication of such title, if such land is owned by another person; (B) that the land is free from all encumbrances, or as the case may be details of the encumbrances on such land including any rights, title, interest or name of any party in or over such land along with details; and (C) the time period within which he undertakes to complete the project or phase thereof, as the case may be. 191. The promoter has to deposit 70% of the amounts realised for the project from the allottees from time to time in the separate account to be maintained in a Scheduled Bank to cover the cost of construction and the land cost and shall be used only for that purpose. Interest accrued thereon is credited to that account. The promoter retains with himself 30% realised from the allottees. The provisions thereto enable the prom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. To ascertain the meaning of a clause in a statute the Court has to look into the whole statute. To ascertain the meaning of a clause in a statute the court must look at the whole statute, at what precedes and at what succeeds and not merely at the clause itself. An isolated consideration of a provision leads to some other interrelated provision becoming otiose or devoid of meaning. 194. First proviso to Section 3(1) lays down that projects that are ongoing on the date of commencement of the Act and for which the completion certificate has not been issued, the promoter has to make an application to the Authority for registration of the said project within a period of three months from the date of commencement of the Act. Subsection (2) of Section 3 lays down that no registration of the real estate project shall be required in respect of clauses (a) to (c). Explanation thereto lays down that for the purpose of Section 3, where the project is to be developed in phases, every such phase shall be considered a stand alone real estate project, and the promoter shall obtain registration under the Act for each phase separately. Section 4(2) requires the promoter to enclose documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding upon the promoter. Thus, even in case the Authority finds that the registration of the promoter is liable to be revoked still discretion is conferred upon the Authority to permit registration to remain in force albeit upon imposing conditions. Likewise under Section 8, the Authority may continue registration of the promoter for carrying out all the remaining development works. Thus when the Authority is satisfied about the circumstances contemplated by first proviso to Section 6, it has ample power to continue the registration of the project under Section 7(3) and Section 8. Under section 37 the Authority, for the purpose of discharging its functions under the provisions of the Act or Rules or Regulations made thereunder, is empowered to issue such directions from time to time, to the promoters or to the allottees, as the case may be, as it may consider necessary and such direction shall be binding on all concerned. In my opinion, Sections 6, 7, 8 and 37 are required to be construed harmoniously so as to effectuate the object of RERA. 199. Mr. Kamdar relied upon paragraphs-42 to 48, 53 to 59, 61, 64, 66, 82, 89 and 96 of Cellular Operators Association of India v. Telecom Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... takings) Act 22 of 1969 which replaced the Ordinance with certain modifications. The petitioner contended that these provisions impaired his rights guaranteed under Articles 14, 19 and 31 of the Constitution of India and are on that account invalid. 202. In paragraph-56 the question whether the provisions of Sections 4 5 of Act 22, of 1969 and the other related provisions of the Act impaired the fundamental freedoms under Article 19(1)(f) (g) was considered. By Section 4 the entire undertaking of each named bank vested in the Union, and the Bank was prohibited from engaging in the business of banking in India and even in a foreign country, except where by the laws of a foreign country banking business owned or controlled by Government could not be carried on, the named bank was entitled to continue the business in that country. The business which the named banks carried on was -- (1) the business of banking as defined in Section 5(b) of the Banking Regulation Act, 1949, and business incidental thereto; and (2) other business which by virtue of Section 6(1) they were not prohibited from carrying on, though not part of or incidental to the business of banking. By Act 22 of 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph-65 it was observed that where restrictions imposed upon the carrying on of a business were so stringent that the business could not in practice be carried on, the Court will regard the imposition of the restrictions as unreasonable. Reference was made to the decision of Mohammad Yasin v. the Town Area Committee, Jalalabad, and another, :AIR 1952 SC 115. 206. In paragraph-67 it was observed that if compensation paid was in such a form that it is not immediately available for restarting any business, declaration of the right to carry on business other than banking became an empty formality, when the entire undertaking of the named banks was transferred to and vested in the new banks together with the premises and the names of the banks, and the named banks were deprived of the services of its administrative and other staff. 207. In paragraph-68, it was held that the restriction imposed upon the right of the named banks to carry on non-banking business was unreasonable. 208. In paragraph-71 it was observed that by the definition of existing bank in Section 2(d) of the Act, fourteen named banks in the First Schedule were, out of many commercial banks engaged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /USSD message. In the case of a post-paid consumer, such details of amount credited in the account of the calling consumer were to be provided in the next bill. 211. The Apex Court referred to the paper called Technical Paper on call drops in cellular network issued by TRAI on 13.11.2015. In that TRAI specifically adverted to the fact that the call drops take place due to variety of reasons. It was pointed that one of the reasons was due to the consumer's own fault, and that 36.9% of call drops are attributable to consumer faults. The High Court dealt with the challenge to the Regulation on two grounds, namely, (1) the ground of being ultra vires the parent Act, and (2) the ground that the Regulation was otherwise unreasonable and manifestly arbitrary. The High Court repelled the challenge. The High Court held that the power vested in TRAI under Section 36(1) to make Regulations is wide and pervasive, and that the Regulation was made to ensure quality of service extended to the consumer by the service provider, it would fall within Section 36(1) read with Section 11(1)(b)(v). The High Court rejected the contention that the compensation provided under the Regulation amounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result of intelligent care and deliberation, that is, the choice of a course which reason dictates. Any arbitrary invasion of a fundamental right cannot be said to contain this quality. A proper balance between the freedoms guaranteed and the control permitted under Article 19(6) must be struck in all cases before the impugned law can be said to be a reasonable restriction in the public interest. 215. In paragraph-49, it was observed that the technical paper dated 13.11.2015 showed that an average of 36.9% can be call drops owing to the fault of the consumer. If this is so, the Regulation's very basis was destroyed. The Regulation was based on the fact that the service provider is 100% at fault. This being a case it was clear that the service provider was made to pay for call drops that may not be attributable to his fault, and the consumer receives compensation for a call drop that may be attributable to the fault of the consumer himself, and that makes the Regulation a Regulation framed without intelligent care and deliberation. 216. In paragraph-52 it was observed that the language of the Regulation is definite and unambiguous. Paragraph-19 of the Explanatory Memorandu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are as pure as its ends - only then will Regulations made by it pass constitutional muster. 219. In paragraph-57 it was held that whether the service providers make profits or losses cannot be said to be relevant for determining whether the Regulation is otherwise arbitrary or unreasonable. It is always open to the Authority, with the vast powers given to it under the TRAI Act, to ensure, in a reasonable and non-arbitrary manner, that service providers provide the necessary funds for infrastructure development and deal with them so as to protect the interest of the consumer. 220. In paragraph-60, the Apex Court dealt with the submissions advanced on behalf of the appellants that 2% allowance of call drops on the basis of averaging call drops per month had been allowed to them by the Standards of Quality of Service of Basic Telephone Service (Wireline) and Cellular Mobile Telephone Service Regulations, 2009 dated 20.3.2009 (for short, Quality of Service Regulations ). It was observed that this would amount to the Authority penalizing the service provider even when it complies with another Regulation made under the same source of power, and for this reason alone, the Regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with call drops thanks to the fault on the part of the service providers in which consumers would be severely inconvenienced. The mere ipse dixit of the learned Attorney General, without any facts being pleaded to this effect, cannot possibly make an unconstitutional Regulation constitutional. The Apex Court held that a strict penal liability laid down on the erroneous basis that the fault is entirely with the service provider is manifestly arbitrary and unreasonable. Also, the payment of such penalty to a consumer who may himself be at fault, and which gives an unjustifiable windfall to such consumer, is manifestly arbitrary and unreasonable. 223. In paragraph-64, the Apex Court referred to the decision of Shree Bhagwati Steel Rolling Mills v. Commissioner of Central Excise, :(2016) 3 SCC 643 and extracted paragraph-35. In paragraph-35 of that decision, the Apex Court dealt with the circumstances of force majeure which may prevent a bona fide assessee from paying the duty in time and on given factual circumstances despite there being no fault on the part of the assessee in making the deposit of duty in time, a mandatory penalty of an equivalent amount of duty would be compuls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Schedule of the Constitution of India. The petitioners have not challenged the legislative competence in enacting RERA. They have also not contended that the impugned legislation does not fall under Entries 6, 7 and 46 of List III-Concurrent List of the Seventh Schedule of the Constitution of India. In fact no argument was advanced on behalf of the petitioners in that regard. 228. Mr. Kamdar submitted that the provisions of Section 8 read with Sections 6 and 7 in so far as they relate to completion of the remaining development works by making funds available through sale of unsold flats is also ex-facie confiscatory and expropriatory without payment of compensation. Section 6 contemplates lapsing of registration. Section 7 contemplates revocation of registration by taking over the real estate project by Authority under Section 8. Section 8 does not contemplate or provide for any handing back of the possession to the promoter, which was taken by Authority while exercising power thereunder. Section 8 authorizes the Authority to expropriate the property of the promoter and is, therefore, violative of Article 300-A. 229. Mr. Kamdar relied upon following decisions : (i) Rajiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority, before taking action of revocation of registration has to give not less than 30 days notice in writing stating the ground on which it is proposed to revoke the registration. The Authority has to consider any cause shown by the promoter against the proposed revocation. Any promoter aggrieved by the decision of the Authority has a remedy of appeal before the Appellate Tribunal. Against the decision of the Appellate Tribunal, the promoter has a remedy of filing an Appeal in the High Court on any one or more of the grounds specified under Section 100 of C.P.C. The power conferred on the Authority under sub-section (4) of Section 7 cannot be said to be unbridled and unguided. It is only in the event of the Authority satisfying as regards one or the other ground under clauses (a) to (c) of sub-section (1) of Section 7, it can revoke the registration. The object behind debarring the promoter from accessing its website and also specifying his name in the list of defaulters and displaying his photograph on the website of the Authority and informing other Real Estate Regulatory Authority in other States and Union Territories about the revocation of the registration is cautioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he statute to pay compensation to be fixed or determined according to the criteria laid down in the statute itself. 236. In paragraph-82 it was observed that a distinction and difference has been drawn between the concept of 'no compensation' and the concept of 'nil compensation'. As mandated by Article 300A, a person can be deprived of his property but in a just, fair and reasonable manner. In an appropriate case the Court may find 'nil compensation' also justified and fair if it is found that the State has undertaken to take over the liability and also has assured to compensate in a just and fair manner. But the situation would be totally different if it is a case of 'no compensation' at all. 237. In paragraph-84, the Apex Court recorded that there was sufficient force in the argument of the Counsel for the appellants that awarding no compensation attracts the vice of illegal deprivation of property. In paragraph-85 it was held that the omission of the Section 39(1) (e) (ii) of the UPZALR Act as amended in 1978 was of no consequence since the UPZALR Act leaves no choice to the State other than to pay compensation for the private forests acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i, who refused to register the sale deed. It was alleged that some of the persons who were associated with the couple, had an eye on their properties, including the land used for linaloe cultivation, valuable paintings, jewellery, artefacts etc., and began to create documents to grab those properties. On 26.6.1993 the Deputy Commissioner, Bangalore Rural District had reported that though Roerichs had owned 470.19 acres of land including the land used for Linaloe cultivation they had filed declarations only to the extent of 429.26 acres. Out of the extent of 470.19 acres of land owned by them, they had raised Linaloe cultivation to the extent of 356.15 acres and the remaining extent of 114.04 acres was agricultural land. As per the ceiling provisions of the Land Reforms Act they were entitled to hold an extent of 54 acres of agricultural land. As such, the excess of 60.04 acres ought to have been surrendered by them to the Government. The Law Department stated on 18.11.1993 that the earlier order dated 15.03.1982 of the Land Tribunal, Bangalore dropping the proceedings be re-opened and the action under Section 67(1) be initiated for resumption of the excess land. The Deputy Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. If the company was holding any land with Linaloe cultivation on the date of the commencement of the Act, the same would have vested in the State Government under Section 79B(3) of the Act and an amount as specified in Section 72 would have been paid. 241. In paragraph-68 it was held that Dr. Roerich and Mrs. Devika had got only the conditional exemption from the provisions of the Land Reforms Act for the lands used for Linaloe cultivation and, they also would have lost ownership and possession of the lands once the exemption had been withdrawn and the land would have vested in the State. The land was purchased by the Company with that statutory condition from Roerichs and, hence, was bound by that condition. The Apex Court rejected the contention that Section 110 is void due to excessive delegation of legislative powers. 242. In paragraph-86, the Apex Court repelled the challenge to the validity of Section 110 of the Karnataka Land Reforms Act as well as the notification dated 8.3.1994 and held that the land used for linaloe cultivation would be governed by the provisions of the Land Reforms Act which is protected under Article 31B of the Constitution having been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned Act had provided ₹ 5 crore to meet various priorities, which cannot be said to be illusory, especially when the Government had withdrawn the exemption granted with respect to the land used for linaloe cultivation. It was pointed out but for impugned Act the Roerich's or the transferors would have got only ₹ 2 lakhs under Section 72 of the Land Reforms Act, if they were in possession and ownership of the land. 246. In paragraph-130 on behalf of the respondent it was submitted that in any view, sale deeds dated 23.03.1991 and 16.02.1992 would show that the company had paid only a total sale consideration of ₹ 1,46,10,000 for purchasing the lands from Roerichs' but the transferees/owners and other claimants, if any, would get more than what they had paid. It was further submitted that Section 19A also provides for principles/machinery for payment of amount to the owners/interested persons and the amount is to be apportioned among owners, transferees and interested persons having regard to value on the appointed day i.e. 18.11.1996. It was further submitted that the company has not perfected their title or possession over the land and litigation is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors Association of India (supra) advance the case of the petitioners in any manner whatsoever. 252. Applying the principles of interpretation of statutes as also the principles culled out from the decisions referred in paragraphs 158 to 179 and in the light of the above discussion, if the provisions of Sections 3, 4, 5, 6, 7 and 8 are construed harmoniously, it cannot be said that these provisions are violative of Articles 14, 19(1)(g), 20 and 300-A of the Constitution of India.First proviso to Section 3(1), first proviso to Section (6), Section 7(4)(a) and Sections 18, 38, 59, 60, 61, 63 and 64 are penal in nature: 253. The learned Counsel for the petitioners submitted that the first proviso to Section 3(1), Sections 18, 38, 59, 60, 61, 63 and 64 are retrospective/retroactive and are penal in nature. First proviso to Section 6, Section 7(4)(a) and Section 8 are penal in nature. They are violative of Articles 19(1)(g) and 20(1) of the Constitution of India. As against this the learned Counsel for the respondents submitted that first proviso to Section 3(1), Sections 18, 38, 59, 60, 61, 63 and 64 are prospective in nature. They submitted that first proviso to Section 3(1), fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 256. Section 4(2)(l)(C) enables the promoter to revise the date of completion of project and hand over possession. The provisions of RERA, however, do not rewrite the clause of completion or handing over possession in agreement for sale. Section 4(2)(l)(C) enables the promoter to give fresh time line independent of the time period stipulated in the agreements for sale entered into between him and the allottees so that he is not visited with penal consequences laid down under RERA. In other words, by giving opportunity to the promoter to prescribe fresh time line under Section 4(2)(l)(C) he is not absolved of the liability under the agreement for sale. 257. Section 18(1)(b) lays down that if the promoter fails to complete or is unable to give possession of an apartment due to discontinuance of his business as a developer on account of suspension or revocation of the registration under the Act or for any other reason, he is liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment with interest at such rate as may be prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he promoter in completing the project within a reasonable time and handing over possession to the prospective purchasers, the Parliament has thought it fit to enact RERA so as to ensure completion of project or phase, as the case may be, in a time bound manner. Before RERA coming into force, the provisions of MOFA were applicable. However, the completion of construction of building/project was not envisaged in MOFA. This was a serious lacuna in the law which gave rise to institute suits for specific performance of contracts and/or claiming damages. The object of RERA is that the prospective purchasers can consider booking apartment at the time of launching of the project or when the building is under construction. It is common knowledge that there is substantial difference in price when the apartment is booked at the time of launching of the project or when the building is under construction vis-`-vis when the building is complete in all respects along with Occupation Certificate. Naturally the buyers are interested to book the apartment at the time of launching of the project or when the building is under construction. RERA assures completion of a project in time bound manner. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or for any other reason. The basic presumption is that the promoter was unable to complete the construction despite prescribing the time period under Section 4(2)(l)(C). The amount of 70% is already credited in a dedicated bank account under Section 4(2)(l)(D). The promoter has retained 30% paid by the allottee to him. Thus the allottee has parted with entire consideration for purchasing the apartment and still he is not given possession. The allottee cannot be said to be acting gratuitously. The promoter enjoying the benefit is bound to make compensation to the allottee. In other words though it is a case of unjust enrichment on the part of the promoter, still he is not liable to compensate the allottee by paying interest on the amount retained by him. In view thereof, it cannot be said that Section 18(1)(b) is violative of Articles 14 and 19(1)(b) of the Constitution of India. It also cannot be said to be a penal provision. 263. Insofar as Section 38 is concerned, the Authority is empowered to impose penalty or interest in respect of contravention of obligations cast upon the promoter/allottees under the Act or the Rules and the Regulations made thereunder. Thus, the Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not by way of penalty but is essentially compensatory in nature. As the penalties under Sections 59, 60, 61, 63 and 64 are on account of acts of commission or omission on the part of either promoter or the allottee as the case may be and which are prospective in nature, it cannot be said that these provisions are violative of Articles 14 and 19(1)(g) of the Constitution of India and amount to unreasonable restrictions. 265. Mr. Chinoy relied upon following decisions : (1) Ritesh Agarwal and another v. Securities and Exchange Board of India and others,: (2008) 8 SCC 205; (2) Madras Forgings and Allied Industries (C.B.C.) Ltd. v. Suresh Chandra and another, (1992) 73 Company Cases 385 (Calcutta); (3) State of Andhra Pradesh and others v. Ch. Gandhi, (2013) 5 SCC 111; to contend that Sections 18, 38, 59, 60, 61, 63 and 64 are penal in nature and hence are violative of Article 20(1) of the Constitution of India. 266. Mr. Kamdar relied upon following decisions: (1) Shyam Sunder and others v. Ram Kumar and another, (2001) 8 SCC 24, and in particular paragraphs-22 to 28 and 36; (2) K.S. Paripoornan v. State of Kerala and others, (1994) 5 SCC 593, and in particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aft for the value of the cheques failing which it was told that the cheques would be presented again before the Bank. Accordingly said cheques were again presented on 29.3.1989 and were dishonored on 13.4.1989. On 27.4.1989, the complainant's firm thereupon issued a notice under-registered post with acknowledgment due to the petitioner-company intimating the dishonour of the cheques and demanding payment within fifteen days of receipt of the said notice. The notice was received by the petitioner on 4.5.1989 but no payment was made within the period of 15 days of receipt of the notice. The complainant, therefore, instituted complaint for commission of offence under Sections 138 read with Section 141 of the Negotiable Instruments Act, 1881 (as amended) on 27.6.1989. The learned Metropolitan Magistrate issued process against the petitioners to appear on 11.8.1989 to answer the charges under Section 141 read with Section 138 of the Negotiable Instruments Act, 1881 as amended by the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988. The Amendment Act came into force on 1.4.1989. In paragraph-17 it was observed that the new offence has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Government servant was reduced and his seniority and pay on such restoration to that grade, post or service; 272. In paragraph-51 it was observed thus: 51. In the case at hand, under the unamended Rule, there were, apart from stoppage of increment with cumulative effect and reduction in rank, grade, post or service, three major punishments, namely, compulsory retirement, removal and dismissal from service by which there was severance of service. The maximum punishment that could have been imposed on an employee after conducting due departmental enquiry was dismissal from service. The rule making authority, by way of amendment, has bifurcated Rule 9(vii) into two parts, namely, Rules 9(vii)(a) and 9(vii)(b). As is evincible, the charge-sheet only referred to the imposition of major penalty or to be dealt with under the said Rules relating to major penalty. In this backdrop, it would be difficult to say that the employee had the vested right to be imposed a particular punishment as envisaged under the unamended Rules. Once the charges have been proven, he could have been imposed the punishment of compulsory retirement or removal from service or dismissal from servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or give effect to the substituted Section 15 introduced by the amending Act. I have already held that the provisions of RERA are prospective in nature. 275. In the case of K.S. Paripoornan (supra), the question, namely, whether the benefit of sub-section (1-A) of Section 23 of the Land Acquisition Act, 1894 is to be granted only in the proceedings for the acquisition of land referred to in Clauses (a) and (b) of Section 30(1) of the Land Acquisition (Amendment) Act, 1984, or it is to be granted in all proceedings pending before the Courts on 24th September, 1984, fell for consideration. In paragraph-117, the majority held that in respect of acquisition proceedings initiated prior to the date of commencement of the Amending Act 68 of 1984, the payment of the additional amount under Section 23(1-A) of the Act will be restricted to matters referred to in Clauses (a) and (b) of Sub-section (1) of Section 30 of the Amending Act. Union of India and Anr. v. Zora Singh and Ors.,: (1992) 1 SCC 673 insofar as it holds that the said amount is payable in all cases where the reference was pending before the reference court on September 24, 1984, irrespective of the date of which the award w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Service Rules and Regulations was amended on 20.4.1983. In paragraph-21 it was noted that a show cause notice was issued to Sharma on 21.4.1983. The period of absence indicated in the show cause notice was prior to 20.4.1983. The period of absence prior to amendment cannot be taken into consideration. When prior to 20.4.1983, the services of person could not be terminated on the ground of unauthorised absence from duty under Regulation 16.14 then it is wholly illegal to make the absence during that period as a ground for terminating the services of Sharma. It was observed that it is the basic principle of natural justice that no one can be penalised on the ground of a conduct which was not penal on the day when it was committed. In the show cause notice dated 21.4.1983 the unauthorised absence from duty from 20.12.1982 to 20.4.1983 was taken into account. The Apex Court, therefore, held that the notice served on the appellant was illegal and set aside the order of termination. 280. In the case of Chintaman Rao (supra) it was contended that the law in force in the State authorizing it to prohibit the manufacturer of bidis in certain villages including the one wherein the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there are certain classes of persons residing in every village who do not engage in agricultural operations. They and their womenfolk and children in their leisure hours supplement their income by engaging themselves in bidi business. There seems no reason for prohibiting them from carrying on this occupation. 282. In the case of Namit Sharma (supra), the petitioner had questioned the constitutional validity of sub-sections (5) and (6) of Section 12 and sub-sections (5) and (6) of Section 15 of the Right to Information Act, 2005. It was contended that keeping in view the powers, functions and jurisdiction that the Chief/State Information Commissioner and/or the Information Commissioners exercise undisputedly, including the penal jurisdiction, there is a certain requirement of legal acumen and expertise for attaining the ends of justice, particularly, under the provisions of the Act. The Apex Court partly allowed the Petition and issued directions in paragraphs-108.2 to 108.13. 283. In the case of Shayara Bano (supra), the practice of triple talaq was declared in valid. 284. In the case of Delhi Transport Corporation (supra), Regulation 9(b) of the Delhi Road Transport A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
