2021 (3) TMI 1392 - HC - Indian Laws

Jurisdiction - definition of decree as given under the C.P.C. - nature of proceedings before RERA - can it be said that R.E.R.A. is a Court or a Quasi-Judicial body and has to act Quasi-Judicially when taking a decision under Section 7 of the Act? HELD THAT - The Court observed that in the definition of decree as given under the C.P.C., three words are important namely; adjudication, court and suit. The suit commences with the plaint and ends when the judgement or order is pronounced which culminates into a decree, the order of the Tribunal does not conform to any of the above requirements of a decree as it is rendered on a complaint and is not the result of adjudication in a suit. The proceeding before Real Estate Regulatory Authority is not in the nature of a suit instituted by filing a plaint. Real Estate Regulatory Authority derives jurisdiction on the complaint. Proceedings before it are not governed by strict Rules of Evidence as in a civil Suit. The order passed by Real Estate Regulatory Authority or by the Appellate Tribunal on Appeal arising out of such proceedings maybe executable as a decree of a civil court but the Appellate Tribunal will have all the powers of the civil court only in respect of execution of its orders. Sometimes, it may also send its orders to a civil court having local jurisdiction for execution in case the person or the property of the Promoter or builder or real estate agent is situated within the local jurisdiction of that Civil Court. The Supreme Court has observed in Paramjit Singh Patheja v I.C.D.S Ltd. 2006 (10) TMI 419 - SUPREME COURT , in paragraph 36 that a legal fiction must be limited to the purpose for which it was created. In applying a legal fiction, one should not travel beyond the limits for which it has been created. Therefore the order of the Tribunal can only be considered to be a decree to facilitate its execution. It is otherwise similar to Income Tax Appeals filed under Section 260 of the Income Tax Act, which are not to be characterised as Second Appeal even if they are arising out of an Appellate order. The Court observed that quasi judicial acts are such Acts which mandate an officer the duty of looking into certain facts not in a way in which it is specially directed but after exercising a discretion, in its nature judicial. The exercise of power by such Tribunal or authority contemplates the adjudication of rival claims of persons by an act of the mind, or judgement upon the proposed course of official action for the consequences of which the official will not be liable, although his act was not well judged. A quasi-judicial function has been termed to be one which stands midway between a judicial and an administrative function - where there are two or more parties contesting each other's claim and the statutory authority is required to adjudicate the rival claims between the parties, such a statutory authority was held to be quasi judicial and the decision rendered by it a quasi judicial order. Where there is a lis or two contesting parties are making rival claims and the statutory authority under the statutory provision is required to decide such a dispute, in the absence of any other attributes of a quasi judicial authority, such statutory authorities acquire the quasi judicial authority. The language of Section 7 of the Act and the procedure applicable to the Authority while taking decision under Section 7 does not require the Authority to act judicially. The Act only requires that where the Authority is satisfied that condition for the exercise of its power of revocation of registration of the Promoter or real estate agent exist viz. it is established that the Promoter/ Real Estate Agent is adopting corrupt practices then the Authority may pass an order revoking the registration and the consequences mentioned under the Section would follow - The power under Section 7 is an Administrative Power. Therefore, the power given under Section 81 of the Act to sub delegate the actual drafting of the order giving detailed reasons for invoking its power under Section 7 of the Act against the promoter, the appellant herein, was rightly exercised by the Authority. The appeal is dismissed.

Summary

Issues Involved:
1. Issuance of show cause notice under Section 7 of the Real Estate (Regulation and Development) Act, 2016.
2. Alleged violations by the Promoter regarding project registration and compliance.
3. Inspection and audit findings on project progress and fund diversion.
4. Revocation of project registration by the Authority.
5. Appeal against the revocation order.
6. Arguments on procedural fairness and the right to personal hearing.
7. Delegation of quasi-judicial powers by the Authority.

Detailed Analysis:

1. Issuance of Show Cause Notice:
On 18.03.2019, the Real Estate Regulatory Authority (the "Authority") issued a show cause notice to the Promoter under Section 7 of the Real Estate (Regulation and Development) Act, 2016 (the "Act"). The notice was based on complaints from 24 allottees alleging violations of the Builder Buyers Agreement (BBA) and non-compliance with registration conditions. The Authority found that the necessary conditions for project registration were not met and required details were not uploaded on the RERA website.

2. Alleged Violations by the Promoter:
The Authority's inspection team found significant discrepancies at the project site, including incomplete construction and lack of progress reports. The project was registered under the name "Sampada Livia," but the site board showed "Alturio Residency." Only 10% of the structural work was completed, and work had stopped for the past two years. The Authority suspected unauthorized diversion of funds and ordered an audit, which revealed that about Rs. 47 Crores of allottees' money had been diverted.

3. Inspection and Audit Findings:
The inspection report dated 26.02.2019 and the audit by M/s Currie and Brown confirmed that the project was far behind schedule, with only 10% of the work completed. The audit report indicated a diversion of Rs. 47 Crores. The Promoter had not uploaded the required details on the RERA website, and there was no regular progress report.

4. Revocation of Project Registration:
The Authority issued an order on 30.09.2019, revoking the project registration under Section 7 of the Act due to non-compliance with Sections 4 and 11 and Rule 14. The Promoter's conduct, including being in jail and providing inconsistent completion dates, led to the decision. The Authority decided to proceed under Section 8 of the Act to ensure project completion.

5. Appeal Against the Revocation Order:
The Promoter appealed the revocation order, arguing that the Authority had not provided a personal/oral hearing and had sub-delegated its quasi-judicial powers to the Secretary, RERA. The Appellant contended that the Authority acted in a quasi-judicial capacity and could not delegate its decision-making power.

6. Arguments on Procedural Fairness and Right to Personal Hearing:
The Promoter argued that the revocation had civil consequences, necessitating a personal/oral hearing. The Authority's order dated 30.09.2019 referred to a personal hearing/meeting with the Promoter on 25.04.2019, countering the argument of procedural unfairness. The Tribunal found that the Authority had followed the principles of natural justice by issuing a show cause notice and considering the Promoter's replies.

7. Delegation of Quasi-Judicial Powers:
The Promoter argued that the Authority's decision was made without jurisdiction as the Secretary, RERA, had communicated the decision. The Tribunal held that the Authority had the power to delegate the communication of its decision to the Secretary. The Authority's decision to revoke the registration was based on thorough deliberation and compliance with statutory requirements.

Conclusion:
The High Court dismissed the appeal, upholding the Authority's order dated 30.09.2019 and the Tribunal's order dated 20.10.2020. The Court found no illegality or infirmity in the revocation of the project registration and directed the Promoter to comply with the orders within thirty days.