2021 (1) TMI 1346 - HC - Indian Laws

Seeking declaration that the section 24(a) of the U.P. Real Estate Regulatory Authority (General) Regulation 2019 as ultra vires and contrary to the section 21 and 85 of the RERA Act - HELD THAT - In the instant case the consumer had deposited a sum of Rs.28 lacs and odd in instalments but despite an agreement for giving possession of the flat in the year 2015 it was not handed over to the consumer. The direction for return of the amount with interest has been given in those circumstances. If a consumer is to seek execution of the part of the order through the civil court then the very purpose of the enactment of Act of 2016 to provide speedy dispute redressal mechanism would frustrate. If the argument of the petitioner is accepted then for recovery of a sum of Rs. 28 lacs and odd the non-petitioner consumer is to be send to civil court while recovery of amount of interest of Rs.19 lacs and odd can be made as arrears of land revenue as admitted by the counsel for the petitioner himself. If recovery of amount is to be sought by dividing it in two parts and by different method it would be against the object of the Act of 2016. The object of speedy redressal would frustrate if recovery of the amount is also sought through the civil court. The purpose and object of Section 40(1) is to allow recovery of the amount as arrears of land revenue so as to expeditiously give the relief to the consumer having suffered in the hands of the Promoter. Section 40(1) has to be given interpretation by reading down the provision to make it purposeful and akin to the object of the Act of 2016. Section 40(2) is for any other direction either to act in a particular manner or to restrain a party to do certain act and execution of it can be made by the Adjudicating Authority and in case of failure by the civil court. Section 40(2) covers basically the case of an order of injunction or mandatory injunction. So far as challenge to Rule 24 (a) of U.P. Real Estate Regulatory Authority (General) Regulation 2019 is concerned the issue is kept open. It has not been debated for the reason that an order of the nature provided under Regulation 24 (a) has not been passed in the case in hand. Thus there is no occasion for the petitioner to challenge the vires of the said Regulation in these proceedings However as and when the Authority invokes Regulation 24 (a) of Regulation 2019 the liberty is given to challenge the validity. Conclusion - If a consumer is to seek execution of the part of the order through the civil court then the very purpose of the enactment of Act of 2016 to provide speedy dispute redressal mechanism would frustrate. If the argument of the petitioner is accepted then for recovery of a sum of Rs. 28 lacs and odd the non-petitioner consumer is to be send to civil court while recovery of amount of interest of Rs.19 lacs and odd can be made as arrears of land revenue as admitted by the counsel for the petitioner himself. Petition dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The judgment from the Allahabad High Court considered the following core legal questions:

• Whether Section 24(a) of the U.P. Real Estate Regulatory Authority (General) Regulation, 2019 is ultra vires and contrary to Sections 21 and 85 of the Real Estate (Regulation and Development) Act, 2016.
• Whether the order dated 5.4.2019 passed by the Real Estate Regulatory Authority (RERA) was valid, given it was passed by a single member instead of the full composition as outlined in Section 21 of the Act of 2016.
• Whether the recovery of the principal amount along with interest, as directed by RERA, can be executed as arrears of land revenue under Section 40(1) of the Act of 2016.
• Whether the petitioner can challenge the rate of interest awarded by RERA without availing the statutory remedy of appeal.
• Whether the validity of Rule 24(a) of the U.P. Real Estate Regulatory Authority (General) Regulation, 2019 can be challenged in the current proceedings.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Section 24(a) of the U.P. Real Estate Regulatory Authority (General) Regulation, 2019

• Relevant legal framework and precedents: The petitioner sought to declare Section 24(a) of the U.P. Real Estate Regulatory Authority (General) Regulation, 2019 as ultra vires in relation to Sections 21 and 85 of the Real Estate (Regulation and Development) Act, 2016.
• Court's interpretation and reasoning: The court did not delve into the merits of this issue as no order under Section 24(a) was passed in the present case. The issue was kept open for future consideration.
• Conclusions: The court granted liberty to the petitioner to challenge the validity of the regulation if it is invoked in future proceedings.

Issue 2: Validity of the Order Passed by a Single Member of RERA

• Relevant legal framework and precedents: Sections 21, 29, and 30 of the Real Estate (Regulation and Development) Act, 2016 were considered. Previous judgments by the Allahabad High Court upheld orders passed by a single member.
• Court's interpretation and reasoning: The court noted that Section 30 allows proceedings to continue despite vacancies or defects in the Authority's composition. The court emphasized that the petitioner did not object to the single-member adjudication during the proceedings.
• Conclusions: The court upheld the validity of the order passed by a single member, citing previous judgments and the provisions of Section 30 of the Act of 2016.

Issue 3: Execution of Recovery as Arrears of Land Revenue

• Relevant legal framework and precedents: Section 40 of the Real Estate (Regulation and Development) Act, 2016 was analyzed. The court considered the purpose of the Act to provide speedy redressal.
• Court's interpretation and reasoning: The court interpreted Section 40(1) to allow recovery of the principal amount along with interest as arrears of land revenue to ensure expeditious relief to consumers.
• Conclusions: The court rejected the argument that recovery of the principal amount should be through civil courts, stating that such an interpretation would frustrate the Act's objective.

Issue 4: Challenge to the Rate of Interest Awarded by RERA

• Relevant legal framework and precedents: The petitioner challenged the rate of interest awarded by RERA, arguing it was contrary to agreed terms and the Rules of 2018.
• Court's interpretation and reasoning: The court held that the writ petition was not maintainable for challenging the interest rate, as the petitioner had the remedy of appeal.
• Conclusions: The court dismissed the writ petition on this ground, allowing the petitioner to pursue an appeal if desired.

Issue 5: Challenge to Rule 24(a) of the U.P. Real Estate Regulatory Authority (General) Regulation, 2019

• Relevant legal framework and precedents: The petitioner sought to challenge the vires of Rule 24(a), but no order under this rule was involved in the case.
• Court's interpretation and reasoning: The court did not address this issue substantively, as it was not relevant to the current proceedings.
• Conclusions: The issue was kept open for future litigation if the rule is invoked.

3. SIGNIFICANT HOLDINGS

• Preserve verbatim quotes of crucial legal reasoning: "Section 30 of the Act of 2016 give complete answer to the objection raised by the petitioner regarding composition of the Authority."
• Core principles established: The court emphasized the importance of interpreting statutory provisions in a manner that aligns with the legislative intent of providing speedy redressal to consumers in the real estate sector.
• Final determinations on each issue: The court dismissed the writ petition, upholding the order passed by the single member of RERA and allowing recovery as arrears of land revenue. The challenge to the rate of interest was deemed unfit for writ jurisdiction, and the issue of Rule 24(a)'s validity was left open for future consideration.