Constitutional validity of Section 43(5) of RERA: Punjab & Haryana HC
In the case of Experion Developers Pvt. Ltd. V. State of Haryana and others (CWP No. 38144 of 2018), the Punjab & Haryana HC, had decided upon the constitutional validity under section 43(5) of RERA and Haryana Real Estate ( Regulation and Development) Rules, 2017.
The facts of the case initiate with a writ petition under Article 226 of the Constitution which mostly deals with the interpretation of the provisions of the Real Estate (Regulation and Development) Act, 2016 (hereinafter ‘the Act’) as well as the Haryana Real Estate (Regulation and Development) Rules, 2017 (hereinafter ‘the Haryana Rules’). In some of these petitions, the constitutional validity of the proviso to Section 43 (5) of the Act, is challenged. Correspondingly the orders had been passed by the Real Estate Appellate Tribunal (hereinafter ‘Appellate Tribunal’) rejecting the prayer of the Petitioners for waiver of the pre-deposit for entertaining the appeal against an order of either the Real Estate Regulatory Authority (‘Authority’) or the Adjudicating Officer (‘AO’), as the case may be.
The Appellate Tribunal has had extended the time for making the pre-deposit while rejecting such prayer. The further prayer in these petitions deals with the undue hardship faced by the Petitioners, the aforesaid orders of the Appellate Tribunal should be interfered with by this Court, in the exercise of its jurisdiction under Article 226 of the Constitution of India, and the Appellate Tribunal be directed to entertain the Petitioners’ appeals without insisting on the pre-deposit.
A challenge has been laid to Rules 28 and 29 of the Haryana Rules as well as to forms CRA and CAO as amended by the Haryana Real Estate (Regulation and Development) Amendment Rules, 2019 notified on 12th September 2019 (‘Haryana Amendment Rules 2019’) as being ultra vires the Act, in some of the petitions. The further issue urged in these petitions concerns the scope and jurisdiction of the Authority and the AO respectively in relation to complaints under the Act. In these petitions, there is a corresponding prayer for quashing the orders passed by the Authority as being without jurisdiction.
The court, in this case, had held “It must be noticed straightway that while Section 43 (5) of the Act envisages the filing of an appeal before the Appellate Tribunal, against the order of the Authority or the AO, by any “person”, the Explanation appended thereto clarifies that for the purpose of Section 43 (5), ‘person’ shall include an association of allottees or any voluntary consumer association registered under any law for the time being in force. The proviso to Section 43 (5) of the Act applies only where the “promoter” intends to appeal against an order of the Authority or the AO.”
Thus the judges also rejected the argument that imposing the condition only on “promoters” was discriminatory. They held that “The DB in M/s. Lotus Realtech Pvt. Ltd. (supra) also negatived the plea that requiring only the promoters who are in appeal to make the pre-deposit as a condition to entertaining their appeals by the Appellate Tribunal, was discriminatory.”
“The proviso to Section 43 (5) of the Act clearly states that the pre-deposit is required to be made “before the said appeal is heard.” In other words, the Appellate Tribunal is not obliged to proceed to ‘entertain’ or hear an appeal that has been filed before it, if the promoter, who has filed such appeal, fails to comply with the direction for making the pre-deposit in terms of the proviso to Section 43 (5) of the Act.”
Thus the court had come down to the following conclusion :
- “The challenge to the constitutional validity of the proviso to Section 43 (5) of the Act is rejected.
- The orders of the Appellate Tribunal declining to grant the Petitioners further time to make the pre-deposit beyond the date as stipulated by the Appellate Tribunal or where the appeals have been rejected on account of the Petitioners’ failure to make the pre-deposit as directed, are hereby affirmed. Nevertheless, this Court has in paragraphs 94 and 95 hereafter issued directions giving one last opportunity to the Petitioners to make the pre-deposit in a time-bound manner.
- In the facts and circumstances of the individual cases, no grounds have been made out to persuade this Court to exercise its writ jurisdiction under Article 226 of the Constitution to grant any relief in respect of waiver of pre-deposit. In none of the cases is the Court satisfied that a case of ‘genuine hardship’ has been made out.
- On the interpretation of the provisions of the Act, the conclusions in this judgment on the scope of jurisdiction of the Authority and the AO respectively, and given the prayers in the individual complaints from which these writ petitions arise, in none of the cases the Authority can be held to have exercised a jurisdiction that it lacked and its orders cannot be said to be without jurisdiction. No interference under Article 226 is warranted on that score.
- As regards the merits of the order of the Authority the remedy of an appeal before the Appellate Tribunal is in any event available. Even where according to the party aggrieved the Authority lacked jurisdiction to decide the complaint, it would be for the Appellate Tribunal to decide that issue in light of the legal position explained in this judgment on the respective adjudicatory powers of the Authority and the AO. In such instance too the pre-deposit would be mandatory.
- A collective reading of provisions makes it apparent that when it comes to refund of the amount, and interest on the refund amount, or directing payment of interest for delayed delivery of possession, or penalty and interest thereon, it is the Authority which has the power to examine and determine the outcome of a complaint. When it comes to question of seeking the relief of compensation or interest by way of compensation, the AO alone has the power to determine it on a collective reading of Sections 71 and 72 of the Act.
- Rules 28 and 29 of the Haryana Rules as amended seek to give effect to the harmonized construction of the provisions of the Act concerning the powers of the Authority and of the AO. They are not ultra vires the Act. The Court rejects the challenge to the validity of the amended Rules 28 and 29 of the Rules and the amendments to Forms CRA and CAO.
- A complaint yet to be decided as on the date of the notification of the Haryana Amendment Rules 2019, will now be decided consistent with the procedure outlined under the amended Rules 28 and 29 of the Haryana Rules.
- The challenge to Sections 13, 18 (1) and 19 (4) of the Act and Rules 8 and 15 of the Haryana Rules as regards their retroactive applicability to ‘ongoing projects’ is hereby rejected.”