Case Law Details

Case Name : Gold Bricks Infrastructures Pvt. Ltd. Vs Atit Agrawal (Chhattisgarh High Court)
Appeal Number : MA No. 25 of 2021
Date of Judgement/Order : 06/05/2022
Related Assessment Year :

Gold Bricks Infrastructures Pvt. Ltd. Vs Atit Agrawal (Chhattisgarh High Court)

The order of the Appellate Tribunal is for appointment of Architect and make an inspection in respect of development carried out. The order further contains to decide the quantum of infrastructure/ user charges in absence of agreement and thereafter to decide the modus of agreement i.e. charges to be paid in absence of any infrastructure development agreement. We are of the opinion that both the amalgamated direction passed by the learned Tribunal would be against the spirit of section 71. The first part of the order whereby it has been directed that the Architect may be appointed to evaluate the development carried out and both the parties may be given opportunity would fall in line with the object of section 71, which may eventually lead to decide a quantum of compensation qua the existing development as against the promise made to buyers at the time of floating of scheme. The second part of the direction that a mutual settlement may be arrived for execution of the agreement for user charges is not contemplated under section 71(1) of the Act of 2016. Therefore, the second part of the order to arrive at a mutual decision for agreement and development charges cannot be done by the adjudicating officer, as such, that part of order cannot be sustained being beyond the powers conferred under section 71(1) of the Act of 2016. Therefore, the question of law is answered that the remand of the case to the adjudicating officer other than to decide the question of compensation is held to be without jurisdiction. Consequently, the part of the order that the adjudicating officer may in order to ascertain the development work carried out qua the advertisement / prospectus may appoint an Architect to find out the work so far carried out on spot. In such adjudication process, the parties shall also be given opportunity of hearing by following the rules of natural justice. Therefore, we direct that the adjudication process to grant compensation under section 71 of the Act of 2016 to adjudicate the compensation, if any, shall be carried out by procedure as discussed hereinabove within further period of 5 months from the date of receipt a copy of this order.

RERA Adjudicating Authority alone can decide Compensation amount

FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT

1. All these miscellaneous appeals are heard together, as have been admitted primarily on the common questions of law.

2. The appellants herein are the Builders/ Colonizers/ Developers. The private respondents who purchased the plots filed a complaint before the Real Estate Regulatory Authority (for short “RERA”). According to the private respondents, they purchased plots in a project known as Anandam World City, Kachna on different dates. It was alleged that while they wanted to construct the houses, it was objected by the builders and a demand was made for infrastructure developments fees. Apart from that, the development work in the Colony i.e. Walkway, Fire-station, Open Area, Temple, Development of Pond, Garden, Other amenities of the Retail & Business Shops, Hospital, Amphitheater, Supermarket, Multiplex, ATM, Library, Doctor, Kids’ Play Area was not provided. The boundary wall also remained incomplete and the roads were without street lights. Whereas in the brochure and the advertisement, all the amenities were promised to be provided. On such different count, the petition was filed wherein a joint order was passed by the RERA on 10.02.2020 and all the applications filed by the private respondents/ beneficiaries were dismissed.

3. Being aggrieved by such order, an appeal was preferred before the Appellate Tribunal. The Appellate Tribunal by its order dated 08.12.2020 remanded the case with certain directions and RERA was directed to get the area inspected by an Architect to evaluate whether development work was carried out or not and further direction was given that issue about payment of development/user charges in absence of agreement non-execution of the agreement be referred to the adjudicating authority and the grievances of the private home-buyer were directed to be decided afresh.

4. Being aggrieved by the said order of the Appellate Tribunal, these appeals have been filed.

5. (i) A. No.25/2021 was admitted on the following substantial questions of law :

(a) “Whether the order dated 08-12-2020 passed by the learned Real Estate Appellate Tribunal was without jurisdiction since it was passed by a single member?

(b) “Whether the learned Real Estate Appellate Tribunal was justified in law in remanding the case to the adjudicating officer constituted under Section 71 of Real Estate (Regulation and Development) Act,2016 (for short “RERA”) to adjudicate on various complaints other than issue of compensation in view of limited jurisdiction conferred on the adjudicating officer under Section 71 of the RERA Act, 2016”

(ii) M.A.No.22/2021 was admitted on the following substantial questions of law :

(a) “Whether the order dated 08-12-2020 passed by the learned Real Estate Appellate Tribunal was without jurisdiction since it was passed by a single member?

(b) “Whether the learned Real Estate Appellate Tribunal was justified in law in remanding the case to the adjudicating officer constituted under Section 71 of Real Estate (Regulation and Development) Act, 2016 (for short “RERA”) to adjudicate on various complaints other than issue of compensation in view of limited jurisdiction conferred on the adjudicating officer under Section 71 of the RERA Act, 2016”

(iii) M.A.No.31/2021 was admitted on the following substantial question of law :

“Whether the order dated 04/03/2021 passed by the learned Real Estate Appellate Tribunal was without jurisdiction since it was passed by a single member bench?”

(iv) M.A.No.19/2021 was admitted on the following substantial questions of law :

(a) “Whether the order dated 08-12-2020 passed by the learned Real Estate Appellate Tribunal was without jurisdiction since it was passed by a single member?

(b) “Whether the learned Real Estate Appellate Tribunal was justified in law in remanding the case to the adjudicating officer constituted under Section 71 of Real Estate(Regulatory and Development) Act,2016 (for short “RERA”) to adjudicate on various complaints other than issue of compensation in view of limited jurisdiction conferred on the adjudicating officer under Section 71 of the RERA Act, 2016”

(v) M.A.No.20/2021 was admitted on the following substantial questions of law :

(a) “Whether the order dated 04.03.2021 passed by the learned Real Estate Appellate Tribunal was without jurisdiction since it was passed by a single member?”

(b) “Whether the learned Real Estate Appellate was justified in law in remanding the case to the adjudicatinn officer constituted under Section 71 of Real Estate Regulatory Authority Act, 2016. (for short ‘RERA’) to adjudicate on various complaints other than issue of compensation in view of limited jurisdiction confessed on the adjudicating officer under Section 71 of the RERA Act, 2016?”.

which was further amended and be read as :

“In substantial question of law-(a), in place of date of order passed by the Real Estate Appellate Tribunal “04-03­2021”, it should be read as “08-12-2020”.

In substantial question of law-(b), after the word “Real Estate Appellate”, the word “Tribunal” shall be added.

In third line of substantial question of law-(b), in place of “Real Estate Regulatory Authority-2016”, it shall be read as “Real Estate (Regulatory and Development) Act, 2016.

In fifth line of substantial question of law-(b), in place of word “confessed”, it shall be read as “conferred”.

6. Mr. Ashish Surana & Mr. Shalvik Tiwari, learned counsel for the appellants would submit that the private respondents have filed a complaint with the authority i.e. RERA, which is defined under section 2(i) which defines the Real Estate Regulatory Authority established under sub-section (1) of section 20 of the Real Estate (Regulation & Development) Act, 2016 (hereinafter referred to as “Act of 2016”). It is stated whereas the “adjudicating officer” is defined under section 2(a) who is appointed under sub-section (1) of section 71. He would submit that the establishment of the Real Estate Appellant Tribunal is under section 43 of the Act of 2016, which mandates that the Government within one year from the date of coming into force of this Act of 2016, by notification, shall established the Appellate Tribunal and as per sub-section (3) of section 43, the Appellate Tribunal shall consist of at least one Judicial Member and one Administrative or Technical Member. He further submits that section 45 of the Act of 2016 further postulates the Composition of the Appellate Tribunal and therefore section 43 & 45 of the Act of 2016 would be relevant to answer the first question of law.

7. He would submit that initially the Real Estate Appellate Tribunal was constituted by a notification on 29.04.2017, it was non functional and as such it was withdrawn by subsequent notification dated 23.10.2019. He would submit that on 31.10.2019, the power to exercise the power of Appellate Tribunal was given to the single member Tribunal of State Transport Appellant Tribunal (STAT) which is constituted under section 89 of the Motor Vehicles Act, 1988 and the orders herein which are under challenged have been passed by the Single Member of STAT exercising the power of Appellate Tribunal under RERA.

8. Referring to the case law of Man Global Limited v. Bharat Prakash Joukani (2019 SCC Online Bombay 2466), Janta Land Promoters Private Limited v. Union of India & Others (2020 SCC Online Punjab & Haryana 2030) and Newtech Promoters & Developers Pvt. Ltd. v. State of U.P. & Others (2021 SCC Online SC 1044), the counsel would submit that the order passed by the Single Member Committee would be without jurisdiction, as it would be against the spirit of section 43(3) read with section 45 of the Act of 2016. He further submits that the order further directing the adjudicating authority to decide the complaint would also be illegal, as adjudicating authority appointed under section 71(1) of the Act of 2016 is only empowered to order for compensation.

9. Per contra, Mr. R.S.Marhas, Mr. Anup Majumdar, Mr. Shailesh Tiwari with Mr. Shrijan Shukla, learned counsels appearing for the respondents along with learned Amicus Curiae Amrito Das would submit that the State in the instant case has exercised the power under the proviso clause to section 43 of the Act of 2016, as at the first instance though the Tribunal was established but it was withdrawn. Therefore, till further establishment of Tribunal, as establishment was in transitory process, the appellate power was given to the single member Tribunal of STAT. He would submit subsequently as of now in the Tribunal, the Chairperson has been appointed. He would further submit that therefore the law point raised by the appellant is not in dispute but the case in hand being an exceptional case, the power was exercised by the State Transport Appellate Tribunal who was vested with the power to exercise power of Appellate Tribunal. He would further submit that the order dated 08.12.2020 whereby remand was made, contains two fold direction (i) for the Architect to see the development and compare it with promise (ii) to deliberate the user charges to be paid in absence of any agreement by Adjudicating Authority and after hearing the parties may pass an order. Therefore, virtually no orders have been passed, which is contrary to the Act of 2016.

10. We have heard learned counsel for the parties and perused the documents.

11. The first question of law in substance is with respect to whether the power exercised by the single member Appellate Tribunal of STAT would be valid under the RERA and therefore whether it was within the jurisdiction.

12. In order to get the answer, the mandate to section 43 & 45 under Chapter VII of the Act of 2016 would be relevant. For the sake of brevity, section 43 & 45 are reproduced herein below :

“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 to 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 Tribunal under this section is established, all matters pending with the Appellate Tribunal designated to hear appeals, shall stand transferred to the Appellate Tribunal so established and shall be heard from the stage such appeal is transferred.

(5) Any person aggrieved by any direction or decision or order made by the Authority or by an adjudicating officer under this Act may prefer an appeal before the Appellate Tribunal having jurisdiction over the matter:

Provided that where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained, without the promoter first having deposited with the Appellate Tribunal at least thirty per cent of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, as the case may be, before the said appeal is heard.

Explanation.- For the purpose of this sub-section “person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.

Section 45. Composition of Appellate Tribunal – 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, to be appointed by the appropriate Government.

Explanation.- For the purposes of this Chapter,-

(i) “Judicial Member” means a Member of the Appellate Tribunal appointed as such under clause (b) of sub­section (1) of section 46;

(ii) “Technical or Administrative Member” means a Member of the Appellate Tribunal appointed as such under clause (c) of sub-section (1) of section 46”

13. The admitted facts are that after the Act of 2016 was enacted, the appropriate government, i.e. State Government herein by a notification dated 29.04.2017 established the Chhattisgarh Real Estate Appellate Tribunal for State of Chhattisgarh at Raipur, which was inconformity to sub-section (1) of section 43 of the Act of 2016. After establishment of the Appellate Tribunal, it remains non­functional. Reading of section 43(1) of the Act of 2016 though purports that word have been used that Appellate Tribunal shall be constituted within one year of coming into force of the Act of 2016, but in case it is not established or non-functional what would be the consequence is not provided in the Act of 2016.

14. The cases before us, it is admitted that by a subsequent notification dated 23.10.2019, the earlier establishment of Real Estate Appellate Tribunal was withdrawn. Therefore, the Appellate Tribunal of RERA was not available at State of Chhattisgarh, as was required under the principle Act of 2016 to be established within one year. In case of like nature, when the consequences of non-compliance in statute are not provided or if the Act is not followed, will it be mandatory or directory. The Supreme Court in the matter of Balwant Singh v. Anand Kumar Sharma, (2003) 3 SCC 433 has emphasized the effect of law that when no consequence is provided, it would be directory in nature.

15. The Supreme Court in State of Uttar Pradesh Vs. Babu Ram Upadhyay (AIR 1961 SC 751) has held that it is well established that an enactment in form mandatory might in substance be directory. It was further held that it is the duty of the Courts of Justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed. The reference is made to Maxwell on “The interpretation of Statutes”, 10th Edition, at Page 381 and the Court ruled the following:

“On the other hand, where the prescriptions of a statute relate to the performance of a public duty and where the invalidation of acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty without promoting the essential aims of the legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and government of those on whom the duty is imposed, or, in other words, as directory only.

The neglect of them may be penal, indeed, but it does not affect the validity of the act done in disregard of them.”

This passage was accepted by the judicial Committee of the Privy Council in the case of Montreal Street Rly. Com. v. Normandin 1917 AC 170: (AIR 1917 PC l42) and by this Court in 1958 SCR 533: ((S) AIR 1957 SC 912).

16. The Supreme Court in Mohan Singh v. International Airport Authority of India (1997) 9 SCC 132 has made a reference to the book of mandate on the construction of statute and has fortified the principle the question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way of the other. The Supreme Court in this case further laid down that where the language of statute creates a duty, the special remedy is required to be prescribed for non-performance of the duty. Applying the aforesaid principle, the interpretation of sub­section (1) of section 43 of the Act of 2016 when the Appellate Tribunal is not established by State within one year, as required by the Act of 2016, non compliance since would not result any consequence, the word used in section 43(1) of the Act of 2016 would be directory in nature.

17. Further undisputed facts are that, by subsequent order passed by the State on 31.10.2019, the State in exercise of power under proviso to sub-section (5) had ordered that till the Appellate Tribunal is constituted under RERA, the power of Appellate Tribunal RERA would be executed by Chhattisgarh State Transport Appellate Tribunal. Therefore, STAT was bestowed with the power to exercise the appellate function. The proviso clause 2 sub-section 4 of section 43 reads that until the establishment of Appellate Tribunal under section 43, the appropriate Government (which is a State of Chhattisgarh here), by order shall designate any Appellate Tribunal functioning under any law for the time being enforce, to be the Appellate Tribunal to hear the appeal under the Act of 2016.

18. Here the STAT which was an Appellate Tribunal functioning under the Motor Vehicles Act, 1988 and was constituted under Section 89 of Motor Vehicle Act, 1988 was designated to exercise the power of the Appellate Tribunal of RERA. Prima facie therefore confirmant of power on STAT was done as per the power conferred under proviso to Act of 2016. Section 43 of the Act of 2016 further provides that after the Appellate Tribunal is established, the matter pending before the designated Appellate Tribunal shall be transferred to the Appellate Tribunal constituted under the RERA. Reading of the proviso clause do not contemplate that Appellate Tribunal cannot be of a single member and was constituted under the Motor Vehicles Act, 1988, therefore, would have the jurisdiction. The case law relied on by the learned counsel for the appellant are not in conflict to the legal proposition but hear the designation of STAT, which is of a single member was only for a transitory period while the Tribunal constituted under the Act of 2016 is required to be done under section 43(3) of the Act of 2016. The proviso clause is qualified with the word that the designation to any other Appellate Tribunal can be functioning under any law for the time being enforce can exercise the power. Therefore, that qualified exception would bring it out the necessity of section 43(3) read with section 45 of the Act of 2016, wherein certain number of members are required to complete the constitution of forum i.e. Judicial & Technical/ Administrative Member.

19. In a result, the order passed by the learned single member STAT in exercise of power of Real Estate Appellate Tribunal would be justified. As a consequence, the question No.1 is answered in affirmative that the order passed by the Single Member Committee of STAT was well within jurisdiction.

20. Now referring to the question No.2, which primarily pertains to the fact whether the Tribunal was justified in law remanding the case to the adjudicating officer under section 71 of the Act of 2016 to adjudicate the complaint other than the issue of compensation in view of the limited jurisdiction conferred on the adjudicating officer under section 71 of the Act of 2016.

21. We have perused the order of the learned Appellate Tribunal. The direction given by the Tribunal is two fold, first direction contains that an Architect should be appointed either of RERA or with the consent of both the litigant an inspection be carried out about the development done by builder. The order further contains a direction that the litigants be given the chance of hearing and produce evidence. Thereafter the second part of direction contains that with the consent of both the parties/ litigants, different development and infrastructure charges which are required to be levied may be decided in absence of agreement of same.

22. The adjudicating officer is defined under section 2(a) which refers that “adjudicating officer” means the adjudicating officer appointed under sub-section (1) of section 71. It is distinct from the authority under section 21. The powers of the authorities are defined from section 30 to 38. Section 71 defines the power of adjudicating authority. Reading of section 71(1) of the Act of 2016 would show that the power of adjudicating officer is to adjudicate compensation. As a necessary corollary to decide the quantum of compensation, the adjudicating officer may hold an inquiry after giving a person concerned reasonable opportunity of being heard to find out the degree of development to be carried out. The said appointment of the adjudicating officer is also in conformity to the object of the legislation to decide the compensation.

23. The order of the Appellate Tribunal is for appointment of Architect and make an inspection in respect of development carried out. The order further contains to decide the quantum of infrastructure/ user charges in absence of agreement and thereafter to decide the modus of agreement i.e. charges to be paid in absence of any infrastructure development agreement. We are of the opinion that both the amalgamated direction passed by the learned Tribunal would be against the spirit of section 71. The first part of the order whereby it has been directed that the Architect may be appointed to evaluate the development carried out and both the parties may be given opportunity would fall in line with the object of section 71, which may eventually lead to decide a quantum of compensation qua the existing development as against the promise made to buyers at the time of floating of scheme. The second part of the direction that a mutual settlement may be arrived for execution of the agreement for user charges is not contemplated under section 71(1) of the Act of 2016. Therefore, the second part of the order to arrive at a mutual decision for agreement and development charges cannot be done by the adjudicating officer, as such, that part of order cannot be sustained being beyond the powers conferred under section 71(1) of the Act of 2016. Therefore, the question of law is answered that the remand of the case to the adjudicating officer other than to decide the question of compensation is held to be without jurisdiction. Consequently, the part of the order that the adjudicating officer may in order to ascertain the development work carried out qua the advertisement / prospectus may appoint an Architect to find out the work so far carried out on spot. In such adjudication process, the parties shall also be given opportunity of hearing by following the rules of natural justice. Therefore, we direct that the adjudication process to grant compensation under section 71 of the Act of 2016 to adjudicate the compensation, if any, shall be carried out by procedure as discussed hereinabove within further period of 5 months from the date of receipt a copy of this order.

24. Now it has been further submitted before us that by a notification dated 05.03.2021, Chhattisgarh Real Estate Appellate Tribunal has been constituted. It has further been stated that during the course of submission though the Chairperson has been appointed but other members have not been appointed, therefore, the Appellate Tribunal is non-functional. The State, which is a welfare State, pursuant to the object of the Act of 2016, which is for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building in an efficient and transparent manner and to protect the interest of consumers in the real state sector and to establish an adjudicating mechanism for speedy dispute redressal is required to establish the Appellate Tribunal. Only appointment of single member committee will not complete the constitution of Appellate Tribunal. Under the circumstances, since considerable time has passed after the Act of 2016 came into being, it is directed that the State shall ensure that the Appellate Tribunal shall made functional so that the grievance of the public at large who are affected are redressed. It is expected that the Real Estate Appellate Tribunal shall be made functional with all infrastructure within a short span of time to redress the grievance of the aggrieved.

25. With such observation, all the appeals stand disposed off.

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