M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. versus STATE OF UP & ORS. ETC. on 11 November 2021

[2021] 9 S.C.R. 909

M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD.

v.

STATE OF UP & ORS. ETC.

(Civil Appeal Nos. 6745-6749 of 2021)

NOVEMBER 11, 2021[UDAY UMESH LALIT, AJAY RASTOGIAND ANIRUDDHA BOSE, JJ.]

Real Estate (Regulation and Development) Act, 2016:

ss. 3,18, 19, 31, 71, 81, 43(5) proviso and 40(1) – Appellants-promoters and real estate developers failed to hand over possessionof the unit to allottees/home buyers – Complaint by home buyersfor refund – Single member of regulatory authority passed orderdirecting refund of the principal amount with interest – Writ petitionby promoters/real estate developers contending that single memberhad no jurisdiction to pass the order of refund, and also challengedthe condition of pre-deposit for filing statutory appeal – Dismissalof writ petition – On appeal, held: Act of 2016 is retroactive incharacter – Conjoint reading of ss. 18 and 19 clearly manifests thepower of regulatory authority to examine and determine the outcomeof the complaint and refund of amount or interest thereon – It waspermissible for authority to delegate its power to one of its membersu/s 31 – Furthermore, the condition of pre-deposit for appeal wassustainable – Thus, there is no error in the order passed by theHigh Court – Uttar Pradesh Real Estate (Regulation andDevelopment) Rules, 2016.

–Act of 2016 – Retrospective or retroactive in its operation Held: Application of the Act is retroactive in character and it cannotbe said to be violative of either Art. 14 or 19(1)(g) – Intention ofthe legislature by necessary implication and without any ambiguityis to include those projects which were ongoing and in cases wherecompletion certificate has not been issued within fold of the Act –Projects already completed or to which the completion certificatehas been granted are not under its fold – At the same time, it wouldapply after getting the on-going projects and future projectsregistered u/s. 3 to prospectively follow the mandate of the Act – ss.3(1), 13, 18(1) and 19(4) – Constitution of India – Arts. 14, 19(1)(g).

A

B

C

D

E

F

G

H

Ass. 12, 14, 18, 19 and 71 – Return/refund of the amount toallottee – Jurisdiction of, regulatory authority or adjudicating officer– Held: There is a complete delineation of the jurisdiction vestedwith the regulatory authority and the adjudicating officer – Aconjoint reading of ss. 18 and 19 clearly manifests that when itcomes to refund of the amount, and interest thereon, it is theBregulatory authority which has the power to examine and determinethe outcome of a complaint – When it comes to seeking the relief ofadjudging compensation and interest thereon, the adjudicatingofficer exclusively has the power to determine, keeping in view thecollective reading of s.71 r/w s.72 – If the adjudication u/ss. 12,C14, 18 and 19 other than compensation as envisaged, if extendedto the adjudicating officer as prayed that, may intend to expandthe ambit and scope of the powers and functions of the adjudicatingofficer u/s. 71 and that would be against the mandate of the Act2016.

A

Ds. 81 – Delegation of power to single member of the authorityto hear complaint instituted u/s. 31 – Permissibility of – Held: Ispermissible – s. 81 positively empowers the authority to delegatesuch of its powers and functions to one of its member by general orspecial order subject to s. 85 – It cannot said to be dehors themandate of law.E

D

s. 43(5) proviso – Condition of pre-deposit for filing appeal– Sustainability of – Held: Is sustainable in law – Obligation is castupon the promoter of pre-deposit u/s. 43(5), being a class in itself,and the promoters are in receipt of money which is being claimedby the home buyers/allottees for refund and determined in the firstFplace by the competent authority – Intention of the legislature wasto ensure that money once determined by the authority be saved ifappeal is to be preferred at the instance of the promoter after duecompliance of pre-deposit as envisaged u/s. 43(5) – Thus, it cannotsaid to be onerous or in violation of Arts. 14 or 19(1)(g) of theGConstitution.

s. 40(1) – Issuance of recovery certificates for recovery ofprinciple amount under – Power of the authority – Held: Power ofauthority to direct the refund of the principal amount is explicit in s.18 and the interest that is payable is on the principal amount –HThere is no interest in the absence of a principal amount being determined by the competent authority – Statute as such is read tomean that the principal sum with interest has become a compositeamount quantified upon to be recovered as arrears of land revenueu/s. 40(1) – There appears some ambiguity in s. 40(1) and byharmonising the construction of the scheme of the Act with the rightof recovery as mandated in s. 40(1), it is made clear that the amountwhich has been determined and refundable to the allottees/homebuyers either by the authority or the adjudicating officer in termsof the order is recoverable within the ambit of s. 40(1).

Object and reasons of the Act – Explained.

Interpretation of Statutes:

Retroactive statute – Meaning of – Held: Retroactive statutemeans a statute which creates a new obligation on transactions orconsiderations already passed or destroys or impairs vested rights– Statute is not retrospective merely because it affects existing rightsor its retrospection because a part of the requisites for its action isdrawn from a time antecedent to its passing.

Disposing of the appeals, the Court

HELD: 1.1. Looking to the scheme of Real Estate(Regulation and Development) Act, 2016 and Section 3 inparticular, all “ongoing projects” that commence prior to the Actand in respect to which completion certificate has not been issuedare covered under the Act. It manifests that the legislative intentis to make the Act applicable not only to the projects which wereyet to commence after the Act became operational but also tobring under its fold the ongoing projects and to protect from itsinception the inter se rights of the stake holders, includingallottees/home buyers, promoters and real estate agents whileimposing certain duties and responsibilities on each of them andto regulate, administer and supervise the unregulated realestate sector within the fold of the real estate Authority.[Para 37][939-B-D]

1.2. The clear and unambiguous language of the statute isretroactive in operation and by applying purposive interpretationrule of statutory construction, only one result is possible, i.e.,the legislature consciously enacted a retroactive statute to ensuresale of plot, apartment or building, real estate project is done in AB

C

D

E

F

G

H

Aan efficient and transparent manner so that the interest ofconsumers in the real estate sector is protected by all means andSections 13, 18(1) and 19(4) are all beneficial provisions forsafeguarding the pecuniary interest of the consumers/allottees.In the given circumstances, if the Act is held prospective thenthe adjudicatory mechanism under Section 31 would not beBavailable to any of the allottee for an ongoing project. Thus, itnegates the submission of the promoters regarding thecontractual terms having an overriding effect over theretrospective applicability of the Act, even on facts of the case.[Para 41][940-D-F]

C

1.3. The provision further emphasizes is that a promoter ofa project which is not complete/sans completion certificate shallget the project registered under the Act but while getting theproject registered, promoter is under an obligation to prescribefresh timelines for getting the remaining development workDcompleted and from the scheme of the Act, the first proviso toSection 3(1) is not in any manner violative of Articles 14 and19(1)(g) of the Constitution of India. The Parliament is alwayscompetent to enact any law affecting the antecedent events underits fold within the parameters of law. [Para 42][940-F-H]

E1.4. At the given time, there was no law regulating the realestate sector, development works/obligations of promoter andallottee, it was badly felt that such of the ongoing projects towhich completion certificate has not been issued must be broughtwithin the fold of the Act 2016 in securing the interests ofallottees, promoters, real estate agents in its best possible wayFobviously, within the parameters of law. Merely becauseenactment as prayed is made retroactive in its operation, it cannotbe said to be either violative of Articles 14 or 19(1)(g) of theConstitution of India. To the contrary, the Parliament indeed hasthe power to legislate even retrospectively to take into its foldGthe pre-existing contract and rights executed between the partiesin the larger public interest. [Para 45][941-D-F]

1.5. The consequences for breach of such obligations underthe Act are prospective in operation and in case ongoing project, H

of which completion certificate is not obtained, are not to becovered under the Act, there is every likelihood of classificationsin respect of underdeveloped ongoing project and the new projectto be commenced. [Para 46][941-F]

1.6. The legislative power to make the law with prospective/retrospective effect is well recognized and it would not bepermissible for the appellants/promoters to say that they haveany vested right in dealing with the completion of the project byleaving the allottees in lurch, in a helpless and miserable conditionthat at least may not be acceptable within the four corners of law.[Para 47][941-G-H]

1.7. The statute is not retrospective merely because itaffects existing rights or its retrospection because a part of therequisites for its action is drawn from a time antecedent to itspassing, at the same time, retroactive statute means a statutewhich creates a new obligation on transactions or considerationsalready passed or destroys or impairs vested rights.[Para 51][943-C]

1.8. The Parliament intended to bring within the fold of thestatute the ongoing real estate projects in its wide amplitude usedthe term “converting and existing building or a part thereof intoapartments” including every kind of developmental activity eitherexisting or upcoming in future under Section 3(1) of the Act, theintention of the legislature by necessary implication and withoutany ambiguity is to include those projects which were ongoingand in cases where Completion certificate has not been issuedwithin fold of the Act. [Para 52][943-D-E]

1.9. Even the terms of the agreement to sale or homebuyers agreement invariably indicates the intention of thedeveloper that any subsequent legislation, rules and regulationsetc. issued by competent authorities would be binding on theparties. The clauses have imposed the applicability of subsequentlegislations to be applicable and binding on the flat buyer/allotteeand either of the parties, promoters/home buyers or allottees,cannot shirk from their responsibilities/liabilities under the Actand implies their challenge to the violation of the provisions ofthe Act and it negates the submission regarding contractual terms A

B

C

D

E

F

G

H

Ahaving an overriding effect to the retrospective applicability ofthe Authority under the provisions of the Act which is completelymisplaced and is rejected. [Para 53][943-E-G]

1.10. From the scheme of the Act 2016, its application isretroactive in character and it can safely be observed that theBprojects already completed or to which the completion certificatehas been granted are not under its fold and therefore, vested oraccrued rights, if any, in no manner are affected. At the sametime, it will apply after getting the on-going projects and futureprojects registered under Section 3 to prospectively follow themandate of the Act 2016. [Para 54][943-G-H; 944-A]C

State of Bombay (Now Maharashtra) versus VishnuRamchandra AIR 1961 SC 307 : [1961] 2 SCR 26;Jay Mahakali Rolling Mills vs. Union of India andOthers 2007 (12) SCC 198 : [2007] 8 SCR 855; ShantiConductors Private Limited and Another vs. Assam StateDElectricity Board and Others 2019 (19) SCC 529;Vineeta Sharma vs. Rakesh Sharma and Others 2020(9) SCC 1 – referred to.

2.1. The legislature in its wisdom has made a specificprovision delineating power to be exercised by the regulatoryEauthority/adjudicating officer. “Refund of the amount” and“compensation” are two distinct components which the allotteeor the person aggrieved is entitled to claim if the promoter hasnot been able to hand over possession with a nature of enquiryand mechanism provided under the Act. So far as the claim withFrespect to refund of amount on demand under Sections 18(1) and19(4) of the Act is concerned, it vests within the jurisdiction ofthe regulatory authority. Section 71 carves out the jurisdiction ofthe adjudicating officer to adjudge compensation under Sections12, 14, 18 and 19 after holding enquiry under Section 71(3) of theAct keeping in view the broad contours referred to under SectionG72 of the Act. [Para 75][952-B-D]

2.2. After the Act of 2016 has come into force, if any personaggrieved wants to make complaint for refund against thepromotor or real estate agent other than compensation, it is to H

be lodged to the regulatory authority and for adjudgingcompensation to the adjudicating officer, and the delineation hasbeen made to expedite the process of adjudication invoked bythe person aggrieved when a complaint has been made underSection 31 of the Act to be adjudicated either by the authority/adjudicating officer as per the procedure prescribed under theAct. [Para 76][952-E-G]

2.3 To safeguard the interests of the parties, on beingdecided by the regulatory authority/adjudicating officer, it is alwayssubject to appeal before the tribunal under Section 43(5) providedcondition of pre-deposit being complied with can be furtherchallenged in appeal before the High Court under Section 58 ofthe Act and, thus, the legislature has put reasonable restrictionand safeguards at all stages. [Para 79][954-A-B]

2.4 The submission that if the allottee has defaulted theterms of the agreement and still refund is claimed which can bepossible, to be determined by the adjudicating officer, appears tobe attractive but is not supported with legislative intent for thereason that if the allottee has made a default either in makinginstalments or made any breach of the agreement, the promoterhas a right to cancel the allotment in terms of Section 11(5) of theAct and proviso to sub-section 5 of Section 11 enables the allotteeto approach the regulatory authority to question the terminationor cancellation of the agreement by the promotor and thus,the interest of the promoter is equally safeguarded. [Para 80][954-B-D]

2.5. The opening words of Section 71(1) of the Act make itclear that the scope and functions of the adjudicating officer areonly for “adjudging compensation” under Sections 12, 14, 18 and19 of the Act. If the legislative intent was to expand the scope ofthe powers of the adjudicating officer, then the wording of Section71(1) ought to have been different. On the contrary, even theopening words of Section 71(2) of the Act make it clear that anapplication before the adjudicating officer is only for “adjudgingcompensation”. Even in Section 71(3) of the Act, it is reiteratedthat the adjudicating officer may direct “to pay such compensationor interest” as the case may be as he thinks fit, in accordance

AB

C

D

E

FG

H

Awith provisions of Sections 12, 14, 18 and 19 of the Act. This hasto be seen together with the opening words of Section 72 of theAct, which reads “while adjudging the quantum of compensationor interest, as the case may be, under Section 71, the adjudicatingofficer shall have due regards” to the broad parameters to bekept in mind while adjudging compensation to be determinedBunder Section 71 of the Act. [Para 81]954-D-G]

2.6 There is a complete delineation of the jurisdiction vestedwith the regulatory authority and the adjudicating officer. If thereis any breach or violation of the provisions of Sections 12, 14, 18and 19 of the Act by the promoter, such a complaint straightawayChas to be filed before the regulatory authority. What is beingreferable to the adjudicating officer is for adjudging compensation,as reflected under Section 71 of the Act and accordingly rulesand regulations have been framed by the authority for streamliningthe complaints which are made by the aggrieved person eitherDon account of violation of the provisions of Sections 12, 14, 18and 19 or for adjudging compensation and there appears noquestion of any inconsistency being made, in the givencircumstances, either by the regulatory authority or theadjudicating officer. [Para 82][955-A-D]

E2.7 So far as the single complaint is filed seeking acombination of reliefs, it is suffice to say, that after the rules havebeen framed, the aggrieved person has to file complaint in aseparate format. If there is a violation of the provisions of sections12, 14, 18 and 19, the person aggrieved has to file a complaint asper form (M) or for compensation under form (N) as referred toFunder Rules 33(1) and 34(1) of the Rules. The procedure forinquiry is different in both the set of adjudication and there is noroom for any inconsistency and the power of adjudication beingdelineated, still if composite application is filed, can be segregatedat the appropriate stage. [Para 83][955-D-F]

G

2.8. If the literal rule of interpretation is seen that whenthe words of the statute are clear, plain and unambiguous, theCourts are bound to give effect to that meaning regardless of itsconsequence. It is always advisable to interpret the legislative

wisdom in the literary sense as being intended by the legislatureand the Courts are not supposed to embark upon an inquiry andfind out a solution in substituting the legislative wisdom which isalways to be avoided. [Para 85][955-G-H; 956-A]

2.9 From the scheme of the Act and taking note of power ofadjudication delineated with the regulatory authority andadjudicating officer, what finally culls out is that although the Actindicates the distinct expressions like ‘refund’, ‘interest’,‘penalty’ and ‘compensation’, a conjoint reading of Sections 18and 19 clearly manifests that when it comes to refund of theamount, and interest on the refund amount, or directing paymentof interest for delayed delivery of possession, or penalty andinterest thereon, it is the regulatory authority which has the powerto examine and determine the outcome of a complaint. At thesame time, when it comes to seeking the relief of adjudgingcompensation and interest thereon under Sections 12, 14, 18 and19, the adjudicating officer exclusively has the power to determine,keeping in view the collective reading of Section 71 read withSection 72 of the Act. If the adjudication under Sections 12, 14,18 and 19 other than compensation as envisaged, if extended tothe adjudicating officer as prayed that, may intend to expand theambit and scope of the powers and functions of the adjudicatingofficer under Section 71 and that would be against the mandate ofthe Act 2016. [Para 86][956-B-E]

Imperia Structures Ltd. vs. Anil Patni and Another 2020(10) SCC 783 – referred to.

3.1. Section 21 of the Act relates to the composition of theauthority which consists of a Chairperson and not less than twowhole time members to be appointed by the appropriateGovernment but conspicuously it does not mention minimumbench strength at the same time consciously prescribes minimumbench/quorum while constituting the Real Estate AppellateTribunal as reflected under Section 43(3) of the Act.[Para 103][962-A-B]

3.2. The emphasis was on Section 29 of the Act whichindicates the quorum of meetings of the authority. There is aspecific provision that there shall be a meeting of the authority A

BC

D

E

FG

H

Awith the minimum quorum being prescribed, such business ofthe meeting of the authority indeed could not be delegated to asingle member of the authority in exercise of power under Section81 of the Act. The term meeting under Section 29 of the Act doesnot deal with the performance of the authority in quasi-judicialmatters which are referred to under Section 31 of the Act. It onlyBrefers to meetings, policy/regulatory issues that the authority ismandated to discharge under the Act. Sections 32 and 33 are inthe nature of policy/regulatory directions which the authority ismandated to be discharged indisputably have to be undertakenby the authority while functioning as a whole body under SectionC29 of the Act. [Paras 104, 105][962-B-E]

3.3 Section 29(3) and (4) of the Act talks about the questionsbefore the authority which are to be disposed of within 60 dayson receiving the applications. It may be noticed that there is noreference to any complaint referred to under Section 31 of theDAct. To buttress it further, Section 29 and Section 81 of the Actare not in derogation to each other. To the contrary, both operatein different fields. Section 29 deals with the meetings of theauthority to be held for taking policy/regulatory decisions in theinterest of the stake holders and does not envisage in its foldquasi-judicial functions which the Act casts upon the authority.EThe legislative intention as reflected from Section 29 is arecognition of the rationale that policy matters ought to beconsidered and decided by the entire strength of the authority sothat the policy decisions reflect the acquired experience of themembers and Chairman of the authority. [Para 106][962-E-G]F

3.4 Section 81 of the Act 2016 empowers the authority, bygeneral or special order in writing, to delegate its powers to anymember of the authority, subject to conditions as may be specifiedin the order, such of the powers and functions under the Act.What has been excluded is the power to make regulations underGSection 85, rest of the powers exercised by the authority canalways be delegated to any of its members obviously forexpeditious disposal of the applications/complaints includingcomplaints filed under Section 31 of the Act and exercise of suchpower by a general and special order to its members is always H

M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD.v. STATE OF UP & ORS. ETC.

permissible under the provisions of the Act. [Para 112][966-E-G]

3.5 In the instant case, the authority by a special order dated5th December, 2018 has delegated its power to the single memberfor disposal of complaints filed under Section 31 of the Act.Pursuant to the delegation of power to the single member of theauthority, complaints filed by the allottees/home buyers for refundof the amount and interest under Section 31 of the Act came tobe decided by the single member of the authority after hearingthe parties in accordance with the provisions of the Act. So far asrefund of the amount with interest is concerned, it may not beconsidered strictly to be mechanical in process but the kind ofinquiry which has to be undertaken by the authority is of asummary procedure based on the indisputable documentaryevidence, indicating the amount which the allottee/home buyerhad invested and interest that has been prescribed by thecompetent authority leaving no discretion with minimal nature ofscrutiny of admitted material on record is needed, if has beendelegated by the authority, to be exercised by the single memberof the authority in exercise of its power under Section 81 of theAct, which explicitly empowers the authority to delegate underits wisdom that cannot be said to be dehors the provisions of theAct. [Paras 107, 108, 113][962-H; 963-A; 966-G-H; 967-A-B]

3.6 What is being urged by the appellants in interpretingthe scope of Section 29 of the Act is limited only to policy mattersand cannot be read in derogation to Section 81 of the Act and theinterpretation as argued by the promoters if to be accepted, thevery mandate of Section 81 itself will become otiose and nugatory.[Para 114][967-B-C]

3.7 It is a well-established principle of interpretation of lawthat the court should read the section in literal sense and cannotrewrite it to suit its convenience; nor does any canon ofconstruction permit the court to read the section in such a manneras to render it to some extent otiose. Section 81 of the Actpositively empowers the authority to delegate such of its powersand functions to any member by a general or a special order withan exception to make regulations under Section 85 of the Act. As

A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

Aa consequence, except the power to make regulations underSection 85 of the Act, other powers and functions of the authority,by a general or special order, if delegated to a single member ofthe authority is indeed within the fold of Section 81 of the Act.[Para 115][967-C-E]

3.8 If the delegation is made at any point of time which is incontravention to the scheme of the Act or is not going to servethe purpose and object with which power to delegate has beenmandated under Section 81 of the Act, it is always open for judicialreview. [Para 116][967-G-H; 968-A]

B

C3.9 The power to be exercised by the authority in decidingcomplaints under Section 31 of the Act is quasi-judicial in naturewhich is delegable provided there is a provision in the statute.Section 81 of the Act empowers the authority to delegate its powerand functions to any of its member, by general or special order.[Para 117][968-C]D

3.10 In the instant case, by exercising its power underSection 81 of the Act, the authority, by a special order dated 5thDecember, 2018 has delegated its power to the single memberof the authority to exercise and decide complaints under Section31 of the Act and that being permissible in law, cannot be said toEbe de hors the mandate of the Act. At the same time, the powerto be exercised by the adjudicating officer who has been appointedby the authority in consultation with the appropriate Governmentunder Section 71 of the Act, such powers are non-delegable toany of its members or officers in exercise of power under SectionF81 of the Act. [Para 118][968-D-E]

3.11 That scheme of the Act, 2016 provides an in-builtmechanism and any order passed on a complaint by the authorityunder Section 31 is appealable before the tribunal under Section43(5) and further in appeal to the High Court under Section 58 ofGthe Act on one or more ground specified under Section 100 ofthe Code of Civil Procedure, 1908, if any manifest error is left bythe authority either in computation or in the amount refundableto the allottee/home buyer, is open to be considered at the H

M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD.v. STATE OF UP & ORS. ETC.

appellate stage on the complaint made by the person aggrieved.[Para 119][968-F-G]

3.12 In view of the remedial mechanism provided underthe Scheme of the Act, 2016 the power of delegation underSection 81 of the Act by the authority to one of its members fordeciding applications/complaints under Section 31 of the Act isnot only well defined but expressly permissible and that cannotbe said to be dehors the mandate of law. [Para 120][968-G-H]

Province of Bombay vs. Kushaldas S Advani and Others[1950] SCR 621; Shivji Nathubhai vs. Union of Indiaand Others [1960] 2 SCR 775; Harinagar Sugar MillsLimited vs. Shyam Sunder Jhunjhunwala and Others[1962] 2 SCR 339; Bombay Municipal Corporation vs.Dhondu Narayan Chowdhary [1965] 2 SCR 929; SahniSilk Mills(P) Ltd. and Another vs. Employees StateInsurance Corporation (1994) 5 SCC 346 : [1994] 1Suppl. SCR 626; Jagannath Temple ManagingCommittee vs. Siddha Math and Others (2015) 16 SCC542; Saurashtra Kutch Stock Exchange Ltd. vs.Securities and Exchange Board of India and Another(2012) 13 SCC 501; State of Uttar Pradesh vs. BatukDeo Pati Tripathi and Another (1978) 2 SCC 102 :[1978] 3 SCR 131; Heinz India Private Limited andAnother vs. State of Uttar Pradesh (2012) 5 SCC 443 :[2012] 3 SCR 898 – referred to.

Barnard vs. National Dock Labour Board 1953 (2) QB18; Vine vs. National Dock Labour Board 1956 (1) QB658 – referred to.

4.1 Section 43(5) of the Act envisages the filing of an appealbefore the appellate tribunal against the order of an authority orthe adjudicating officer by any person aggrieved and where thepromoter intends to appeal against an order of authority oradjudicating officer against imposition of penalty, the promoterhas to deposit at least 30 per cent of the penalty amount or suchhigher amount as may be directed by the appellate tribunal. Wherethe appeal is against any other order which involves the return of A

B

C

D

E

F

G

H

Athe amount to the allottee, the promoter is under obligation todeposit with the appellate tribunal the total amount to be paid tothe allottee which includes interest and compensation imposedon him, if any, or with both, as the case may be, before the appealis to be instituted. [Para 122][969-F-H]

B4.2. Perusal of scheme of the Act makes it clear that thelimited rights and duties are provided on the shoulders of theallottees under Section 19 of the Act at a given time, severalonerous duties and obligations have been imposed on thepromoters i.e. registration, duties of promoters, obligations ofpromoters, adherence to sanctioned plans, insurance of realCestate, payment of penalty, interest and compensation, etc. underChapters III and VIII of the Act 2016. This classification betweenconsumers and promoters is based upon the intelligible differentiabetween the rights, duties and obligations cast upon the allottees/home buyers and the promoters and is in furtherance of the objectDand purpose of the Act to protect the interest of the consumersvis-a-viz., the promoters in the real estate sector. The promotersand allottees are distinctly identifiable, separate class of personshaving been differently and separately dealt with under the variousprovisions of the Act. Therefore, the question of discriminationin the first place does not arise which has been alleged as theyEfall under distinct and different categories/classes. [Paras 125,126][970-E-H]

4.3. Under the present real estate sector which is now beingregulated under the provisions of the Act 2016, the complaint forrefund of the amount of payment which the allottee/consumerFhas deposited with the promoter and at a later stage, when thepromoter is unable to hand over possession in breach of theconditions of the agreement between the parties, are beinginstituted at the instance of the consumer/allotee demanding forrefund of the amount deposited by them and after the scrutiny ofGfacts being made based on the contemporaneous documentaryevidence on record made available by the respective parties. Thelegislature in its wisdom has intended to ensure that the moneywhich has been computed by the authority at least must besafeguarded if the promoter intends to prefer an appeal before H

the tribunal and in case, the appeal fails at a later stage, it becomesdifficult for the consumer/allottee to get the amount recoveredwhich has been determined by the authority and to avoid theconsumer/allottee to go from pillar to post for recovery of theamount that has been determined by the authority in fact, belongsto the allottee at a later stage could be saved from all the miserieswhich come forward against him. [Para 127][971-A-D]

4.4. At the same time, it will avoid unscrupulous anduncalled for litigation at the appellate stage and restrict thepromoter if feels that there is some manifest material irregularitybeing committed or his defence has not been properly appreciatedat the first stage, would prefer an appeal for re-appraisal of theevidence on record provided substantive compliance of thecondition of pre-deposit is made over, the rights of the partiesinter se could easily be saved for adjudication at the appellatestage. [Para 128][971-E]

4.5. There are multiple statutes which provide a conditionof pre-deposit of a stipulated statutory amount to be depositedbefore an appeal is entertained by an appellate forum/tribunal forreappraisal of facts and law at the appellate stage. The intentionof the instant legislation appears to be that the promoters oughtto show their bona fides by depositing the amount socontemplated. [Paras 129, 135][971-F-G; 975-D-E]

4.6. It is indeed the right of appeal which is a creature ofthe statute, without a statutory provision, creating such a rightthe person aggrieved is not entitled to file the appeal. It is neitheran absolute right nor an ingredient of natural justice, the principlesof which must be followed in all judicial and quasi-judicial litigationsand it is always be circumscribed with the conditions of grant. Atthe given time, it is open for the legislature in its wisdom to enacta law that no appeal shall lie or it may lie on fulfilment ofprecondition, if any, against the order passed by the Authority inquestion. [Para 136][975-E-G]

4.7. The obligation cast upon the promoter of pre-depositunder Section 43(5) of the Act, being a class in itself, and thepromoters who are in receipt of money which is being claimed bythe home buyers/allottees for refund and determined in the first A

B

C

D

E

F

G

H

Aplace by the competent authority, if legislature in its wisdomintended to ensure that money once determined by the authoritybe saved if appeal is to be preferred at the instance of the promoterafter due compliance of pre-deposit as envisaged under Section43(5) of the Act, in no circumstance can be said to be onerous asprayed for or in violation of Articles 14 or 19(1)(g) of theBConstitution of India. [Para 137][975-G-H; 976-A-B]

Narayan Chandra Ghosh vs. UCO Bank and Others(2011) 4 SCC 548 : [2011] 3 SCR 1024; Har DeviAsnani vs. State of Rajasthan and Others (2011) 14 SCC160 : [2011] 11 SCR 599; Government of AndhraCPradesh and Others vs. P. Laxmi Devi (Smt.) (2008) 4SCC 720 : [2008] 3 SCR 330; State of Haryana vs.Maruti Udyog Ltd. and Others 2000 (7) SCC 348 :[2000] 3 Suppl. SCR 185; Shreenath Corporation andOthers vs. Consumer Education and Research SocietyDand Others 2014 (8) SCC 657 : [2014] 9 SCR 356;Tecnimont Pvt. Ltd. (Formerly Known As Tecnimont ICBPrivate Limited) vs. State of Punjab and Others AIR2019 SC 4489 : [2019] 12 SCR 229 – referred to.

5.1 The power of authority to direct the refund of theEprincipal amount is explicit in Section 18 and the interest that ispayable is on the principal amount in other words, there is nointerest in the absence of a principal amount being determinedby the competent authority. Further the statute as such is read tomean that the principal sum with interest has become a compositeamount quantified upon to be recovered as arrears of landFrevenue under Section 40(1) of the Act. [Para 139][976-G-H]

5.2 It is settled principle of law that if the plaininterpretation does not fulfil the mandate and object of the Act,this Court has to interpret the law in consonance with the spiritand purpose of the statute. There is indeed a visible inconsistencyGin the powers of the authority regarding refund of the amountreceived by the promoter and the provision of law in Section 18and the text of the provision by which such refund can be referredunder Section 40(1). While harmonising the construction of the H

M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD.v. STATE OF UP & ORS. ETC.

AB

scheme of the Act with the right of recovery as mandated inSection 40(1) of the Act keeping in mind the intention of thelegislature to provide for a speedy recovery of the amountinvested by the allottee along with the interest incurred thereonis self-explanatory. However, if Section 40(1) is strictly construedand it is understood to mean that only penalty and interest on theprincipal amount are recoverable as arrears of land revenue, itwould defeat the basic purpose of the Act. [Para 140][977-A-C]

5.3 Taking into consideration the scheme of the Act whatis to be returned to the allottee is his own life savings with intereston computed/quantified by the authority becomes recoverableand such arrear becomes enforceable in law. There appears someambiguity in Section 40(1) of the Act that by harmonising theprovision with the purpose of the Act, is given effect to theprovisions is allowed to operate rather running either of themredundant, noticing purport of the legislature and the above-stated principle into consideration, it is made clear that the amountwhich has been determined and refundable to the allottees/homebuyers either by the authority or the adjudicating officer in termsof the order is recoverable within the ambit of Section 40(1) ofthe Act. [Para 141][977-D-E]

C

D

5.4 There is no error in the judgment impugned in theappeals. [Para 142][977-F]

H

[2021] 9 S.C.R.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.6745-D6749 of 2021.

From the Judgment and Order dated 29.01.2021 of the High Courtof Judicature at Allahabad, Allahabad Bench, Uttar Pradesh in WRIT CNo.24602, 24604, 26451, 26450 and 26475 of 2020.

With

ECivil Appeal Nos.6750, 6751, 6752, 6753, 6754, 6755, 6756 And6757 of 2021.

Kapil Sibal, Sachin Datta, Narender Hooda, Aashish Chopra,Siddharth Bhatnagar, Gopal Sankaranarayanan, Sr. Advs., AbhimanyuFBhandari, Anirudh Bakhru, Ms. Roohe Hina Dua, Ms. Ananya Sikri,Shalabh Singhal, Sukant Vikram, A. R. Takkar, Ms. Shreya Takkar,Chritarth Palli, Sahil Tagotra, Ishan Dewan, Lokesh Malik, Anant SinghNegi, Vishal Maharaj, Abhishek Sharma, Tarun Gupta, Tushar Singh,Abhikalp Pratap Singh, Ms. Aagam Kaur, Ms. Bhavya Tyagi, Ms. AadyaYadav, Parag Maini, Abhimanyu Chopra, Ms. Pankhuri, SanjeevGSachdeva, Raghav Chadha, Rachna Yadav, Manoranjan Sharma, VineetSinha, Keshav Saini, Deeptanshu Jain, Rajesh P., Senthil Jagadeesan,Ms. Sonakshi Malhan, Ms. Mrinal Kanwar, Abhimanyu Tewari, Ms.Eliza Bar, Ashray Chopra, Ankit Jaglan, Ardhendumauli Kumar Prasad,Ms. Taruna Ardhendumauli Prasad, Pranav Proothi, Ashish Madaan,HRajan Raj, Ms. Shikha Thakur, Hriday Kochhar, Faisal Sherwani, Surender Singh Hooda, Giriraj Subramanium, Pramod Sharma, SimarpalSingh, Raghav Tankha, Prateek K. Chadha, Rangoli Seth, Rakesh Kumar-I, Rajnish Kumar Singh, Ms. Samvedna Verma, Srijan Mehrotra, VikasGoyat, Amit Sahni, Dr. Surender Singh Hooda, Aditya Singh, AnubhavSingh, Shubham Singh, Ujjal Banerjee, Rakesh Dahiya, SandeepChoudhary, Aditya Dahiya, Rajesh P., Swati Dayalan, Ms. Nikita Sharma,Somiran Sharma, Vanshaja Shukla, Shekhar Kumar, Shashank Singh,Sanyat Lodha, Venkat Rao, Ms. Remya Ronald, Ms. Harshita Singhal,Vijay Kumar, Chandan Kumar Mandal, Ms. Nandini Gore, Hemant Saini,Arjun Sharma, Ms. Ratna Priya, Karanveer Singh Anand, Aditya Sidhra,M/s Karanjawala & Co., Amar Dave, Mahesh Agarwal, Ankur Saigal,Rishabh Parikh, Yoiit Mehra, E. C. Agrawala, Mohit Paul, Vivek Sethi,Ms. Shikha Sarin, Ms. Sunaina Phul, Sumesh Malhotra, DeeptanshuSharma, Ravi Prakash, Rohit Priyadarshi, Ms. Nitu Kumari, AdityaKumar, Kousik Ghosh, Durga Dutt, Abir Patel, Ms. Garimaa Agrawal,Ms. Apoorva Kaushik, Shrutanjaya Bhardwaj, Ms. Lavina Bhargawa,Dhawal Desai, Pranaya Goyal, Kumar Shashwat, Advs. for the Appellant.

Tushar Mehta, SG, Ms. Madhavi Divan, ASG, Anil Grover, Sr.AAG, Ms. Bansuri Swaraj, Ajay Bansal, AAGs, Ms. Garima Prasad,Devadatt Kamat, K. K. Rai, Ravindra Raizada, Manoj Swarup, SiddharthaLuthra, Rajiv Atma Ram, Sr. Advs., Rajat Nair, Ms. Neela Kedar Gokhale,Akshay Amritanshu, Mohd. Akhil, Amrish Kumar, Alok Sangwan, SumitKumar Sharma, Anurag Kulharia, Devashish Bharukha, Ms. Bharti Tyagi,Ranbir Singh Yadav, Ms. Anzu K. Varkey, Ms. Pratima Yadav, NagarkattiKartik Uday, Vishnu Anand, Archit Upadhyay, Mudit Gupta, Ms. AvantikaMishra, Ms. Ayushi Verma, K. K. Mani, Ms. T. Archana, Ms. ManyaHasija, Sanjay Kumar Visen, Bhanwar Jadon, Pai Amit, Ms. KomalMundhra, Saurabh Agrawal, Shantanu Singh, Rajesh Inamdar, AniketBhattacharya, Ms. Pankhuri Bhardwaj, Sahil Monga, Ms. Aishani Narain,Ms. Uttara Babbar, Manan Bansal, Ms. Tina Garg, M. K. Ghosh, RohitDutta, Rahul Khurana, Satish Kumar, Ashwani Kumar Dubey, RudraVikram Singh, Manish Kumar, Sanjiv Kumar Balian, Karan Kapur, Ms.Suruchi Mittal, Abhishek Gautam, Aman Gupta, Parveen Mehta, PiyushHans, Ravi Panwar, Narender Kumar Verma, Arjun Singh Bhati, VikasMehta, Ms. Anshula Vijay Kumar Grover, Saurabroto Dutta, KushalSarkar, Mishra Saurabh, Sreoshi Chatterjee, Shiv Kumar Pandey,Chandrashekher A. Chakalabbi, Awanish Kumar, Anshul Rai, M/sDharmaprabhas Law Associates, Ms. Pallavi Pratap, Varun K. Chopra,M/s VKC Law Office, Ms. Rashmi Singh, Rajeev Kumar Dubey, A

B

C

D

E

F

G

H

AAshiwan Mishra, Kamlendra Mishra, Subhash Grover, Santosh Mishra,Neemani Pant, Avinash Gautam, M. L. Lahoty, Paban K Sharma, AnchitSripat, Himanshu Shekhar, Anubhav, Yashwant Singh Yadav, Ms. PreetiYadav, Rameshwar Prasad Goyal, Arjun Singh Bhati, Sumit R. Sharma,Aman Bhatnagar, Aman Preet Singh Rahi, A. Venayagam Balan, Ms.Anindita Mitra, Ritesh Khatri, Uttam Datt, Ms. Sonakshi Singh, RishiBRaj Sharma, Santosh Krishnan, Nipun Dwivedi, Ms. Ankita Tiwari,Lakshay Mehta, Akshay Kumar, Krishnan Kumar, Ms. Charu Ambwani,Ms. Mahua Kalra, Daya Krishan Sharma, Rohit Vats, Vikrant Y. S.Narula, Shubham Rana, Sumit Mehta, Rabin Majumder, Ms. MousumiRoy, Joydeep Mukherjee, Ms. Akansha Srivastava, Rahul Chitnis, SachinCPatil, Aaditya A. Pande, Geo Joseph, Abhimanyu Tewari, Ms. Eliza Bar,Ashray Chopra, Ankit Jaglan, Surender Kumar Rohilla, Ms. Tina Garg,Bhagoti Singh, Vikrant Y. S. Narula, Sumit Mehta, Ajay Kumar Talesara,Harish Pandey, Ms. Bharti Tyagi, H. S. Parihar, N. P. Singh, Dr. KedarNath Tripathy, Raghunath Pathak, Sachin Awana, Advs. for theRespondents.D

The Judgment of the Court was delivered by RASTOGI, J.

1. Leave granted.

E2. The present batch of appeals are filed at the instance ofpromoter/real estate developer assailing the common issues and certainprovisions of The Real Estate(Regulation and Development) Act,2016(hereinafter being referred to as “the Act”), The Uttar PradeshReal Estate(Regulation and Development) Rules, 2016 (hereinafterreferred to as “the Rules”) and the functioning of the Uttar PradeshFReal Estate Regulatory Authority (hereinafter referred to as “theAuthority”), although being decided by separate orders by the High Courtof Allahabad, since the self-same questions are involved with the consentare being decided by the present judgment.

3. The respondents herein are the allottees/home buyers who haveGmade their substantial investment from their hard earned savings underthe belief that the promotor/real estate developer will hand over possessionof the unit in terms of home buyer’s agreement but their bonafide beliefstood shaken when the promotors failed to hand over possession of aunit/plot/building in terms of the agreement and complaints were institutedH

by the home buyers for refund of the investment made along with interestunder Section 31 of the Act.

4. The impugned orders came to be passed by the single memberof the authority on the complaint instituted at the instance of the homebuyers/allottees after hearing the parties with the direction to refund theprincipal amount along with interest(MCLR + 1%) as prescribed by theState Government under the Act. In the ordinary course of business, theorder passed by the authority is appealable under Section 43(5) of theAct provided the statutory compliance of pre-deposit being made underproviso to Section 43(5) before the Appellate Tribunal but the promoter/real estate developers approached the High Court by filing a writ petitionunder Articles 226 and 227 of the Constitution questioning the orderpassed by the authority holding it to be without jurisdiction as it has beenpassed by a single member of the authority who according to the appellantsholds no jurisdiction to pass such orders of refund of the amount ascontemplated under Section 18 of the Act and have also challenged thecondition of pre-deposit as envisaged under proviso to Section 43(5) ofthe Act for filing of a statutory appeal and raised certain ancillary questionsfor consideration in writ jurisdiction of the High Court of Allahabad.Being aggrieved by the orders passed by the High Court dismissing theirwrit petitions, the present batch of appeals have been preferred at theinstance of the promoters/real estate developers.

5. Before adverting to the legal submissions made before us, weconsider it appropriate to take a bird’s-eye view of the scheme of theAct 2016 which may be apposite for proper appreciation of thesubmissions made by the parties.

Object and Reasons of the Act 2016

6. Over the past two decades, with the growth of population andthe attraction of the people to shift towards urbanization, the demand forhousing increased manifold. Government also introduced various housingschemes to cope with the increasing demand but the experience showsthat demands of the housing sector could not be meted out by theGovernment at its own level for various reasons to meet the requirement,the private players entered into the real estate sector in meeting out therising demand of housing. Though availability of loans, both from publicand private banks, become easier, still the High rate of interest and theEMI has posed additional financial burden on the people.

AB

C

D

E

F

G

H

A7. At the given time, the real estate and housing sector was largelyunregulated and the consequence was that consumers were unable toprocure complete information for enforced accountability towards buildersand developers in the absence of an effective mechanism in place.Though, The Consumer Protection Act, 1986 was available to cater thedemand of home buyers in the real estate sector but the experienceBshows that this mechanism was inadequate to address the needs of thehome buyers and promoters in the real estate sector.

A

8. At this juncture, the need for Real Estate (Regulation) Bill wasbadly felt for establishing an oversight mechanism to enforceaccountability to the real estate sector and providing an adjudicatingCmachinery for speedy dispute redressal mechanism and safeguardingthe investments made by the home buyers through legislation to the extentpermissible under the law.

9. The statement of object and reasons of the Act indicates thatthe primal position of the regulatory authority is to regulate the real estateDsector having jurisdiction to ensure compliance with the obligation castupon the promoters. The opening statement of objects and reasons whichhas a material bearing on the subject reads as follows:-

“The real estate sector plays a catalytic role in fulfilling the needand demand for housing and infrastructure in the country. WhileEthis sector has grown significantly in recent years, it has beenlargely unregulated, with absence of professionalism andstandardisation and lack of adequate consumer protection. Thoughthe Consumer Protection Act, 1986 is available as a forum to thebuyers in the real estate market, the recourse is only curative andFis not adequate to address all the concerns of buyers and promotersin that sector. The lack of standardisation, has been a constraintto the healthy and orderly growth of industry. Therefore, the needto regulating the sector has been emphasised in various forums.

2. In view of the above, it becomes necessary to have a Centrallegislation, namely, the Real Estate (Regulation and Development)Bill, 2013, in the interest of the effective consumer protection,uniformity and standardisation of business practices andtransactions in the real estate sector. The proposed Bill providesfor the establishment of the Real estate Regulatory Authority (theAuthority) for regulation and promotion of real estate sector and G

H

to ensure sale of plot, apartment or building, as the case may be,in an efficient and transparent manner and to protect the interestof consumers in real estate sector and establish the Real EstateAppellate Tribunal to hear appeals from the decisions, directionsor orders of the Authority.”

10. It was introduced with an object to ensure greater accountabilitytowards consumers, to significantly reduce frauds & delays and also thecurrent high transaction costs, and to balance the interests of consumersand promoters by imposing certain responsibilities on both, and to bringtransparency of the contractual conditions, set minimum standards ofaccountability and a fast-track dispute resolution mechanism. It alsoproposes to induct professionalism and standardization in the sector, thuspaving the way for accelerated growth and investments in the long run.

11. Some of the relevant Statement of Objects and Reasons areextracted as under:- “4…

(d) to impose liability upon the promoter to pay such compensationto the allottees, in the manner as provided under the proposedlegislation, in case if he fails to discharge any obligations imposedon him under the proposed legislation; (f) the functions of the Authority shall, inter alia, include – (i) torender advice to the appropriate Government in matters relatingto the development of real estate sector; (ii) to publish and maintaina website of records of all real estate projects for which registrationhas been given, with such details as may be prescribed; (iii) toensure compliance of the obligations cast upon the promoters, theallotees and the real estate agents under the proposed legislation.

…

(i) to appoint an adjudicating officer by the Authority for adjudgingcompensation under sections 12, 14 and 16 of the proposedlegislation.

...”

12. The Bill provides for establishment of the authority forregulation and promotion of real estate sector, to ensure sale of plot,apartment or building or sale of real estate project in an efficient and A

BC

D

EF

G

H

Atransparent manner and to protect the interest of consumers in the realestate sector and provide the adjudicating mechanism for speedy disputeredressal mechanism by establishing the regulatory authority and theadjudicating officer and in hierarchy, the Appellate Tribunal for earlyand prompt disposal of the complaint being instituted primarily by thehome buyers for whom this Act has been enacted by the Parliament inB2016.

13. To examine the matter in this perspective, consider what ahouse means in India. The data shows that about more than 77% of totalassets of an average Indian household are held in real estate and it’s thesingle largest investment of an individual in his lifetime. The real estateCin India has a peculiar feature. The buyer borrows money to pay for ahouse and simultaneously plays the role of a financer as building projectscollect money upfront and this puts the buyer in a very vulnerable position-the weakest stakeholder with a high financial exposure. The amendmentto the Insolvency and Bankruptcy Code, 2018 recognised the home buyersDas financial creditors and the present enactment is the most importantregulatory intervention in favour of the home buyers and it’s had animpact and with passage of time, has become a yardstick of laying downminimum standards in the market. Earlier, the real estate sector wascompletely unregulated and there was no transparency in their businessprofile and after the present enactment, it is open for the potential homeEbuyers to check if a project is approved under the Act, 2016 that at leastgives a satisfaction to a person who is coming forward in making alifetime investment.

14. That apart from the project being statutorily regulated, itattaches certain authenticity with regard to completion of the projectFand a statutory obligation upon the developer and home buyer to abideby the terms and conditions of the home buyers agreement and statutorycompliance to the mandate of law. In addition, any project which isapproved under the Act, 2016 helps the promoter in raising funds frombanks and statistics shows that buyers express their satisfaction inGapproved projects which is beneficial not only to the home buyers but tothe promoters and real estate agents as well.

15. Chapter II of the Act relates to the registration of real estateprojects. Section 3 mandates prior registration of real estate projectsincluding ongoing projects with the Real Estate Regulatory Authority.HSection 4 prescribes the ingredients of application by the promotor for registration of real estate projects. In particular, the promotor is requiredto state in the application under sub-section 2(L)(c ) of Section 4, thetimelines for completion of the project. Section 5 relates to the grant ofregistration by the authority and inter alia states that no application shallbe rejected unless the applicant has been given an opportunity of beingheard in the matter. As per Section 5(3) of the Act, the registration is co-terminus with the completion of the project. Under Section 6, the authoritycan extend registration based on the facts of each case or the occurrenceof the force majeure. Section 7 pertains to revocation of registration. Asper Section 8, the authority is under obligation to inter alia carry out theremaining development work where there is lapse or revocation of theregistration.

16. Chapter III lays down, ‘functions and duties of promotor’which is relevant for the purpose of the present case. Section 11 thereofelaborates on the functions and duties of the promoters. Under sub-Section (4) of Section 11, several obligations have been casted upon thepromoters. Under sub-section (5) of Section 11, the promoter may cancelthe allotment if the allottee/home buyer commits any breach of the termsof the agreement for sale, and in such case, the aggrieved allottee hasthe right to approach the authority.

17. Section 12 provides that if any default being committed by thepromoter, either in reference to the information contained in the notice,advertisement or prospectus or on the basis of the model apartment, plotor building which causes any loss or damage to the allottee/home buyerby reason of any incorrect or false statement or wants to withdraw fromthe project, he shall be compensated by the promoter in the manner asprescribed under the Act.

18. Section 14 relates to adherence to Sanctioned Plans & Projectspecification by the promoters and Section 14(3) empowers the allotteeto receive compensation in the event where there is any structural defect.

19. Section 18(1) of the Act spells out the consequences if thepromoter fails to complete or is unable to give possession of an apartment,plot or building either in terms of the agreement for sale or to completethe project by the date specified therein or on account of discontinuanceof his business as a developer either on account of suspension orrevocation of the registration under the Act or for any other reason, theallottee/home buyer holds an unqualified right to seek refund of the amountwith interest at such rate as may be prescribed in this behalf.

A

B

C

D

E

F

G

H

A20. Section 18(2) of the Act mandates that in case, loss is causedto allottee due to defective title of the land, on which the project is beingdeveloped or has been developed, the promoter shall compensate theallottee and such claim for compensation under Section 18(2) shall notbe barred by limitation provided under any law for the time being inforce.B

A

21. Section 18(3) of the Act states that where the promoter failsto discharge any other obligation under the Act or the rules or regulationsframed thereunder or in accordance with the terms and conditions ofthe agreement for sale, the promoter shall be liable to pay ‘suchcompensation’ to the allottees, in the manner as prescribed under theCAct.

22. If we take a conjoint reading of sub-sections (1), (2) and (3)of Section 18 of the Act, the different contingencies spelt out therein,(A) the allottee can either seek refund of the amount by withdrawingfrom the project; (B) such refund could be made together with interestDas may be prescribed; (C) in addition, can also claim compensationpayable under Sections 18(2) and 18(3) of the Act; (D) the allottee hasthe liberty, if he does not intend to withdraw from the project, will berequired to be paid interest by the promoter for every months’ delay inhanding over possession at such rates as may be prescribed.

E

23. Correspondingly, Section 19 of the Act spells out “Rights andduties of allottees”. Section 19(3) makes the allottee entitled to claimpossession of the apartment, plot or building, as the case may be. Section19(4) provides that if the promoter fails to comply or being unable togive possession of the apartment, plot or building in terms of the agreement,Fit makes the allottees entitled to claim the refund of amount paid alongwith interest and compensation in the manner prescribed under the Act.

24. Section 19(4) is almost a mirror provision to Section 18(1) ofthe Act. Both these provisions recognize right of an allottee two distinctremedies, viz, refund of the amount together with interest or interest forGdelayed handing over of possession and compensation.

25. The unqualified right of the allottee to seek refund referredunder Section 18(1)(a) and Section 19(4) of the Act is not dependent onany contingencies or stipulations thereof. It appears that the legislaturehas consciously provided this right of refund on demand as an unconditionalabsolute right to the allottee, if the promoter fails to give possession ofH

the apartment, plot or building within the time stipulated under the termsof the agreement regardless of unforeseen events or stay orders of theCourt/Tribunal, which is in either way not attributable to the allottee/home buyer, the promoter is under an obligation to refund the amount ondemand with interest at the rate prescribed by the State Governmentincluding compensation in the manner provided under the Act with theproviso that if the allottee does not wish to withdraw from the project, heshall be entitled for interest for the period of delay till handing overpossession at the rate prescribed.

26. If we turn to the power of the authority, it envisages underSection 31, the complaints can be filed either with the authority oradjudicating officer for violation or contravention of the provisions of theAct or the rules and regulations framed thereunder. Such complaint canbe filed against “any promoter, allottee or real estate agent”, as the casemay be, and can be filed by “any aggrieved person”, and it has to beread with an explanation, “person” includes an association of allotteesor any voluntary consumer association registered under any law for thetime being in force. The form and manner in which complaint is to beinstituted has been provided under sub-section(2) of Section 31.

27. Section 32 refers to functions of the authority for promotionof real estate sector and Sections 34 to 38 of the Act recognize differentnature of powers and functions of the authority regarding compliance ofits regulations cast upon the promoters, allottee or the real estate agentsand to appoint one or more persons to make an inquiry into the affairs ofany promoter, allottee or the real estate agent and to pass any interimorders, if the promoter, allottee or real estate agent is failing in dischargingof its functions under the Act, rules or regulations, and to issue directionsfrom time to time to the promoter, allottee or real estate agents, ifconsidered necessary can impose penalty or interest if failed to carryout its obligations.

28. At the same time, Chapter VIII of the Act talks about offences,penalties and adjudication. Various kinds of penalties are set out in Sections59 to 68. Each of these provisions clearly states that the penaltythereunder is required to be determined by the authority.

29. We are concerned with Section 71 of the Act titled ‘power toadjudicate’ which is specific to the adjudicating officer. Sub-section(1)of Section 71 opens with the words “for the purpose of adjudging AB

C

D

E

F

G

H

Acompensation under Sections 12, 14, 18 and 19”, the Authority has toappoint in consultation with the appropriate Government, a judicial officernot below the rank of the District Judge, as an adjudicating officer, tohold inquiry in the prescribed manner after giving a person concerned areasonable opportunity of hearing. At the same time, sub-section (2)casts an obligation upon the adjudicating officer that while adjudgingBcompensation under sub-section (1), the application has to be dealt withexpeditiously as possible and to be disposed of within 60 days. If there isa delay being caused exceeding the statutory period of 60 days, in disposalof the application, reasons are to be recorded for extension of the period.

30. Under sub-section (3) of Section 71, the adjudicating officerChas been empowered not only to summon and enforce the attendance ofpersons acquainted with the facts and circumstances of the case to giveevidence or to produce any document which may be useful and relevantfor adjudication, is supposed to take note of the various parameters asreferred to under Section 72 which still is illustrative and not exhaustive

Dwhile adjudging the quantum of compensation payable to the personaggrieved and interest, as the case may be.

31. After we have heard learned counsel for the parties at length,the following questions emerges for our consideration in the presentbatch of appeals are as under:-E1. Whether the Act 2016 is retrospective or retroactive in itsoperation and what will be its legal consequence if tested on the anvil ofthe Constitution of India?

2. Whether the authority has jurisdiction to direct return/refund ofthe amount to the allottee under Sections 12, 14, 18 and 19 of the Act orFthe jurisdiction exclusively lies with the adjudicating officer under Section71 of the Act?

3. Whether Section 81 of the Act authorizes the authority todelegate its powers to a single member of the authority to hear complaintsinstituted under Section 31 of the Act?G4. Whether the condition of pre-deposit under proviso to Section43(5) of the Act for entertaining substantive right of appeal is sustainablein law?

5. Whether the authority has power to issue recovery certificatefor recovery of the principal amount under Section 40(1) of the Act?H

Question 1:- Whether the Act 2016 is retrospective orretroactive in its operation and what will be its legal consequence iftested on the anvil of the Constitution of India?

32. The issue concerns the retroactive application of the provisionsof the Act 2016 particularly, with reference to the ongoing projects. Ifwe take note of the objects and reasons and the scheme of the Act, itmanifests that the Parliament in its wisdom after holding extensivedeliberation on the subject thought it necessary to have a central legislationin the paramount interest for effective consumer protection, uniformityand standardisation of business practices and transactions in the realestate sector, to ensure greater accountability towards consumers, toovercome frauds and delays and also the higher transaction costs, andaccordingly intended to balance the interests of consumers and promotersby imposing certain duties and responsibilities on both. The deliberationon the subject was going on since 2013 but finally the Act was enactedin the year 2016 with effect from 25[th] March, 2016.

33. Under Chapter II of the Act 2016, registration of real estateprojects became mandatory and to make the statute applicable and totake its place under sub-Section (1) of Section 3, it was made statutorythat without registering the real estate project with a real estate regulatoryauthority established under the Act, no promoter shall advertise, market,book, sell or offer for sale, or invite persons to purchase in any mannera plot, apartment or building, as the case may be in any real estate projectbut with the aid of proviso to Section 3(1), it was mandated that such ofthe projects which are ongoing on the date of commencement of the Actand more specifically the projects to which the completion certificatehas not been issued, such promoters shall be under obligation to make anapplication to the authority for registration of the said project within aperiod of three months from the date of commencement of the Act.With certain exemptions being granted to such of the projects coveredby sub-section (2) of Section 3 of the Act, as a consequence, all suchhome buyers agreements which has been executed by the parties interse has to abide the legislative mandate in completion of their ongoingrunning projects.

34. The term “ongoing project” has not been so defined under theAct while the expression “real estate project” is defined under Section2(zn) of the Act which reads as under:- A

BC

D

EF

G

H

A“2(zn) “real estate project” means the development of a buildingor a building consisting of apartments, or converting an existingbuilding or a part thereof into apartments, or the development ofland into plots or apartments, as the case may be, for the purposeof selling all or some of the said apartments or plots or building, asthe case may be, and includes the common areas, the developmentBworks, all improvements and structures thereon, and all easement,rights and appurtenances belonging thereto;”

35. The Act is intended to comply even to the ongoing real estateproject. The expression “ongoing project” has been defined under Rule2(h) of the Uttar Pradesh Real Estate (Regulation and Development)CRules, 2016 which reads as under:- “2(h) “Ongoing project” means a project where development isgoing on and for which completion certificate has not been issuedbut excludes such projects which fulfil any of the following criteriaon the date of notification of these rules:D(i) where services have been handed over to the Local Authorityfor maintenance.

(ii) where common areas and facilities have been handed over tothe Association for the Residents’ Welfare Association formaintenance.E

(iii) where all development work have been completed and sale/lease deeds of sixty percent of the apartment/houses/plots havebeen executed.

(iv) where all development works have been completed andFapplication has been filed with the competent authority for issueof completion certificate.”

36. The expression “completion certification” has been definedunder Section 2(q) and “occupancy certificate” under Section 2(zf) ofthe Act which reads as under:-G

“2(q) “completion certificate” means the completion certificate,or such other certificate, by whatever name called, issued by thecompetent authority certifying that the real estate project has beendeveloped according to the sanctioned plan, layout plan andspecifications, as approved by the competent authority under theHlocal laws;

2(zf) “occupancy certificate” means the occupancy certificate,or such other certificate, by whatever name called, issued by thecompetent authority permitting occupation of any building, asprovided under local laws, which has provision for civicinfrastructure such as water, sanitation and electricity;”

37. Looking to the scheme of Act 2016 and Section 3 in particularof which a detailed discussion has been made, all “ongoing projects”that commence prior to the Act and in respect to which completioncertificate has not been issued are covered under the Act. It manifeststhat the legislative intent is to make the Act applicable not only to theprojects which were yet to commence after the Act became operationalbut also to bring under its fold the ongoing projects and to protect fromits inception the inter se rights of the stake holders, including allottees/home buyers, promoters and real estate agents while imposing certainduties and responsibilities on each of them and to regulate, administerand supervise the unregulated real estate sector within the fold of thereal estate authority.

38. The emphasis of Mr. Kapil Sibal, learned senior counsel forthe appellant is that the agreement of sale was executed in the year2010-11, i.e. much before the coming into force of the Act and the presentAct has retrospective application and registration of ongoing project underthe Act would be in contravention to the contractual rights establishedbetween the promoter and allottee under the agreement for sale executedwhich is impermissible in law and further submits that Sections 13, 18(1),19(4) of the Act 2016 to the extent of their retrospective application is inviolation of Articles 14, 19(1)(g) of the Constitution of India.

39. Mr. Tushar Mehta, learned Solicitor General, on the otherhand, submits that a bare perusal of the object and reasons manifest thatthe Act does not take away the substantive jurisdiction, rather it protectsthe interest of homebuyers where project/possession is delayed andfurther submits that the scheme of the Act has retroactive application,which is permissible under the law. The provisions make it clear that itoperates in future, however, its operation is based upon the characterand status which have been done earlier and the presumption againstretrospectivity in this case is ex-facie rebuttable. The literal interpretationof the statute manifest that it has not made any distinction between the“existing” real estate projects and “new” real estate projects as hasbeen defined under Section 2(zn) of the Act.

A

BC

D

E

F

G

H

A40. Learned counsel further submits that the key word, i.e.,“ongoing on the date of the commencement of this Act” by necessaryimplication, ex-facie and without any ambiguity, means and includes thoseprojects which were ongoing and in cases where only issuance ofcompletion certificate remained pending, legislature intended that eventhose projects have to be registered under the Act. Therefore, the ambitBof Act is to bring all projects under its fold, provided that completioncertificate has not been issued. The case of the appellant is based on“occupancy certificate” and not of “completion certificate”. In thiscontext, learned counsel submits that the said proviso ought to be readwith Section 3(2)(b), which specifically excludes projects whereCcompletion certificate has been received prior to the commencement ofthe Act. Thus, those projects under Section 3(2) need not be registeredunder the Act and, therefore, the intent of the Act hinges on whether ornot a project has received a completion certificate on the date ofcommencement of the Act.D41. The clear and unambiguous language of the statute is retroactive D41. The clear and unambiguous language of the statute is retroactivein operation and by applying purposive interpretation rule of statutoryconstruction, only one result is possible, i.e., the legislature consciouslyenacted a retroactive statute to ensure sale of plot, apartment or building,real estate project is done in an efficient and transparent manner so thatthe interest of consumers in the real estate sector is protected by allEmeans and Sections 13, 18(1) and 19(4) are all beneficial provisions forsafeguarding the pecuniary interest of the consumers/allottees. In thegiven circumstances, if the Act is held prospective then the adjudicatorymechanism under Section 31 would not be available to any of the allotteefor an on-going project. Thus, it negates the contention of the promotersFregarding the contractual terms having an overriding effect over theretrospective applicability of the Act, even on facts of this case.

42. What the provision further emphasizes is that a promoter of aproject which is not complete/sans completion certificate shall get theproject registered under the Act but while getting the project registered,Gpromoter is under an obligation to prescribe fresh timelines for gettingthe remaining development work completed and from the scheme of theAct, we do not find that the first proviso to Section 3(1) in any manner iseither violative of Articles 14 and 19(1)(g) of the Constitution of India.The Parliament is always competent to enact any law affecting theantecedent events under its fold within the parameters of law.H

43. In State of Bombay (Now Maharashtra) versus VishnuRamchandra[1], this Court observed that if the part of requisites foroperation of the statute were drawn from a time antecedent to its passing,it did not make the statute retrospective so long as the action was takenafter the Act came into force.

44. To meet out different nature of exigencies, it was noticed bythe Parliament that Pan India, large number of real estate projects wherethe allottees did not get possession for years together and complaintsbeing filed before different forums including under the ConsumerProtection Act has failed to deliver adequate/satisfactory results to theconsumer/allottees and their life savings is locked in and sizable sectionsof allottees had invested their hard-earned money, money obtained throughloans or financial institutions with the belief that they will be able to geta roof in the form of their apartments/flats/unit.

45. At the given time, there was no law regulating the real estatesector, development works/obligations of promoter and allottee, it wasbadly felt that such of the ongoing projects to which completion certificatehas not been issued must be brought within the fold of the Act 2016 insecuring the interests of allottees, promoters, real estate agents in itsbest possible way obviously, within the parameters of law. Merely becauseenactment as prayed is made retroactive in its operation, it cannot besaid to be either violative of Articles 14 or 19(1)(g) of the Constitution ofIndia. To the contrary, the Parliament indeed has the power to legislateeven retrospectively to take into its fold the pre-existing contract andrights executed between the parties in the larger public interest.

46. The consequences for breach of such obligations under theAct are prospective in operation and in case ongoing project, of whichcompletion certificate is not obtained, are not to be covered under theAct, there is every likelihood of classifications in respect ofunderdeveloped ongoing project and the new project to be commenced.

47. The legislative power to make the law with prospective/retrospective effect is well recognized and it would not be permissiblefor the appellants/promoters to say that they have any vested right indealing with the completion of the project by leaving the allottees inlurch, in a helpless and miserable condition that at least may not beacceptable within the four corners of law.

A

B

C

D

E

F

G

H

A48. The distinction between retrospective and retroactive has beenexplained by this Court in Jay Mahakali Rolling Mills Vs. Union ofIndia and Others[2], which reads as under:- “8. ”Retrospective” means looking backward, contemplating whatis past, having reference to a statute or things existing before theBstatute in question. Retrospective law means a law which looksbackward or contemplates the past; one, which is made to affectacts or facts occurring, or rights occurring, before it comes intoforce. Retroactive statute means a statute, which creates a newobligation on transactions or considerations or destroys or impairsvested rights.”C

49. Further, this Court in Shanti Conductors Private Limitedand Another Vs. Assam State Electricity Board and Others[3], held asunder:- “67. Retroactivity in the context of the statute consists ofDapplication of new rule of law to an act or transaction which hasbeen completed before the rule was promulgated.

68. In the present case, the liability of buyer to make paymentand day from which payment and interest become payable underSections 3 and 4 does not relate to any event which took placeEprior to the 1993 Act, it is not even necessary for us to say thatthe 1993 Act is retroactive in operation. The 1993 Act is clearlyprospective in operation and it is not necessary to term it asretroactive in operation. We, thus, do not subscribe to the opiniondated 31-8-2016 [Shanti Conductors (P) Ltd. v. Assam SEB,(2016) 15 SCC 13] of one of the Hon’ble Judges holding that theF1993 Act is retroactive.”

50. In the recent judgment of this Court rendered in the case ofVineeta Sharma Vs. Rakesh Sharma and Others[4 ] wherein, this Courthas interpreted the scope of Section 6(1) of the Hindu Succession Act,1956, the law of retroactive statute held as under:-G“

“61. The prospective statute operates from the date of itsenactment conferring new rights. The retrospective statuteoperates backwards and takes away or impairs vested rights2 2007(12) SCC 1983 2019(19) SCC 529H4 2020(9) SCC 1

acquired under existing laws. A retroactive statute is the one thatdoes not operate retrospectively. It operates in futuro. However,its operation is based upon the character or status that arose earlier.Characteristic or event which happened in the past or requisiteswhich had been drawn from antecedent events. Under theamended Section 6, since the right is given by birth, that is, anantecedent event, and the provisions operate concerning claimingrights on and from the date of the Amendment Act.”

51. Thus, it is clear that the statute is not retrospective merelybecause it affects existing rights or its retrospection because a part ofthe requisites for its action is drawn from a time antecedent to its passing,at the same time, retroactive statute means a statute which creates anew obligation on transactions or considerations already passed or destroysor impairs vested rights.

52. The Parliament intended to bring within the fold of the statutethe ongoing real estate projects in its wide amplitude used the term“converting and existing building or a part thereof into apartments”including every kind of developmental activity either existing or upcomingin future under Section 3(1) of the Act, the intention of the legislature bynecessary implication and without any ambiguity is to include thoseprojects which were ongoing and in cases where completion certificatehas not been issued within fold of the Act.

53. That even the terms of the agreement to sale or home buyersagreement invariably indicates the intention of the developer that anysubsequent legislation, rules and regulations etc. issued by competentauthorities will be binding on the parties. The clauses have imposed theapplicability of subsequent legislations to be applicable and binding onthe flat buyer/allottee and either of the parties, promoters/home buyersor allottees, cannot shirk from their responsibilities/liabilities under theAct and implies their challenge to the violation of the provisions of theAct and it negates the contention advanced by the appellants regardingcontractual terms having an overriding effect to the retrospectiveapplicability of the Authority under the provisions of the Act which iscompletely misplaced and deserves rejection.

54. From the scheme of the Act 2016, its application is retroactivein character and it can safely be observed that the projects alreadycompleted or to which the completion certificate has been granted arenot under its fold and therefore, vested or accrued rights, if any, in no AB

C

DE

F

GH

Amanner are affected. At the same time, it will apply after getting the on-going projects and future projects registered under Section 3 toprospectively follow the mandate of the Act 2016.

Question no. 2: Whether the authority has jurisdiction todirect return/refund of the amount to the allottee under Sections 12,B14, 18 and 19 of the Act or the jurisdiction exclusively lies with theadjudicating officer under Section 71 of the Act?

55. Before examining the question, we have to take a holisticview of the scheme of the Act along with the rules/regulations framedby the Authority in exercise of its powers under Sections 84 and 85 ofCthe Act that postulates certain functions and duties to the promoter ofthe real estate project and its entailing consequences if the promoterfails to fulfil his obligations defined under Chapter III. Some of theobligations are spelt out in Sections 12, 14, 18 and 19 of the Act.

56. Section 12 which falls for consideration in these petitions readsas follows:D

“12. Where any person makes an advance or a deposit on thebasis of the information contained in the notice advertisement orprospectus, or on the basis of any model apartment, plot or building,at the case may be, and sustains any loss or damage by reason ofEany incorrect, false statement included therein, he shall becompensated by the promoter in the manner as providedunder this Act:”

Provided that if the person affected by such incorrect, falsestatement contained in the notice, advertisement or prospectus,For the model apartment, plot or building, as the case may be, intendsto withdraw from the proposed project, he shall be returned hisentire investment along with interest at such rate as may beprescribed and the compensation in the manner providedunder this Act.”

57. Section 14 relates to adherence to sanctioned plans and projectGspecifications by the promoter. Section 14(3) empowers the allottee toreceive compensation in the event there is any structural defect or anyother defect in workmanship etc. Section 14(3) reads as under:

“(3) In case any structural defect or any other defect inworkmanship, quality or provision of services or any otherH

obligations of the promoter as per the agreement for sale relatingto such development is brought to the notice of the promoter withina period of five years by the allottee from the date of handingover possession, it shall be the duty of the promoter to rectifysuch defects without further charge, within thirty days, and in theevent of promoter’s failure to rectify such defects within suchtime, the aggrieved allottees shall be entitled to receive appropriatecompensation in the manner as provided under this Act.”

58. Section 18 starts with the marginal note “Return of amountand compensation”. The two aspects namely ‘return of amount’ and‘compensation’ are distinctly delineated. Section 18 reads as follows:

18. (1) If the promoter fails to complete or is unable to givepossession 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 specifiedtherein; or (b) due to discontinuance of his business as a developer onaccount of suspension or revocation of the registration underthis Act or for any other reason, he shall be liable on demand to the allottees, in case theallottee wishes to withdraw from the project, withoutprejudice to any other remedy available, to return theamount received by him in respect of that apartment, plot,building, as the case may be, with interest at such rate asmay be prescribed in this behalf including compensation inthe manner as provided under this Act:

Provided that where an allottee does not intend to withdraw fromthe project, he shall be paid, by the promoter, interest for everymonth of delay, till the handing over of the possession, at suchrate as may be prescribed.

(2) The promoter shall compensatethe allottees in case of anyloss caused to him due to defective title of the land, on which theproject is being developed or has been developed, in the manneras provided under this Act, and the claim for compensation underthis subsection shall not be barred by limitation provided underany law for the time being in force.

A

B

C

D

E

F

G

H

A(3) If the promoter fails to discharge any other obligations imposedon him under this Act or the rules or regulations made thereunderor in accordance with the terms and conditions of the agreementfor sale, he shall be liable to pay such compensation to theallottees,in the manner as provided under this Act.

(emphasis supplied)

B

59. Chapter IV deals with the rights and duties of the allotteesand in particular, Section 19(4) entitles the allottees to a refund of theamount paid. Section 19(4) reads as follows:- “(4) The allottee shall be entitled toclaim the refund of amountCpaid along with interest at such rate as may be prescribed andcompensation in the manner as provided under this Actfrom the promoter, if the promoter fails to comply or is unable togive possession of the apartment, plot or building, as the case maybe, in accordance with the terms of agreement for sale or due toDdiscontinuance of his business as a developer on account ofsuspension or revocation of his registration under the provisionsof this Act or the rules or regulations made thereunder.”

60. Section 31 relates to the filing of complaints to the authorityand reads as follows:

EFiling of complaints with the Authority or the adjudicatingofficer—

(1) Any aggrieved person may file a complaint with the Authorityor the adjudicating officer, as the case may be, for any violation orcontravention of the provisions of this Act or the rules andFregulations made thereunder, against any promoter, allottee or realestate agent, as the case may be.

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

G

(2) The form, manner and fees for filing complaint under sub-section (1) shall be such as may be prescribed.

61. Section 71 relates to Power to Adjudicate vested with theadjudicating officer while adjudging compensation which reads as follows:

H

71. Power to adjudicate.—

(1) For the purpose of adjudging compensationundersections 12, 14, 18 and section 19, the Authority shallappoint, in consultation with the appropriate Government,one or more judicial officer as deemed necessary, who is orhas been a District Judge to be an adjudicating officer forholding an inquiry in the prescribed manner, after giving any personconcerned a reasonable opportunity of being heard:

Provided that any person whose complaint in respect of matterscovered under sections 12, 14, 18 and section 19 is pending beforethe Consumer Disputes Redressal Forum or the ConsumerDisputes Redressal Commission or the National ConsumerRedressal Commission, established under Section 9 of theConsumer Protection Act, 1986 (68 of 1986), on or before thecommencement of this Act, he may, with the permission of suchForum or Commission, as the case may be, withdraw the complaintpending before it and file an application before the adjudicatingofficer under this Act.

(2) The application for adjudging compensation under sub-section (1), shall be dealt with by the adjudicating officer asexpeditiously as possible and dispose of the same within a periodof sixty days from the date of receipt of the application: Providedthat where any such application could not be disposed of withinthe said period of sixty days, the adjudicating officer shall recordhis reasons in writing for not disposing of the application withinthat period.

(3) While holding an inquiry the adjudicating officer shall havepower to summon and enforce the attendance of any personacquainted with the facts and circumstances of the case to giveevidence or to produce any document which in the opinion of theadjudicating officer, may be useful for or relevant to the subjectmatter of the inquiry and if, on such inquiry, he is satisfied that theperson has failed to comply with the provisions of any of thesections specified in sub-section (1), he may direct to pay suchcompensation or interest, as the case any be, as he thinks fit inaccordance with the provisions of any of those sections.

A

B

C

DE

F

G

H

[2021] 9 S.C.R.

A62. The broad factors to be considered while adjudgingcompensation have been provided under Section 72 which reads asunder:- “72. While adjudging the quantum of compensation orinterest, as the case may be, under section 71, theBadjudicating officer shall have due regard to the followingfactors, namely:—

(a) the amount of disproportionate gain or unfair advantage,wherever quantifiable, made as a result of the default; (b) the amount of loss caused as a result of the default; C

(c) the repetitive nature of the default; (d) such other factors which the adjudicating officer considersnecessary to the case in furtherance of justice.”

63. The Uttar Pradesh Real Estate Regulatory Authority in exerciseDof its power under Section 85 of the Act 2016 has framed its regulationson 27[th] February, 2019 called as Uttar Pradesh Real Estate RegulatoryAuthority(General) Regulations, 2019 (hereinafter being referred to as“Regulations 2019”).

64. Regulations 18 to 23 deal with meetings of the authority, otherEthan adjudication proceedings. Regulation 24 falls in the chapter of“Adjudicatory Proceedings” and reads as follows:- “24(a) For adjudication proceedings with respect to complaintsfiled with the Authority, the Authority may, by order, direct thatspecific matters or issues be heard and decided by a single benchFof either the Chairperson or any Member of the Authority.

(b) The Authority, in consultation with the state government, willappoint Adjudicating Officers on the Panel of U.P. RERA for thepurposes of adjudicating the matters of compensation admissibleunder the Act.

G(c) The aggrieved persons will be required to file complaints beforethe Authority online in form – M. The Claims of compensationwill also be included in form – M itself. While the Authority willdecide all the questions of breaches of the Act, Rules andRegulations, it will refer the question relating to the adjudicationof compensation to one of the Adjudicating Officers on the PanelH

of U.P. RERA who will then decide the matter expeditiously andpreferably within 60 days.

(d) The Adjudicating Officers on the Panel of U.P. RERA willhold their courts at Lucknow or Gautam Buddhnagar as decidedby the chairman. The complaints relating to the districts of NCRwill be heard at Gautam Buddhnagar whereas complaints fromthe remaining districts of the State will be heard at Lucknow.

65. The complaint before the regulatory authority for any violationof the Act or rules or regulations made thereunder by an aggrieved personhas to be submitted in Form (M) as per the procedure prescribed underRule 33(1) which the regulatory authority has to follow. At the sametime, any person who is aggrieved to claim compensation under Sections12, 14, 18 and 19 has to submit his compliant in Form (N) for adjudgingcompensation as per the procedure provided under Section 71(3) of theAct taking into consideration the factors indicated under Section 72 andin the manner provided under Rule 34(1) of the Rules 2016.

66. Rules 33(1) and 34(1) of the Uttar Pradesh RealEstate(Regulation and Development) Rules, 2016 which is relatable tothe adjudicatory powers of the regulatory authority/adjudicating officerreads as follows:- “33(1) Any aggrieved person may file a complaint with theregulatory authority for any violation under the Act or the rulesand regulations made thereunder, save as those provided to beadjudicated by the adjudicating officer, in Form ‘M’ which shallbe accompanied by a fee of rupees one thousand in the form of ademand draft drawn on a nationalized bank in favour of regulatoryauthority and payable at the main branch of that bank at the stationwhere the seat of the said regulatory authority is situated.Explanation:- For the purpose of this sub-rule “person” shall includethe association of allottees or any voluntary consumer associationregistered under any law or the time being in force.

34(1) Any aggrieved person may file a complaint with theadjudicating officer for compensation under Sections 12, 14, 18and 19 in Form N which shall be accompanied by a fee of rupeesone thousand in the form of a demand draft drawn on a nationalizedbank in favour of regulatory authority and payable at the mainbranch of that bank at the station where the rest of the saidregulatory authority is situated.”

(emphasis supplied)

A

B

C

D

E

F

G

H

A67. Rule 33(2) of the Rules 2016 delineates the procedure whichthe authority has to follow in making inquiry to the allegations or violationsof the provisions of the Act, rules and regulations. At the given time,Rule 34(2) delineates the procedure to be followed by the adjudicatingofficer while adjudging quantum of compensation and interest which theperson aggrieved is entitled for under the provisions of the Act.B

A

68. Mr. Kapil Sibal, learned senior counsel for the appellantssubmits that both the ‘authority’ and the ‘adjudicating officer’ operate incompletely distinct spheres. The authority and the adjudicating officerare defined under Sections 2(i) and 2(a) of the Act and are, therefore,creature of statute and their powers and respective jurisdiction(s) areCexplicitly delineated in the statute itself.

69. The adjudicating officer under Section 71 is specifically vestedwith the jurisdiction to adjudicate complaints under Sections 12,14,18 &19 of the Act 2016. In disposing of such complaints, the adjudicatingofficer alone is empowered under Section 71(3) to conduct enquiry andDdirect the payment of refund as well as compensation and interest, asthe case may be, in taking note of the broad parameters enumerated inSection 72 and such complaints are to be statutorily disposed of within60 days failing which the reasons are to be recorded.

70. According to the learned counsel for the appellants, proviso toESection 71(1), the jurisdiction to adjudicate complaints under Sections12, 14, 18 and 19 which were earlier pending before the authorityestablished under the Consumer Protection Act, 1986 stands vested withthe adjudicating officer. According to him, the legislative intent is clearand unambiguous that the complaints emanating from the bundle of rightsFwhich flow from Sections 12, 14, 18 and 19 including the cause of actionfor refund and interest be withdrawn from the forums established underthe Consumer Protection Act and in turn be filed before and adjudicatedby the Adjudicating Officer under this Act and that being the legislativeintent, matters arising under Sections 12, 14, 18 and 19 would be examinedand adjudicated exclusively by the adjudicating officer as mandated byGlaw.

71. Per contra, Ms. Madhavi Divan, learned senior counsel forthe respondents while supporting the findings recorded by the High Courtin the impugned judgment submits that the Act provides distinct remedies,i.e., ‘return of amount/investment’ on the one hand and ‘compensation’H

on the other, to be determined separately. According to her, the right torefund on demand is a statutory right, fundamentally, contextually andconceptually distinct from the right to receive compensation. While theright to refund emanates from the Legislature’s recognition of the factthat homebuyers are “out of pocket” financial creditors, the right tocompensation seeks to make amends for injury or loss.

72. Thus, refund and compensation are two distinct rights underthe Act and cannot be conflated. The manner in which the two are to bedetermined would require a different process and involve differentconsiderations. According to her, the determination of compensationinvolves a full-fledged adjudicatory process which is more complex thanthat involved in determining refund. To do so, it would tantamount toregressing into the very malaise that the legislature intended to liberatethe allottees-homebuyers. The result of conflating the rights and/orrelegating the allottees to the adjudicating officer would amount to acompromise of the timeliness of the right to refund on demand. It wouldalso deter and daunt allottees from seeking compensation because in theprocess the remedies would be clubbed and the availability of refundwould get relatively delayed as compensation requires a more elaborateadjudication process (even though the same is required to be completedin 60 days). The authority to determine a claim for refund on demandwhile the adjudicating officer to determine the claim for compensation.

73. The expression “on demand” which follows the right to “returnof amount” is indicative of the priority, immediacy and expediency whichis accorded to the right to refund. Thus, according to her, the expressions“refund” and “return of amount” is an act of restitution, and the obligationto restitute lies on the person or the authority that has received unjustenrichment or unjust benefit.

74. Learned counsel further submits that in order to give full effectto the letter and spirit of the right to refund in the context explainedabove, there can be no doubt that the determination of the right to refundmust be left to the authority whereas the adjudication for adjudgingcompensation with the adjudicating officer as reflected under Section71 of the Act. According to the learned counsel, the authority is fullyseized with the standard agreements entered into between the promotersand the allottees, and therefore, is best equipped to determine the extentof delay, if any. Therefore, refund claims can most conveniently andeffectively be dealt with by the authority and interest on refund is available A

B

C

D

E

F

G

H

Aat the rate prescribed by the appropriate Government. In the instantbatch of matters, the prescribed rate of interest is (MCLR + 1%), whichhas been notified by the Government of Uttar Pradesh.

75. The legislature in its wisdom has made a specific provisiondelineating power to be exercised by the regulatory authority/adjudicatingBofficer. “Refund of the amount” and “compensation” are two distinctcomponents which the allottee or the person aggrieved is entitled toclaim if the promoter has not been able to hand over possession with anature of enquiry and mechanism provided under the Act. So far as theclaim with respect to refund of amount on demand under Sections 18(1)and 19(4) of the Act is concerned, it vests within the jurisdiction of theCregulatory authority. Section 71 carves out the jurisdiction of theadjudicating officer to adjudge compensation under Sections 12, 14, 18and 19 after holding enquiry under Section 71(3) of the Act keeping inview the broad contours referred to under Section 72 of the Act.

76. The submission made by learned counsel for the appellantsDthat the proviso under Section 71(1) empowers the adjudicating officerto examine the complaints made under Sections 12, 14, 18 and 19 pendingbefore the Consumer Disputes Redressal Forum/Commission is indifferent context and it was one time mechanism to provide a window tothe consumers whose composite claims are pending before the ConsumerForum/Commission to avail the benevolent provision of the Act 2016 forEthe reason that under the Consumer Protection Act, there is no distinctionas to whether the complaint is for refund of the amount or forcompensation as defined under Section 71(1) of the Act, but after theAct 2016 has come into force, if any person aggrieved wants to makecomplaint for refund against the promotor or real estate agent other thanFcompensation, it is to be lodged to the regulatory authority and foradjudging compensation to the adjudicating officer, and the delineationhas been made to expedite the process of adjudication invoked by theperson aggrieved when a complaint has been made under Section 31 ofthe Act to be adjudicated either by the authority/adjudicating officer as per the procedure prescribed under the Act.G77. The further submission made by the learned counsel for theappellants is that the return of the amount adversely impacts the promotorand such a question can be looked into by the adjudicating officer in thebetter prospective. The submission has no foundation for the reason thatthe legislative intention and mandate is clear that Section 18(1) is anHindefeasible right of the allottee to get a return of the amount on demand if the promoter is unable to handover possession in terms of the agreementfor sale or failed to complete the project by the date specified and thejustification which the promotor wants to tender as his defence as towhy the withdrawal of the amount under the scheme of the Act may notbe justified appears to be insignificant and the regulatory authority withsummary nature of scrutiny of undisputed facts may determine the refundof the amount which the allottee has deposited, while seeking withdrawalfrom the project, with interest, that too has been prescribed under theAct, as in the instant case, the State of Uttar Pradesh has prescribedMCLR + 1% leaving no discretion to the authority and can also claimcompensation as per the procedure prescribed under Section 71(3) readwith Section 72 of the Act.

78. This Court while interpreting Section 18 of the Act, inImperiaStructures Ltd. Vs. Anil Patni and Another5 held that Section 18 confersan unqualified right upon an allottee to get refund of the amount depositedwith the promoter and interest at the prescribed rate, if the promoterfails to complete or is unable to give possession of an apartment as perthe date specified in the home buyer’s agreement in para 25 held asunder:-

“25. In terms of Section 18 of the RERA Act, if a promoter failsto complete or is unable to give possession of an apartment dulycompleted by the date specified in the agreement, the promoterwould be liable, on demand, to return the amount received by himin respect of that apartment if the allottee wishes to withdrawfrom the Project. Such right of an allottee is specifically made“without prejudice to any other remedy available to him”. Theright so given to the allottee is unqualified and if availed, themoney deposited by the allottee has to be refunded with interestat such rate as may be prescribed. The proviso to Section 18(1)contemplates a situation where the allottee does not intend towithdraw from the Project. In that case he is entitled to and mustbe paid interest for every month of delay till the handing over ofthe possession. It is up to the allottee to proceed either underSection 18(1) or under proviso to Section 18(1). The case ofHimanshu Giri came under the latter category. The RERA Actthus definitely provides a remedy to an allottee who wishes towithdraw from the Project or claim return on his investment.”

(emphasis supplied)

AB

C

D

E

F

G

H

A79. To safeguard the interests of the parties, on being decided bythe regulatory authority/adjudicating officer, it is always subject to appealbefore the Tribunal under Section 43(5) provided condition of pre-depositbeing complied with can be further challenged in appeal before the HighCourt under Section 58 of the Act and, thus, the legislature has putreasonable restriction and safeguards at all stages.B

A

80. The further submission made by learned counsel for theappellants that if the allottee has defaulted the terms of the agreementand still refund is claimed which can be possible, to be determined by theadjudicating officer. The submission appears to be attractive but is notsupported with legislative intent for the reason that if the allottee hasCmade a default either in making instalments or made any breach of theagreement, the promoter has a right to cancel the allotment in terms ofSection 11(5) of the Act and proviso to sub-section 5 of Section 11 enablesthe allottee to approach the regulatory authority to question the terminationor cancellation of the agreement by the promotor and thus, the interestDof the promoter is equally safeguarded.

81. The opening words of Section 71(1) of the Act make it clearthat the scope and functions of the adjudicating officer are only for“adjudging compensation” under Sections 12, 14, 18 and 19 of the Act.If the legislative intent was to expand the scope of the powers of theEadjudicating officer, then the wording of Section 71(1) ought to havebeen different. On the contrary, even the opening words of Section 71(2)of the Act make it clear that an application before the adjudicating officeris only for “adjudging compensation”. Even in Section 71(3) of the Act,it is reiterated that the adjudicating officer may direct “to pay suchcompensation or interest” as the case may be as he thinks fit, inFaccordance with provisions of Sections 12, 14, 18 and 19 of the Act.This has to be seen together with the opening words of Section 72 of theAct, which reads “while adjudging the quantum of compensation orinterest, as the case may be, under Section 71, the adjudicating officershall have due regards” to the broad parameters to be kept in mind whileGadjudging compensation to be determined under Section 71 of the Act.

82. The further submission made by the learned counsel for theappellants that if the authority and the adjudicating officer either cometo different conclusions on the same questions or in a single complaint,the person aggrieved is seeking manifold reliefs with one of the relief ofHcompensation and payment of interest, with the timelines being provided for the adjudicating officer to decide the complaint under Section 71 ofthe Act. At least, there is no provision which could be referred to expeditethe matter if filed before the regulatory authority. The submission maynot hold good for the reason that there is a complete delineation of thejurisdiction vested with the regulatory authority and the adjudicatingofficer. If there is any breach or violation of the provisions of Sections12, 14, 18 and 19 of the Act by the promoter, such a complaintstraightaway has to be filed before the regulatory authority. What isbeing referable to the adjudicating officer is for adjudging compensation,as reflected under Section 71 of the Act and accordingly rules andregulations have been framed by the authority for streamlining thecomplaints which are made by the aggrieved person either on accountof violation of the provisions of Sections 12, 14, 18 and 19 or for adjudgingcompensation and there appears no question of any inconsistency beingmade, in the given circumstances, either by the regulatory authority orthe adjudicating officer.

83. So far as the single complaint is filed seeking a combination ofreliefs, it is suffice to say, that after the rules have been framed, theaggrieved person has to file complaint in a separate format. If there is aviolation of the provisions of Sections 12, 14, 18 and 19, the personaggrieved has to file a complaint as per form (M) or for compensationunder form (N) as referred to under Rules 33(1) and 34(1) of the Rules.The procedure for inquiry is different in both the set of adjudication andas observed, there is no room for any inconsistency and the power ofadjudication being delineated, still if composite application is filed, can besegregated at the appropriate stage.

84. So far as submission in respect of the expeditious disposal ofthe application before the adjudicating officer, as referred to under sub-section (2) of Section 71 is concerned, it pre-supposes that theadjudicatory mechanism provided under Section 71(3) of the Act has tobe disposed of within 60 days. It is expected by the regulatory authorityto dispose of the application expeditiously and not to restrain the mandateof 60 days as referred to under Section 71(3) of the Act.

85. The provisions of which a detailed reference has been made,if we go with the literal rule of interpretation that when the words of thestatute are clear, plain and unambiguous, the Courts are bound to giveeffect to that meaning regardless of its consequence. It leaves no mannerof doubt and it is always advisable to interpret the legislative wisdom in A

B

C

D

E

F

G

H

Athe literary sense as being intended by the legislature and the Courts arenot supposed to embark upon an inquiry and find out a solution insubstituting the legislative wisdom which is always to be avoided.

86. From the scheme of the Act of which a detailed referencehas been made and taking note of power of adjudication delineated withBthe regulatory authority and adjudicating officer, what finally culls out isthat although the Act indicates the distinct expressions like ‘refund’,‘interest’, ‘penalty’ and ‘compensation’, a conjoint reading of Sections18 and 19 clearly manifests that when it comes to refund of the amount,and interest on the refund amount, or directing payment of interest fordelayed delivery of possession, or penalty and interest thereon, it is theCregulatory authority which has the power to examine and determine theoutcome of a complaint. At the same time, when it comes to a questionof seeking the relief of adjudging compensation and interest thereonunder Sections 12, 14, 18 and 19, the adjudicating officer exclusively hasthe power to determine, keeping in view the collective reading of Section71 read with Section 72 of the Act. If the adjudication under Sections 12,D14, 18 and 19 other than compensation as envisaged, if extended to theadjudicating officer as prayed that, in our view, may intend to expand theambit and scope of the powers and functions of the adjudicating officerunder Section 71 and that would be against the mandate of the Act2016.EQuestion no. 3: Whether Section 81 of the Act authorizes theauthority to delegate its powers to a single member of the authorityto hear complaints instituted under Section 31 of the Act?

87. It is the specific stand of the respondent Authority of the Stateof Uttar Pradesh that the power has been delegated under Section 81 toFthe single member of the authority only for hearing complaints underSection 31 of the Act. To meet out the exigency, the authority in itsmeeting held on 14[th] August 2018, had earlier decided to delegate thehearing of complaints to the benches comprising of two members eachbut later looking into the volume of complaints which were filed by thehome buyers which rose to about 36,826 complaints, the authority in itsGlater meeting held on 5[th] December, 2018 empowered the single memberto hear the complaints relating to refund of the amount filed under Section31 of the Act.

88. Mr. Gopal Sankarnarayanan, learned counsel for the appellantssubmits that if this Court comes to the conclusion that other than adjudgingH

compensation wherever provided all other elements/components includingrefund of the amount and interest etc. vests for adjudication by theauthority, in that event, such power vests with the authority constitutedunder Section 21 and is not open to be delegated in exercise of powerunder Section 81 of the Act to a single member of the authority and suchdelegation is a complete abuse of power vested with the authority andsuch orders passed by the single member of the authority in directingrefund of the amount with interest are wholly without jurisdiction and isin contravention to the scheme of the Act.

89. Learned counsel further submits that the order passed by thesingle member of the authority is without jurisdiction and it suffers fromcoram non-judice. Section 21 of the Act clearly provides that the authorityshall consist of a Chairperson and not less than two whole time membersto be appointed by the Government. Regulation 24(a) of the Regulations2019 framed by the authority is in clear contravention to the parent statutethat the delegation of power can be of class, category of cases, specificto the member of the authority but a general delegation of power to thesingle member of the authority in exercise of power under Section 81 isnot contemplated under the Act and delegation to a single member ofthe authority in adjudicating the disputes under Sections 12, 14, 18 and19 is without jurisdiction and that is the reason for which the appellantshave approached the High Court by filing a writ petition under Article226 of the Constitution and in furtherance to this Court.

90. Learned counsel further submits that from the plain readingof the statute itself, the role of the authority is of a quasi-judicial bodyforms its underpinning. The adjudicatory role of the authority is specificallyrecognized under Sections 5, 6, 7(2), 9(3) and 31 where the authority issupposed to hear the other side, after compliance of the principles ofnatural justice, is supposed to pass an order in accordance with law.

91. Section 31 allows the aggrieved person to file a complaintwith the authority or the adjudicating officer for any violation or breachor contravention to the provisions of the Act or the rules and regulationsmade thereunder and this being a quasi-judicial power to be exercisedby the authority could not be delegated to a single member of the authorityunder the guise of Section 81 of the Act, that apart, there are certainprovisions where authority alone holds power to initiate action or makeinquiries like Sections 35(1), 35(2), 36 or 38, the powers are exclusivelyexercised by the authority and the tests for determining whether an action AB

C

D

E

F

G

H

Ais quasi-judicial or not are laid down in Province of Bombay Vs.Kushaldas S Advani and Others[6] which has been consistently followedby the Constitution Bench in its decision in Shivji Nathubhai Vs. Unionof India and Others[7]; Harinagar Sugar Mills Limited Vs. ShyamSunder Jhunjhunwala and Others[8].

B92. Learned counsel further submits that according to him, thepowers which have been exercised by the authority under Sections 12,14, 18 and 19 of the Act have the trappings of the judicial function whichin no manner can be delegated without being expressly bestowed. Placingreliance on two decisions of the Queen’s Bench in Barnard Vs. NationalDock Labour Board[9] and Vine Vs. National Dock Labour Board[10]Cand taking assistance thereof, learned counsel submits that the judgmentsindicated above makes it clear that the delegation of judicial power mustbe express; that a provision of quorum for a quasi-judicial body isdistinguishable from the delegation of power to the exclusion of othermembers of that body; and the reasons of workload cannot trump the Dlegal requirement. These principles have been adopted by this Courtconsistently in Bombay Municipal Corporation Vs. Dhondu NarayanChowdhary[11]; Sahni Silk Mills(P) Ltd. and Another Vs. EmployeesState Insurance Corporation[12]; Jagannath Temple ManagingCommittee Vs. Siddha Math and Others[13].

E93. Learned counsel submits that it has been consistently held bythis Court that the power being quasi-judicial in nature, the presumptionis that it ought to be exercised by the authority competent and no other,unless the law expressly or by clear implication permits it.

94. Learned counsel further submits that even by necessaryFimplication, the judicial power of the authority cannot be delegated bythe multi-member authority to any of its members. If at all there arepractical considerations of workload, the Government can alwaysestablish more than one authority in terms of the second proviso to Section20(1).

6 1950 SCR 621G7 1960(2) SCR 7758 1962(2) SCR 3399 1953(2) QB 1810 1956(1) QB 65811 1965(2) SCR 92912 1994(5) SCC 346H13 2015(16) SCC 542

95. Per contra, Mr. Devadatt Kamat, learned senior counsel forthe respondents submits that the complaint of the appellants has beenprimarily on the issue that a single member is not competent to exercisepower to hear complaints under Section 31 of the Act and the delegationof its power by the authority invoking Section 81 is beyond jurisdiction.

96. Learned counsel submits that as a matter of fact the entirefunctioning of the authority has not been delegated to the single member.It is only the hearing of complaints under Section 31 that the singlemember of the authority has been empowered to deal with suchcomplaints, keeping in view the overall object of speedy disposal of suchcomplaints mandated under the law. According to him, it is factuallyincorrect to say that the other functions of the authority like impositionof penalty under Section 38, revocation of registration under Section 7or functions of the authority under Sections 32 or 33 have been delegatedto a single member of the authority.

97. Learned counsel further submits that the question is not whetherthe delegation per se to a single member is bad, but the question is whetherthe power to hear complaints in reference to Sections 12,14,18 and 19delegated to a single member is permissible under the law. It may benoticed that the authority has been vested with several other powersand functions under the Act, which the authority has consciously notdelegated to a single member.

98. Learned counsel further submits that pursuant to the delegationof power under Section 81 by the special order dated 5[th] December,2018 read with Regulation 24, a single member has been authorized bythe authority to hear the matters related to refund of the amount underSection 31 of the Act.

99. Learned counsel further submits that almost in a pari materiascheme, Section 29-A of the SEBI Act gives the power to delegate andSection 19 of the SEBI Act empowers the board to delegate its power toany member of the Board has been examined by this Court in SaurashtraKutch Stock Exchange Ltd. Vs. Securities and Exchange Board ofIndia and Another[14]. This Court has approved the power of delegationto a single member of the respective authority and held that suchdelegation is always permissible in law unless specifically prohibited andas long as there is a legislative sanction for delegation of even judicial A

B

C

D

E

F

G

H

Apower, there is no illegality as held in Bombay MunicipalCorporation(supra); State of Uttar Pradesh Vs. Batuk Deo PatiTripathi and Another[15]Heinz India Private Limited and Another Vs.State of Uttar Pradesh[16]; and taking assistance thereof, learned counselsubmits that such delegation of power to a single member of the authorityin deciding application for refund of the amount and interest under SectionB18 of the Act is well within the jurisdiction of the authority to its delegateemore so when the power to delegate under Section 81 has not beenquestioned in either of the pending appeals before the Court.100. Learned counsel further submits that Section 21 of the Actrelates to the composition of the authority and does not deal with minimumCbench strength. At the given time, the legislature has consciously avoidedprescribing any minimum bench/quorum strength to hear complaints bythe authority. At the same time, the Act only prescribes a bench/quorumonly of the Appellate Tribunal under Section 43(3) of the Act and furthersubmits that in the absence of the minimum bench/quorum strength being

Dfixed by statute, it is impermissible to treat the composition of the authorityitself as a minimum bench strength.101. Learned counsel further submits that Sections 29 and 81 arenot in derogation to each other and operate in different fields. Section 29is concerned with the meetings of the authority and does not envisage inits fold the quasi-judicial functions which the Act casts upon the authority.EThe term “meetings” under Section 29 does not deal with the performanceof quasi-judicial functions which are referred to the authority underSection 31. It can only refer to meetings on policy/regulatory issues andinvited attention to Sections 32 and 33 of the Act which are in the natureof policy/regulatory decisions the authority is mandated under the Act. ItFcan be further noticed from Section 29(3) and (4) which talks about‘questions’ before the authority, to be disposed off within 60 days ofreceiving the ‘application’ and there is no reference to any ‘complaints’as indicated in Section 31 of the Act.102. To examine the scheme of the Act it may be relevant to takenote of certain provisions add infra:-G

“21. The Authority shall consist of a Chairperson and not lessthan two whole time Members to be appointed by the appropriateGovernment.

15 1978(2) SCC 102H16 2012(5) SCC 443

29. (1) The Authority shall meet at such places and times, andshall follow such rules of procedure in regard to the transaction ofbusiness at its meetings, (including quorum at such meetings), asmay be specified by the regulations made by the Authority.

(2) If the Chairperson for any reason, is unable to attend a meetingof the Authority, any other Member chosen by the Memberspresent amongst themselves at the meeting, shall preside at themeeting.

(3) All questions which come up before any meeting of theAuthority shall be decided by a majority of votes by the Memberspresent and voting, and in the event of an equality of votes, theChairperson or in his absence, the person presiding shall have asecond or casting vote.

(4) The questions which come up before the Authority shall bedealt with as expeditiously as possible and the Authority shalldispose of the same within a period of sixty days from the date ofreceipt of the application:

Provided that where any such application could not be disposedof within the said period of sixty days, the Authority shall recordits reasons in writing for not disposing of the application withinthat period.

31. (1) Any aggrieved person may file a complaint with theAuthority or the adjudicating officer, as the case may be, for anyviolation or contravention of the provisions of this Act or the rulesand regulations made thereunder against any promoter allottee orreal estate agent, as the case may be.

Explanation.—For the purpose of this sub-section “person” shallinclude the association of allottees or any voluntary consumerassociation registered under any law for the time being in force.(2) The form, manner and fees for filing complaint under sub-section (1) shall be such as may be specified.

81. The Authority may, by general or special order in writing,delegate to any member, officer of the Authority or any otherperson subject to such conditions, if any, as may be specified inthe order, such of its powers and functions under this Act (exceptthe power to make regulations under section 85), as it may deemnecessary.

A

B

C

D

E

F

G

H

A103. Section 21 of the Act relates to the composition of the authoritywhich consists of a Chairperson and not less than two whole timemembers to be appointed by the appropriate Government butconspicuously it does not mention minimum bench strength at the sametime consciously prescribes minimum bench/quorum while constitutingthe Real Estate Appellate Tribunal as reflected under Section 43(3) ofBthe Act.

A

104. The emphasis of the appellants was on Section 29 of the Actwhich indicates the quorum of meetings of the authority. There is aspecific provision that there shall be a meeting of the authority with theminimum quorum being prescribed, such business of the meeting of theCauthority indeed could not be delegated to a single member of the authorityin exercise of power under Section 81 of the Act.

105. The term meeting under Section 29 of the Act does not dealwith the performance of the authority in quasi-judicial matters which arereferred to under Section 31 of the Act. It only refers to meetings, policy/Dregulatory issues that the authority is mandated to discharge under theAct. It may be noticed that Sections 32 and 33 are in the nature ofpolicy/regulatory directions which the authority is mandated to bedischarged indisputably have to be undertaken by the authority whilefunctioning as a whole body under Section 29 of the Act.

E

106. To add it further, Section 29(3) and (4) of the Act talks aboutthe questions before the authority which are to be disposed of within 60days on receiving the applications. It may be noticed that there is noreference to any complaint referred to under Section 31 of the Act. Tobuttress it further, Section 29 and Section 81 of the Act are not in derogationFto each other. To the contrary, both operate in different fields. Section29 deals with the meetings of the authority to be held for taking policy/regulatory decisions in the interest of the stake holders and does notenvisage in its fold quasi-judicial functions which the Act casts upon theauthority. The legislative intention as reflected from Section 29 is arecognition of the rationale that policy matters ought to be consideredGand decided by the entire strength of the authority so that the policydecisions reflect the acquired experience of the members and Chairmanof the authority.

107. It may be relevant to note that the authority in its meetingheld on 5[th] December, 2018 in exercise of its power under Section 81 of H

the Act for disposal of complaints under Section 31 delegated its powerto a single member of the authority. The extract of the minutes of themeeting dated 5[th] December, 2018 relevant for the purpose is extractedas under:- Point wise decision on agenda is as under:- Agenda point no. 1:

Regarding hearing by both the benches of Uttar Pradesh RealEstate Regulatory Authority in the month of December 2018 andsubsequently also while working as single benches as per therequirement, for disposal of complaint cases at Lucknow andGautambudh Nagar on same dates.

Decision:

Proposal was approved by the authority.

..

..”

108. Pursuant to the delegation of power to the single member ofthe authority, complaints filed by the allottees/home buyers for refund ofthe amount and interest under Section 31 of the Act came to be decidedby the single member of the authority after hearing the parties inaccordance with the provisions of the Act.

109. This Court, while examining the pari materia provisions ofdelegation of power under Section 29A and Section 19 of the SEBI Actwhich empowered the board to delegate its power to any member of theBoard held that the board may in writing delegate its power to any memberof the board and such is valid in law as held by this Court in SaurashtraKutch Stock Exchange Ltd.(supra)as under:- “6. The High Court dismissed the special civil application videorder dated 19-11-2007 [Saurashtra Kutch Stock Exchange

A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

Ltd. v. SEBI, Special Civil Application No. 23902 of 2007, decidedon 19-11-2007 (Guj)] and considered the submission of theappellant in the following manner:

“Section 29-A is reproduced hereunder:

‘29-A. Power to delegate.—The Central Government may,by order published in the Official Gazette, direct that the powers(except the power under Section 30) exercisable by it underany provision of this Act shall, in relation to such matters andsubject to such conditions, if any, as may be specified in theorder, be exercisable also by the Securities and Exchange Boardof India or Reserve Bank of India constituted under Section 3of the Reserve Bank of India Act, 1934 (2 of 1934).’

Notification dated 13-9-1994 issued by the Central Governmentreads as under:

‘In exercise of powers conferred by Section 29-A of theSecurities Contracts (Regulation) Act, 1956 (42 of 1956), theCentral Government hereby directs that the powers exercisableby it under Section 3, sub-sections (1), (2), (3) and (4) of Section4, Section 5, sub-section (2) of Section 7-A, Section 13, sub-section (2) of Section 18, Section 22 and sub-section (2) ofSection 28 of the Act shall also be exercisable by the Securitiesand Exchange Board of India.’

Section 19 of the SEBI Act, 1992 reads as under:

‘19. Delegation.—The Board may, by general or special orderin writing delegate to any member, officer of the Board or anyother person subject to such conditions, if any, as may bespecified in the order, such of its powers and functions underthis Act (except the powers under Section 29) as it may deemnecessary.’

Thus, the above Notification dated 13-9-1994 issued in exerciseof power under Section 29-A of the SCR Act of 1956, readwith Section 19 of the SEBI Act, would mean that the Boardmay in writing delegate its power to any member of the Boardand, therefore, the power exercised by the Full-Time Memberof the Board under Section 11 of the SEBI Act, 1992, or evenwithdrawal or recognition under Section 5 of the SCR Act of 1956, cannot be said to be unjust or arbitrary or dehors theprovisions of the statute and, therefore, the contention of MrShelat that no remedy of appeal is available to the petitionercannot be accepted.”

9. In Para 2 of the civil appeal, the following question of law hasbeen framed:

“Whether the whole-time single member of SEBI has nojurisdiction to cancel or withdraw recognition granted to a stockexchange on the principle that delegate cannot further delegateits power, and whether the order under challenge is withoutjurisdiction?”

In our view, it is not necessary to go into the above question aswe find that this very question was raised by the appellantbefore the High Court in extraordinary jurisdiction under Article226 of the Constitution of India. The High Court, as notedabove, in its order dated 19-11-2007 [Saurashtra Kutch StockExchange Ltd. v. SEBI, Special Civil Application No. 23902of 2007, decided on 19-11-2007 (Guj)] held that the withdrawalof recognition under Section 5 of the 1956 Act by the Full-Time Member of SEBI under Section 11 of the Securities andExchange Board of India Act, 1992 cannot be said to be dehorsthe provisions of the Act. The special leave petition from theabove order of the High Court came to be dismissed by thisCourt on 10-3-2008 [Saurashtra Kutch Stock ExchangeLtd. v. SEBI, SLP (C) No. 5197 of 2008, decided on 10-3-2008 (SC)] . The same question cannot be allowed to bereopened in the present appeal.”

110. The express provision of delegation of power under the SEBIAct is akin to Section 81 of the Act 2016. This Court observed that if thepower has been delegated by the competent authority under the statute,such action, if being exercised by a single member cannot be said to bedehors the provisions of the Act.

111. In Heinz India Private Limited and Another (supra), therevisional powers were conferred upon the State Agricultural MarketBoard under Section 32 of the state law to examine the orders passedby the market committee. Section 33 thereof empowered the Board todelegate its powers to the Director. In the facts of the case, an objection A

B

C

D

E

F

G

H

Awas taken to the exercise of revisional powers not by the Director himselfbut by some officer lower in the hierarchy. This Court, while taking noteof the definition of ‘Director’ as provided in Section 2(h) to include “anyother officer authorized by the Director to perform all or any of hisfunctions under this Act” held as under:- B“34. Now, it is true that the stakes involved in the present batchof cases are substantial and those called upon to satisfy thedemands raised against them would like their cases to be heardby a senior officer or a committee of officers to be nominated bythe Board. But in the absence of any data as to the number ofcases that arise for consideration involving a challenge to theCdemands raised by the Market Committee and the nature of thedisputes that generally fall for determination in such cases, it willnot be possible for this Court to step in and direct an alteration inthe mechanism that is currently in place. The power to decide therevisions vests with the Board who also enjoys the power toDdelegate that function to the Director. So long as there is statutorysanction for the Director to exercise the revisional power vestedin the Board, any argument that such a delegation is eitherimpermissible or does not serve the purpose of providing a suitablemachinery for adjudication of the disputes shall have to be rejected.”

E112. Section 81 of the Act 2016 empowers the authority, by generalor special order in writing, to delegate its powers to any member of theauthority, subject to conditions as may be specified in the order, such ofthe powers and functions under the Act. What has been excluded is thepower to make regulations under Section 85, rest of the powers exercisedby the authority can always be delegated to any of its members obviouslyFfor expeditious disposal of the applications/complaints including complaintsfiled under Section 31 of the Act and exercise of such power by a generaland special order to its members is always permissible under theprovisions of the Act.

113. In the instant case, the authority by a special order dated 5[th]GDecember, 2018 has delegated its power to the single member for disposalof complaints filed under Section 31 of the Act. So far as refund of theamount with interest is concerned, it may not be considered strictly to bemechanical in process but the kind of inquiry which has to be undertakenby the authority is of a summary procedure based on the indisputableHdocumentary evidence, indicating the amount which the allottee/home buyer had invested and interest that has been prescribed by the competentauthority leaving no discretion with minimal nature of scrutiny of admittedmaterial on record is needed, if has been delegated by the authority, tobe exercised by the single member of the authority in exercise of itspower under Section 81 of the Act, which explicitly empowers theauthority to delegate under its wisdom that cannot be said to be dehorsthe provisions of the Act.

114. What is being urged by the learned counsel for the appellantsin interpreting the scope of Section 29 of the Act is limited only to policymatters and cannot be read in derogation to Section 81 of the Act andthe interpretation as argued by learned counsel for the promoters if to beaccepted, the very mandate of Section 81 itself will become otiose andnugatory.

115. It is a well-established principle of interpretation of law thatthe court should read the section in literal sense and cannot rewrite it tosuit its convenience; nor does any canon of construction permit the courtto read the section in such a manner as to render it to some extentotiose. Section 81 of the Act positively empowers the authority to delegatesuch of its powers and functions to any member by a general or a specialorder with an exception to make regulations under Section 85 of theAct. As a consequence, except the power to make regulations underSection 85 of the Act, other powers and functions of the authority, by ageneral or special order, if delegated to a single member of the authorityis indeed within the fold of Section 81 of the Act.

116. The further submission made by learned counsel for thepromoters that Section 81 of the Act empowers even delegation to anyofficer of the authority or any other person, it is true that the authority,by general or special order, can delegate any of its powers and functionsto be exercised by any member or officer of the authority or any otherperson but we are not examining the delegation of power to any thirdparty. To be more specific, this Court is examining the limited questionas to whether the power under Section 81 of the Act can be delegatedby the authority to any of its member to decide the complaint underSection 31 of the Act. What has been urged by learned counsel for thepromoters is hypothetical which does not arise in the facts of the case.If the delegation is made at any point of time which is in contravention tothe scheme of the Act or is not going to serve the purpose and object A

B

C

D

E

F

G

H

Awith which power to delegate has been mandated under Section 81 ofthe Act, it is always open for judicial review.

117. The further submission made by learned counsel for theappellants that Section 81 of the Act permits the authority to delegatesuch powers and functions to any member of the authority which areBmainly administrative or clerical, and cannot possibly encompass any ofthe core functions which are to be discharged by the authority, the judicialfunctions are non-delegable, as these are the core functions of theauthority. The submission may not hold good for the reason that thepower to be exercised by the authority in deciding complaints underSection 31 of the Act is quasi-judicial in nature which is delegable providedCthere is a provision in the statute. As already observed, Section 81 of theAct empowers the authority to delegate its power and functions to anyof its member, by general or special order.

118. In the instant case, by exercising its power under Section 81of the Act, the authority, by a special order dated 5[th] December, 2018Dhas delegated its power to the single member of the authority to exerciseand decide complaints under Section 31 of the Act and that beingpermissible in law, cannot be said to be de hors the mandate of the Act.At the same time, the power to be exercised by the adjudicating officerwho has been appointed by the authority in consultation with theEappropriate Government under Section 71 of the Act, such powers arenon-delegable to any of its members or officers in exercise of powerunder Section 81 of the Act.

119. That scheme of the Act, 2016 provides an in-built mechanismand any order passed on a complaint by the authority under Section 31 isFappealable before the tribunal under Section 43(5) and further in appealto the High Court under Section 58 of the Act on one or more groundspecified under Section 100 of the Code of Civil Procedure, 1908, if anymanifest error is left by the authority either in computation or in theamount refundable to the allottee/home buyer, is open to be consideredat the appellate stage on the complaint made by the person aggrieved.G

120. In view of the remedial mechanism provided under thescheme of the Act 2016, in our considered view, the power of delegationunder Section 81 of the Act by the authority to one of its member fordeciding applications/complaints under Section 31 of the Act is not onlywell defined but expressly permissible and that cannot be said to beHdehors the mandate of law.

-Question no. 4: Whether the condition of pre-deposit underproviso to Section 43(5) of the Act for entertaining substantive rightof appeal is sustainable in law?

121. Before we examine the challenge to the proviso to Section43(5) of the Act of making pre-deposit for entertaining an appeal beforethe Tribunal, it may be apposite to take note of Section 43(5) of the Act,2016. Section 43(5) reads as follows:- “43. Establishment of Real Estate Appellate Tribunal-

…….

(5) Any person aggrieved by any direction or decision or ordermade by the Authority or by an adjudicating officer under this Actmay prefer an appeal before the Appellate Tribunal havingjurisdiction over the matter:

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

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

122. It may straightaway be noticed that Section 43(5) of the Actenvisages the filing of an appeal before the appellate tribunal against theorder of an authority or the adjudicating officer by any person aggrievedand where the promoter intends to appeal against an order of authorityor adjudicating officer against imposition of penalty, the promoter has todeposit at least 30 per cent of the penalty amount or such higher amountas may be directed by the appellate tribunal. Where the appeal is againstany other order which involves the return of the amount to the allottee,the promoter is under obligation to deposit with the appellate tribunal thetotal amount to be paid to the allottee which includes interest andcompensation imposed on him, if any, or with both, as the case may be,before the appeal is to be instituted.

A

B

C

D

E

F

G

H

A123. The plea advanced by the learned counsel for the appellantsis that substantive right of appeal against an order of authority/adjudicatingofficer cannot remain dependent on fulfilment of pre-deposit which isotherwise onerous on the builders alone and only the builders/promoterswho are in appeal are required to make the pre-deposit to get the appealentertained by the Appellate Tribunal is discriminatory amongst theBstakeholders as defined under the provisions of the Act.

A

124. Learned counsel further submits that if the entire sum as hasbeen computed either by the Authority or adjudicating officer, is to bedeposited including 30 per cent of the penalty in the first place, the remedyof appeal provided by one hand is being taken away by the other sinceCthe promoter is financially under distress and incapable to deposit thefull computed amount by the authority/adjudicating officer. The right ofappreciation of his defence at appellate stage which is made available tohim under the statute became nugatory because of the onerous mandatoryrequirement of pre-deposit in entertaining the appeal only on the promoterDwho intends to prefer under Section 43(5) of the Act which according tohim is in the given facts and circumstances of this case is unconstitutionaland violative of Article 14 of the Constitution of India.

125. The submission in the first blush appears to be attractive butis not sustainable in law for the reason that a perusal of scheme of theEAct makes it clear that the limited rights and duties are provided on theshoulders of the allottees under Section 19 of the Act at a given time,several onerous duties and obligations have been imposed on the promotersi.e. registration, duties of promoters, obligations of promoters, adherenceto sanctioned plans, insurance of real estate, payment of penalty, interestand compensation, etc. under Chapters III and VIII of the Act 2016.FThis classification between consumers and promoters is based upon theintelligible differentia between the rights, duties and obligations cast uponthe allottees/home buyers and the promoters and is in furtherance of theobject and purpose of the Act to protect the interest of the consumersvis-a-viz., the promoters in the real estate sector. The promoters andGallottees are distinctly identifiable, separate class of persons having beendifferently and separately dealt with under the various provisions of theAct.

126. Therefore, the question of discrimination in the first placedoes not arise which has been alleged as they fall under distinct andHdifferent categories/classes.

127. It may further be noticed that under the present real estatesector which is now being regulated under the provisions of the Act2016, the complaint for refund of the amount of payment which theallottee/consumer has deposited with the promoter and at a later stage,when the promoter is unable to hand over possession in breach of theconditions of the agreement between the parties, are being instituted atthe instance of the consumer/allotee demanding for refund of the amountdeposited by them and after the scrutiny of facts being made based onthe contemporaneous documentary evidence on record made availableby the respective parties, the legislature in its wisdom has intended toensure that the money which has been computed by the authority atleast must be safeguarded if the promoter intends to prefer an appealbefore the tribunal and in case, the appeal fails at a later stage, it becomesdifficult for the consumer/allottee to get the amount recovered whichhas been determined by the authority and to avoid the consumer/allotteeto go from pillar to post for recovery of the amount that has beendetermined by the authority in fact, belongs to the allottee at a laterstage could be saved from all the miseries which come forward againsthim.

128. At the same time, it will avoid unscrupulous and uncalled forlitigation at the appellate stage and restrict the promoter if feels thatthere is some manifest material irregularity being committed or his defencehas not been properly appreciated at the first stage, would prefer anappeal for re-appraisal of the evidence on record provided substantivecompliance of the condition of pre-deposit is made over, the rights of theparties inter se could easily be saved for adjudication at the appellatestage.

129. There are multiple statutes which provide a condition of pre-deposit of a stipulated statutory amount to be deposited before an appealis entertained by an appellate forum/tribunal for re-appraisal of factsand law at the appellate stage and it has been examined by this Court aswell. Proviso to Section 18 of SARFAESI Act, 2002 of the Act whichprovides pre-deposit is as follows:- “18. Appeal to Appellate Tribunal

…….

Provided further that no appeal shall be entertained unless theborrower has deposited with the Appellate Tribunal fifty per cent A

B

C

D

E

F

G

H

Aof the amount of debt due from him, as claimed by the securedcreditors or determined by the Debts Recovery Tribunal, whicheveris less:

Provided also that the Appellate Tribunal may, for the reasons tobe recorded in writing, reduce the amount to not less than twenty-Bfive per cent. of debt referred to in the second proviso.”

130. The intention of the legislature appears to be to ensure thatthe rights of the decree-holder (the successful party) is to be protectedand only genuine bona fide appeals are to be entertained. Whileinterpretating Section 18 of SARFAESI Act, this Court in NarayanCChandra Ghosh Vs. UCO Bank and Others[17]observed as under:- “8. It is well-settled that when a statute confers a right of appeal,while granting the right, the legislature can impose conditions forthe exercise of such right, so long as the conditions are not soonerous as to amount to unreasonable restrictions, rendering theDright almost illusory. Bearing in mind the object of the Act, theconditions hedged in the said proviso cannot be said to be onerous.Thus, we hold that the requirement of pre-deposit under sub-section(1) of Section 18 of the Act is mandatory and there is no reasonwhatsoever for not giving full effect to the provisions contained inSection 18 of the Act. In that view of the matter, no court, muchEless the Appellate Tribunal, a creature of the Act itself, can refuseto give full effect to the provisions of the statute. We have nohesitation in holding that deposit under the second proviso to Section18(1) of the Act being a condition precedent for preferring anappeal under the said section, the Appellate Tribunal had erred inFlaw in entertaining the appeal without directing the appellant tocomply with the said mandatory requirement.”

131. In Har Devi Asnani Vs. State of Rajasthan and Others[18],the validity of proviso to Section 65(1) of the Rajasthan Stamp Act, 1998came up for consideration in terms of which no revision application couldGbe entertained unless it was accompanied by a satisfactory proof ofpayment of 50 per cent of the recoverable amount. Relying on the earlierdecisions of this Court including in Government of Andhra Pradeshand Others Vs. P. Laxmi Devi (Smt.)[19], the challenge was repelled17 (2011) 4 SCC 54818 (2011) 14 SCC 160H19 (2008) 4 SCC 720

and the view expressed in P. Laxmi Devi(supra) was repeated in HarDevi Ashani(supra) wherein this Court held as under:-

“In our opinion in this situation it is always open to a party to file awrit petition challenging the exorbitant demand made by theregistering officer under the proviso to Section 47-A alleging thatthe determination made is arbitrary and/or based on extraneousconsiderations, and in that case it is always open to the High Court,if it is satisfied that the allegation is correct, to set aside suchexorbitant demand under the proviso to Section 47-A of the StampAct by declaring the demand arbitrary. It is well settled thatarbitrariness violates Article 14 of the Constitution vide ManekaGandhi v. Union of India [(1978) 1 SCC 248] . Hence, the partyis not remediless in this situation.”

132. At the same time, Section 19 of the Consumer ProtectionAct, 1986 prescribes a condition for pre-deposit which provides that anappeal shall not be entertained unless 50 per cent of the amount awardedby the State Commission or Rs. 35,000/- whichever is less is depositedbefore the National Consumer Disputes Redressal Commission(NCDRC). This Court while placing reliance on State of Haryana Vs.Maruti Udyog Ltd. and Others[20]; in Shreenath Corporation andOthers Vs. Consumer Education and Research Society and Others[21]held that such a condition is imposed to avoid frivolous appeals.

“7. Section 19 of the Consumer Protection Act, 1986 deals withthe appeals against the order made by the State Commission inexercise of its power conferred by sub-clause (i) of clause (a) ofSection 17 and the said section reads as follows:

“19. Appeals.—Any person aggrieved by an order made by theState Commission in exercise of its powers conferred by sub-clause (i) of clause (a) of Section 17 may prefer an appeal againstsuch order to the National Commission within a period of thirtydays from the date of the order in such form and manner as maybe prescribed:

Provided that the National Commission may entertain an appealafter the expiry of the said period of thirty days if it is satisfiedthat there was sufficient cause for not filing it within that period:

20 2000(7) SCC 348

21 2014(8) SCC 657

A

B

C

E

F

G

H

Provided further that no appeal by a person, who is required topay any amount in terms of an order of the State Commission,shall be entertained by the National Commission unless theappellant has deposited in the prescribed manner fifty per cent ofthe amount or rupees thirty-five thousand, whichever is less.”

A

On plain reading of the aforesaid Section 19, we find that thesecond proviso to Section 19 of the Act relates to “pre-deposit”required for an appeal to be entertained by the NationalCommission.

B

9. The second proviso to Section 19 of the Act mandates pre-deposit for consideration of an appeal before the NationalCommission. It requires 50% of the amount in terms of an orderof the State Commission or Rs 35,000, whichever is less forentertainment of an appeal by the National Commission. Unlessthe appellant has deposited the pre-deposit amount, the appealcannot be entertained by the National Commission. A pre-depositcondition to deposit 50% of the amount in terms of the order ofthe State Commission or Rs 35,000 being condition precedent forentertaining appeal, it has no nexus with the order of stay, as suchan order may or may not be passed by the National Commission.The condition of pre-deposit is there to avoid frivolous appeals.”

C

D

E

133. Similarly, under Section 19 of the Micro, Small and MediumEnterprises Development Act, 2006, any appellant, other than the supplier,is required to make a pre-deposit of 75 per cent to maintain an appealagainst any decree, award or order made either by the Micro and SmallEnterprises Facilitation Council or by any institution or center providingFalternate dispute resolution services to which a reference is made by theCouncil. Section 19 reads as follows:-

“19. Application for setting aside decree, award or order.—No application for setting aside any decree, award or other ordermade either by the Council itself or by any institution or centreGproviding alternate dispute resolution services to which a referenceis made by the Council, shall be entertained by any court unlessthe appellant (not being a supplier) has deposited with it seventy-five per cent. of the amount in terms of the decree, award or, asthe case may be, the other order in the manner directed by suchcourt: Provided that pending disposal of the application to set asideHthe decree, award or order, the court shall order that such

v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]

percentage of the amount deposited shall be paid to the supplier,as it considers reasonable under the circumstances of the case,subject to such conditions as it deems necessary to impose.”

134. Similarly, the condition of pre-deposit has been examinedrecently by this Court in Tecnimont Pvt. Ltd. (Formerly Known AsTecnimont ICB Private Limited) Vs. State of Punjab and Others[22],where the validity of Section 62(5) of the Punjab Value Added Tax Act,2005 (PVAT) which imposes a condition of 25 per cent of pre-depositfor hearing of first appeal has been upheld. Section 62(5) of the PVATAct reads as follows:- “62. First Appeal ……

(5) No appeal shall be entertained, unless such appeal isaccompanied by satisfactory proof of the prior minimum paymentof twenty-five per cent of the total amount of tax, penalty andinterest, if any.

……..”

135. To be noticed, the intention of the instant legislation appearsto be that the promoters ought to show their bona fides by depositing theamount so contemplated.

136. It is indeed the right of appeal which is a creature of thestatute, without a statutory provision, creating such a right the personaggrieved is not entitled to file the appeal. It is neither an absolute rightnor an ingredient of natural justice, the principles of which must befollowed in all judicial and quasi- judicial litigations and it is always becircumscribed with the conditions of grant. At the given time, it is openfor the legislature in its wisdom to enact a law that no appeal shall lie orit may lie on fulfilment of pre-condition, if any, against the order passedby the Authority in question.

137. In our considered view, the obligation cast upon the promoterof pre-deposit under Section 43(5) of the Act, being a class in itself, andthe promoters who are in receipt of money which is being claimed bythe home buyers/allottees for refund and determined in the first place bythe competent authority, if legislature in its wisdom intended to ensurethat money once determined by the authority be saved if appeal is to be 22 AIR 2019 SC 4489

AB

C

D

E

F

G

H

Apreferred at the instance of the promoter after due compliance of pre-deposit as envisaged under Section 43(5) of the Act, in no circumstancecan be said to be onerous as prayed for or in violation of Articles 14 or19(1)(g) of the Constitution of India.

Question No.5:- Whether the authority has the power to issuerecovery certificates for recovery of the principal amount underBSection 40(1) of the Act?

138. To examine this question, it will be apposite to take note ofSection 40 that states regarding the recovery of interest or penalty orcompensation to be recovered as arrears of land revenue, and reads asunder:-C40. Recovery of interest or penalty or compensation andenforcement of order, etc.—

(1) If a promoter or an allottee or a real estate agent, as the casemay be, fails to pay any interest or penalty or compensation imposedon him, by the adjudicating officer or the Regulatory Authority orDthe Appellate Authority, as the case may be, under this Act or therules and regulations made thereunder, it shall be recoverable fromsuch promoter or allottee or real estate agent, in such manner asmay be prescribed as an arrears of land revenue.

(2) If any adjudicating officer or the Regulatory Authority or theAppellate Tribunal, as the case may be, issues any order or directsEany person to do any act, or refrain from doing any act, which it isempowered to do under this Act or the rules or regulations madethereunder, then in case of failure by any person to comply withsuch order or direction, the same shall be enforced, in such manneras may be prescribed.”F139. The submission of the appellants/promoters is that underSection 40(1) of the Act only the interest or penalty imposed by theauthority can be recovered as arrears of land revenue and no recoverycertificate for the principal amount as determined by the authority canbe issued. If we examine the scheme of the Act, the power of authorityto direct the refund of the principal amount is explicit in Section 18 andGthe interest that is payable is on the principal amount in other words,there is no interest in the absence of a principal amount being determinedby the competent authority. Further the statute as such is read to meanthat the principal sum with interest has become a composite amountquantified upon to be recovered as arrears of land revenue under Section40(1) of the Act.H

140. It is settled principle of law that if the plain interpretationdoes not fulfil the mandate and object of the Act, this Court has to interpretthe law in consonance with the spirit and purpose of the statute. There isindeed a visible inconsistency in the powers of the authority regardingrefund of the amount received by the promoter and the provision of lawin Section 18 and the text of the provision by which such refund can bereferred under Section 40(1). While harmonising the construction of thescheme of the Act with the right of recovery as mandated in Section40(1) of the Act keeping in mind the intention of the legislature to providefor a speedy recovery of the amount invested by the allottee along withthe interest incurred thereon is self-explanatory. However, if Section40(1) is strictly construed and it is understood to mean that only penaltyand interest on the principal amount are recoverable as arrears of landrevenue, it would defeat the basic purpose of the Act.

141. Taking into consideration the scheme of the Act what is tobe returned to the allottee is his own life savings with interest on computed/quantified by the authority becomes recoverable and such arrear becomesenforceable in law. There appears some ambiguity in Section 40(1) ofthe Act that in our view, by harmonising the provision with the purposeof the Act, is given effect to the provisions is allowed to operate ratherrunning either of them redundant, noticing purport of the legislature andthe above-stated principle into consideration, we make it clear that theamount which has been determined and refundable to the allottees/homebuyers either by the authority or the adjudicating officer in terms of theorder is recoverable within the ambit of Section 40(1) of the Act.

142. The upshot of the discussion is that we find no error in thejudgment impugned in the instant appeals. Consequently, the batch ofappeals are disposed off in the above terms. However, we make it clearthat if any of the appellant intends to prefer appeal before the AppellateTribunal against the order of the authority, it may be open for him tochallenge within 30 days from today provided the appellant(s) complywith the condition of pre-deposit as contemplated under the proviso toSection 43(5) of the Act which may be decided by the Tribunal on itsown merits in accordance with law. No costs.

143. Pending application(s), if any, stand disposed of.

Appeals disposed of.

A

B

C

D

E

F

G

H