Status as on– 17/11/21
In March 2020, The Real Estate Regulatory Authority (RERA) of Uttar Pradesh ordered Newtech Promoters and Developer to refund the principal amount along with interest to homebuyers as the possession was not delivered on time.
However, the promoter/developer dissatisfied with the said order of UP-RERA, challenged the order in Allahabad High Court on the grounds that hearing cannot be adjudicated by a single member of the Authority and raised issues in relation to the grant of interest rate and had sought a stay on the recovery certificates issued by the Authority. Providentially, the HC has dismissed a writ petition filed by the promoter.
Subsequently, the Newtech Promoters and Developer filed an appeal before Supreme Court against an Allahabad High Court order which dismissed its plea against an order of a single member of the Uttar Pradesh Real Estate Regulatory Authority.
In the matter M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. VS. STATE OF UP & ORS. ETC. CIVIL APPEAL NO(S). 6745 - 6749 OF 2021
QUESTIONS OF LAW
A Bench of Hon’ble Mr. Justice Uday Umesh Lalit, Hon’ble Mr. Justice Ajay Rastogi and Hon’ble Mr. Justice Aniruddha Bose observed the following questions of law in this matter: –
- Whether the Act 2016 is retrospective or retroactive in its operation and what will be its legal consequence if tested on the anvil of the Constitution of India?
The RERA Act is retroactive and applies to Projects which did not receive a Completion Certificate till the date of enactment. The promoter is under obligation to apply for a time extension for getting the remaining construction complete. The court observed that section 3 of the Act is not violative of Art 14 and Art 19(1)(g) of the Constitution of India, in any manner.
- Whether the authority has jurisdiction to direct refund of the amount to the allottee under section 12,14,18,19 of the RERA Act?
Section 71 of the Act expressly provides the jurisdiction to adjudicate complaints under sections 12,14,18 & 19 of the Act. The apex court observed that the adjudicating officer has exclusive power to determine the relief of adjudging compensation and interest with maintaining the view of section 71 read with section 72 of the Act.
- Whether section 81 of the RERA Act authorizes the authority to delegate its powers to a single member of the authority to hear complaints instituted under Section 31of the Act?
Section 81 of the RERA Act, empowers the authority to delegate its power and function to any member of the authority by general or special order in writing subject to specified conditions mentioned in the order, except the power to make regulations under Section 85 of the Act. Therefore, the court observed that adjudication exercised by a single member of authority under section 81 of the Act cannot say to be dehors the provision of the Act.
The apex court held that:
“the power of delegation under Section 81 of the Act by the authority to one of its members for deciding applications/complaints under Section 31 of the Act is not only well defined but expressly permissible and that cannot be said to be dehors the mandate of law.”
- Whether the authority has the power to issue a recovery certificate for recovery of the principal amount under Section 40(1) of the Act?
The court observed that the RERA Authority is authorized to issue RC for recovery for interest and compensation along with the principal amount within the ambit of Section 40(1) of the Actor else the law will be meaningless.
In the matter, the Apex Court on 11th November 2021, observed that RERA Act is retroactive and applies to Projects which did not receive a Completion Certificate till the date of enactment. Also assessed that the allottees have rights to seek a refund on default and no excuse available to the builder. Most importantly, the court examined that the jurisdiction to order refund is with the Authority and the jurisdiction to order for compensation u/s 12, 14, 18, 19 is with the Adjudicating Officer. Significantly court also observed one more aspect and held that the Authority is authorized to delegate its power to hear complaints to a member in view of speedy disposal and the rule making power cannot be delegated.
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