Allahabad High Court
Air Force Naval Housing Board Thru. ... vs Union Of India Min. Of Housing & Urban ... on 17 November, 2020
Bench: Pankaj Mithal, Saurabh Lavania
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Court No. - 1 Case :- MISC. BENCH No. - 20879 of 2020 Petitioner :- Air Force Naval Housing Board Thru. Authorized Signatory Respondent :- Union Of India Min. Of Housing & Urban Affairs & Ors. Counsel for Petitioner :- Prashant Kumar,Kushagra Dikshit Counsel for Respondent :- C.S.C.,A.S.G.,Shobhit Mohan Shukla Hon'ble Pankaj Mithal,J.
Hon'ble Saurabh Lavania,J.
Heard Sri J. N. Mathur, Senior Advocate assisted by Sri Kushal Dixit and Sri Mudit Agrawal, learned Counsel for the petitioner, Sri Shobhit Mohan Shukla, learned Counsel for the third and fourth respondents, Sri Ambrish Rai, learned Counsel for Union of India and learned Standing Counsel for the State of Uttar Pradesh.
The petitioner-Air Force Naval Housing Board is a Society registered under the Societies Registration Act, 1860. It undertook construction of a Self-Financing Housing Scheme at Meerut on a land provided by the Meerut Development Authority as per the approved lay-out plan. The said Scheme known as Jal Vayu Towers provided for development of the area and construction of 545 flats in 8 towers.
On the enforcement of the Real Estate (Regulation and Development) Act, 2016 [hereinafter referred to as the '2016 Act'] w.e.f. 29.8.2016, the aforesaid Scheme/project was got registered on 15.8.2017 with RERA (Real Estate Regulatory Authority). The Scheme/project was to be completed by 31.7.2018. It could not be completed within time and therefore, some of the members of the Society specially the fifth respondent-Prateek Vashistha filed a complaint before the RERA. About 16 other complaints were also filed and they were all tagged together. The complainants demanded immediate possession of the units allotted to them with 18% interest on the amount deposited by them for the period of delay in completion of the project; the refund of excess amount realized due to escalation of the price; and damages for the mental and physical pain and harassment suffered by them. It was also alleged that the speed at which the Scheme/project is proceeding, there is hardly any chance for its completion and for possession for at least next two years.
The petitioner contested the complaints/claims before RERA. It alleged that the Scheme/project was floated in the year 2008. The construction work was assigned to the M/s Omaxe Infrastructure & Constructions Ltd. on the basis of tender, but the said company could not complete the work. Accordingly, its contract was terminated and a new contractor, namely, M/s Umaxe Projects (P) Ltd. was appointed. Due to change in the policy of the Meerut Development Authority, the estimated cost of the units fixed earlier had to be increased. The allottees were duly informed of the price escalation vide separate letters dated 18.12.2013.
RERA on the pleadings of the parties framed three issues. The first issue was decided in favour of the petitioner and against complainants, whereas issue No.2 was decided in favour of the complainants and it was held that the Authority had the jurisdiction to decide the matter. The crucial issue was issue No.3 with regard to payment of interest for the period of delay in completion of the Project/Scheme. RERA held that the complainants are entitled for interest from the date of the agreement till Occupancy Certificate (OC)/Completion Certificate (CC) or the date of offer of possession whichever is later @ Marginal Cost of Funds Based Landing Rate (MCLR) plus 1%. The said amount of interest was directed to be adjusted in the balance amount payable by the complaints towards the cost of the house and in case interest exceeded the balance amount, the excess amount be paid to the complainants.
The petitioner appealed against the order of RERA dated 10.04.2019 under Section 43 of the 2016 Act to the Real Estate Appellate Tribunal (hereinafter referred to as 'the Tribunal'] but it is not being entertained on the technical ground that the petitioner had not deposited atleast 30% of the penalty or the amount to be paid by it to the allottees including interest and compensation imposed on it as required under Section 43 (5) of the said Act.
It is trite to mention here that in view of Section 43 (5) of the 2016 Act, the appeal by the promoter against the order of RERA before the Tribunal can be entertained and heard only if the Promoter deposits with the Tribunal at least 30% of the penalty or the total amount to be paid by the promoter under the order of RERA including interest and compensation.
The petitioner has thus invoked the extraordinary discretionary jurisdiction of this Court so as to challenge the Appellate Order dated 28.2.2020 and the order dated 10.4.2019 of the RERA.
Sri J. N. Mathur, learned Senior Counsel very fairly submitted that it may not be possible for him to successfully assail the appellate order dated 28.2.2020, but as the order of RERA dated 10.04.2019 is patently illegal and can not be sustained in law, the Court may examine the same and do justice with the petitioner.
In Whirlpoool1 it has been laid down that power to issue writs under Article 226 of the Constitution of India is plenary in nature and the High Court in its discretion may refuse to entertain a petition on the basis of the self-imposed restrictions one of which happens to be availability of an effective and efficacious alternate remedy. It has further been laid down that the availability of alternate remedy would not operate as an absolute bar in exercising discretionary jurisdiction at least in three contingencies where the writ jurisdiction has been invoked for the enforcement of fundamental rights or where there is violation of principles of natural justice and where the proceedings are wholly without jurisdiction or the vires of any statutory provision is under challenge. Apart from the exceptions provided in the above decision for entertaining a writ petition, in addition to availability of alternate remedy, the Apex Court in the case of P. Laxmi2 expressed that a writ petition can be filed challenging the exorbitant demand and where the determination of the amount demanded is arbitrary and/or based upon extraneous considerations as arbitrariness is violative of Article 14 of the Constitution of India.
Thus, a decision can be challenged directly in writ jurisdiction inter alia only when the party approaching the Court satisfies that the payment required to be made is exorbitant and has been awarded arbitrary based upon extraneous considerations.
It may be relevant to refer to the exposition of the Apex Court in Titaghur3, wherein it is observed that where a right or liability is created by a statute, which gives a special remedy for enforcing it, the remedy provided by that statute must only be availed of.
In the subsequent decision in Mafatlal4, the Apex Court went on to observe that an Act cannot bar and curtail remedy under Article 226 or 32 of the Constitution. The Court, however, added a word of caution and expounded that the constitutional Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise its jurisdiction consistent with the provisions of the enactment. To put it differently, the fact that the High Court has wide jurisdiction under Article 226 of the Constitution, does not mean that it can disregard the substantive provisions of a statute and pass orders which can be settled only through a mechanism prescribed by the statute.
Now coming to the validity of Sub-Section (5) of Section 43 of 2016 Act, we may mention that the validity of the aforesaid provision has been upheld not only by the Madras High Court in T. Chitty Babu5 and Punjab & Haryana High Court in M/s Lotus Realtech Pvt. Ltd.6 but also by the Allahabad High Court in M/s Ansal Properties7. The said decisions may be under challenge in superior Court and there may be stay in respect of the decisions of Madras High Court and Punjab & Haryana High Court, nonetheless, in view of the decision of the Apex Court in Shree Chamundi Mopeds Ltd.8 the said decisions continue to exist in the law books and do not seize to exist. Moreover, there is no stay against the decision of the Allahabad High Court. The said decision in clear and unequivocal manner lays down that the condition of depositing the amount as contemplated under Section 43 (5) of the 2016 Act is neither unreasonable or onerous. The Court in holding as such held that the earlier decisions cited from the side of the promoter are of no help as they were rendered in connection with taxation laws, whereas in the cases under RERA, the amount is required to be deposited after complete adjudication of the lis for entertaining and hearing the appeal thereafter.
In M/s Ansal Properties & Infrastructure Ltd. v. Union of India & Ors., Misc. Bench No.5867 of 2020, a Division Bench of this Court in considering the challenge made to the Section 43 (5) of 2016 Act on the ground that the condition imposed in entertaining and hearing the appeal thereunder is unreasonable and onerous and as such, is unconstitutional held that the challenge to the constitutional validity of Section 43 (5) of the Act 2016 cannot be accepted. Section 43 (5) of the 2016 Act provides for a remedy of appeal after adjudication of the dispute by RERA. Since the appeal is after adjudication of the rights of the parties and not a unilateral act, the condition of pre-deposit cannot be termed to be unreasonable or unfair. The object of Section 43 (5) of the 2016 Act is quite clear and it is to secure the rights of the complainants after their rights have been adjudicated in a dispute by RERA.
The right to prefer an appeal is a statutory right and therefore it can always be made conditional upon satisfying certain conditions by the Statute itself. Any such condition imposed by the Statute for the purposes of filing an appeal is ordinarily deemed to be valid, piece of legislation and that the Appellate Authority does not have any inherent power to waive the said condition prescribed by the Statute.
The object and reasons of 2016 Act demonstrates that it seeks to provide inter alia amongst other things greater accountability towards consumers and significantly reduce fraud and delays as also the current high transaction costs and to impose liability upon the promoter to pay compensation to the allottees as provided under the legislation. The Act provides to balance the rights of the consumers vis-a-vis promoters in the real sector. The promoters and the consumers/allottees form distinctly identifiable separate class of persons and therefore, the imposition of the condition of pre-deposit placed upon the promoters is not discriminatory. The condition of pre-deposit imposed upon the promoters is in furtherance of the proclaimed objects and purposes of 2016 Act and basically seeks to avoid delay in completion of projects and fraud being played upon the consumers/allottees.
A Division Bench of the High Court of Punjab and Haryana High Court at Chandigarh in M/s Lotus Realtech Pvt. Ltd.9, while deciding the validity of Section 43 (5) of the 2016 Act, after dealing with various earlier pronouncements including that of Mardia Chemicals10 and some others and by following the decision of Technimont11, held that the promoters and the allottees form a separate distinct class and category and in view of Supreme Court's decision in M/s. Technimont (supra), there is no merit in the challenge to Section 43 (5) of the 2016 Act on the basis of Article 14 of the Constitution of India.
In the light of the above, we have no option but to follow the opinion given by a coordinate Bench of the Allahabad High Court and to hold that the condition of pre-deposit contained in the above provision is not unfair and unreasonable, rather they are mandatory for maintaining an appeal under the said Act. The said condition does not make the remedy of appeal an illusory one.
Sri Mathur contends that the petitioner's primary attack is on the order dated 10.4.2019 of RERA rather than the appellate order of the Tribunal. He submits that the equity is in favour of the petitioner. The petitioner has not denied possession of the units to the allottees. The delay, if any, is due to unprecedented circumstances beyond the control of the petitioner as the builders who are also Promoters failed to execute the work in time. His argument is that the petitioner alone could not have been saddled with the liability to pay interest and that it ought to have been equally apportioned between petitioner and other Promoters, i.e., the builders, namely, M/s Omaxe Infrastructure & Constructions Ltd.; and new contractor M/s Umaxe Projects (P) Ltd. RERA has thus manifestly erred in putting the entire liability upon the petitioner. The petitioner is having an award dated 13.3.2020 of the Arbitral Tribunal for a sum of Rs.40.50 crores in its favour in relation to the dispute with the earlier builder which is pending execution. Therefore, the amount payable to the complaints is secure and that the petitioner can easily pay the balance of the amount required to be deposited as a pre-condition for maintaining the appeal. The petitioner, under such circumstances, may be permitted to give security for the balance amount and the appeal be directed to be heard on merits.
In the case at hand, the payment is not in any way shown or proved to be arbitrary or said to be based upon on extraneous considerations. The interest imposed and directed to be paid is also not on higher side, though the total amount payable may be a huge one, but that is on account of the number of complainants and the period of delay caused by the petitioner in completion of the project.
On merits of the order of RERA, it is useful to refer to Section 2 (zk) of Act 2016 which defines 'Promoter' reads as under:-
"(zk) "promoter" means,-
(i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or
(ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or
(iii) any development authority or any other public body in respect of allottees of-
(a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or
(b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or
(iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or
(v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or
(vi) such other person who constructs any building or apartment for sale to the general public.
Explanation.-For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder;
In short, any person who constructs or causes to be constructed an independent building or a building consisting of apartments etc.; or a person who develops land into a project; or any development authority or any public body in respect of allottees of buildings or apartments or plots and owned by such party or body or placed at their disposal by the Government or apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings or any person who acts as a builder, coloniser or contractor, developer or such other person who constructs any building or apartment for sale to the general public or all included within the definition of constitution of 'Promoter'.
There is no denial to the fact that the petitioner is one of the Promoter of the Scheme/project in question. The petitioner alone is registered as a Promoter. In the Certificate of Registration of Project/Scheme issued by RERA under Section 5 of the 2016 Act, name of the petitioner-Air Force Naval Housing Board has been mentioned as the 'Promoter' to whom the said Certificate has been granted and the Project/Scheme has been registered. There is no other person named in the Certificate to demonstrate that any of the builders as alleged are also the Promoters of the said Project/Scheme.
There is no averment that the builders/contractors acquired the status of the promoter under the terms and conditions of the building contract.
It is important to note that the petitioner is even otherwise the sole Promoter as the builders to whom the contracts for development and construction may have been awarded would only be the agents of the Promoter and would not be the Promoter in the absence of their names as promoters in the certificate of registration or any stipulation in this regard in the contract.
The Memorandum of Association of the Air Force Naval Housing Board and the Master Brochure issued by it inviting applications for allotment of houses in the aforesaid Scheme clearly reveals that the petitioner is the sole promoter. The master brochure nowhere contains the name of any other person either that of the builder or the contractor to whom the development and building work in the Scheme is assigned as the promoter or even as the builder. All allotment letters allotting the houses to various allottees have also been issued by the petitioner alone and there is no mention that any other person other than the petitioner is also a promoter or a relevant person for the purposes of the promotion of the Scheme or for allotting the houses.
In view of above, we find that the alleged builders or the contractors have not been associated by the petitioner as one of the promoters alongwith it.
Accordingly, under the aforesaid facts and circumstances, the argument that the petitioner alone is not the promoter and that the contractors are also to be recognized as promoters is bereft of merit and cannot be accepted.
No other point has been raised on which the order of RERA could be challenged.
In view of the aforesaid facts and circumstances, we find no merit in this petition which may compel us to exercise our discretionary jurisdiction.
Accordingly, the writ petition is dismissed with no order as to costs.
[Saurabh Lavania, J.] [Pankaj Mithal, J.]
Order Date :- 17.11.2020
lakshman