Orissa High Court
M/S Seven Hills Estate Ltd And vs M/S Seven Hills Flat Owners on 28 February, 2025
Author: R.K. Pattanaik
Bench: R.K. Pattanaik
AFR IN THE HIGH COURT OF ORISSA AT CUTTACK
MSA Nos.10 and 11 of 2024
M/s Seven Hills Estate Ltd and .... Appellants
Another
Mr. P.K. Ray, Sr. Advocate
-Versus-
M/s Seven Hills Flat Owners .... Respondents
Association and others Mr. A. Rath, Advocate for respondent Nos.1 and 2 Mr. B.P. Tripathy, Advocate for respondent No.3 CORAM:
JUSTICE R.K. PATTANAIK DATE OF JUDGMENT:28.02.2025
1. Both appeals are disposed of by the following common judgment.
2. MSA No.10 of 2024: Instant appeal filed under Section 58 of Real Estate (Regulation and Development) Act, 2016 read with Section 151 CPC, 1908 (herein after referred to as 'the Act') is at the behest of appellants assailing the impugned order dated 3rd January, 2024 as at Annexure-3 passed in connection with OREAT Appeal No.17(T) of 2020 corresponding to Complaint Case No.03 of 2018 disposed of on 25th May, 2019 by the Odisha Real Estate Regulatory Page 1 of 12 Authority, Bhubaneswar (in short 'the ORERA') on the grounds inter alia that the same is liable to be quashed.
3. MSA No.11 of 2024: The present appeal is filed under the Act by the appellants questioning the correctness and legality of the impugned decision by order dated 3rd January, 2024 at Annexure-3 in OREAT Appeal No.02(T) of 2022 arising out of Execution Case No.56 of 2019 disposed of on 8 th November, 2021 by the ORERA on the grounds stated therein.
4. Heard Mr. Ray, learned Senior Advocate for the appellants, Mr. Rath, learned counsel for respondent Nos.1 and 2 and Mr. Tripathy, learned counsel for respondent No.3.
5. Appellant No.1 is a real estate company, whereas, appellant No.2 is the Director of the said company. In fact, the company floated an advertisement in the name and style of Seven Hills and Sands at Puri for sale of flats. Following the advertisement, the members of the flats Association entered into agreements with the company. As per the contract, the project was to be completed within a stipulated period. According to appellant No.1, in terms of the agreements, the project was completed within time but it could not be in respect of common areas and therefore, the Association approached the ORERA with a complaint in CC Case No.03 of 2018. Ultimately, the said complaint upon disposal was followed by order dated 25th May, 2019 and on being aggrieved, the appellants filed the appeal disposed of Page 2 of 12 on 3rd January, 2024. The pleading on record from the side of the appellants is that the learned Appellate Tribunal did not properly consider the facts and appreciate the law and hence, the impugned order in OREAT Appeal No.17(T) of 2020 and also the decision in Complaint Case No.03 of 2018 are liable to be set aside. With such other grounds raised, the appellants questioned the decisions of the ORERA and learned Appellate Tribunal. In the meantime, with the order in Complaint Case No.03 of 2018 dated 25th May, 2019, the proceeding in Execution Case No.56 of 2019 was initiated and it led to the passing of the order dated 8th November, 2021 which is under challenge in MSA No.11 of 2024 with similar grounds and in view of the pendency of appeal by then. The ORERA declined to suspend the execution and proceeded to dispose it of instructing the appellants to register the project immediately and to complete construction providing the promised amenities to the members of the Association as per the agreements executed between them within a period of three months and to obtain occupancy certificates from the competent authority on such completion of project with consequential directions issued. The said order in complaint case was challenged in OREAT Appeal No. 02(T) of 2022. The execution proceeding and the order passed therein, as earlier stated, was challenged in OREAT Appeal No.17(T) of 2022. Both orders in the complaint and execution have gone against the appellants as learned Appellate Tribunal declined to intervene.Page 3 of 12
6. The undisputed facts are that the ORERA held the project to be mandatorily registerable, hence, directed the appellants accordingly as required under the Act. It reached at a conclusion that the materials available on record are sufficient to hold that the appellants defaulted in handing over the flats with all promised amenities within the stipulated period of time and hence, the same amounted to the violation of Section 18 under the Act. The learned Appellate Tribunal upheld the decision of the ORERA and dismissed the appeal. Similarly, the execution was declined to be interfered with by learned Appellate Tribunal in OREAT Appeal No.17(T) of 2022 with a conclusion that a technical team inspected the project area on 22 nd October, 2021 and submitted a report which revealed that the directions issued in Complaint Case No.03 of 2018 not to have been complied with and even the promoter delivered possession of the flats, which were not constructed with the approval of the complaint authority and there was no provision of water supply, electricity connection to the project and the project to be still incomplete and that apart, the promoter has not obtained the structural safety and fire certificates besides completion and occupancy certificates.
The stay of the execution was also declined on the ground that filing of an appeal does not suspend the proceeding unless there is an order in terms of Order 41 Rule 5 CPC. It is revealed from the record that the execution proceeding is already disposed of by the ORERA, whereafter, the Page 4 of 12 Association approached the Adjudicating Authority in AOCC No.20 of 2021 demanding compensation from the promoter which was disposed of by order dated 19th January, 2023 directing payment of compensation in their favour which has also not been complied with till date and in that behalf, Execution Case No.10 of 2023 has been initiated for execution of such order. With the dissatisfaction noted down, learned Appellate Tribunal dismissed the challenge to the execution and also the complaint.
7. Mr. Ray, learned Senior Advocate for the appellants filed a host of citations, such as, Newtech Promoters and Developers Pvt. Ltd. Vrs. State of U.P. & others (2021) 18 SCC 1; Sanwarlal Agrawal and others Vrs. Ashok Kumar Kothari & others (2023) 7 SCC 307; Pradeep Mehra Vrs. Harijivan J. Jethwa (Since Deceased through LRs.) and others MANU/SC/1189/2023; Nihalsons Real Estate Developers Vrs. Wave Megacity Centre Pvt. Ltd.
MANU/RT/0461/2023; Kanta Malhotra Vrs. M/s Parsvnath Developers Limited and others
MANU/RT/0122/2021, however, confined the argument on the points, namely, maintainability of the action before the ORERA in Complaint Case No.03 of 2018 in view of an arbitration clause between the parties and no claim certificates received from the members of the Association. The Apex Court in Newtech Promoters & Developers Pvt. Ltd. (supra), discussed in detail, the object and reasons of the Act and the role of the Regulatory Authority vis-à-vis the real Page 5 of 12 estate sector and reproduced the same therein, which is to the following effect:
"The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardization and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardization, has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasized in various forums.
2. In view of the above, it becomes necessary to have a Central legislation, namely, the Real Estate (Regulation and Development) Bill, 2013, in the interests of the effective consumer protection, uniformity and standardization of business practices and transactions in the real estate sector. The proposed bill provides for the establishment of the Real Estate Regulatory Authority (the Authority) for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority."
In the above decision, it has been held that the object of the Act is to ensure greater accountability towards Page 6 of 12 consumers, to significantly reduce frauds and delays and also the current high transaction costs and at the same time, to balance the interests of consumers and promoters by imposing certain responsibilities on both and to bring transparency of the contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism.
8. On the contrary, Mr. Rath, learned counsel for respondent Nos.1 and 2 justifies the impugned orders of authorities below and highlights upon the conduct of the promoter and how the flats have been handed over with unfinished work. Mr. Tripathy, learned counsel for OREAT supported the impugned decisions of learned Appellate Tribunal on the ground that the appellants to be grossly guilty of default as the amenities as per the agreements have not been provided complying the directions of the ORERA and in course of argument, produced the original records in CC No.03 of 2018 and EC No.56 of 2019 for reference of the Court.
9. As to the argument advanced from the side of the appellants by Mr. Ray, learned Senior Advocate, the same is based on a decision of the Delhi High Court in Praveen Chhabra Vs. Real Estate Appellate Tribunal in W.P.(C) No. 14552 of 2021 dated 26th May, 2022. By claiming that the authorities below failed to take cognizance of the material facts and law involved, Mr. Ray, learned Senior Advocate would further submit that the suo motu proceeding under Page 7 of 12 Section 35 of the Act is unsustainable. It is contended by Mr. Ray, learned Senior Advocate that as per agreements between the promoter and members of the Association, any such dispute between them shall be referred to arbitration, the fact, which has been lost the sight of by both the authorities below and refers to Sections 5 and 8 of the Arbitration and Conciliation Act, 1996. It is claimed that a preliminary objection was raised on the maintainability of the complaint but it was not considered and dealt with by the ORERA and also learned Appellate Tribunal. It is alleged that the members of the Association are responsible to suppress the arbitration clause in the agreements and therefore, would be guilty of playing fraud on the authorities below and in that connection, Mr. Ray, learned Senior Advocate refers to a decision of the Apex Court in S.P. Chengalvaraya Naidu (Dead) by Lrs. Vrs. Jagannath (Dead) by LRs. and others AIR 1994 SC 853. In reply and response to the above, Mr. Rath, learned counsel for respondent Nos.1 and 2 submits that such question was not raised before the learned courts below. Even though, any such objection was raised, it was not specific. Rather, the Court finds that on such other grounds, the jurisdiction of the ORERA was questioned. The appellants, as it appears, wholeheartedly participated in the complaint proceeding and the same was disposed of at last. Even learned Appellate Tribunal declined to suspend the execution pending disposal of the appeal which was finally disposed of on 3rd January, 2024. The absence of jurisdiction Page 8 of 12 of the ORERA was to be challenged on such specific ground due to existence of arbitration clause and the same having been not resorted to, rather, a general objection was raised, the Court is of the view that the appellants at this distant point of time cannot be allowed to turn back and question the maintainability of the complaint under the Act. The fraud alleged against the members of the Association is equally untenable since the promoter did not raise such a question at the very inception. The Court is in agreement with the contention advanced by Mr. Rath, learned counsel since the appellants did not really question the jurisdiction in view of the arbitration clause and sincerely participated in the proceeding till the complaint was disposed of. A decision of the Apex Court Mumtaz Yarud Dowla Wakf Vrs. Badam Balakrishna Hotel Pvt. Ltd. and others 2023 SCC Online SC 1378 is cited by Mr. Rath, learned counsel for respondent Nos.1 and 2 to contend that even, otherwise, failure on the part of the Court to do so is not a ground to intervene in view of the legal maxim "actus curiae neminem gravabit" which means, in case, where a Court has failed to check its jurisdiction and a plea has been raised subsequently and especially, after receiving an adverse verdict, the forum shall not be declared as having lack of jurisdiction, especially when, there is no apparent injury otherwise to the rights conferred under a statute. In the case (supra), an earlier decision of the Apex Court in Indore Development Authority Vrs. Manoharlal and others (2020) 8 SCC 129 Page 9 of 12 was referred to. In the case at hand, it is without any doubt that the appellants raised a question of maintainability but it was not specifically concerned with the arbitration clause. Since, the complaint is at the instance of respondent Nos.1 and 2 and a preliminary objection on maintainability was to be questioned, it was the responsibility of the appellants rather to raise it. At the cost of repetition, the Court forms an opinion that at no point in time, not even before learned Appellate Tribunal, the appellants did question the maintainability of the complaint on any such ground of arbitration. A general objection by the appellants on some other unspecific grounds cannot be a basis to allege that the issue of lack of jurisdiction by the ORERA was not examined. The Court concludes that a point of jurisdiction has to be seriously raised before the Court or even if, not raised, the Court is to consider the same which cannot be disregarded but it should be brought to the notice of the Court concerned. In absence of any such material on record to show and satisfy that the appellants ever objected to the complaint on the ground of want of jurisdiction of the ORERA, the same cannot be entertained thereafter unless it is found that one of the parties to the arbitration has really been prejudiced. Even if, respondent Nos.1 and 2 are held to be irresponsible but in view of the conduct of the appellants, it cannot be alleged that the former was guilty of fraud. Even otherwise, when the rights of the parties have been looked into and adjudicated upon without any prejudice, the Court is Page 10 of 12 of the view that such a question on arbitration and lack of jurisdiction is not to be entertained to nullify the decisions of the authorities below rendered on merit.
10. In Praveen Chhabra (supra), the Delhi High Court held that the suo motu proceedings by the Appellate Tribunal are needed to be quashed as being not inconsonance with the provisions of the Act. As to the decision in S.P. Chengalvaraya Naidu (supra), the same, in the considered view of the Court, is inapplicable as it is not inclined to hold respondent Nos. 1 & 2 guilty of fraud. As such, the facts and circumstances of the case, in the above decision, are totally different, wherein, a preliminary decree was obtained by playing fraud on the Court by an act of deliberate deception and it was intended to cheat and receive an advantage. Such is not the case vis-à-vis respondent Nos.1 and 2, who are the allottees and members of the Association fighting a battle against the promoter ever since 2018 and still are deprived of the promised amenities. As far as, the argument of Mr. Ray, learned Senior Advocate for the appellants is concerned, with regard to no claim certificates of the flat owners, the Court is of the further view that such cannot absolve the promoter from complying the directions of the ORERA in providing the amenities to which they are otherwise entitled to. The Court is of the conclusion that merely because no claim certificates have been obtained by the promoter, if there is an acceptable claim pending and as in the instant case, the amenities as agreed upon have not been provided, the same Page 11 of 12 cannot be ground to oppose the action under the Act. On a similar analogy, the decision of the Apex Court in R.L. Kalathia and Company Vrs. State of Gujarat AIR 2011 SC 754 is profitable to be referred, where, it has been held that a contractor shall still be entitled to make a claim, even if, he is a signatory to the no claim certificate. Normally, in a case of present kind, no claim certificates are issued by the allottees, at times, under compulsion or for such other reasons, which is not to debar them from demanding all of the promised amenities, the same having not been provided by the promoter.
11. Considering the grounds advanced and submissions of Mr. Ray, learned Senior Advocate for the appellants, Mr. Rath, learned counsel for respondent Nos.1 and 2 and Mr. Tripathy, learned counsel for respondent No.3, the irresistible conclusion of the Court is that the learned authorities below did not commit any error or illegality and hence, the orders under challenge deserve to be affirmed.
12. Hence, it is ordered.
13. In the result, the appeals are dismissed.
14. In the circumstances, there is no order as to the costs.
(R.K. Pattanaik) Signature Not Verified Judge Digitally Signed Signed Rojinaby: ROJINA SAHOO Designation: Junior Stenographer Reason: Authentication Location: OHC, CTC Date: 04-Mar-2025 19:35:44 Page 12 of 12