Real Estate Appellate Authority Can't Initiate Suo Moto Proceedings: Delhi High Court

The Delhi High Court has held that the Real Estate Appellate Authority cannot possibly be recognized as conferred with the power to initiate proceedings suo moto or on its own motion.

Analyzing the relevant provisions of the Real Estate (Regulation and Development) Act, 2016, Justice Yashwant Varma added that the Appellate Tribunal is a creation of statute and that it is not an authority which may be recognised as being vested with inherent powers.

"Regard must also be had to the fact that the Appellate Tribunal is not part of the hierarchy of traditional judicial institutions which constitute the judicial system of our country. It is an appellate forum whose origin and formation stems from the provisions of the Act. It is in that sense an adjudicatory authority which owes its existence and authority to a special statute," the Court observed.

It added "Viewed in that light it is manifest that it can neither assume nor arrogate to itself a power or authority which may otherwise not stand conferred on it by the Act. There is thus an evident and blatant assumption of jurisdiction which otherwise does not stand vested upon the Appellate Tribunal. The Court thus comes to the firm conclusion that the impugned proceedings are clearly ultra vires the Act."

The Court allowed the petition filed by one Praveen Chhabra claiming to be engaged in the business of developing residential and commercials properties in Delhi, Uttar Pradesh and Chandigarh.

The petitioner had challenged the order passed by the Real Estate Appellate Tribunal dated November 24, 2021. Vide the said order, the Delhi Real Estate Appellate Tribunal had stayed all the construction activities, including residential and commercial activities, in the national capital that were undertaken without registration of the Real Estate Regulatory Authority (RERA) till the project was registered with the authority.

The suo moto proceedings were initiated by it for ensuring strict compliance of the provisions of the Real Estate (Regulation and Development) Act, 2016 regarding prior registration of projects and also to curb incidents of developers cheating innocent buyers.

According to the petitioner, it was submitted that the said order was passed in blatant violations of Section 3 of Real Estate (Regulation and Development) Act, 2016 the promoters or builders in respect of construction projects.

Vide the impugned order, the Tribunal had also directed the concerned Commissioner as well as Executive Engineer of each of the Municipal Corporations, DDA, NDMC and the Commissioner of Police through concerned SHO of the local Police Station of each area to ensure that with immediate effect no further construction activity is continued in the absence of RERA registration.

The Tribunal had also observed that the object of the statute is to redress the grievances of the buyers against any builder in transactions related to both residential and commercial projects and to further ensure the timely completion of the same.

It was submitted that the Appellate Tribunal do not have any jurisdiction to initiate suo motu proceedings and pass directions and that the tribunal had proceeded on an entirely wrong premise by failing to appreciate that sec. 3(2) of the Act has mandated compulsory prior registration of the project under the Act.

The Court had therefore appointed Senior Advocate Rajeeve Mehra as the amicus curiae to assist it in considering the issue as to whether the Real Estate Appellate Tribunal has the jurisdiction to initiate suo motu proceedings and pass directions affecting the ongoing constructions in the city.

The High Court observed that there was a patent lack of jurisdiction and the proceedings as drawn by the Appellate Tribunal were liable to be quashed in entirety.

It added that the Appellate Tribunal had clearly and abjectly failed to bear in mind the true ambit of sec. 3 of the Act and proceeded on the incorrect and unfounded premise that all projects were liable to be compulsorily registered under the Act.

The Court also took into consideration the significant portent of the direction issued wherein it had practically injuncted all construction activity in the NCT of Delhi.

"The aforesaid injunction is not shown to have been preceded by any enquiry with respect to the validity of a particular project or even a prima facie assessment or evaluation of the validity of a single project. In fact, the order does not even take note of a proven or evident violation of the provisions of the Act by a particular project. This Court is constrained to observe the procedure as adopted by the Appellate Tribunal can neither be countenanced nor accorded an imprimatur," the Court observed.

Accordingly, the Court set aside impugned orders of 17 November 2021 and 24 November 2021. It also quashed all proceedings relating to the suo moto case.

"This judgment shall however not be construed as restraining the Authority from independently examining the validity of individual projects and enforcing the provisions of the Act in accordance with law," the Court added.

Case Title: PRAVEEN CHHABRA v. REAL ESTATE APPELLATE TRIBUNAL

Citation: 2022 LiveLaw (Del) 500

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