RERA Act | Under Section 71(1), The Adjudicating Authority Can Decide The Compensation Alone. : Chhattisgarh High Court

The Chhattisgarh High Court recently held that under Section 71(1) of the Real Estate (Regulation & Development) Act, 2016, the adjudicating authority can decide the compensation alone. A Division Bench of Justices Goutam Bhaduri and Sanjay S. Aggarwal remarked that reading Section 71(1) of the RERA Act, 2016 would show that the power of adjudicating officers is to adjudicate compensation. As a necessary corollary to decide the quantum of compensation, the adjudicating officer may hold an inquiry after giving a person concerned a reasonable opportunity of being heard to find out the degree of development to be carried out. The said appointment of the adjudicating officer is also in conformity to the object of the legislation to decide the compensation.

The appellants in the instant case are builders and developers, and the private respondents are the ones who have purchased plots. The private respondents filed a complaint before the Real Estate Regulatory Authority. It is their case that they purchased plots in a project known as Adam World City, Kachina, on different dates. They wanted to construct the houses, but the builders objected to the same, making a demand for infrastructure development fees. Apart from that, the development work in the Colony, i.e., Walkway, Fire-station, Open Area, Temple, Development of Pond, Garden, Other amenities of the Retail & Business Shops, Hospital, Amphitheater, Supermarket, Multiplex, ATM, Library, Doctor, Kids' Play Area was not provided. The boundary wall also remained incomplete, and the roads were without street lights. Whereas in the brochure and the advertisement, all the amenities were promised to be provided.

Before the RERA, all the applications filed by the private respondents were dismissed through a joint order. After that, an appeal was preferred before the Appellate Tribunal, which remanded the case with certain directions to get the area inspected to evaluate whether development work was carried out or not, and further direction was given on the issue of payment of development/user charges in the absence of agreement non-execution of the agreement be referred to the adjudicating authority. The grievances of the private homebuyer were directed to be decided afresh.

Being aggrieved by the said order, the present appeals have been filed.

The first question of law in substance concerns whether the power exercised by the single-member Appellate Tribunal of STAT would be valid under the RERA and, therefore, whether it was within the jurisdiction.

To answer the question, the Court perused the mandate of Sections 43 & 45 of the Real Estate (Regulation and Development) Act, 2016. The Appellate Tribunal of RERA was not available in Chhattisgarh, as was required under the RERA Act, 2016, to be established within one year.

When the consequences of non-compliance in the statute are not provided or if the Act is not followed, will it be mandatory or directory? It referred to the case of Balwant Singh v. Anand Kumar Sharma. In this case, the Court had emphasized the effect of law that when no consequence is provided, it would be directory in nature. Also, in the case of State of Uttar Pradesh v. Babu Ram Upadhyay, it was held that it is well established that enactment in form mandatory might in substance be a directory. It was further held that the Courts of Justice must try to get at the real intention of the Legislature by carefully attending to the whole scope of the statute to be construed.

It referred to the decision of the Supreme Court in Mohan Singh v. International Airport Authority of India (1997), where a reference to the book of mandate on the construction of the statute has fortified the principle of the question as to whether a statute is mandatory or directory depends upon the intent of the Legislature and not upon the language in which the intent is clothed. It had remarked,

"The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provision, but also by considering its nature, its design, and the consequences which would follow from construing it the one way of the other."

The Supreme Court, in this case, further laid down that where the language of the statute creates a duty, a special remedy is required to be prescribed for non-performance of the duty. Applying the aforesaid principle, the interpretation of subsection (1) of section 43 of the Act of 2016 when the Appellate Tribunal is not established by the State within one year, as required by the Act of 2016, non-compliance since would not result in any consequence, the word used in section 43(1) of the Act of 2016 would be directory in nature.

It was further remarked that the State, in the exercise of power under proviso to sub-section (5), had ordered that until the Appellate Tribunal is constituted under RERA, the powers will be executed Chhattisgarh State Transport Appellate Tribunal.

Therefore, STAT was bestowed with the power to exercise the appellate function. The proviso Section 43(4)(2) reads that until the establishment of the Appellate Tribunal under section 43, the appropriate Government, by order, shall designate any Appellate Tribunal functioning under any law for the time being enforced to be the Appellate Tribunal to hear the appeal under the Act of 2016.

In the instant case, the STAT, which was an Appellate Tribunal functioning under the Motor Vehicles Act, 1988 and was constituted under Section 89 of the Motor Vehicle Act, 1988, was designated to exercise the power of the Appellate Tribunal of RERA. The Court remarked that prima facie, therefore conformant of power on STAT was done as per the power conferred under proviso to RERA Act, 2016

Section 43 of the RERA Act, 2016 further provides that after the Appellate Tribunal is established, the matter pending before the designated Appellate Tribunal shall be transferred to the Appellate Tribunal constituted under the RERA. Reading the proviso clause does not contemplate that Appellate Tribunal cannot be of a single member and was constituted under the Motor Vehicles Act, 1988; therefore, it would have the jurisdiction. It remarked,

"The proviso clause is qualified with the word that the designation to any other Appellate Tribunal can be functioning under any law for the time being enforce can exercise the power. Therefore, that qualified exception would bring it out the necessity of section 43(3) read with section 45 of the Act of 2016, wherein certain number of members are required to complete the constitution of forum i.e. Judicial & Technical/ Administrative Member."

Therefore, the order passed by the single-member STAT in exercising the power of the Real Estate Appellate Tribunal was held to be justified.

On whether the Tribunal was justified in law remanding the case to the adjudicating officer under Section 71 of RERA Act, 2016, the Court perused the order of the learned Appellate Tribunal. It noted that the direction given by the Tribunal is twofold- the first direction contains that an Architect should be appointed either of RERA or with the consent of both the litigant an inspection be carried out about the development done by the builder. The order further contains a direction that the litigants be given a chance to hear and produce evidence. After that, the second part of the direction contains that with the consent of both the parties/ litigants, different development and infrastructure changes required to be levied may be decided in the absence of agreement of same.

Case Title: M/s. Gold Bricks Infrastructures Pvt. Ltd v. Atit Agrawal and other connected matters

Citation: 2022 LiveLaw (Chh) 45

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