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M/s. Panchmal Properties A Proprietorship Concern Having Its Registered Office, Mangalore v/s Union of India, Rep. by the Secretary & Others

    Writ Appeal Nos. 3789 to 3791 of 2019
    Decided On, 05 March 2021
    At, High Court of Karnataka
    By, THE HONOURABLE MR. JUSTICE SATISH CHANDRA SHARMA & THE HONOURABLE MR. JUSTICE V. SRISHANANDA
    For the Appearing Parties: V. Sanjay Krishna, Laxminarayana, K. Manjunatha Rao Bhonsle, Advocates.


Judgment Text
Satish Chandra Sharma, J.

1. Writ appeal bearing WA.No.3789/2019 has been filed being aggrieved by the order dated 20.8.2019 passed by the learned Single Judge in WP.No.25211/2018 between M/s Panchmal Properties and Union of India and Others.

2. The facts of the case in WA.No.3789/2019 reveal that the appellant before this Court, who is a promoter of a mixed development Real Estate Project, namely Green Gates , situated at Padavu village, Mangaluru, has filed WP.No.25211/2018 praying for issuance of writ of mandamus directing the State of Karnataka to establish Real Estate Regulatory Authority and Real Estate Appellate Tribunal, as provided under Section 20(1) and Section 43(1) of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as Act of 2016 ). The appellant has also made a prayer for issuance of a writ of certiorari to strike down Rule 18(8) and 31(9) of the Karnataka Real Estate (Regulation and Development) Rules, 2017, (hereinafter referred to Rules of 2017) as ultra vires. A prayer was also made for quashment of the order dated 11.5.2018 passed by the Interim Authority constituted under the Rules of 2017.

3. The appellant herein, who is the petitioner in the writ petitioner (hereinafter referred to as the appellant for the sake of convenience) has stated before this Court that Act of 2016 came into force vide gazette notification dated 26.4.2016 and as per Section 20(1) of the Act of 2016, it was incumbent upon the State Government to establish an authority within a period of one year from the date of coming into force of the Act of 2016 viz., Real Estate Regulatory Authority. The Act of 2016 also provided that until a Regulatory Authority is established, the State Government shall, by an order, designate any Regulatory Authority or any Officer preferably the Secretary of the Department of Housing, as Regulatory Authority for the purposes under the Act.

4. The appellant has stated before the learned Single Judge that under Section 84 of the Act of 2016, it was mandatory to make Rules for carrying out the provisions of the Act of 2016 within six months from the date of commencement of the Act of 2016 and the State Government by 30.4.2017 was under an obligation to complete the process of framing of the Rules. It was further stated that the Government of India, vide notification dated 19.4.2017, w.e.f., 1.5.2017 brought into force the remaining provisions of the Act of 2016 relating to registration of Real Estate Projects with the Real Estate Regulatory Authority appointed under the Act of 2016. The appellant further contended that the State Government, after a lapse of about 15 months from the date of the commencement of the Act of 2016, on 11.7.2017 framed the Rules known as the Karnataka Real Estate (Regulation and Development) Rules, 2017 under Section 84 of the Act of 2016 and under Rule 18(8) of the Rules of 2017, made a provision for appointing the Secretary of the Housing Department as an Interim Regulatory Authority, for the period, beyond which the Interim Authority could be designated, in violation of the Act of 2016.

5. It has been further stated by the appellant that the Interim Regulatory Authority has assumed jurisdiction of a Regulatory Authority and has started dealing with the applications, complaints and cases with respect to Real Estate Projects, ignoring the mandate of law requiring composition of Authority consisting of a Chairman and not less than two whole time Members, as required under Section 21 of the Act of 2016.

6. The appellant further contended before the learned Single Judge that the Interim Regulatory Authority appointed under Rule 18(8) of the Rules of 2017 is ultra vires of the provisions of the Act of 2016 and the Interim Authority has no jurisdiction as a Real Estate Regulatory Authority to function and perform under the Act of 2016. The appellant has stated further that the Interim Authority has launched a web portal on 24.7.2017 and a public notice was also issued dated 19.8.2017 for registration of Projects under RERA. It was also mentioned in the public notice that non compliance, would attract penalties under Section 59(1) and (2) of the Act.

7. The appellant contended that it was served with a show cause notice dated 5.4.2018 pursuant to aforesaid public notice and a reply was filed by it on 5.4.2018. Subsequently, an order was passed on 11.5.2018 directing the appellant to pay a sum of Rs.76,94,000/- and in those circumstances, the appellant has approached this Court.

8. The appellant contended before the learned Single Judge that keeping in view Section 20(1) and also keeping in view Section 43(1) of the Act of 2016, the appropriate Government is required to establish an authority within a period of one year from the date of coming into force of the Act of 2016 i.e., Real Estate Regulatory Authority and Real Estate Appellate Tribunal. The appellant contended that the aforesaid two authorities were required to be established from the period from 1.5.2016 to 30.4.2017. However, in May 2017 the Rules of 2017 have been enacted and the Real Estate Regulatory Authority and the Real Estate Appellate Tribunal have been merely notified. It has been stated that the order passed by the Interim Regulatory Authority is bad in law as the State Government was not having a power to appoint the Interim Regulatory Authority beyond a period of one year as stated earlier and the appellant also does not have a remedy as the Appellate Tribunal has not been established.

9. The appellant also contended that the Rules of 2017 have been framed beyond the period of one year and the Real Estate Regulatory Authority and the Real Estate Appellate Tribunal have been constituted after the expiry of the period of one year and therefore, the Rules of 2017 are ultra vires the provisions of Section 20(1) and 43(1) of the Act of 2016.

10. The State Government has opposed the prayer made by the appellant and it was vehemently argued that it is well within the domain of the appropriate Government to designate any Regulatory Authority or any Officer for the purposes of the Act of 2016 and the State Government has rightly done so keeping in view Sections 20(1) and 43(1) of the Act of 2016 by framing Rules of 2017 and nominating the Interim Appellate Tribunal. It was also argued that it was well within the jurisdiction and competence of the State Government to frame the Rules of 2017 and to appoint the Interim Authorities. It was also submitted by the State Government that the expression shall under Section 20(1) and under Section 43(1) of the Act of 2016 is directory in nature. Learned counsel for the State also took a stand informing the learned Single Judge that the Supreme Court by an order dated 19.8.2019 passed in WP (C) No.43/2019 has directed the States and the Union Territories, who have not established the Real Estate Regulatory Authority and the Real Estate Appellate Tribunal under the Act of 2016, to do so, within a period of three months and in the State of Karnataka the Real Estate Regulatory Authority has been established and on 8.3.2019 a notification in respect of appointment of the Chairman and the Members of the Appellate Tribunal, has been issued.

11. The learned Single Judge, after dealing with the statutory provisions governing the field, has passed an order on 20.1.2019. Paragraphs 5 to 10 of the order passed by the learned Single Judge dated 20.1.2019 read as under:

5. I have considered the submissions made by learned counsel on both the sides and have perused the record. Before proceeding further, it is apposite to take note of relevant provisions Sections 20(1) & 43(4) of the Act, Rule 18(8) and Rule 31(9) of the Rules, which read as under:

20.Establishment and incorporation of Real Estate Regulatory Authority--

(1) The appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification, establish an Authority to be known as the Real Estate Regulatory Authority to exercise the powers conferred on it and to perform the functions assigned to it under this Act:

Xxxx

Xxxx

Provided also that until the establishment of a Regulatory Authority under this Section, the appropriate Government shall, by order, designate any Regulatory Authority or any officer preferably the Secretary of the department dealing with Housing, as the Regulatory Authority for the purposes under this Act.

43. Establishment of Real Estate Appellate Tribunal

(1) xxxx

(2) xxxx

(3) xxxx

(4) The appropriate Government of two or more States or Union territories may, if it deems fit, establish one single Appellate Tribunal.

Provided that, until the establish of an Appellate Tribunal under this section, the appropriate Government shall designate, by order, any Appellate Tribunal to hear appeals under the Act.

18. Manner of Section of Chairperson and Members of the Authority12

(1)xxxxxx

(2)xxxxxx

(8) The State Government shall appoint the Secretary of the Housing Department as Interim Regulatory Authority for the purpose of this Act in terms of sub-Section (1) of Section 20.

31. Manner of Section of Member of the Appellate Tribunal-

(1) xxxxx

(2) xxxxx

(9) The State Government shall nominate the Karnataka Appellate Tribunal as Interim Appellate Tribunal in terms of sub-Section (4) of Section 43.

6. Thus, from perusal of the aforesaid provisions, it is axiomatic that the provisos appended to Section 20(1) of the Act and Section 43(4) of the Act empowers the appropriate Government to designate any regulatory authority or to appoint any Appellate Tribunal to be the Appellate Tribunal to hear the appeals. Therefore, the Act itself empowers the appropriate government to constitute the Authority as well as an Appellate Authority on an interim basis under the Rules.

7. It is well settled in law that where a public officer is directed by a statute to perform duty in a specified time the provision as to the time has been held to be directory. [SEE: R VS. URBANOWSKI, 1976 1 ALLER 697']. Similar view has been taken while dealing with Section 17(1) of the industrial Disputes act, 1947 with regard to publication of an award and it has been held that publication of the award within a period of 30 days is not mandatory [SEE: REMINGTON RAND OF INDIA VS. WORKMEN, 1968 AIR(SC) 224, MUNICIPAL COMMITTEE CHARKHI DADRI VS. RAMJI LAL BAGLA, 1995 4 SCALE 559]. [SEE: PRINCIPLES OF STATUTORY INTERPRETION, 13th EDITION, PAGE 414, JUSTICE G.P.SINGH] [ALSO SEE: P.T.RAJAN VS. T.P.M.SAHIR, 2003 8 SCC 498 and UPSEB vs. SHIV MOHAN SINGH, 2004 8 SCC 402. For yet another reason, the provision is required to be held directory as no consequences of its non compliance had been mentioned in the statute. A directory provision is intended to be obeyed but a fulfillment to obey it does not render a thing duly done in disobedience of it a nullity. [SEE: DRIGRAJ KUAR (RANI) VS. AMAR KRISHNA NARAIN SINGH (RAJA), 1960 AIR(SC) 444']. It is equally well settled legal proposition that the subordinate legislation i.e., the Rules must be sub servient to the parent Act and in case the subordinate legislation contravenes the provision of the parent Act, the same would be ultra vires.

8. In the Backdrop of aforesaid well settled legal position, the facts of the case may be examined. Admittedly, the State Government has not constituted the Real Estate Regulatory Authority and Real Estate Appellate Tribunal within a period of one year. Therefore, the Notification of the aforesaid authorities beyond the period of one year has no bearing on its validity. The provisions to Section 20(1) and Section 43(1) empower the State Government to appoint the Real Estate Regulatory Authority as well as the Real Estate Appellate Tribunal on an interim basis. Therefore, it is evident that the Rules viz., Rules 18(8) and Rule 31(9) are not in contravention of the parent Act but are in consonance with the powers conferred therein. Therefore, the submission made on behalf of the petitioner that the provisions of the Rules are ultra vires, the Act is sans substance and does not deserve acceptance.

9. Against the impugned order dated 11.05.2018, which has been passed by the interim authority the petitioner has an alternative efficacious remedy of filing the appeal before the Appellate Tribunal constituted under Section 44 of the Act, therefore, no case for interference is made out at this stage. Needless to state that till the appeal is filed by the petitioner and the application for stay is considered by the Appellate Authority, the interim order granted by a bench of this court shall continue.

10. It has been stated by learned Additional Advocate General that the Real Estate Regulatory Authority has been established and has started functioning. Therefore, this Court deems it appropriate to direct that in case the Real Estate Regulatory Authority has not been established, the same shall be established positively within a period of one month from today as undertaken by the learned Additional Advocate General. Needless to state that the State Government shall provide all necessary infrastructure as well as the staff to ensure that the Real Estate Regulatory Authority becomes functional. Admittedly, the Real Estate Appellate Tribunal has only been notified and has not been established. In view of the undertaking given by the learned Additional Advocate General, it is directed that the Tribunal shall be established including the staff shall be provided to the Appellate Tribunal to make it functional in an effective manner within a period of one month from today. With the aforesaid directions, the petition is disposed of."

12. The appellant being aggrieved by the order passed by the learned Single Judge has preferred the present writ appeal and has raised the following grounds;

"1. Section 20(1) and 43(1) of the Act did not conceive of either designation of an officer as interim Regulatory Authority or designation of any Appellate Tribunal as an interim Appellate Tribunal beyond one year:-

It is a well settled position of law that a proviso cannot be read de hors the main provision. In the instant case, as per Section 20(1) and 43(1) of the Act, the 2nd respondent was required to establish a Regulatory Authority and an Appellate Tribunal within a period of one year and until then, a provision for designation of an interim Regulatory Authority and an interim Appellate Tribunal was made. Admittedly, the 2nd respondent designated the Interim Regulatory Authority and Interim Appellate Tribunal only after 10.7.2017 i.e., after a period of one year, as opposed to the period stipulated under the main provision of the Act. The Hon ble High Court of Rajasthan in similar matter has held that the proviso to Section 20 and Section 43 of the Act 2016 cannot be read de hors the main provision. A copy of the order passed by the Hon ble High Court of Rajasthan is produced for the ready reference and kind perusal of this Hon ble Court. It is submitted that since the designation of the Interim Regulatory Authority in exercise of the powers conferred under proviso to Section 20 and Section 43 of the Act by the State being de hors the main provision, the designation beyond the period of one year from the date of the section 20 and Section 43 of the Act coming into force, the order passed by such Interim Regulatory Authority vide the impugned Annexures at L, K and J respectively is a nullity in the eye of law, and hence liable to be set aside.

2) Statutory requirement prescribed under law cannot be an empty formality:

Assuming but not conceding that the Act did conceive of designation of an interim Regulatory Authority beyond one year, the proviso to section 20(1) as well as Section 43(1) of the Act required designation of an interim Regulatory Authority By Order of the 2nd respondent. Admittedly, in the present case, the appointment/nomination of the Interim Regulatory Authority/Interim Appellate Tribunal has been done by virtue of the Rules 18(8) and 31(9) and not By Order as stipulated. It is a well settled principle that where law provides for a particular thing to be done, in a particular manner, then such thing has to be done in the same prescribed manner and not in any other manner. The Division Bench of this Hon ble Court, in the matter of Samsthana Mahabaleshwara Devaru, while deciding a similar question, held that Where a power of given to do a certain thing in a certain way, the thing must be done in that way or not at all . (para 112 of the judgment). A copy of the judgment is produced for ready reference and kind perusal of this Hon ble court. It is submitted that when the Statute in the present case expressly provided for designation of an Interim Regulatory Authority By Order , it was not appropriate for the 2nd respondent to have appointed/nominated the Interim Regulatory Authority/Interim Appellate Tribunal by way of framing Rules in that regard."

13. The learned counsel for the appellant has placed reliance upon the judgment delivered by the High Court of Judicature, Rajasthan, in D.B.Civil Writs No.14186/2018, dated 18.12.2018, in the case of GRJ Distributors and Developers Private Ltd., vs., Union of India and connected matters and as well as the judgment delivered by the Karnataka High Court in WP.No.30690/2008, dated 10.8.2018 in the case of Samsthana Mahabaleshwara Devaru & ors., vs. Secretary, Revenue Department (Endowment), Government of India and Ors.,

14. On the other hand, the learned Government Advocate for the State has placed reliance upon the judgments delivered in the following cases;

1) LAKSHMANASAMI GOUNDER VS. C.I.T., SELVAMANI & OTHERS, 1992 1 SCC 91',

2) UNION OF INDIA & OTHERS VS. A.K.PANDEY, 2009 10 SCC 552',

3) DINESH CHANDRA PANDEY VS. HIGH COURT OF MADHYA PRADESH & ANOTHER, 2010 11 SCC 500,

4) MAY GEORGE VS. SPECIAL TAHSILDAR & OTHERS, 2010 13 SCC 98' and

5) PIONEER URBAN LAND & INFRASTRUCTURE LIMITED & ANR. VS. UNION OF INDIA & ORS. , W.P.(CIVIL) NO.43/2019.

15. This Court has carefully gone through the order passed by the learned Single Judge and the judgments relied upon by the learned counsel for the parties.

16. The Hon’ble Supreme Court, vide order dated 9.8.2019, in WP(C) No.43/2019, in the case of Pioneer Urban Land & Infrastructure Ltd., & Anr., vs. Union of India & Ors., in paragraph 87 has held as under:

"Postscript

87. We have been informed that most of the States and Union Territories have established/appointed adjudicating officers, the Real Estate Regulatory Authority, as well as the Appellate Tribunal as under the RERA. Yet, despite the fact that 1st May, 2017 has long gone, some recalcitrant States and Union Territories have yet to do the needful. We direct that in those States in which the needful has not been done, in that, only interim or no adjudicating officer/Real Estate Regulatory Authority and/or Appellate Tribunal have been appointed/established, such States/Union Territories are directed to appoint permanent adjudicating officers, a Real Estate Regulatory Authority and Appellate Tribunal within a period of three months from the date of this judgment. Copies of this judgment be sent to the Chief Secretaries of all the States and Union Territories immediately. To be placed for compliance by affidavits filed by the Chief Secretaries of these States and Union Territories within 3 months as aforesaid. Post these matters in the second week of January, 2020."

17. The Hon’ble Supreme Court, in the aforesaid judgment, has granted three months time to the States to appoint permanent Real Estate Regulatory Authority and Appellate Tribunal within a period of three months. In the present case, as informed by the learned Government Advocate, the Real Estate Regulatory Authority and the Appellate Tribunal have been established on 8.3.2019. Therefore, the learned Single Judge was justified in dismissing the writ petition as the petitioner does have an alternative remedy to prefer an appeal under Section 44 of the Act of 2016 before the Appellate Tribunal. The learned Single Judge was also justified in holding that where a public officer is directed by a statute to perform public duty in a specified time the provision as to the time has been held to be directory in the light of the judgments delivered in the case of R vs. Urbanowski (supra), Remington Rand of India vs. Workmen (supra) and Municipal Committee Charkhi Dadri vs. Ramji Lal Bagla (supra) and other cases.

18. The first ground raised by the appellant that the Interim Regulatory Authority or the Appellate Tribunal was not appointed within one year, does not help the appellant in any manner as the word used in the statute is shall and it is a settled proposition of law that the provision that includes the word shall is a directory provision and the provision is required to be held directory in case no consequences of its non c

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ompliance had been mentioned in the statute. 19. The second ground raised by the learned counsel for the appellant that the statutory requirement prescribed under the law cannot be an empty formality was also looked into by this Court. It is true that the statutory requirement prescribed under the law cannot be an empty formality, but merely because the Interim Regulatory Authority or the Appellate Tribunal have been constituted, it does not make out a case for declaring Rules 18(8) and 31(9) of the Rules of 2017 as ultra vires. The Rules have been framed by the State Government and the State Government is jurisdictionally competent to frame the Rules keeping in view the statutory provisions as contained under the Act of 2016, hence, the Rules are not arbitrary and therefore, the prayer to declare the Rules as ultra vires, is rejected. 20. The learned Single Judge has rightly arrived at a conclusion that the provision though it includes the word shall , it is a directory provision as the provision is required to be held directory, in case, no consequences of its non compliance had been mentioned in the statute. This Court is in agreement with the logic given and the reasoning assigned by the learned single Judge and does not find any reason to interfere with the order passed by the learned Single Judge. 21. The judgment delivered by the Rajasthan High Court in the case of GRJ Distributors and Developers Private Ltd., vs., Union of India (supra), does not help the appellant and the appellant does have a remedy of an appeal, as held by the learned Single Judge. 22. Resultantly, the writ appeal being devoid of merits and substance, is dismissed accordingly. No orders as to costs. 23. The other connected writ appeals bearing WA.No.3790/2019 and WA.No.3791/2019 are arising out of the order dated 20.8.2019 passed in WP.No.14105/2019 (M/s.Nandana Builders vs. Union of India and Others) and WP.No.26325/2018 (M/s.Suprabhat Constructions vs. Union of India and Others). The learned Single Judge keeping in view the order passed in an identical case, namely WP.No.25211/2018, has disposed of the writ petitions on the same terms and directions. Therefore, WA.No.3790/2019 and WA.No.3791/2019 are also dismissed in terms of the order passed in WA.No.3789/2019. Pending applications, if any, stand dismissed.
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