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M/s. Panchmal Properties v/s Union of India & Others

    Writ Petition No. 25211 of 2018
    Decided On, 20 August 2019
    At, High Court of Karnataka
    By, THE HONOURABLE MR. JUSTICE ALOK ARADHE
    For the Petitioner: V. Sanjay Krishna, Advocate. For the Respondents: Sandesh J. Chouta, B. Balakrishna, K. Manjunatha Rao Bhonsle, M.V. Prashanth, Advocates.


Judgment Text

Mr.Sanjay Krishna V., learned counsel for the petitioner.

Mr.Sandesh J. Chouta, learned Additional Advocate General along with Mr.B.Balakrishna, learned Additional Government Advocate for respondent No. 2.

Mr.K.Manjunatha Rao Bhonsle, learned counsel for the respondent No.1.

Mr.Prashanth M.V., learned counsel for respondent No. 3.

1. In this petition, the petitioner inter alia seeks a writ of mandamus directing respondent No.2 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 'the Act' for short). The petitioner also seeks a writ of certiorari to striked down Rules 18(8) and 31(9) of the Karnataka Real Estate (Regulation and Development) Rules,2017 as ultra vires, the Act (hereinafter referred to as 'the Rules' for short). The petitioner also seeks quashment of impugned order dated 11.05.2018 passed by the authority constituted under the Rules. In order to appreciate the petitioner's challenge few facts need mention, which are stated infra:

2. The petitioner is a promoter of mixed development real estate project for which it has obtained sanction of building plan from Bengaluru Mahanagara Palike on 09.01.2017. The petitioner commenced the project work on 07.03.2017. The provisions of Sections 2,20 to 39,41 to 58,71 to 78 and 81 to 92 of the Act came into force vide a Notification dated 26.04.2016 with effect from 01.05.2016. The remaining Sections of the Act came into force by a Notification dated 19.05.2017 with effect from 01.05.2017. The respondent No.2 framed the Rules, which came in to force on 11.07.2017. Under Rule 18(8) of the Rules, the Secretary of the Housing Department was appointed as Interim Regulatory Authority. The petitioner on 09.11.2017 applied for the project. On 01.12.2017, respondent No.3 issued a memorandum by which compulsory penalty was sought to be imposed on ongoing projects in respect of the builders who failed to register themselves before 31.07.2017. Thereafter, on 05.04.2018 a show cause notice was issued to the petitioner by respondent No.3. The petitioner responded to the aforesaid show cause notice by filing a reply on 05.04.2018. However, by an order dated 11.05.2018, the respondent No.3 directed the petitioner to pay a sum of Rs.76,94,000/- as penalty. In the aforesaid obtaining factual matrix, the petitioner has visited this court seeking the reliefs as stated supra:

3. Learned counsel for the petitioner while inviting the attention of this court to Section 20(1) of the Act as well as Section 43(1) of the Act submitted that the aforesaid provisions prescribed that appropriate Government shall within a period of one year from the date of coming into force of this Act by Notification shall establish authorities viz., Real Estate Regulatory Authority and the Real Estate Appellate Tribunal respectively under Sections 20(1) and 43(1) of the Act. It is further submitted that the aforesaid authorities were required to be established from the period from 01.05.2016 till 30.04.2017. However, in the month of May 2017, the Rules have been enacted and under the Rules viz., Rules 18(8) and Rule 31(9) of the Rules, the Real Estate Regulatory Authority and Real Estate Appellate Tribunal have been merely notified. It is further submitted that power to deal with violation in respect of Sections 3 and 4 of the Act lies with the authority and not the Adjudicating Officer. It is also submitted that petitioner does not have any alternative remedy as the Appellate Tribunal has not been established. It is also urged that since, the Rules have been framed beyond the period of one year and under Rules 18(8) and 31(9) the Real Estate Regulatory Authority and Real Estate Appellate Tribunal have been constituted. Therefore, the aforesaid Rules are ultra vires the provisions of Sections 20(1) and 43(1) of the Act respectively.

4. On the other hand, learned Additional Advocate General for the respondent No.1 has invited the attention of this court to proviso to Sections 20(1) and 43(1) of the Act and has submitted that the provisos empower the appropriate Government to designate any regulatory authority or any officer for the purposes of the Act. Therefore, in view of the proviso contained in Sections 20(1) and 43(1) of the Act, the Rules have been framed viz., Rule 18(8) and Rule 31(9), which provides for appointment of the Interim Regulatory Authority and for nomination of Interim Appellate Tribunal. Therefore, the aforesaid Rules cannot be held to be ultra vires the Act as they are in consonance with the provisos contained in the Act. It is further submitted that the expression 'shall' used in Section 20(1) and Section 43(1) of the Act is directory in nature. It is also submitted that Supreme Court by an order dated 19.08.2019 passed in W.P.(Civil)No.43/2019 has directed the States and Union Territories, which have not established the Real Estate Regulatory Authority and the Real Estate Appellate Tribunal under the Act, to do so within a period of three months. Learned Additional Advocate General also submitted that the Real Estate Regulatory Authority in the State of Karnataka has been established and on 08.03.2019, the Notification appointing Chairman and members of the Appellate Tribunal has been issued and the staff and space and all necessary infrastructure to establish the Tribunal shall be provided within a period of one month. It is also submitted that against the impugned order dated 11.05.2018, the petitioner has an alternative remedy before the Karnataka Appellate Tribunal constituted under Rule 43 of the Rules. In support of his submissions, learned Additional Advocate General has placed reliance on decisions of Supreme Court in 'LAKSHMANASAMI GOUNDER VS. C.I.T., SELVAMANI & OTHERS, (1992) 1 SCC 91', 'UNION OF INDIA & OTHERS VS. A.K.PANDEY, (2009) 10 SCC 552', 'DINESH CHANDRA PANDEY VS. HIGH COURT OF MADHYA PRADESH & ANOTHER, (2010) 11 SCC 500', 'MAY GEORGE VS. SPECIAL TAHSILDAR & OTHERS, (2010) 13 SCC 98', and 'PIONEER URBAN LAND & INFRASTRUCTURE LIMITED & ANR. VS. UNION OF INDIA & ORS.', W.P.(CIVIL) NO.43/2019.

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 Authority-

(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 a

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t 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.
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