M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. v. STATE OF UP & ORS. ETC.

The Judgment of the Court was delivered by RASTOGI, J.

1Copy pinpoint1. Leave granted.

2Copy pinpoint2. The present batch of appeals are filed at the instance of promoter/real estate developer assailing the common issues and certain provisions of The Real Estate(Regulation and Development) Act, 2016(hereinafter being referred to as “the Act”), The Uttar Pradesh Real Estate(Regulation and Development) Rules, 2016 (hereinafter referred to as “the Rules”) and the functioning of the Uttar Pradesh F Real Estate Regulatory Authority (hereinafter referred to as “the Authority”), although being decided by separate orders by the High Court of Allahabad, since the self-same questions are involved with the consent are being decided by the present judgment.

3Copy pinpoint3. The respondents herein are the allottees/home buyers who have G made their substantial investment from their hard earned savings under the belief that the promotor/real estate developer will hand over possession of the unit in terms of home buyer’s agreement but their bonafide belief stood shaken when the promotors failed to hand over possession of a unit/plot/building in terms of the agreement and complaints were instituted H

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by the home buyers for refund of the investment made along with interest A under Section 31 of the Act.

4Copy pinpoint4. The impugned orders came to be passed by the single member of the authority on the complaint instituted at the instance of the home buyers/allottees after hearing the parties with the direction to refund the principal amount along with interest(MCLR + 1%) as prescribed by the B State Government under the Act. In the ordinary course of business, the order passed by the authority is appealable under Section 43(5) of the Act provided the statutory compliance of pre-deposit being made under proviso to Section 43(5) before the Appellate Tribunal but the promoter/ real estate developers approached the High Court by filing a writ petition under Articles 226 and 227 of the Constitution questioning the order passed by the authority holding it to be without jurisdiction as it has been passed by a single member of the authority who according to the appellants holds no jurisdiction to pass such orders of refund of the amount as contemplated under Section 18 of the Act and have also challenged the condition of pre-deposit as envisaged under proviso to Section 43(5) of the Act for filing of a statutory appeal and raised certain ancillary questions for consideration in writ jurisdiction of the High Court of Allahabad. Being aggrieved by the orders passed by the High Court dismissing their writ petitions, the present batch of appeals have been preferred at the instance of the promoters/real estate developers. E

5Copy pinpoint5. Before adverting to the legal submissions made before us, we consider it appropriate to take a bird’s-eye view of the scheme of the Act 2016 which may be apposite for proper appreciation of the submissions made by the parties. Object and Reasons of the Act 2016 F

6Copy pinpoint6. Over the past two decades, with the growth of population and the attraction of the people to shift towards urbanization, the demand for housing increased manifold. Government also introduced various housing schemes to cope with the increasing demand but the experience shows that demands of the housing sector could not be meted out by the G Government at its own level for various reasons to meet the requirement, the private players entered into the real estate sector in meeting out the rising demand of housing. Though availability of loans, both from public and private banks, become easier, still the High rate of interest and the EMI has posed additional financial burden on the people. H

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7Copy pinpoint7. At the given time, the real estate and housing sector was largely unregulated and the consequence was that consumers were unable to procure complete information for enforced accountability towards builders and developers in the absence of an effective mechanism in place. Though, The Consumer Protection Act, 1986 was available to cater the demand of home buyers in the real estate sector but the experience shows that this mechanism was inadequate to address the needs of the home buyers and promoters in the real estate sector.

8Copy pinpoint8. At this juncture, the need for Real Estate (Regulation) Bill was badly felt for establishing an oversight mechanism to enforce accountability to the real estate sector and providing an adjudicating machinery for speedy dispute redressal mechanism and safeguarding the investments made by the home buyers through legislation to the extent permissible under the law.

9Copy pinpoint9. The statement of object and reasons of the Act indicates that the primal position of the regulatory authority is to regulate the real estate sector having jurisdiction to ensure compliance with the obligation cast upon the promoters. The opening statement of objects and reasons which has a material bearing on the subject reads as follows:- “The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While E this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardisation 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 F is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardisation, has been a constraint to the healthy and orderly growth of industry. Therefore, the need to regulating the sector has been emphasised in various forums.

2. In view of the above, it becomes necessary to have a Central G legislation, namely, the Real Estate (Regulation and Development) Bill, 2013, in the interest of the effective consumer protection, uniformity and standardisation 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 H

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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.”

10Copy pinpoint10. It was introduced with an object to ensure greater accountability towards consumers, to significantly reduce frauds & delays and also the current high transaction costs, and 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. It also proposes to induct professionalism and standardization in the sector, thus paving the way for accelerated growth and investments in the long run.

11Copy pinpoint11. Some of the relevant Statement of Objects and Reasons are extracted as under:- “4… D (d) to impose liability upon the promoter to pay such compensation to the allottees, in the manner as provided under the proposed legislation, in case if he fails to discharge any obligations imposed on him under the proposed legislation; (f) the functions of the Authority shall, inter alia, include – (i) to render advice to the appropriate Government in matters relating to the development of real estate sector; (ii) to publish and maintain a website of records of all real estate projects for which registration has been given, with such details as may be prescribed; (iii) to ensure compliance of the obligations cast upon the promoters, the allotees and the real estate agents under the proposed legislation. … (i) to appoint an adjudicating officer by the Authority for adjudging compensation under sections 12, 14 and 16 of the proposed legislation. G ...”

12Copy pinpoint12. The Bill provides for establishment of the authority for regulation and promotion of real estate sector, to ensure sale of plot, apartment or building or sale of real estate project in an efficient and H

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A transparent manner and to protect the interest of consumers in the real estate sector and provide the adjudicating mechanism for speedy dispute redressal mechanism by establishing the regulatory authority and the adjudicating officer and in hierarchy, the Appellate Tribunal for early and prompt disposal of the complaint being instituted primarily by the home buyers for whom this Act has been enacted by the Parliament in B 2016.

13Copy pinpoint13. To examine the matter in this perspective, consider what a house means in India. The data shows that about more than 77% of total assets of an average Indian household are held in real estate and it’s the single largest investment of an individual in his lifetime. The real estate in India has a peculiar feature. The buyer borrows money to pay for a house and simultaneously plays the role of a financer as building projects collect money upfront and this puts the buyer in a very vulnerable position- the weakest stakeholder with a high financial exposure. The amendment to the Insolvency and Bankruptcy Code, 2018 recognised the home buyers as financial creditors and the present enactment is the most important regulatory intervention in favour of the home buyers and it’s had an impact and with passage of time, has become a yardstick of laying down minimum standards in the market. Earlier, the real estate sector was completely unregulated and there was no transparency in their business profile and after the present enactment, it is open for the potential home buyers to check if a project is approved under the Act, 2016 that at least gives a satisfaction to a person who is coming forward in making a lifetime investment.

14Copy pinpoint14. That apart from the project being statutorily regulated, it attaches certain authenticity with regard to completion of the project and a statutory obligation upon the developer and home buyer to abide by the terms and conditions of the home buyers agreement and statutory compliance to the mandate of law. In addition, any project which is approved under the Act, 2016 helps the promoter in raising funds from banks and statistics shows that buyers express their satisfaction in approved projects which is beneficial not only to the home buyers but to the promoters and real estate agents as well.

15Copy pinpoint15. Chapter II of the Act relates to the registration of real estate projects. Section 3 mandates prior registration of real estate projects including ongoing projects with the Real Estate Regulatory Authority. H Section 4 prescribes the ingredients of application by the promotor for

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registration of real estate projects. In particular, the promotor is required A to state in the application under sub-section 2(L)(c ) of Section 4, the timelines for completion of the project. Section 5 relates to the grant of registration by the authority and inter alia states that no application shall be rejected unless the applicant has been given an opportunity of being heard in the matter. As per Section 5(3) of the Act, the registration is co- B terminus with the completion of the project. Under Section 6, the authority can extend registration based on the facts of each case or the occurrence of the force majeure. Section 7 pertains to revocation of registration. As per Section 8, the authority is under obligation to inter alia carry out the remaining development work where there is lapse or revocation of the registration. C

16Copy pinpoint16. Chapter III lays down, ‘functions and duties of promotor’ which is relevant for the purpose of the present case. Section 11 thereof elaborates on the functions and duties of the promoters. Under sub- Section (4) of Section 11, several obligations have been casted upon the promoters. Under sub-section (5) of Section 11, the promoter may cancel the allotment if the allottee/home buyer commits any breach of the terms of the agreement for sale, and in such case, the aggrieved allottee has the right to approach the authority.

17Copy pinpoint17. Section 12 provides that if any default being committed by the promoter, either in reference to the information contained in the notice, advertisement or prospectus or on the basis of the model apartment, plot or building which causes any loss or damage to the allottee/home buyer by reason of any incorrect or false statement or wants to withdraw from the project, he shall be compensated by the promoter in the manner as prescribed under the Act. F

18Copy pinpoint18. Section 14 relates to adherence to Sanctioned Plans & Project specification by the promoters and Section 14(3) empowers the allottee to receive compensation in the event where there is any structural defect.

19Copy pinpoint19. Section 18(1) of the Act spells out the consequences if the promoter fails to complete or is unable to give possession of an apartment, G plot or building either in terms of the agreement for sale or to complete the project by the date specified therein or on account of discontinuance of his business as a developer either on account of suspension or revocation of the registration under the Act or for any other reason, the allottee/home buyer holds an unqualified right to seek refund of the amount with interest at such rate as may be prescribed in this behalf. H

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20Copy pinpoint20. Section 18(2) of the Act mandates that in case, loss is caused to allottee due to defective title of the land, on which the project is being developed or has been developed, the promoter shall compensate the allottee and such claim for compensation under Section 18(2) shall not be barred by limitation provided under any law for the time being in force. B

21Copy pinpoint21. Section 18(3) of the Act states that where the promoter fails to discharge any other obligation under the Act or the rules or regulations framed thereunder or in accordance with the terms and conditions of the agreement for sale, the promoter shall be liable to pay ‘such compensation’ to the allottees, in the manner as prescribed under the C Act.

22Copy pinpoint22. If we take a conjoint reading of sub-sections (1), (2) and (3) of Section 18 of the Act, the different contingencies spelt out therein, (A) the allottee can either seek refund of the amount by withdrawing from the project; (B) such refund could be made together with interest D as may be prescribed; (C) in addition, can also claim compensation payable under Sections 18(2) and 18(3) of the Act; (D) the allottee has the liberty, if he does not intend to withdraw from the project, will be required to be paid interest by the promoter for every months’ delay in handing over possession at such rates as may be prescribed.

23Copy pinpoint23. Correspondingly, Section 19 of the Act spells out “Rights and duties of allottees”. Section 19(3) makes the allottee entitled to claim possession of the apartment, plot or building, as the case may be. Section 19(4) provides that if the promoter fails to comply or being unable to give possession of the apartment, plot or building in terms of the agreement, it makes the allottees entitled to claim the refund of amount paid along with interest and compensation in the manner prescribed under the Act.

24Copy pinpoint24. Section 19(4) is almost a mirror provision to Section 18(1) of the Act. Both these provisions recognize right of an allottee two distinct remedies, viz, refund of the amount together with interest or interest for delayed handing over of possession and compensation.

25Copy pinpoint25. The unqualified right of the allottee to seek refund referred under Section 18(1)(a) and Section 19(4) of the Act is not dependent on any contingencies or stipulations thereof. It appears that the legislature has consciously provided this right of refund on demand as an unconditional absolute right to the allottee, if the promoter fails to give possession of H

M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 935 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]

the apartment, plot or building within the time stipulated under the terms of the agreement regardless of unforeseen events or stay orders of the Court/Tribunal, which is in either way not attributable to the allottee/ home buyer, the promoter is under an obligation to refund the amount on demand with interest at the rate prescribed by the State Government including compensation in the manner provided under the Act with the proviso that if the allottee does not wish to withdraw from the project, he shall be entitled for interest for the period of delay till handing over possession at the rate prescribed.

26Copy pinpoint26. If we turn to the power of the authority, it envisages under Section 31, the complaints can be filed either with the authority or adjudicating officer for violation or contravention of the provisions of the C Act or the rules and regulations framed thereunder. Such complaint can be filed against “any promoter, allottee or real estate agent”, as the case may be, and can be filed by “any aggrieved person”, and it has to be read with an explanation, “person” includes an association of allottees or any voluntary consumer association registered under any law for the time being in force. The form and manner in which complaint is to be instituted has been provided under sub-section(2) of Section 31.

27Copy pinpoint27. Section 32 refers to functions of the authority for promotion of real estate sector and Sections 34 to 38 of the Act recognize different nature of powers and functions of the authority regarding compliance of its regulations cast upon the promoters, allottee or the real estate agents and to appoint one or more persons to make an inquiry into the affairs of any promoter, allottee or the real estate agent and to pass any interim orders, if the promoter, allottee or real estate agent is failing in discharging of its functions under the Act, rules or regulations, and to issue directions from time to time to the promoter, allottee or real estate agents, if considered necessary can impose penalty or interest if failed to carry out its obligations.

28Copy pinpoint28. At the same time, Chapter VIII of the Act talks about offences, penalties and adjudication. Various kinds of penalties are set out in Sections 59 to 68. Each of these provisions clearly states that the penalty thereunder is required to be determined by the authority.

29Copy pinpoint29. We are concerned with Section 71 of the Act titled ‘power to adjudicate’ which is specific to the adjudicating officer. Sub-section(1) of Section 71 opens with the words “for the purpose of adjudging H

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A compensation under Sections 12, 14, 18 and 19”, the Authority has to appoint in consultation with the appropriate Government, a judicial officer not below the rank of the District Judge, as an adjudicating officer, to hold inquiry in the prescribed manner after giving a person concerned a reasonable opportunity of hearing. At the same time, sub-section (2) casts an obligation upon the adjudicating officer that while adjudging compensation under sub-section (1), the application has to be dealt with expeditiously as possible and to be disposed of within 60 days. If there is a delay being caused exceeding the statutory period of 60 days, in disposal of the application, reasons are to be recorded for extension of the period.

30Copy pinpoint30. Under sub-section (3) of Section 71, the adjudicating officer has been empowered not only to summon and enforce the attendance of persons acquainted with the facts and circumstances of the case to give evidence or to produce any document which may be useful and relevant for adjudication, is supposed to take note of the various parameters as referred to under Section 72 which still is illustrative and not exhaustive while adjudging the quantum of compensation payable to the person aggrieved and interest, as the case may be.

31Copy pinpoint31. After we have heard learned counsel for the parties at length, the following questions emerges for our consideration in the present batch of appeals are as under:-

E 1. Whether the Act 2016 is retrospective or retroactive in its operation and what will be its legal consequence if tested on the anvil of the Constitution of India?

2. Whether the authority has jurisdiction to direct return/refund of the amount to the allottee under Sections 12, 14, 18 and 19 of the Act or F the jurisdiction exclusively lies with the adjudicating officer under Section 71 of the Act?

3. Whether Section 81 of the Act authorizes the authority to delegate its powers to a single member of the authority to hear complaints instituted under Section 31 of the Act? G

4. Whether the condition of pre-deposit under proviso to Section 43(5) of the Act for entertaining substantive right of appeal is sustainable in law?

5. Whether the authority has power to issue recovery certificate for recovery of the principal amount under Section 40(1) of the Act? H

M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 937 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]

Question 1:- Whether the Act 2016 is retrospective or retroactive in its operation and what will be its legal consequence if tested on the anvil of the Constitution of India?

32Copy pinpoint32. The issue concerns the retroactive application of the provisions of the Act 2016 particularly, with reference to the ongoing projects. If we take note of the objects and reasons and the scheme of the Act, it manifests that the Parliament in its wisdom after holding extensive deliberation on the subject thought it necessary to have a central legislation in the paramount interest for effective consumer protection, uniformity and standardisation of business practices and transactions in the real estate sector, to ensure greater accountability towards consumers, to overcome frauds and delays and also the higher transaction costs, and accordingly intended to balance the interests of consumers and promoters by imposing certain duties and responsibilities on both. The deliberation on the subject was going on since 2013 but finally the Act was enacted in the year 2016 with effect from 25th March, 2016.

33Copy pinpoint33. Under Chapter II of the Act 2016, registration of real estate projects became mandatory and to make the statute applicable and to take its place under sub-Section (1) of Section 3, it was made statutory that without registering the real estate project with a real estate regulatory authority established under the Act, no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner E a plot, apartment or building, as the case may be in any real estate project but with the aid of proviso to Section 3(1), it was mandated that such of the projects which are ongoing on the date of commencement of the Act and more specifically the projects to which the completion certificate has not been issued, such promoters shall be under obligation to make an application to the authority for registration of the said project within a F period of three months from the date of commencement of the Act. With certain exemptions being granted to such of the projects covered by sub-section (2) of Section 3 of the Act, as a consequence, all such home buyers agreements which has been executed by the parties inter se has to abide the legislative mandate in completion of their ongoing G running projects.

34Copy pinpoint34. The term “ongoing project” has not been so defined under the Act while the expression “real estate project” is defined under Section 2(zn) of the Act which reads as under:- H

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A “2(zn) “real estate project” means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of land into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or building, as the case may be, and includes the common areas, the development B works, all improvements and structures thereon, and all easement, rights and appurtenances belonging thereto;”

35Copy pinpoint35. The Act is intended to comply even to the ongoing real estate project. The expression “ongoing project” has been defined under Rule 2(h) of the Uttar Pradesh Real Estate (Regulation and Development) C Rules, 2016 which reads as under:- “2(h) “Ongoing project” means a project where development is going on and for which completion certificate has not been issued but excludes such projects which fulfil any of the following criteria on the date of notification of these rules: D (i) where services have been handed over to the Local Authority for maintenance. (ii) where common areas and facilities have been handed over to the Association for the Residents’ Welfare Association for maintenance. (iii) where all development work have been completed and sale/ lease deeds of sixty percent of the apartment/houses/plots have been executed. (iv) where all development works have been completed and application has been filed with the competent authority for issue of completion certificate.”

36Copy pinpoint36. The expression “completion certification” has been defined under Section 2(q) and “occupancy certificate” under Section 2(zf) of the Act which reads as under:- G “2(q) “completion certificate” means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws;

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2(zf) “occupancy certificate” means the occupancy certificate, or such other certificate, by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity;”

37Copy pinpoint37. Looking to the scheme of Act 2016 and Section 3 in particular of which a detailed discussion has been made, all “ongoing projects” that commence prior to the Act and in respect to which completion certificate has not been issued are covered under the Act. It manifests that the legislative intent is to make the Act applicable not only to the projects which were yet to commence after the Act became operational but also to bring under its fold the ongoing projects and to protect from its inception the inter se rights of the stake holders, including allottees/ home buyers, promoters and real estate agents while imposing certain duties and responsibilities on each of them and to regulate, administer and supervise the unregulated real estate sector within the fold of the real estate authority. D

38Copy pinpoint38. The emphasis of Mr. Kapil Sibal, learned senior counsel for the appellant is that the agreement of sale was executed in the year 2010-11, i.e. much before the coming into force of the Act and the present Act has retrospective application and registration of ongoing project under the Act would be in contravention to the contractual rights established between the promoter and allottee under the agreement for sale executed which is impermissible in law and further submits that Sections 13, 18(1), 19(4) of the Act 2016 to the extent of their retrospective application is in violation of Articles 14, 19(1)(g) of the Constitution of India.

39Copy pinpoint39. Mr. Tushar Mehta, learned Solicitor General, on the other hand, submits that a bare perusal of the object and reasons manifest that the Act does not take away the substantive jurisdiction, rather it protects the interest of homebuyers where project/possession is delayed and further submits that the scheme of the Act has retroactive application, which is permissible under the law. The provisions make it clear that it operates in future, however, its operation is based upon the character and status which have been done earlier and the presumption against retrospectivity in this case is ex-facie rebuttable. The literal interpretation of the statute manifest that it has not made any distinction between the “existing” real estate projects and “new” real estate projects as has been defined under Section 2(zn) of the Act. H

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40Copy pinpoint40. Learned counsel further submits that the key word, i.e., “ongoing on the date of the commencement of this Act” by necessary implication, ex-facie and without any ambiguity, means and includes those projects which were ongoing and in cases where only issuance of completion certificate remained pending, legislature intended that even those projects have to be registered under the Act. Therefore, the ambit of Act is to bring all projects under its fold, provided that completion certificate has not been issued. The case of the appellant is based on “occupancy certificate” and not of “completion certificate”. In this context, learned counsel submits that the said proviso ought to be read with Section 3(2)(b), which specifically excludes projects where completion certificate has been received prior to the commencement of the Act. Thus, those projects under Section 3(2) need not be registered under the Act and, therefore, the intent of the Act hinges on whether or not a project has received a completion certificate on the date of commencement of the Act.

41Copy pinpoint41. The clear and unambiguous language of the statute is retroactive in operation and by applying purposive interpretation rule of statutory construction, only one result is possible, i.e., the legislature consciously enacted a retroactive statute to ensure sale of plot, apartment or building, real estate project is done in an efficient and transparent manner so that the interest of consumers in the real estate sector is protected by all means and Sections 13, 18(1) and 19(4) are all beneficial provisions for safeguarding the pecuniary interest of the consumers/allottees. In the given circumstances, if the Act is held prospective then the adjudicatory mechanism under Section 31 would not be available to any of the allottee for an on-going project. Thus, it negates the contention of the promoters regarding the contractual terms having an overriding effect over the retrospective applicability of the Act, even on facts of this case.

42Copy pinpoint42. What the provision further emphasizes is that a promoter of a project which is not complete/sans completion certificate shall get the project registered under the Act but while getting the project registered, promoter is under an obligation to prescribe fresh timelines for getting the remaining development work completed and from the scheme of the Act, we do not find that the first proviso to Section 3(1) in any manner is either violative of Articles 14 and 19(1)(g) of the Constitution of India. The Parliament is always competent to enact any law affecting the antecedent events under its fold within the parameters of law. H

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43Copy pinpoint43. In State of Bombay (Now Maharashtra) versus Vishnu A Ramchandra1, this Court observed that if the part of requisites for operation of the statute were drawn from a time antecedent to its passing, it did not make the statute retrospective so long as the action was taken after the Act came into force.

44Copy pinpoint44. To meet out different nature of exigencies, it was noticed by the Parliament that Pan India, large number of real estate projects where the allottees did not get possession for years together and complaints being filed before different forums including under the Consumer Protection Act has failed to deliver adequate/satisfactory results to the consumer/allottees and their life savings is locked in and sizable sections of allottees had invested their hard-earned money, money obtained through loans or financial institutions with the belief that they will be able to get a roof in the form of their apartments/flats/unit.

45Copy pinpoint45. At the given time, there was no law regulating the real estate sector, development works/obligations of promoter and allottee, it was badly felt that such of the ongoing projects to which completion certificate has not been issued must be brought within the fold of the Act 2016 in securing the interests of allottees, promoters, real estate agents in its best possible way obviously, within the parameters of law. Merely because enactment as prayed is made retroactive in its operation, it cannot be said to be either violative of Articles 14 or 19(1)(g) of the Constitution of E India. To the contrary, the Parliament indeed has the power to legislate even retrospectively to take into its fold the pre-existing contract and rights executed between the parties in the larger public interest.

46Copy pinpoint46. The consequences for breach of such obligations under the Act are prospective in operation and in case ongoing project, of which completion certificate is not obtained, are not to be covered under the Act, there is every likelihood of classifications in respect of underdeveloped ongoing project and the new project to be commenced.

47Copy pinpoint47. The legislative power to make the law with prospective/ retrospective effect is well recognized and it would not be permissible for the appellants/promoters to say that they have any vested right in dealing with the completion of the project by leaving the allottees in lurch, in a helpless and miserable condition that at least may not be acceptable within the four corners of law. 1 AIR 1961 SC 307 H

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48Copy pinpoint48. The distinction between retrospective and retroactive has been explained by this Court in Jay Mahakali Rolling Mills Vs. Union of India and Others2, which reads as under:- “8. ”Retrospective” means looking backward, contemplating what is past, having reference to a statute or things existing before the B statute in question. Retrospective law means a law which looks backward or contemplates the past; one, which is made to affect acts or facts occurring, or rights occurring, before it comes into force. Retroactive statute means a statute, which creates a new obligation on transactions or considerations or destroys or impairs vested rights.” C

49Copy pinpoint49. Further, this Court in Shanti Conductors Private Limited and Another Vs. Assam State Electricity Board and Others3, held as under:- “67. Retroactivity in the context of the statute consists of application of new rule of law to an act or transaction which has been completed before the rule was promulgated.

68. In the present case, the liability of buyer to make payment and day from which payment and interest become payable under Sections 3 and 4 does not relate to any event which took place prior to the 1993 Act, it is not even necessary for us to say that the 1993 Act is retroactive in operation. The 1993 Act is clearly prospective in operation and it is not necessary to term it as retroactive in operation. We, thus, do not subscribe to the opinion dated 31-8-2016 [Shanti Conductors (P) Ltd. v. Assam SEB, (2016) 15 SCC 13] of one of the Hon’ble Judges holding that the F 1993 Act is retroactive.”

50Copy pinpoint50. In the recent judgment of this Court rendered in the case of Vineeta Sharma Vs. Rakesh Sharma and Others4 wherein, this Court has interpreted the scope of Section 6(1) of the Hindu Succession Act, 1956, the law of retroactive statute held as under:- G “61. The prospective statute operates from the date of its enactment conferring new rights. The retrospective statute operates backwards and takes away or impairs vested rights 2 2007(12) SCC 198 3 2019(19) SCC 529 4 H 2020(9) SCC 1

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acquired under existing laws. A retroactive statute is the one that does not operate retrospectively. It operates in futuro. However, its operation is based upon the character or status that arose earlier. Characteristic or event which happened in the past or requisites which had been drawn from antecedent events. Under the amended Section 6, since the right is given by birth, that is, an antecedent event, and the provisions operate concerning claiming rights on and from the date of the Amendment Act.”

51Copy pinpoint51. Thus, it is clear that the statute is not retrospective merely because it affects existing rights or its retrospection because a part of the requisites for its action is drawn from a time antecedent to its passing, at the same time, retroactive statute means a statute which creates a C new obligation on transactions or considerations already passed or destroys or impairs vested rights.

52Copy pinpoint52. The Parliament intended to bring within the fold of the statute the ongoing real estate projects in its wide amplitude used the term “converting and existing building or a part thereof into apartments” D including every kind of developmental activity either existing or upcoming in future under Section 3(1) of the Act, the intention of the legislature by necessary implication and without any ambiguity is to include those projects which were ongoing and in cases where completion certificate has not been issued within fold of the Act. E

53Copy pinpoint53. That even the terms of the agreement to sale or home buyers agreement invariably indicates the intention of the developer that any subsequent legislation, rules and regulations etc. issued by competent authorities will be binding on the parties. The clauses have imposed the applicability of subsequent legislations to be applicable and binding on the flat buyer/allottee and either of the parties, promoters/home buyers or allottees, cannot shirk from their responsibilities/liabilities under the Act and implies their challenge to the violation of the provisions of the Act and it negates the contention advanced by the appellants regarding contractual terms having an overriding effect to the retrospective applicability of the Authority under the provisions of the Act which is completely misplaced and deserves rejection.

54Copy pinpoint54. From the scheme of the Act 2016, its application is retroactive in character and it can safely be observed that the projects already completed or to which the completion certificate has been granted are not under its fold and therefore, vested or accrued rights, if any, in no H

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A manner are affected. At the same time, it will apply after getting the on- going projects and future projects registered under Section 3 to prospectively follow the mandate of the Act 2016. Question no. 2: Whether the authority has jurisdiction to direct return/refund of the amount to the allottee under Sections 12, B 14, 18 and 19 of the Act or the jurisdiction exclusively lies with the adjudicating officer under Section 71 of the Act?

55Copy pinpoint55. Before examining the question, we have to take a holistic view of the scheme of the Act along with the rules/regulations framed by the Authority in exercise of its powers under Sections 84 and 85 of the Act that postulates certain functions and duties to the promoter of the real estate project and its entailing consequences if the promoter fails to fulfil his obligations defined under Chapter III. Some of the obligations are spelt out in Sections 12, 14, 18 and 19 of the Act.

56Copy pinpoint56. Section 12 which falls for consideration in these petitions reads as follows: “12. Where any person makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building, at the case may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be compensated by the promoter in the manner as provided under this Act:” Provided that if the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, or the model apartment, plot or building, as the case may be, intends to withdraw from the proposed project, he shall be returned his entire investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act.”

57Copy pinpoint57. Section 14 relates to adherence to sanctioned plans and project specifications by the promoter. Section 14(3) empowers the allottee to receive compensation in the event there is any structural defect or any other defect in workmanship etc. Section 14(3) reads as under: “(3) In case any structural defect or any other defect in workmanship, quality or provision of services or any other H

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obligations of the promoter as per the agreement for sale relating to such development is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act.”

58Copy pinpoint58. Section 18 starts with the marginal note “Return of amount and compensation”. The two aspects namely ‘return of amount’ and ‘compensation’ are distinctly delineated. Section 18 reads as follows: C 18.(1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building,- (a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or D (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without E prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act: F Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed. (2) The promoter shall compensate the allottees in case of any G loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force. H

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A (3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act. B (emphasis supplied)

59Copy pinpoint59. Chapter IV deals with the rights and duties of the allottees and in particular, Section 19(4) entitles the allottees to a refund of the amount paid. Section 19(4) reads as follows:- “(4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder.”

60Copy pinpoint60. Section 31 relates to the filing of complaints to the authority and reads as follows: E Filing of complaints with the Authority or the adjudicating officer— (1) Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and F regulations made thereunder, against any promoter, allottee or real estate agent, as the case may be. Explanation—For the purpose of this sub-section “person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force. G (2) The form, manner and fees for filing complaint under sub- section (1) shall be such as may be prescribed.

61Copy pinpoint61. Section 71 relates to Power to Adjudicate vested with the adjudicating officer while adjudging compensation which reads as follows:

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71. Power to adjudicate.— A (1) For the purpose of adjudging compensation under sections 12, 14, 18 and section 19, the Authority shall appoint, in consultation with the appropriate Government, one or more judicial officer as deemed necessary, who is or has been a District Judge to be an adjudicating officer for B holding an inquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard: Provided that any person whose complaint in respect of matters covered under sections 12, 14, 18 and section 19 is pending before the Consumer Disputes Redressal Forum or the Consumer C Disputes Redressal Commission or the National Consumer Redressal Commission, established under Section 9 of the Consumer Protection Act, 1986 (68 of 1986), on or before the commencement of this Act, he may, with the permission of such Forum or Commission, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating D officer under this Act. (2) The application for adjudging compensation under sub- section (1), shall be dealt with by the adjudicating officer as expeditiously as possible and dispose of the same within a period of sixty days from the date of receipt of the application: Provided E that where any such application could not be disposed of within the said period of sixty days, the adjudicating officer shall record his reasons in writing for not disposing of the application within that period. (3) While holding an inquiry the adjudicating officer shall have power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document which in the opinion of the adjudicating officer, may be useful for or relevant to the subject matter of the inquiry and if, on such inquiry, he is satisfied that the person has failed to comply with the provisions of any of the sections specified in sub-section (1), he may direct to pay such compensation or interest, as the case any be, as he thinks fit in accordance with the provisions of any of those sections.

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62Copy pinpoint62. The broad factors to be considered while adjudging compensation have been provided under Section 72 which reads as under:- “72. While adjudging the quantum of compensation or interest, as the case may be, under section 71, the B adjudicating officer shall have due regard to the following factors, namely:— (a) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; (b) the amount of loss caused as a result of the default; C (c) the repetitive nature of the default; (d) such other factors which the adjudicating officer considers necessary to the case in furtherance of justice.”

63Copy pinpoint63. The Uttar Pradesh Real Estate Regulatory Authority in exercise of its power under Section 85 of the Act 2016 has framed its regulations on 27th February, 2019 called as Uttar Pradesh Real Estate Regulatory Authority(General) Regulations, 2019 (hereinafter being referred to as “Regulations 2019”).

64Copy pinpoint64. Regulations 18 to 23 deal with meetings of the authority, other than adjudication proceedings. Regulation 24 falls in the chapter of “Adjudicatory Proceedings” and reads as follows:- “24(a) For adjudication proceedings with respect to complaints filed with the Authority, the Authority may, by order, direct that specific matters or issues be heard and decided by a single bench of either the Chairperson or any Member of the Authority. (b) The Authority, in consultation with the state government, will appoint Adjudicating Officers on the Panel of U.P. RERA for the purposes of adjudicating the matters of compensation admissible under the Act. G (c) The aggrieved persons will be required to file complaints before the Authority online in form – M. The Claims of compensation will also be included in form – M itself. While the Authority will decide all the questions of breaches of the Act, Rules and Regulations, it will refer the question relating to the adjudication of compensation to one of the Adjudicating Officers on the Panel H

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of U.P. RERA who will then decide the matter expeditiously and preferably within 60 days. (d) The Adjudicating Officers on the Panel of U.P. RERA will hold their courts at Lucknow or Gautam Buddhnagar as decided by the chairman. The complaints relating to the districts of NCR will be heard at Gautam Buddhnagar whereas complaints from the remaining districts of the State will be heard at Lucknow.

65Copy pinpoint65. The complaint before the regulatory authority for any violation of the Act or rules or regulations made thereunder by an aggrieved person has to be submitted in Form (M) as per the procedure prescribed under Rule 33(1) which the regulatory authority has to follow. At the same time, any person who is aggrieved to claim compensation under Sections C 12, 14, 18 and 19 has to submit his compliant in Form (N) for adjudging compensation as per the procedure provided under Section 71(3) of the Act taking into consideration the factors indicated under Section 72 and in the manner provided under Rule 34(1) of the Rules 2016.

66Copy pinpoint66. Rules 33(1) and 34(1) of the Uttar Pradesh Real D Estate(Regulation and Development) Rules, 2016 which is relatable to the adjudicatory powers of the regulatory authority/adjudicating officer reads as follows:- “33(1) Any aggrieved person may file a complaint with the regulatory authority for any violation under the Act or the rules and regulations made thereunder, save as those provided to be E adjudicated by the adjudicating officer, in Form ‘M’ which shall be accompanied by a fee of rupees one thousand in the form of a demand draft drawn on a nationalized bank in favour of regulatory authority and payable at the main branch of that bank at the station where the seat of the said regulatory authority is situated. F Explanation:- For the purpose of this sub-rule “person” shall include the association of allottees or any voluntary consumer association registered under any law or the time being in force. 34(1) Any aggrieved person may file a complaint with the adjudicating officer for compensation under Sections 12, 14, 18 and 19 in Form N which shall be accompanied by a fee of rupees G one thousand in the form of a demand draft drawn on a nationalized bank in favour of regulatory authority and payable at the main branch of that bank at the station where the rest of the said regulatory authority is situated.” (emphasis supplied) H

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67Copy pinpoint67. Rule 33(2) of the Rules 2016 delineates the procedure which the authority has to follow in making inquiry to the allegations or violations of the provisions of the Act, rules and regulations. At the given time, Rule 34(2) delineates the procedure to be followed by the adjudicating officer while adjudging quantum of compensation and interest which the person aggrieved is entitled for under the provisions of the Act. B

68Copy pinpoint68. Mr. Kapil Sibal, learned senior counsel for the appellants submits that both the ‘authority’ and the ‘adjudicating officer’ operate in completely distinct spheres. The authority and the adjudicating officer are defined under Sections 2(i) and 2(a) of the Act and are, therefore, creature of statute and their powers and respective jurisdiction(s) are explicitly delineated in the statute itself.

69Copy pinpoint69. The adjudicating officer under Section 71 is specifically vested with the jurisdiction to adjudicate complaints under Sections 12,14,18 & 19 of the Act 2016. In disposing of such complaints, the adjudicating officer alone is empowered under Section 71(3) to conduct enquiry and direct the payment of refund as well as compensation and interest, as the case may be, in taking note of the broad parameters enumerated in Section 72 and such complaints are to be statutorily disposed of within 60 days failing which the reasons are to be recorded.

70Copy pinpoint70. According to the learned counsel for the appellants, proviso to E Section 71(1), the jurisdiction to adjudicate complaints under Sections 12, 14, 18 and 19 which were earlier pending before the authority established under the Consumer Protection Act, 1986 stands vested with the adjudicating officer. According to him, the legislative intent is clear and unambiguous that the complaints emanating from the bundle of rights which flow from Sections 12, 14, 18 and 19 including the cause of action for refund and interest be withdrawn from the forums established under the Consumer Protection Act and in turn be filed before and adjudicated by the Adjudicating Officer under this Act and that being the legislative intent, matters arising under Sections 12, 14, 18 and 19 would be examined and adjudicated exclusively by the adjudicating officer as mandated by law.

71Copy pinpoint71. Per contra, Ms. Madhavi Divan, learned senior counsel for the respondents while supporting the findings recorded by the High Court in the impugned judgment submits that the Act provides distinct remedies, i.e., ‘return of amount/investment’ on the one hand and ‘compensation’ H

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on the other, to be determined separately. According to her, the right to A refund on demand is a statutory right, fundamentally, contextually and conceptually distinct from the right to receive compensation. While the right to refund emanates from the Legislature’s recognition of the fact that homebuyers are “out of pocket” financial creditors, the right to compensation seeks to make amends for injury or loss. B

72Copy pinpoint72. Thus, refund and compensation are two distinct rights under the Act and cannot be conflated. The manner in which the two are to be determined would require a different process and involve different considerations. According to her, the determination of compensation involves a full-fledged adjudicatory process which is more complex than that involved in determining refund. To do so, it would tantamount to regressing into the very malaise that the legislature intended to liberate the allottees-homebuyers. The result of conflating the rights and/or relegating the allottees to the adjudicating officer would amount to a compromise of the timeliness of the right to refund on demand. It would also deter and daunt allottees from seeking compensation because in the process the remedies would be clubbed and the availability of refund would get relatively delayed as compensation requires a more elaborate adjudication process (even though the same is required to be completed in 60 days). The authority to determine a claim for refund on demand while the adjudicating officer to determine the claim for compensation. E

73Copy pinpoint73. The expression “on demand” which follows the right to “return of amount” is indicative of the priority, immediacy and expediency which is accorded to the right to refund. Thus, according to her, the expressions “refund” and “return of amount” is an act of restitution, and the obligation to restitute lies on the person or the authority that has received unjust enrichment or unjust benefit. F

74Copy pinpoint74. Learned counsel further submits that in order to give full effect to the letter and spirit of the right to refund in the context explained above, there can be no doubt that the determination of the right to refund must be left to the authority whereas the adjudication for adjudging compensation with the adjudicating officer as reflected under Section G 71 of the Act. According to the learned counsel, the authority is fully seized with the standard agreements entered into between the promoters and the allottees, and therefore, is best equipped to determine the extent of delay, if any. Therefore, refund claims can most conveniently and effectively be dealt with by the authority and interest on refund is available H