M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. v. STATE OF UP & ORS. ETC.
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- Court
- Supreme Court of India
- Decided
- Bench
- UDAY UMESH LALIT, AJAY RASTOGI and ANIRUDDHA BOSE
- Citation
- [2021] 9 S.C.R. 909
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A at the rate prescribed by the appropriate Government. In the instant batch of matters, the prescribed rate of interest is (MCLR + 1%), which has been notified by the Government of Uttar Pradesh.
7575. The legislature in its wisdom has made a specific provision delineating power to be exercised by the regulatory authority/adjudicating officer. “Refund of the amount” and “compensation” are two distinct components which the allottee or the person aggrieved is entitled to claim if the promoter has not been able to hand over possession with a nature of enquiry and mechanism provided under the Act. So far as the claim with respect to refund of amount on demand under Sections 18(1) and 19(4) of the Act is concerned, it vests within the jurisdiction of the regulatory authority. Section 71 carves out the jurisdiction of the adjudicating officer to adjudge compensation under Sections 12, 14, 18 and 19 after holding enquiry under Section 71(3) of the Act keeping in view the broad contours referred to under Section 72 of the Act.
7676. The submission made by learned counsel for the appellants that the proviso under Section 71(1) empowers the adjudicating officer to examine the complaints made under Sections 12, 14, 18 and 19 pending before the Consumer Disputes Redressal Forum/Commission is in different context and it was one time mechanism to provide a window to the consumers whose composite claims are pending before the Consumer Forum/Commission to avail the benevolent provision of the Act 2016 for the reason that under the Consumer Protection Act, there is no distinction as to whether the complaint is for refund of the amount or for compensation as defined under Section 71(1) of the Act, but after the Act 2016 has come into force, if any person aggrieved wants to make complaint for refund against the promotor or real estate agent other than compensation, it is to be lodged to the regulatory authority and for adjudging compensation to the adjudicating officer, and the delineation has been made to expedite the process of adjudication invoked by the person aggrieved when a complaint has been made under Section 31 of the Act to be adjudicated either by the authority/adjudicating officer as per the procedure prescribed under the Act. G
7777. The further submission made by the learned counsel for the appellants is that the return of the amount adversely impacts the promotor and such a question can be looked into by the adjudicating officer in the better prospective. The submission has no foundation for the reason that the legislative intention and mandate is clear that Section 18(1) is an indefeasible right of the allottee to get a return of the amount on demand
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if the promoter is unable to handover possession in terms of the agreement for sale or failed to complete the project by the date specified and the justification which the promotor wants to tender as his defence as to why the withdrawal of the amount under the scheme of the Act may not be justified appears to be insignificant and the regulatory authority with summary nature of scrutiny of undisputed facts may determine the refund of the amount which the allottee has deposited, while seeking withdrawal from the project, with interest, that too has been prescribed under the Act, as in the instant case, the State of Uttar Pradesh has prescribed MCLR + 1% leaving no discretion to the authority and can also claim compensation as per the procedure prescribed under Section 71(3) read with Section 72 of the Act. C
7878. This Court while interpreting Section 18 of the Act, in Imperia Structures Ltd. Vs. Anil Patni and Another5 held that Section 18 confers an unqualified right upon an allottee to get refund of the amount deposited with the promoter and interest at the prescribed rate, if the promoter fails to complete or is unable to give possession of an apartment as per the date specified in the home buyer’s agreement in para 25 held as under:- “25. In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the Project. Such right of an allottee is specifically made “without prejudice to any other remedy available to him”. The right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest at such rate as may be prescribed. The proviso to Section 18(1) contemplates a situation where the allottee does not intend to withdraw from the Project. In that case he is entitled to and must be paid interest for every month of delay till the handing over of the possession. It is up to the allottee to proceed either under Section 18(1) or under proviso to Section 18(1). The case of G Himanshu Giri came under the latter category. The RERA Act thus definitely provides a remedy to an allottee who wishes to withdraw from the Project or claim return on his investment.” (emphasis supplied) 5 2020(10) SCC 783 H
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7979. To safeguard the interests of the parties, on being decided by the regulatory authority/adjudicating officer, it is always subject to appeal before the Tribunal under Section 43(5) provided condition of pre-deposit being complied with can be further challenged in appeal before the High Court under Section 58 of the Act and, thus, the legislature has put reasonable restriction and safeguards at all stages. B
8080. The further submission made by learned counsel for the appellants that if the allottee has defaulted the terms of the agreement and still refund is claimed which can be possible, to be determined by the adjudicating officer. The submission appears to be attractive but is not supported with legislative intent for the reason that if the allottee has made a default either in making instalments or made any breach of the agreement, the promoter has a right to cancel the allotment in terms of Section 11(5) of the Act and proviso to sub-section 5 of Section 11 enables the allottee to approach the regulatory authority to question the termination or cancellation of the agreement by the promotor and thus, the interest of the promoter is equally safeguarded.
8181. The opening words of Section 71(1) of the Act make it clear that the scope and functions of the adjudicating officer are only for “adjudging compensation” under Sections 12, 14, 18 and 19 of the Act. If the legislative intent was to expand the scope of the powers of the adjudicating officer, then the wording of Section 71(1) ought to have been different. On the contrary, even the opening words of Section 71(2) of the Act make it clear that an application before the adjudicating officer is only for “adjudging compensation”. Even in Section 71(3) of the Act, it is reiterated that the adjudicating officer may direct “to pay such compensation or interest” as the case may be as he thinks fit, in accordance with provisions of Sections 12, 14, 18 and 19 of the Act. This has to be seen together with the opening words of Section 72 of the Act, which reads “while adjudging the quantum of compensation or interest, as the case may be, under Section 71, the adjudicating officer shall have due regards” to the broad parameters to be kept in mind while adjudging compensation to be determined under Section 71 of the Act.
8282. The further submission made by the learned counsel for the appellants that if the authority and the adjudicating officer either come to different conclusions on the same questions or in a single complaint, the person aggrieved is seeking manifold reliefs with one of the relief of compensation and payment of interest, with the timelines being provided
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for the adjudicating officer to decide the complaint under Section 71 of the Act. At least, there is no provision which could be referred to expedite the matter if filed before the regulatory authority. The submission may not hold good for the reason that there is a complete delineation of the jurisdiction vested with the regulatory authority and the adjudicating officer. If there is any breach or violation of the provisions of Sections B 12, 14, 18 and 19 of the Act by the promoter, such a complaint straightaway has to be filed before the regulatory authority. What is being referable to the adjudicating officer is for adjudging compensation, as reflected under Section 71 of the Act and accordingly rules and regulations have been framed by the authority for streamlining the complaints which are made by the aggrieved person either on account of violation of the provisions of Sections 12, 14, 18 and 19 or for adjudging compensation and there appears no question of any inconsistency being made, in the given circumstances, either by the regulatory authority or the adjudicating officer.
8383. So far as the single complaint is filed seeking a combination of reliefs, it is suffice to say, that after the rules have been framed, the aggrieved person has to file complaint in a separate format. If there is a violation of the provisions of Sections 12, 14, 18 and 19, the person aggrieved has to file a complaint as per form (M) or for compensation under form (N) as referred to under Rules 33(1) and 34(1) of the Rules. The procedure for inquiry is different in both the set of adjudication and as observed, there is no room for any inconsistency and the power of adjudication being delineated, still if composite application is filed, can be segregated at the appropriate stage.
8484. So far as submission in respect of the expeditious disposal of the application before the adjudicating officer, as referred to under sub- F section (2) of Section 71 is concerned, it pre-supposes that the adjudicatory mechanism provided under Section 71(3) of the Act has to be disposed of within 60 days. It is expected by the regulatory authority to dispose of the application expeditiously and not to restrain the mandate of 60 days as referred to under Section 71(3) of the Act. G
8585. The provisions of which a detailed reference has been made, if we go with the literal rule of interpretation that when the words of the statute are clear, plain and unambiguous, the Courts are bound to give effect to that meaning regardless of its consequence. It leaves no manner of doubt and it is always advisable to interpret the legislative wisdom in H
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A the literary sense as being intended by the legislature and the Courts are not supposed to embark upon an inquiry and find out a solution in substituting the legislative wisdom which is always to be avoided.
8686. From the scheme of the Act of which a detailed reference has been made and taking note of power of adjudication delineated with the regulatory authority and adjudicating officer, what finally culls out is that although the Act indicates the distinct expressions like ‘refund’, ‘interest’, ‘penalty’ and ‘compensation’, a conjoint reading of Sections 18 and 19 clearly manifests that when it comes to refund of the amount, and interest on the refund amount, or directing payment of interest for delayed delivery of possession, or penalty and interest thereon, it is the regulatory authority which has the power to examine and determine the outcome of a complaint. At the same time, when it comes to a question of seeking the relief of adjudging compensation and interest thereon under Sections 12, 14, 18 and 19, the adjudicating officer exclusively has the power to determine, keeping in view the collective reading of Section 71 read with Section 72 of the Act. If the adjudication under Sections 12, D 14, 18 and 19 other than compensation as envisaged, if extended to the adjudicating officer as prayed that, in our view, may intend to expand the ambit and scope of the powers and functions of the adjudicating officer under Section 71 and that would be against the mandate of the Act 2016. E Question no. 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?
8787. It is the specific stand of the respondent Authority of the State of Uttar Pradesh that the power has been delegated under Section 81 to the single member of the authority only for hearing complaints under Section 31 of the Act. To meet out the exigency, the authority in its meeting held on 14th August 2018, had earlier decided to delegate the hearing of complaints to the benches comprising of two members each but later looking into the volume of complaints which were filed by the home buyers which rose to about 36,826 complaints, the authority in its later meeting held on 5th December, 2018 empowered the single member to hear the complaints relating to refund of the amount filed under Section 31 of the Act.
8888. Mr. Gopal Sankarnarayanan, learned counsel for the appellants submits that if this Court comes to the conclusion that other than adjudging H
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compensation wherever provided all other elements/components including refund of the amount and interest etc. vests for adjudication by the authority, in that event, such power vests with the authority constituted under Section 21 and is not open to be delegated in exercise of power under Section 81 of the Act to a single member of the authority and such delegation is a complete abuse of power vested with the authority and such orders passed by the single member of the authority in directing refund of the amount with interest are wholly without jurisdiction and is in contravention to the scheme of the Act.
8989. Learned counsel further submits that the order passed by the single member of the authority is without jurisdiction and it suffers from coram non-judice. Section 21 of the Act clearly provides that the authority shall consist of a Chairperson and not less than two whole time members to be appointed by the Government. Regulation 24(a) of the Regulations 2019 framed by the authority is in clear contravention to the parent statute that the delegation of power can be of class, category of cases, specific to the member of the authority but a general delegation of power to the single member of the authority in exercise of power under Section 81 is not contemplated under the Act and delegation to a single member of the authority in adjudicating the disputes under Sections 12, 14, 18 and 19 is without jurisdiction and that is the reason for which the appellants have approached the High Court by filing a writ petition under Article 226 of the Constitution and in furtherance to this Court. E
9090. Learned counsel further submits that from the plain reading of the statute itself, the role of the authority is of a quasi-judicial body forms its underpinning. The adjudicatory role of the authority is specifically recognized under Sections 5, 6, 7(2), 9(3) and 31 where the authority is supposed to hear the other side, after compliance of the principles of natural justice, is supposed to pass an order in accordance with law.
9191. Section 31 allows the aggrieved person to file a complaint with the authority or the adjudicating officer for any violation or breach or contravention to the provisions of the Act or the rules and regulations made thereunder and this being a quasi-judicial power to be exercised by the authority could not be delegated to a single member of the authority under the guise of Section 81 of the Act, that apart, there are certain provisions where authority alone holds power to initiate action or make inquiries like Sections 35(1), 35(2), 36 or 38, the powers are exclusively exercised by the authority and the tests for determining whether an action H
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A is quasi-judicial or not are laid down in Province of Bombay Vs. Kushaldas S Advani and Others6 which has been consistently followed by the Constitution Bench in its decision in Shivji Nathubhai Vs. Union of India and Others7; Harinagar Sugar Mills Limited Vs. Shyam Sunder Jhunjhunwala and Others8.
9292. Learned counsel further submits that according to him, the powers which have been exercised by the authority under Sections 12, 14, 18 and 19 of the Act have the trappings of the judicial function which in no manner can be delegated without being expressly bestowed. Placing reliance on two decisions of the Queen’s Bench in Barnard Vs. National Dock Labour Board9 and Vine Vs. National Dock Labour Board10 C and taking assistance thereof, learned counsel submits that the judgments indicated above makes it clear that the delegation of judicial power must be express; that a provision of quorum for a quasi-judicial body is distinguishable from the delegation of power to the exclusion of other members of that body; and the reasons of workload cannot trump the D legal requirement. These principles have been adopted by this Court consistently in Bombay Municipal Corporation Vs. Dhondu Narayan Chowdhary11; Sahni Silk Mills(P) Ltd. and Another Vs. Employees State Insurance Corporation 12 ; Jagannath Temple Managing Committee Vs. Siddha Math and Others13.
9393. Learned counsel submits that it has been consistently held by this Court that the power being quasi-judicial in nature, the presumption is that it ought to be exercised by the authority competent and no other, unless the law expressly or by clear implication permits it.
9494. Learned counsel further submits that even by necessary F implication, the judicial power of the authority cannot be delegated by the multi-member authority to any of its members. If at all there are practical considerations of workload, the Government can always establish more than one authority in terms of the second proviso to Section 20(1). 6 1950 SCR 621 G 7 1960(2) SCR 775 8 1962(2) SCR 339 9 1953(2) QB 18 10 1956(1) QB 658 11 1965(2) SCR 929 12 1994(5) SCC 346 13 H 2015(16) SCC 542
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9595. Per contra, Mr. Devadatt Kamat, learned senior counsel for the respondents submits that the complaint of the appellants has been primarily on the issue that a single member is not competent to exercise power to hear complaints under Section 31 of the Act and the delegation of its power by the authority invoking Section 81 is beyond jurisdiction.
9696. Learned counsel submits that as a matter of fact the entire functioning of the authority has not been delegated to the single member. It is only the hearing of complaints under Section 31 that the single member of the authority has been empowered to deal with such complaints, keeping in view the overall object of speedy disposal of such complaints mandated under the law. According to him, it is factually incorrect to say that the other functions of the authority like imposition of penalty under Section 38, revocation of registration under Section 7 or functions of the authority under Sections 32 or 33 have been delegated to a single member of the authority.
9797. Learned counsel further submits that the question is not whether the delegation per se to a single member is bad, but the question is whether the power to hear complaints in reference to Sections 12,14,18 and 19 delegated to a single member is permissible under the law. It may be noticed that the authority has been vested with several other powers and functions under the Act, which the authority has consciously not delegated to a single member. E
9898. Learned counsel further submits that pursuant to the delegation of power under Section 81 by the special order dated 5th December, 2018 read with Regulation 24, a single member has been authorized by the authority to hear the matters related to refund of the amount under Section 31 of the Act. F
9999. Learned counsel further submits that almost in a pari materia scheme, Section 29-A of the SEBI Act gives the power to delegate and Section 19 of the SEBI Act empowers the board to delegate its power to any member of the Board has been examined by this Court in Saurashtra Kutch Stock Exchange Ltd. Vs. Securities and Exchange Board of G India and Another14. This Court has approved the power of delegation to a single member of the respective authority and held that such delegation is always permissible in law unless specifically prohibited and as long as there is a legislative sanction for delegation of even judicial 14 2012(13) SCC 501 H
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A power, there is no illegality as held in Bombay Municipal Corporation(supra); State of Uttar Pradesh Vs. Batuk Deo Pati Tripathi and Another15Heinz India Private Limited and Another Vs. State of Uttar Pradesh16; and taking assistance thereof, learned counsel submits that such delegation of power to a single member of the authority in deciding application for refund of the amount and interest under Section B 18 of the Act is well within the jurisdiction of the authority to its delegatee more so when the power to delegate under Section 81 has not been questioned in either of the pending appeals before the Court.
100100. Learned counsel further submits that Section 21 of the Act relates to the composition of the authority and does not deal with minimum bench strength. At the given time, the legislature has consciously avoided prescribing any minimum bench/quorum strength to hear complaints by the authority. At the same time, the Act only prescribes a bench/quorum only of the Appellate Tribunal under Section 43(3) of the Act and further submits that in the absence of the minimum bench/quorum strength being fixed by statute, it is impermissible to treat the composition of the authority itself as a minimum bench strength.
101101. Learned counsel further submits that Sections 29 and 81 are not in derogation to each other and operate in different fields. Section 29 is concerned with the meetings of the authority and does not envisage in its fold the quasi-judicial functions which the Act casts upon the authority. E The term “meetings” under Section 29 does not deal with the performance of quasi-judicial functions which are referred to the authority under Section 31. It can only refer to meetings on policy/regulatory issues and invited attention to Sections 32 and 33 of the Act which are in the nature of policy/regulatory decisions the authority is mandated under the Act. It F can be further noticed from Section 29(3) and (4) which talks about ‘questions’ before the authority, to be disposed off within 60 days of receiving the ‘application’ and there is no reference to any ‘complaints’ as indicated in Section 31 of the Act.
102102. To examine the scheme of the Act it may be relevant to take note of certain provisions add infra:- G “21. The Authority shall consist of a Chairperson and not less than two whole time Members to be appointed by the appropriate Government. 15 1978(2) SCC 102 16 H 2012(5) SCC 443
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29. (1) The Authority shall meet at such places and times, and A shall follow such rules of procedure in regard to the transaction of business at its meetings, (including quorum at such meetings), as may be specified by the regulations made by the Authority. (2) If the Chairperson for any reason, is unable to attend a meeting of the Authority, any other Member chosen by the Members B present amongst themselves at the meeting, shall preside at the meeting. (3) All questions which come up before any meeting of the Authority shall be decided by a majority of votes by the Members present and voting, and in the event of an equality of votes, the C Chairperson or in his absence, the person presiding shall have a second or casting vote. (4) The questions which come up before the Authority shall be dealt with as expeditiously as possible and the Authority shall dispose of the same within a period of sixty days from the date of D receipt of the application: Provided that where any such application could not be disposed of within the said period of sixty days, the Authority shall record its reasons in writing for not disposing of the application within that period. E
31. (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 regulations made thereunder against any promoter allottee or real estate agent, as the case may be. F 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. (2) The form, manner and fees for filing complaint under sub- section (1) shall be such as may be specified. G
81. The Authority may, by general or special order in writing, delegate to any member, officer of the Authority or any other person subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act (except the power to make regulations under section 85), as it may deem necessary. H
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103103. Section 21 of the Act relates to the composition of the authority which consists of a Chairperson and not less than two whole time members to be appointed by the appropriate Government but conspicuously it does not mention minimum bench strength at the same time consciously prescribes minimum bench/quorum while constituting the Real Estate Appellate Tribunal as reflected under Section 43(3) of the Act.
104104. The emphasis of the appellants was on Section 29 of the Act which indicates the quorum of meetings of the authority. There is a specific provision that there shall be a meeting of the authority with the minimum quorum being prescribed, such business of the meeting of the authority indeed could not be delegated to a single member of the authority in exercise of power under Section 81 of the Act.
105105. The term meeting under Section 29 of the Act does not deal with the performance of the authority in quasi-judicial matters which are referred to under Section 31 of the Act. It only refers to meetings, policy/ D regulatory issues that the authority is mandated to discharge under the Act. It may be noticed that Sections 32 and 33 are in the nature of policy/regulatory directions which the authority is mandated to be discharged indisputably have to be undertaken by the authority while functioning as a whole body under Section 29 of the Act.
106106. To add it further, Section 29(3) and (4) of the Act talks about the questions before the authority which are to be disposed of within 60 days on receiving the applications. It may be noticed that there is no reference to any complaint referred to under Section 31 of the Act. To buttress it further, Section 29 and Section 81 of the Act are not in derogation to each other. To the contrary, both operate in different fields. Section 29 deals with the meetings of the authority to be held for taking policy/ regulatory decisions in the interest of the stake holders and does not envisage in its fold quasi-judicial functions which the Act casts upon the authority. The legislative intention as reflected from Section 29 is a recognition of the rationale that policy matters ought to be considered and decided by the entire strength of the authority so that the policy decisions reflect the acquired experience of the members and Chairman of the authority.
107107. It may be relevant to note that the authority in its meeting held on 5th December, 2018 in exercise of its power under Section 81 of H
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the Act for disposal of complaints under Section 31 delegated its power A to a single member of the authority. The extract of the minutes of the meeting dated 5th December, 2018 relevant for the purpose is extracted as under:-
C Point wise decision on agenda is as under:- Agenda point no. 1: Regarding hearing by both the benches of Uttar Pradesh Real Estate Regulatory Authority in the month of December 2018 and subsequently also while working as single benches as per the D requirement, for disposal of complaint cases at Lucknow and Gautambudh Nagar on same dates. Decision: Proposal was approved by the authority. E .. ..”
108108. Pursuant to the delegation of power to the single member of the authority, complaints filed by the allottees/home buyers for refund of the amount and interest under Section 31 of the Act came to be decided F by the single member of the authority after hearing the parties in accordance with the provisions of the Act.
109109. This Court, while examining the pari materia provisions of delegation of power under Section 29A and Section 19 of the SEBI Act which empowered the board to delegate its power to any member of the G Board held that the board may in writing delegate its power to any member of the board and such is valid in law as held by this Court in Saurashtra Kutch Stock Exchange Ltd.(supra)as under:- “6. The High Court dismissed the special civil application vide order dated 19-11-2007 [Saurashtra Kutch Stock Exchange H
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A Ltd. v. SEBI, Special Civil Application No. 23902 of 2007, decided on 19-11-2007 (Guj)] and considered the submission of the appellant in the following manner: “Section 29-A is reproduced hereunder: ‘29-A. Power to delegate.—The Central Government may, B by order published in the Official Gazette, direct that the powers (except the power under Section 30) exercisable by it under any provision of this Act shall, in relation to such matters and subject to such conditions, if any, as may be specified in the order, be exercisable also by the Securities and Exchange Board C of India or Reserve Bank of India constituted under Section 3 of the Reserve Bank of India Act, 1934 (2 of 1934).’ Notification dated 13-9-1994 issued by the Central Government reads as under: ‘In exercise of powers conferred by Section 29-A of the D Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Central Government hereby directs that the powers exercisable by it under Section 3, sub-sections (1), (2), (3) and (4) of Section 4, Section 5, sub-section (2) of Section 7-A, Section 13, sub- section (2) of Section 18, Section 22 and sub-section (2) of E Section 28 of the Act shall also be exercisable by the Securities and Exchange Board of India.’ Section 19 of the SEBI Act, 1992 reads as under: ‘19. Delegation.—The Board may, by general or special order in writing delegate to any member, officer of the Board or any other person subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act (except the powers under Section 29) as it may deem necessary.’ Thus, the above Notification dated 13-9-1994 issued in exercise of power under Section 29-A of the SCR Act of 1956, read with Section 19 of the SEBI Act, would mean that the Board may in writing delegate its power to any member of the Board and, therefore, the power exercised by the Full-Time Member of the Board under Section 11 of the SEBI Act, 1992, or even withdrawal or recognition under Section 5 of the SCR Act of H
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1956, cannot be said to be unjust or arbitrary or dehors the A provisions of the statute and, therefore, the contention of Mr Shelat that no remedy of appeal is available to the petitioner cannot be accepted.”
9. In Para 2 of the civil appeal, the following question of law has been framed: B “Whether the whole-time single member of SEBI has no jurisdiction to cancel or withdraw recognition granted to a stock exchange on the principle that delegate cannot further delegate its power, and whether the order under challenge is without jurisdiction?” C In our view, it is not necessary to go into the above question as we find that this very question was raised by the appellant before the High Court in extraordinary jurisdiction under Article 226 of the Constitution of India. The High Court, as noted above, in its order dated 19-11-2007 [Saurashtra Kutch Stock D Exchange Ltd. v. SEBI, Special Civil Application No. 23902 of 2007, decided on 19-11-2007 (Guj)] held that the withdrawal of recognition under Section 5 of the 1956 Act by the Full- Time Member of SEBI under Section 11 of the Securities and Exchange Board of India Act, 1992 cannot be said to be dehors the provisions of the Act. The special leave petition from the E above order of the High Court came to be dismissed by this Court on 10-3-2008 [Saurashtra Kutch Stock Exchange Ltd. v. SEBI, SLP (C) No. 5197 of 2008, decided on 10-3- 2008 (SC)] . The same question cannot be allowed to be reopened in the present appeal.” F
110110. The express provision of delegation of power under the SEBI Act is akin to Section 81 of the Act 2016. This Court observed that if the power has been delegated by the competent authority under the statute, such action, if being exercised by a single member cannot be said to be dehors the provisions of the Act. G
111111. In Heinz India Private Limited and Another (supra), the revisional powers were conferred upon the State Agricultural Market Board under Section 32 of the state law to examine the orders passed by the market committee. Section 33 thereof empowered the Board to delegate its powers to the Director. In the facts of the case, an objection H
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A was taken to the exercise of revisional powers not by the Director himself but by some officer lower in the hierarchy. This Court, while taking note of the definition of ‘Director’ as provided in Section 2(h) to include “any other officer authorized by the Director to perform all or any of his functions under this Act” held as under:- B “34. Now, it is true that the stakes involved in the present batch of cases are substantial and those called upon to satisfy the demands raised against them would like their cases to be heard by a senior officer or a committee of officers to be nominated by the Board. But in the absence of any data as to the number of cases that arise for consideration involving a challenge to the demands raised by the Market Committee and the nature of the disputes that generally fall for determination in such cases, it will not be possible for this Court to step in and direct an alteration in the mechanism that is currently in place. The power to decide the revisions vests with the Board who also enjoys the power to delegate that function to the Director. So long as there is statutory sanction for the Director to exercise the revisional power vested in the Board, any argument that such a delegation is either impermissible or does not serve the purpose of providing a suitable machinery for adjudication of the disputes shall have to be rejected.”
112112. Section 81 of the Act 2016 empowers the authority, by general or special order in writing, to delegate its powers to any member of the authority, subject to conditions as may be specified in the order, such of the powers and functions under the Act. What has been excluded is the power to make regulations under Section 85, rest of the powers exercised by the authority can always be delegated to any of its members obviously F for expeditious disposal of the applications/complaints including complaints filed under Section 31 of the Act and exercise of such power by a general and special order to its members is always permissible under the provisions of the Act.
113113. In the instant case, the authority by a special order dated 5th G December, 2018 has delegated its power to the single member for disposal of complaints filed under Section 31 of the Act. So far as refund of the amount with interest is concerned, it may not be considered strictly to be mechanical in process but the kind of inquiry which has to be undertaken by the authority is of a summary procedure based on the indisputable documentary evidence, indicating the amount which the allottee/home
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buyer had invested and interest that has been prescribed by the competent authority leaving no discretion with minimal nature of scrutiny of admitted material on record is needed, if has been delegated by the authority, to be exercised by the single member of the authority in exercise of its power under Section 81 of the Act, which explicitly empowers the authority to delegate under its wisdom that cannot be said to be dehors the provisions of the Act.
114114. What is being urged by the learned counsel for the appellants in interpreting the scope of Section 29 of the Act is limited only to policy matters and cannot be read in derogation to Section 81 of the Act and the interpretation as argued by learned counsel for the promoters if to be accepted, the very mandate of Section 81 itself will become otiose and nugatory.
115115. It is a well-established principle of interpretation of law that the court should read the section in literal sense and cannot rewrite it to suit its convenience; nor does any canon of construction permit the court to read the section in such a manner as to render it to some extent otiose. Section 81 of the Act positively empowers the authority to delegate such of its powers and functions to any member by a general or a special order with an exception to make regulations under Section 85 of the Act. As a consequence, except the power to make regulations under Section 85 of the Act, other powers and functions of the authority, by a E general or special order, if delegated to a single member of the authority is indeed within the fold of Section 81 of the Act.
116116. The further submission made by learned counsel for the promoters that Section 81 of the Act empowers even delegation to any officer of the authority or any other person, it is true that the authority, F by general or special order, can delegate any of its powers and functions to be exercised by any member or officer of the authority or any other person but we are not examining the delegation of power to any third party. To be more specific, this Court is examining the limited question as to whether the power under Section 81 of the Act can be delegated by the authority to any of its member to decide the complaint under G Section 31 of the Act. What has been urged by learned counsel for the promoters is hypothetical which does not arise in the facts of the case. If the delegation is made at any point of time which is in contravention to the scheme of the Act or is not going to serve the purpose and object H
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A with which power to delegate has been mandated under Section 81 of the Act, it is always open for judicial review.
117117. The further submission made by learned counsel for the appellants that Section 81 of the Act permits the authority to delegate such powers and functions to any member of the authority which are mainly administrative or clerical, and cannot possibly encompass any of the core functions which are to be discharged by the authority, the judicial functions are non-delegable, as these are the core functions of the authority. The submission may not hold good for the reason that the power to be exercised by the authority in deciding complaints under Section 31 of the Act is quasi-judicial in nature which is delegable provided there is a provision in the statute. As already observed, Section 81 of the Act empowers the authority to delegate its power and functions to any of its member, by general or special order.
118118. In the instant case, by exercising its power under Section 81 of the Act, the authority, by a special order dated 5th December, 2018 D has delegated its power to the single member of the authority to exercise and decide complaints under Section 31 of the Act and that being permissible in law, cannot be said to be de hors the mandate of the Act. At the same time, the power to be exercised by the adjudicating officer who has been appointed by the authority in consultation with the appropriate Government under Section 71 of the Act, such powers are non-delegable to any of its members or officers in exercise of power under Section 81 of the Act.
119119. That scheme of the Act, 2016 provides an in-built mechanism and any order passed on a complaint by the authority under Section 31 is appealable before the tribunal under Section 43(5) and further in appeal to the High Court under Section 58 of the Act on one or more ground specified under Section 100 of the Code of Civil Procedure, 1908, if any manifest error is left by the authority either in computation or in the amount refundable to the allottee/home buyer, is open to be considered at the appellate stage on the complaint made by the person aggrieved. G
120120. In view of the remedial mechanism provided under the scheme of the Act 2016, in our considered view, the power of delegation under Section 81 of the Act by the authority to one of its member for deciding applications/complaints under Section 31 of the Act is not only well defined but expressly permissible and that cannot be said to be dehors the mandate of law.
M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 969 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]
Question no. 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?
121121. Before we examine the challenge to the proviso to Section 43(5) of the Act of making pre-deposit for entertaining an appeal before the Tribunal, it may be apposite to take note of Section 43(5) of the Act, B
2016. Section 43(5) reads as follows:- “43. Establishment of Real Estate Appellate Tribunal- ……. (5) Any person aggrieved by any direction or decision or order made by the Authority or by an adjudicating officer under this Act may prefer an appeal before the Appellate Tribunal having jurisdiction over the matter: Provided that where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained, without the promoter first having deposited with the Appellate Tribunal at least thirty per cent of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, as the case may be, before the said appeal is heard. E 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.”
122122. It may straightaway be noticed that Section 43(5) of the Act envisages the filing of an appeal before the appellate tribunal against the order of an authority or the adjudicating officer by any person aggrieved and where the promoter intends to appeal against an order of authority or adjudicating officer against imposition of penalty, the promoter has to deposit at least 30 per cent of the penalty amount or such higher amount as may be directed by the appellate tribunal. Where the appeal is against any other order which involves the return of the amount to the allottee, the promoter is under obligation to deposit with the appellate tribunal the total amount to be paid to the allottee which includes interest and compensation imposed on him, if any, or with both, as the case may be, before the appeal is to be instituted. H
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123123. The plea advanced by the learned counsel for the appellants is that substantive right of appeal against an order of authority/adjudicating officer cannot remain dependent on fulfilment of pre-deposit which is otherwise onerous on the builders alone and only the builders/promoters who are in appeal are required to make the pre-deposit to get the appeal entertained by the Appellate Tribunal is discriminatory amongst the stakeholders as defined under the provisions of the Act.
124124. Learned counsel further submits that if the entire sum as has been computed either by the Authority or adjudicating officer, is to be deposited including 30 per cent of the penalty in the first place, the remedy of appeal provided by one hand is being taken away by the other since the promoter is financially under distress and incapable to deposit the full computed amount by the authority/adjudicating officer. The right of appreciation of his defence at appellate stage which is made available to him under the statute became nugatory because of the onerous mandatory requirement of pre-deposit in entertaining the appeal only on the promoter who intends to prefer under Section 43(5) of the Act which according to him is in the given facts and circumstances of this case is unconstitutional and violative of Article 14 of the Constitution of India.
125125. The submission in the first blush appears to be attractive but is not sustainable in law for the reason that a perusal of scheme of the E Act makes it clear that the limited rights and duties are provided on the shoulders of the allottees under Section 19 of the Act at a given time, several onerous duties and obligations have been imposed on the promoters i.e. registration, duties of promoters, obligations of promoters, adherence to sanctioned plans, insurance of real estate, payment of penalty, interest and compensation, etc. under Chapters III and VIII of the Act 2016. F This classification between consumers and promoters is based upon the intelligible differentia between the rights, duties and obligations cast upon the allottees/home buyers and the promoters and is in furtherance of the object and purpose of the Act to protect the interest of the consumers vis-a-viz., the promoters in the real estate sector. The promoters and allottees are distinctly identifiable, separate class of persons having been differently and separately dealt with under the various provisions of the Act.
126126. Therefore, the question of discrimination in the first place does not arise which has been alleged as they fall under distinct and different categories/classes.
M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 971 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]
127127. It may further be noticed that under the present real estate sector which is now being regulated under the provisions of the Act 2016, the complaint for refund of the amount of payment which the allottee/consumer has deposited with the promoter and at a later stage, when the promoter is unable to hand over possession in breach of the conditions of the agreement between the parties, are being instituted at the instance of the consumer/allotee demanding for refund of the amount deposited by them and after the scrutiny of facts being made based on the contemporaneous documentary evidence on record made available by the respective parties, the legislature in its wisdom has intended to ensure that the money which has been computed by the authority at least must be safeguarded if the promoter intends to prefer an appeal before the tribunal and in case, the appeal fails at a later stage, it becomes difficult for the consumer/allottee to get the amount recovered which has been determined by the authority and to avoid the consumer/allottee to go from pillar to post for recovery of the amount that has been determined by the authority in fact, belongs to the allottee at a later stage could be saved from all the miseries which come forward against him.
128128. At the same time, it will avoid unscrupulous and uncalled for litigation at the appellate stage and restrict the promoter if feels that there is some manifest material irregularity being committed or his defence has not been properly appreciated at the first stage, would prefer an appeal for re-appraisal of the evidence on record provided substantive compliance of the condition of pre-deposit is made over, the rights of the parties inter se could easily be saved for adjudication at the appellate stage.
129129. There are multiple statutes which provide a condition of pre- F deposit of a stipulated statutory amount to be deposited before an appeal is entertained by an appellate forum/tribunal for re-appraisal of facts and law at the appellate stage and it has been examined by this Court as well. Proviso to Section 18 of SARFAESI Act, 2002 of the Act which provides pre-deposit is as follows:- G “18. Appeal to Appellate Tribunal ……. Provided further that no appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent H
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A of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less: Provided also that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than twenty- B five per cent. of debt referred to in the second proviso.”
130130. The intention of the legislature appears to be to ensure that the rights of the decree-holder (the successful party) is to be protected and only genuine bona fide appeals are to be entertained. While interpretating Section 18 of SARFAESI Act, this Court in Narayan C Chandra Ghosh Vs. UCO Bank and Others17observed as under:- “8. It is well-settled that when a statute confers a right of appeal, while granting the right, the legislature can impose conditions for the exercise of such right, so long as the conditions are not so onerous as to amount to unreasonable restrictions, rendering the right almost illusory. Bearing in mind the object of the Act, the conditions hedged in the said proviso cannot be said to be onerous. Thus, we hold that the requirement of pre-deposit under sub-section (1) of Section 18 of the Act is mandatory and there is no reason whatsoever for not giving full effect to the provisions contained in Section 18 of the Act. In that view of the matter, no court, much less the Appellate Tribunal, a creature of the Act itself, can refuse to give full effect to the provisions of the statute. We have no hesitation in holding that deposit under the second proviso to Section 18(1) of the Act being a condition precedent for preferring an appeal under the said section, the Appellate Tribunal had erred in law in entertaining the appeal without directing the appellant to comply with the said mandatory requirement.”
131131. In Har Devi Asnani Vs. State of Rajasthan and Others18, the validity of proviso to Section 65(1) of the Rajasthan Stamp Act, 1998 came up for consideration in terms of which no revision application could be entertained unless it was accompanied by a satisfactory proof of payment of 50 per cent of the recoverable amount. Relying on the earlier decisions of this Court including in Government of Andhra Pradesh and Others Vs. P. Laxmi Devi (Smt.)19, the challenge was repelled 17 (2011) 4 SCC 548 18 (2011) 14 SCC 160 19 H (2008) 4 SCC 720
M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 973 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]
and the view expressed in P. Laxmi Devi(supra) was repeated in Har A Devi Ashani(supra) wherein this Court held as under:- “In our opinion in this situation it is always open to a party to file a writ petition challenging the exorbitant demand made by the registering officer under the proviso to Section 47-A alleging that the determination made is arbitrary and/or based on extraneous considerations, and in that case it is always open to the High Court, if it is satisfied that the allegation is correct, to set aside such exorbitant demand under the proviso to Section 47-A of the Stamp Act by declaring the demand arbitrary. It is well settled that arbitrariness violates Article 14 of the Constitution vide Maneka Gandhi v. Union of India [(1978) 1 SCC 248] . Hence, the party is not remediless in this situation.”
132132. At the same time, Section 19 of the Consumer Protection Act, 1986 prescribes a condition for pre-deposit which provides that an appeal shall not be entertained unless 50 per cent of the amount awarded by the State Commission or Rs. 35,000/- whichever is less is deposited before the National Consumer Disputes Redressal Commission (NCDRC). This Court while placing reliance on State of Haryana Vs. Maruti Udyog Ltd. and Others20; in Shreenath Corporation and Others Vs. Consumer Education and Research Society and Others 21 held that such a condition is imposed to avoid frivolous appeals. E “7. Section 19 of the Consumer Protection Act, 1986 deals with the appeals against the order made by the State Commission in exercise of its power conferred by sub-clause (i) of clause (a) of Section 17 and the said section reads as follows: “19. Appeals.—Any person aggrieved by an order made by the F State Commission in exercise of its powers conferred by sub- clause (i) of clause (a) of Section 17 may prefer an appeal against such order to the National Commission within a period of thirty days from the date of the order in such form and manner as may be prescribed: G Provided that the National Commission may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period: 20 2000(7) SCC 348 21 2014(8) SCC 657 H
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A Provided further that no appeal by a person, who is required to pay any amount in terms of an order of the State Commission, shall be entertained by the National Commission unless the appellant has deposited in the prescribed manner fifty per cent of the amount or rupees thirty-five thousand, whichever is less.” B On plain reading of the aforesaid Section 19, we find that the second proviso to Section 19 of the Act relates to “pre-deposit” required for an appeal to be entertained by the National Commission.
9. The second proviso to Section 19 of the Act mandates pre- C deposit for consideration of an appeal before the National Commission. It requires 50% of the amount in terms of an order of the State Commission or Rs 35,000, whichever is less for entertainment of an appeal by the National Commission. Unless the appellant has deposited the pre-deposit amount, the appeal cannot be entertained by the National Commission. A pre-deposit D condition to deposit 50% of the amount in terms of the order of the State Commission or Rs 35,000 being condition precedent for entertaining appeal, it has no nexus with the order of stay, as such an order may or may not be passed by the National Commission. The condition of pre-deposit is there to avoid frivolous appeals.”
133133. Similarly, under Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006, any appellant, other than the supplier, is required to make a pre-deposit of 75 per cent to maintain an appeal against any decree, award or order made either by the Micro and Small Enterprises Facilitation Council or by any institution or center providing alternate dispute resolution services to which a reference is made by the Council. Section 19 reads as follows:- “19. Application for setting aside decree, award or order.— No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy- five per cent. of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court: Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such
M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 975 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]
percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose.”
134134. Similarly, the condition of pre-deposit has been examined recently by this Court in Tecnimont Pvt. Ltd. (Formerly Known As Tecnimont ICB Private Limited) Vs. State of Punjab and Others 22, B where the validity of Section 62(5) of the Punjab Value Added Tax Act, 2005 (PVAT) which imposes a condition of 25 per cent of pre-deposit for hearing of first appeal has been upheld. Section 62(5) of the PVAT Act reads as follows:- “62. First Appeal C …… (5) No appeal shall be entertained, unless such appeal is accompanied by satisfactory proof of the prior minimum payment of twenty-five per cent of the total amount of tax, penalty and interest, if any. D ……..”
135135. To be noticed, the intention of the instant legislation appears to be that the promoters ought to show their bona fides by depositing the amount so contemplated. E
136136. It is indeed the right of appeal which is a creature of the statute, without a statutory provision, creating such a right the person aggrieved is not entitled to file the appeal. It is neither an absolute right nor an ingredient of natural justice, the principles of which must be followed in all judicial and quasi- judicial litigations and it is always be circumscribed with the conditions of grant. At the given time, it is open for the legislature in its wisdom to enact a law that no appeal shall lie or it may lie on fulfilment of pre-condition, if any, against the order passed by the Authority in question.
137137. In our considered view, the obligation cast upon the promoter of pre-deposit under Section 43(5) of the Act, being a class in itself, and the promoters who are in receipt of money which is being claimed by the home buyers/allottees for refund and determined in the first place by the competent authority, if legislature in its wisdom intended to ensure that money once determined by the authority be saved if appeal is to be 22 AIR 2019 SC 4489 H
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A preferred at the instance of the promoter after due compliance of pre- deposit as envisaged under Section 43(5) of the Act, in no circumstance can be said to be onerous as prayed for or in violation of Articles 14 or 19(1)(g) of the Constitution of India. Question No.5:- Whether the authority has the power to issue recovery certificates for recovery of the principal amount under B Section 40(1) of the Act?
138138. To examine this question, it will be apposite to take note of Section 40 that states regarding the recovery of interest or penalty or compensation to be recovered as arrears of land revenue, and reads as under:-
C 40. Recovery of interest or penalty or compensation and enforcement of order, etc.— (1) If a promoter or an allottee or a real estate agent, as the case may be, fails to pay any interest or penalty or compensation imposed on him, by the adjudicating officer or the Regulatory Authority or the Appellate Authority, as the case may be, under this Act or the rules and regulations made thereunder, it shall be recoverable from such promoter or allottee or real estate agent, in such manner as may be prescribed as an arrears of land revenue. (2) If any adjudicating officer or the Regulatory Authority or the Appellate Tribunal, as the case may be, issues any order or directs any person to do any act, or refrain from doing any act, which it is empowered to do under this Act or the rules or regulations made thereunder, then in case of failure by any person to comply with such order or direction, the same shall be enforced, in such manner as may be prescribed.”
139139. The submission of the appellants/promoters is that under Section 40(1) of the Act only the interest or penalty imposed by the authority can be recovered as arrears of land revenue and no recovery certificate for the principal amount as determined by the authority can be issued. If we examine the scheme of the Act, the power of authority to direct the refund of the principal amount is explicit in Section 18 and G the interest that is payable is on the principal amount in other words, there is no interest in the absence of a principal amount being determined by the competent authority. Further the statute as such is read to mean that the principal sum with interest has become a composite amount quantified upon to be recovered as arrears of land revenue under Section 40(1) of the Act. H
M/S. NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. 977 v. STATE OF UP & ORS. ETC. [AJAY RASTOGI, J.]
140140. It is settled principle of law that if the plain interpretation does not fulfil the mandate and object of the Act, this Court has to interpret the law in consonance with the spirit and purpose of the statute. There is indeed a visible inconsistency in the powers of the authority regarding refund of the amount received by the promoter and the provision of law in Section 18 and the text of the provision by which such refund can be referred under Section 40(1). While harmonising the construction of the scheme of the Act with the right of recovery as mandated in Section 40(1) of the Act keeping in mind the intention of the legislature to provide for a speedy recovery of the amount invested by the allottee along with the interest incurred thereon is self-explanatory. However, if Section 40(1) is strictly construed and it is understood to mean that only penalty and interest on the principal amount are recoverable as arrears of land revenue, it would defeat the basic purpose of the Act.
141141. Taking into consideration the scheme of the Act what is to be returned to the allottee is his own life savings with interest on computed/ quantified by the authority becomes recoverable and such arrear becomes enforceable in law. There appears some ambiguity in Section 40(1) of the Act that in our view, by harmonising the provision with the purpose of the Act, is given effect to the provisions is allowed to operate rather running either of them redundant, noticing purport of the legislature and the above-stated principle into consideration, we make it clear that the amount which has been determined and refundable to the allottees/home buyers either by the authority or the adjudicating officer in terms of the order is recoverable within the ambit of Section 40(1) of the Act.
142142. The upshot of the discussion is that we find no error in the judgment impugned in the instant appeals. Consequently, the batch of appeals are disposed off in the above terms. However, we make it clear that if any of the appellant intends to prefer appeal before the Appellate Tribunal against the order of the authority, it may be open for him to challenge within 30 days from today provided the appellant(s) comply with the condition of pre-deposit as contemplated under the proviso to Section 43(5) of the Act which may be decided by the Tribunal on its own merits in accordance with law. No costs. G
143143. Pending application(s), if any, stand disposed of.
Nidhi Jain Appeals disposed of.
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