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Legal Principals propounded by Supreme Court in Newtech Promoters Vs Union of India

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Newtech Promoters Vs Union of India: REAR Act has been enacted by the Parliament of India mainly for the purpose of regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner. The Act also seeks to protect the interest of homebuyers in the real estate sector.

In the matter of CIVIL APPEAL NO. 6745- 6749 OF 2021 (ARISING OUT OF SLP (CIVIL) NO. 3711-3715 OF 2021) M/S NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD. VERSUS STATE OF U.P. AND OTHERS DECIDED ON 11.11.2021, following questions were framed and decided by Hon’ble Supreme Court:-

Findings of the court – On this point following reasonings have been given by the court for deciding the issue:-

Hon'ble Supreme Court in Newtech Promoters Vs Union of India

Proviso of Section 3(1) of RERA Act expressly provides that ongoing projects which do not have completion certificate on the date of commencement of RERA Act, need to be registered with RERA within three months from the commencement of RERA Act. The main purpose for bringing ongoing projects within the scheme of RERA Act was to secure the interest of allottees, promoters and real estate agents.

On the basis of above discussion, Supreme Court held application of RERA Act 2016 is retroactive in
character. Projects already completed or to which completion certificate has been granted are not under
its fold. At the same time, it will apply after getting the ongoing projects and future projects registered
under section 3 of the RERA Act.

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?

Findings of the court – On this point following reasonings have been given by the court for deciding the issue:-

  1. 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. Under section 81 of RERA Act, Authority can delegate all its functions and duty, except power to make regulations.
  2. U.P. RERA has framed regulation 24(a) of U.P. RERA (General) Regulations, 2019 by which single member of Authority has been empowered to hear complaints. No other functions of Authority have been delegated to single member of the Authority.
  3. Section 29 and 81 of RERA Act are not in derogation to each other but they operate in different fields. Section 29 is only meant for performing administrative functions, whereas under section 31 , Authority has to perform quasi-judicial functions.
  4. In RERA Act no minimum bench strength has been provided for hearing of complaints under section 31. On the other hand, section 43(3) of RERA Act prescribes that bench/Coram has to be constituted for hearing of appeal. Meaning thereby, there is no legal embargo on delegation of hearing of complaints under section 31 by single bench of the Authority.

On the basis of above discussion, Supreme Court has propounded that under section 81 of the Act delegation of power by the Authority to one of its members for deciding applications, complaints under section of the Act expressly permissible and that cannot be said to be dehors of the mandate of law.

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

Findings of court – On this point following reasonings have been given by the court for deciding this issue:-

  1. Under RERA Act, limited rights and duties of allottees are provided under section 19, on the other hand, under chapter Ill and VIII of the Act onerous duties and obligations have been imposed on the promoter. The promoters and allottees are distinctly identifiable separate class of persons. Therefore, there is no question of violation of Article 14 of the Constitution of India in the requirement of pre deposit for appeal as per section 43(5) of RERA .
  2. Main object of this section is to avoid unscrupulous and uncalled for litigation at the appellate stage and to ensure that money which has been computed by the Authority at least must be secured if the promoter intends to prefer an appeal before the tribunal.

On the basis of above discussion, Supreme Court has propounded that condition of pre-deposit under section 43(5) of RERA Act is not violative of Article 14 or 19 (1) (g) of the Constitution of India.

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

Findings of Court:- On this point following reasonings have been given by the court for deciding this issue:-

  1. In section 40(1) of the RERA Act, there is ambiguity in regard to whether recovery certificate can be issued for realization of principal amount.
  2. It is settled principle that if the plain interpretation does not fulfil the mandate and object of the Act, then the court has to harmonize the provisions of the Act with the purpose of the Act.
  3. The power of the Authority to direct the refund of the principal amount is explicit in section 18 meaning thereby in the absence of the principal amount being determined, no interest can be calculated. Therefore, if principal amount cannot be recovered under section 40(1) of RERA Act, it would defeat the basic purpose of the Act.

On the basis of above discussion, Supreme Court has propounded that Under Section 40(1) of the RERA Act, recovery certificate can be issued for principal amount also. Through this judgement, hon’ble Supreme Court has finally settled all the legal question on which the promoters had been agitating before the hon’ble High Court and hon’ble Supreme Court.

Full Judgement of M/s Newtech Promoters Vs Union of India

Below is the full copy of the M/s Newtech Promoters Vs Union of India. For the legal purposes, you can apply the certified copy from the website of the Hon’ble Supreme Court of India.

This Post Has One Comment

  1. Mohan Trivedi

    Useful Information. Came handy when preparing WS.

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