Hearing on a clutch of petitions questioing the constitutional validity of provisions of the new real estate regulatory law began in the Bombay high court on Monday. The developers have questioned its retroactive application on prior agreements in pending projects and the lack of a judicial mind to head the authority among other issues that vex them.
The Central legislation, Real Estate (Regulation and Development) Act (Rera) to bring “transparency and efficiency’’ in real estate, drew challenges across states, with builders petitioning courts in Nagpur, MP and elsewhere. Dismissing a transfer plea filed by the Centre, the Supreme Court in September entrusted Bombay high court to be the first to decide on RERA. More than nine petitions, including by big builders, several interventions by individuals and activists’ groups, some in support of the new law is what the HC bench of Justices Naresh Patil and R G Ketkar is now hearing.
On Monday, senior counsel Aspi Chinoy for DB Realty, said the retroactive application of the Act might run counter to the earlier contractual obligations in pending projects. Another senior counsel, Virendra Tulzapurkar, appearing for another petitioner, argued, “There has to be a judicial member if there is an adjudicatory role being played by the authority under RERA as wherever a person performs a judicial function it is mandatory to have a judicial member.’’ He also raised the point that the Centre and State were not on the same page in respect of the real estate regulatory authority’s role. The Centre considered it ‘adjudicatory,’ but the state said it is ‘regulatory’. When the Act has ousted jurisdiction of civil court, the authority has to be headed by an judicial mind, he said.
Girish Godbole, counsel in a petition by DB Realty, which challenged the constitutional validity of various Sections, including provisions making the Act applicable to on-going projects and mandatory deposit of 70% of the amount collected from those who have booked flats in a separate account and provisions limiting the extension of the project time to a year, said established contractual rights in respect of on-going projects are being affected by the onerous provisions of the Act, which violates the right to freedom of trade and pointed to the “arbitrary’’ and confounding “two parallel dispute resolution mechanisms’’ under the Act, Real Estate Regulatory Authority and the Adjudicating Officer, without clearly marking out their mutually exclusive jurisdictions.
The court observed that the Act provided for complaints being made to each “as the case may be’’. The Act says the adjudicatory officer being appointed has to be a “judicial officer’’ who has been a district judge and can deal with issues or disputes under four sections under the Act. He pointed to the “wide powers of delegation conferred on the authority’’and how it can also empower a non-qualified person to entertain complaints. He had problems with how even “voluntary consumer associations” can also file complaints under RERA and said “Section 15 of the Act, which saddles the promoter with the precondition of obtaining the consent of 2/3rd allottees prior to transferring the promoter’s majority interest in the real estate project, ought to be quashed.’’ The hearing continues today.