Supreme Court strikes down West Bengal law on real estate

NEW DELHI, 09/08/2013: INDEX-Supreme Court of India, New Delhi. August 09, 2013. Photo: Shanker Chakravarty

The Supreme Court on Tuesday struck down as unconstitutional a West Bengal State law meant to protect home buyers, saying the State wanted to create a “parallel regime” and encroached upon an identical Central law — Real Estate (Regulation and Development) Act — enacted the year before.

In a jolt to the Mamata Banerjee government, a Bench of Justices D.Y. Chandrachud and M.R. Shah declared the West Bengal Housing Industry Regulation Act of 2017 (WB-HIRA) “repugnant” to the Parliamentary law of Real Estate (Regulation and Development) Act of 2016.

“We have come to the conclusion that WB-HIRA is repugnant to the RERA, and is hence unconstitutional. We also hold and declare that as a consequence of the declaration by this Court of the invalidity of the provisions of WB-HIRA, there shall be no revival of the provisions of the West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993 since it would stand impliedly repealed upon the enactment of the RERA,” Justice Chandrachud, who authored the 190-page judgment, declared.

The court, however, exercised its extraordinary powers under Article 142 and made the effect of its judgment striking down the provisions of WB-HIRA prospective.

“Since its enforcement in the State of West Bengal, the WB-HIRA would have been applied to building projects and implemented by the authorities constituted under the law in the state. In order to avoid uncertainty and disruption in respect of actions taken in the past, recourse to the jurisdiction of this Court under Article 142 is necessary. Hence, in exercise of the jurisdiction under Article 142, we direct that the striking down of WB-HIRA will not affect the registrations, sanctions and permissions previously granted under the legislation prior to the date of this judgment,” the bench said.

The court said WB-HIRA was identical to RERA and thus an encroachment into parliamentary authority to make law on subjects falling within its ambit under the Concurrent List of the Seventh Schedule of the Constitution.

“What the State legislature in the present case has done is not to enact cognate or allied legislation but legislation which, insofar as the statutory overlaps is concerned is identical to and bodily lifted from the Parliamentary law. This plainly implicates the test of repugnancy by setting up a parallel regime under the State law,” Justice Chandrachud explained.

“The State legislature has encroached upon the legislative authority of Parliament... The exercise conducted by the State legislature of doing so, is plainly unconstitutional,” the court concluded.

The judgment said another test of repugnancy between WB-HIRA and RERA was the valuable safeguards introduced by the Parliament in public interest and certain remedies which were created by Parliament were found to be absent in WB-HIRA, the court noted.

The verdict was based on a petition filed by an NGO, Forum for People’s Collective Efforts (FPCE), and another questioning the constitutional validity of WB-HIRA

Among the questions raised was that WB-HIRA had neither been reserved for nor had received Presidential assent under Article 254(2). Besides the State enactment had contained provisions directly inconsistent with RERA and it was a “virtual replica” of the Central law.

“A significant and even overwhelmingly large part of WB-HIRA overlaps with the provisions of RERA. These provisions of the RERA have been lifted bodily, word for word and enacted into the State enactment... In essence and substance, WB-HIRA has enacted a parallel mechanism and parallel regime as that which has been entailed under the RERA,” the judgment said.

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