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Part I: An Analysis of Constitutionality of WBHIRA

Author: Nupur Agrawal


In this two-part essay, the author analyses the seeming repugnancy caused by the passage of the West Bengal Housing Industry Regulation Act, 2017 pursuant to the enactment of the Real Estate (Regulation and Development) Act 2016.


In this part, the author analyses the incongruencies between both the laws by juxtapositioning their respective provisions. Further, she undertakes an analysis of the 'pith and substance' of the WBHIRA as opposed to its stated objectives so as to comment on the constitutionality of the Act, which she does in the next part of her essay.


Introduction


The Real Estate industry today is one of the fastest-growing markets in today’s date. Following its unprecedented pace, the governments felt a need for regulating the industry, and consequently, an act was passed in the year 2016 under the name of ‘The Real Estate (Regulation and Development) Act, 2016[1] (hereafter, RERA). Following this development, almost similar legislation was enacted by the government of West Bengal under the name of the ‘West Bengal Housing Industry Regulatory Act, 2017[2] (hereafter, WBHIRA).


Enactment of such legislation resulted in a state of confusion within the developers of real estate projects regarding whether they would need registration under RERA or WBHIRA. Consequently, as a direct reaction to this, a public interest litigation was filed challenging the constitutional validity of WBHIRA under A-254 (2) of the constitution. The PIL has been accepted by the Supreme court of India in February 2019[3].


The article makes it mandatory for any state legislation enacted on any matter of the concurrent list to take the assent of the president if the legislation in question is repugnant to the provisions of an earlier enactment by the central government.[4] However, the statement of objects and reasons of WBHIRA which was attached to the bill for the enactment of the legislation suggests that it has been formed under entries 24, 27 and 18 of the state list, rather than entries 6 and 7 of the concurrent list under which RERA is claimed to have been formulated.


In such a situation where the power of the state legislature to formulate an act is disputed, the court is required to look at the ‘pith and substance’ of the legislation. The doctrine is applied not only in the cases of direct conflict between the powers of two legislatures but also to find out whether a legislation is covered by particular legislative power under which it is purported to be made[5]. This is to say that the court needs to ascertain the true character and nature of the legislation. To make such an assertion, the court must examine the whole enactment, its object, scope, and effects of its provisions[6].


But at the onset, before initiating the analysis of pith and substance of WBHIRA, it becomes pertinent to find out that even if it is assumed that WBHIRA falls under the scope of the concurrent list, does there exist any repugnancy between WBHIRA and RERA for Article 254(2) to apply.

WBHIRA v. RERA


Article 254(2) envisages the situation of inconsistency between the laws made by the parliament and the state legislatures. It lays down that in the event of any such inconsistency unless the state legislation has received the assent of the president it shall be considered to be void to the extent of repugnancy and the central legislation will prevail over the state legislation.


One of the most important cautions which needs to be taken into account while checking the state legislation on the touchstone of A-254 is that the question of repugnancy arises only about the subjects mentioned in List III, Schedule VI, Constitution of India. Article 254 does not have any application in a situation where the overlapping seems to be between legislation made under State list i.e. List-II and a Central Act made under list III[7].


Repugnancy arises in mainly two situations[8]:

i) when there is a clear and direct inconsistency between the central and state legislation.

ii) where the nature of inconsistency is such that obeying one would lead to disobeying the other.

Furthermore, repugnancy is not confined to a situation where the inconsistency is so direct that obeying one will lead to disobeying the other but it also covers those situations where both laws operate in the same field and the two cannot stand together because the provisions of both the enactments are leading to different legal results[9] which may be due to different procedures laid down in the enactments, for instance.


If the provision of WBHIRA and RERA are analysed parallel to each other, some of the provisions manifest a clear picture of this repugnancy.


One of the major contradictions between the two legislations leading to this repugnancy is the authority with which the Real Estate Projects would be required to be registered as both RERA and WBHIRA mandate registration under the central and state authorities respectively[10]. Another provision that manifests the repugnancy is the scope of Force Majeure Clause. The clause has a wider scope under WBHIRA[11] as compared to RERA[12], which would effectively lead to no developer being able to avail the benefit of the clause under WBHIRA without disobeying the RERA. Similarly, the definition of ‘garage’ is different under both the legislations[13] which would lead to a situation that if a sale of open space is being sanctioned by the authority under WBHIRA as a sale of a garage then the developer would be disobeying the RERA act. Furthermore, both the legislations differ on the point of compounding of offense. While the same is allowed by RERA[14], there is no such provision in WBHIRA. This places those being governed under WBHIRA on a disadvantageous and unequal legal pedestal than those being governed under RERA for the same offense committed.


The findings are reflective of the fact that there are some provisions in WBHIRA which are inconsistent with the provisions of RERA. Hence, there lies repugnancy between the two legislations.


Pursuant to this finding, if the analysis of pith and substance of WBHIRA leads us to conclude that the same falls under the Concurrent list and not the State list then the legislation would be hit by A-254(2) as it has not yet reached the table of the president.


Pith and Substance of WBHIRA


To identify the pith and substance of WBHIRA, it becomes essential to find out the objective behind the enactment of the legislation. The objective of the legislation will be read based on its preamble which reads as:


“An act to establish the Housing industry Regulation Authority for regulating and promotion of the housing sector and to ensure the sale of plot, apartment or buildings, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interests of consumers in the real estate sector and to establish a mechanism for speedy dispute redressal and for matters connected therewith or incidental thereto,”[15]


The act was legislated mainly to regulate the ‘housing sector’. The definition provided in the act for ‘housing sector’ includes development, construction, sale of houses and plots of land for any purpose[16]. Apart from this the act also aims to protect the rights and interest of consumers by monitoring the entire process of the sale of land, apartments, buildings or any other real estate projects by laying down proper mechanism for the procedure[17], establishing an authority to ensure compliance of such procedure[18] and setting up a grievance settlement machinery to address issues related to the subject speedily.[19]


To understand the way WBHIRA is trying to achieve the said objectives, it becomes pertinent to assess the provisions of the act.


Section 3 – section 9- provisions about the aspect of the registration process, for the sale of real estate projects, of this act, and the real estate agents. The sections deal with prior registration of real estate projects, the grant of registration, the extension of registration, revocation of registration, the lapse of registration, and registration of real estate agents.


Section 10- deals with the function of a real estate agent. An agent should ensure that the real estate project is registered; all the accounts are maintained; there is no involvement in any kind of unfair trade practices, and the allottee is provided with all the information needed and documents to which s/he is entitled.


Section 11 – section 19- regulating the transfer of title in the real estate properties to the consumers. It deals with the duties and obligations of the builder towards the buyer about information being provided, payment, or deposits being received, compensation given to the buyer. At the same time, these sections also provide for the rights and duties of the buyer.


Section 20 – section 42- these sections deal with the establishment of an authority for ensuring the implementation of the act and promoting the growth of the real estate sector.


Section 43 – section 58- the establishment of a tribunal for the speedy redressal of grievances arising under this act.


Section 59 – section 69- these provisions lay down penalties and punishments for all the offenses under this act.

If the objective of WBHIRA is juxtaposed to its provisions, it is revealed that although the act aims to regulate the ‘housing industry’ which includes development; construction; sale of houses and plots of land, the provisions of the act are majorly aimed at regulating their sale. All the provisions of the act are governing either the steps in the procedure of sale of a real estate project or the rights & duties of all the stakeholders in that procedure. The act does not have even one single provision which lays down any mandatory compliances which are to be taken care of by the builders while the construction is taking place. Rather, all the provisions are regulating the actions of the builders after the construction is complete and the result needs to exchange hands.


In furtherance to this determination about the pith and substance of WBHIRA, it becomes pertinent to analyse the scope of the entries under which the two legislations, in question, are claimed to have been formulated. It would lead us to determine, which list of the constitution favours the enactment of the two identical legislations.


This analysis would be continued in the next part of the article.


[The author is a student of Law at the National Law University, Delhi.]



Notes and References

[1] The Real Estate (Regulation and development) Act, 2016 [2] West Bengal Housing Industry Regulatory Act, 2017 [3] Dipak K Daksh, ‘West Bengal govt’s RERA alternative challenged in Supreme Court’ (TNN, 12 February 2019) <https://timesofindia.indiatimes.com/india/west-bengal-govts-rera-alternative-challenged-in-supreme-court/articleshow/67951157.cms> accessed 10 February 2020 [4] Kailash Babar, ‘Apex court admits home buyers’ plea to repeal Bengal’s realty act’ (ET Bureau, 12 February 2019) <https://economictimes.indiatimes.com/wealth/real-estate/apex-court-admits-home-buyers-plea-to-repeal-bengals-realty-act/articleshow/67958162.cms> accessed 11 February 2019 [5] Union of India v Shah Goverdhan L. Kabra Teachers College, (2002) 8 SCC 228, para 7 [6] The state of Karnataka and Ors. v Drive-in-Enterprises, (2001) 4 SCC 60, para 6 [7] Hoechst Pharmaceuticals Ltd. v State of Bihar, AIR 1983 SC 1019; (1983) 4 SCC 45, para 69 [8] Dharappa v Bijpur Coop Milk Producers Societies Union Ltd., (2007) 9 SCC 109, para 12 [9] Engineering Kamgar union v Electro Steels Castings Ltd., (2004) 6 SCC 36, para 21-24 [10] The Real Estate (Regulation and Development) Act, 2016, s 4(1), The West Bengal Housing Industry Regulation Act, 2017, s 4(1) [11] West Bengal housing industry regulation Act, s 6 [12] The Real Estate (Regulation and Development) Act, 2016, s 6 [13] The West Bengal Housing Industry Regulation Act, 2017, s 2(x); The Real Estate (Regulation and Development) Act, 2016, s 2(y) [14] The Real Estate (Regulation and Development) Act, 2016, s 70 [15] The West Bengal Housing Industry Regulation Act, 2017 [16] The West Bengal Housing Industry Regulation Act 2017, s 2(y) [17] Chapter III, The West Bengal Housing Industry Regulation Act 2017 [18] Chapter VI, The West Bengal Housing Industry Regulation Act 2017 [19] Chapter VII, The West Bengal Housing Industry Regulation Act 2017

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