INTRODUCTION
Today, I will talk about the case of Newtech Promoters
and Developers Pvt. Ltd. v. State of UP & Others, 2021 SCC OnLine
SC 1044, wherein the Hon’ble Supreme Court discussed about the constitutional
validity of the Real Estate (Regulation and Development) Act, 2016 (in short, “RERA”).
QUESTION OF LAW
The Court had framed five questions of law with respect to
the constitutional validity of RERA. On the present show, we will be discussing
the first question that is concerned with the retrospective or retroactive applicability
of RERA. The Court had asked: -
“Whether the Act of 2016 is retrospective or
retroactive in its operation and what will be its legal consequence if tested
on the anvil of the Constitution of India?”
In order to understand the answer to this question, let us
go through the pertinent observations by the Court.
OBSERVATIONS BY THE COURT
Firstly, the Court differentiated between retrospectivity
and retroactivity. According to the Court, “retrospective means looking
backward, contemplating what is past, having reference to a statute or things
existing before the statute in question” and a “retrospective law
means a law which looks backward or contemplates the past; one, which is made
to affect acts or facts occurring, or rights occurring, before it comes into
force.” In contrast, retroactive signifies “characteristic or
event which happened in the past or requisites which had been drawn from
antecedent events” and “retroactive statute means a statute,
which creates a new obligation on transactions or considerations or destroys or
impairs vested rights.” Further, a retroactive statute operates in
futuro and “its operation is based upon the character or status that
arose earlier.”
Secondly, the Court observed that merely because a
legislation is made retroactive in its operation, “it cannot be said to
be violative of Articles 14 or 19(1)(g) of the Constitution of India. To the
contrary, the Parliament indeed has the power to legislate even retrospectively
to take into its fold the pre-existing contract and rights executed between the
parties in the larger public interest.”
Thirdly, the Court explained that the objects and the scheme
of the RERA intend to promote “effective consumer protection, uniformity
and standardisation of business practices and transactions in the real estate
sector, to ensure greater accountability towards consumers, to overcome frauds
and delays and also the higher transaction costs.”
Fourthly, the Court further elucidated that the scheme of
RERA makes the registration of real estate projects mandatory and even the
projects that were commenced before coming into force of RERA, will have to “to
make an application to the authority for registration of the said project
within a period of three months from the date of commencement of the Act.”
Fifthly, the Court clarified that the intention of the
Parliament in enacting RERA was to “bring within the fold of the statute
the ongoing real estate projects” and its provisions in unequivocal
terms apply to existing as well as upcoming projects. Thus, by way of necessary
implication, the Parliament intended to include even those ongoing projects
where completion certificate has not been issued under RERA.
Sixthly, according to the Court, “the clear and
unambiguous language of the statute is retroactive in operation and by applying
purposive interpretation rule of statutory construction, only one result is
possible, i.e., the legislature consciously enacted a retroactive statute to
ensure that sale of plot, apartment or building and real estate project is done
in an efficient and transparent manner so that the interest of consumers in the
real estate sector is protected by all means.”
And lastly, the Court was of the view that “even the
terms of the agreement to sale or home buyers agreement invariably indicates
the intention of the developer that any subsequent legislation, rules and
regulations etc. issued by competent authorities will be binding on the
parties.” Thus, such clauses ensure that subsequent legislations
continue to apply on the ongoing projects, and it would be imprudent to say
that contractual provisions will have an overriding effect on the retroactive
applicability of the authorities under RERA.
HELD AND CONCLUSION
In light of the afore-stated legal exposition, it was held
that from the scheme of the RERA, it is manifest that its application is
retroactive and not retrospective in character and “it can safely be
observed that the projects already completed or to which the completion
certificate has been granted are not under its fold and therefore, vested or
accrued rights, if any, in no manner are affected.”
Thus, I hope that it is clear that the RERA has retroactive
applicability and not retrospective applicability.
very good Article
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