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Supreme Court admits homebuyers' petition challenging constitutional validity of WBHIRA

The apex court has issued a notice to West Bengal government and directed it to file a response within a fortnight.

Vandana Ramnani @vandanaramnani1

The Supreme Court on February 11 admitted a PIL filed by a group of homebuyers that challenges the constitutional validity of  West Bengal Housing & Industrial Regulation Act 2017 (HIRA).

The apex court issued notice to the West Bengal government to file its reply within a fortnight.

The West Bengal government has been directed to file a reply within two weeks, lawyers said.

West Bengal is the only state in the country that has not accepted RERA. The Central Real Estate (Regulation and Development) Act (RERA) came into effect on May 1, 2017, exactly a year after it was passed by the Parliament.

The petition has been filed by the Forum for People's Collective Efforts (FPCE), an umbrella homebuyers association. In its petition, the association has said that if WBHIRA is allowed to continue, it would give way for state legislatures to enter into other fields to legislate under the concurrent List, which otherwise are occupied by central legislations.

It may also prompt other states to come out with their own State laws, further diluting the provisions in favour of builders, thereby defeating the purpose of a uniform RERA and rendering RERA redundant, they have said in their petition.

In its petition, FPCE has prayed that the Supreme Court pass an order declaring the West Bengal Housing Industry Regulation Act, 2017 as ultra vires the provisions of the Constitution of India and consequently, issue an appropriate writ/order or direction in the nature of writ of mandamus/order directing the State of West Bengal to not enforce the provisions of the West Bengal Housing Industry Regulation Act, 2017 within the State of West Bengal.

It has also prayed that the apex court issue an appropriate writ/order or direction in the nature of writ of mandamus/order directing the State of West Bengal to enforce and act in accordance with the provisions of the Real Estate (Regulation and Development) Act, 2016 in its letter and spirit within the State of West Bengal; and, issue such further appropriate writ/order/direction as this Hon’ble Court may deem fit and proper in facts and circumstances of the case.

The homebuyers have argued that a Central RERA already existed before the state of West Bengal enacted WBHIRA.

"The constitutional scheme requires that the State Act should give way to the Central legislation and it is the Central statute alone, which should prevail in the State of West Bengal," they have said in their petition.

RERA made by the Parliament is a 'complete and exhaustive code' and therefore, there is no scope for any State legislation to be enacted in the area save in terms of Article 254(2) of the Constitution of India, it notes.

Also, 'the requirement of Article 254(2) to obtain the assent of the President of India has not been fulfilled while enacting the impugned State Act', it states, adding "It is an admitted position that the State of West Bengal had neither reserved the impugned State Act for consideration of the President nor had ever obtained the President's assent inspite of the fact that the entire field stood occupied by RERA, 2016 enacted by the Parliament."

They have noted that there is a direct conflict between Central RERA and WBHIRA. For instance, whether the Regulatory Authority would be under RERA or WBHIRA, or whether registration of real estate projects or real estate agents will be under the Central law or State law. This would lead to chaos in the state, the petition states.

The petition notes that the Government of Kerala had also repealed the Kerala Real Estate (Regulation and Development) Act, after the passage of RERA, in order to comply with the Parliamentary Law.

Homebuyers have argued that while RERA is in various stages of implementation and most states have either taken the lead in notifying the rules or some are at various stages of implementation, it is only West Bengal that stands out as it is not only not implementing RERA but rather, has chosen to enact the impugned State Act in complete disregard for the Central Act, questioning the supremacy of Parliament.

Besides the six north eastern states that have not notified RERA and its rules due to West Bengal is the only state in the country to have enacted a state Act which almost mirrors RERA except for a few differences pertaining to definition of force majeure and garage.

The state law in Maharashtra was earlier repealed despite a presidential assent and Kerala too did not implement its own Act.

Real estate developers and realty agents in West Bengal say that they have no option but to register under WBHIRA to stay in business.

"There is confusion in West Bengal. Both developers and real agents are a confused lot. As many as 50 developer projects have been registered under the state Act and the same number of agents have applied for registration and paid the fees," an agent active in West Bengal told Moneycontrol.

"Until we register ourselves we cannot work in West Bengal after September 1, we cannot book unregistered properties for our clients. Similarly, developers cannot sell units in a project that has not been registered under WBHIRA. We are scared that we do not register, we may have to pay penalty. So, we are compelled to register. Right now, we are working basis the applied for registration numbers," he says.

As for the fees paid to the West Bengal government treasury as registration fees, both builders and agents say that whichever law prevails, the fees will continue to be paid to the state treasury.

"Only the name will change from WBHIRA to RERA in case the state decides to register projects under RERA. The buyer-builder agreements may also have to be revised but it does not seem that the state government is willing to relent anytime soon," says a builder on condition of anonymity.

Experts say that HIRA defeats the very purpose of Central RERA.

"The first is to do with the force majeure clause or unforeseen circumstances under which a builder may not fulfil conditions laid down under the contract signed with the homebuyers. RERA clearly lays down the circumstances of force majeure such as war, flood, drought, fire, cyclone, earthquake or any other natural calamity. HIRA has made an addition to this clause and talks about '…any other circumstances as may be prescribed'. This is a major dilution."

Sale of open space as a garage or parking area was an issue dealt under RERA. HIRA has interpreted it differently. RERA defines garage to mean a place within a project that has a roof and walls on three sides for parking any vehicle but it does not include unenclosed or uncovered parking area, especially open parking.

HIRA, on the other hand, states that car parking area means such an area as may be prescribed and defined garage to mean garage and parking space as sanctioned by the competent authority.
First Published on Feb 11, 2019 12:58 pm
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