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2021 SCC OnLine SC 1044

In the Supreme Court of India

Distinguished in ECGC Ltd. v. Mokul Shriram EPC JV, (2022) 6 SCC

704
(BEFORE UDAY U. LALIT, AJAY RASTOGI AND ANIRUDDHA BOSE, JJ.)

Civil Appeal No(s). 6745 - 6749 of 2021

(Arising out of SLP (Civil) No(s). 3711-3715 of 2021)
Newtech Promoters and Developers Pvt. Ltd. …
Appellant(s);
Versus
State of UP and Others … Respondent(s).
With
Civil Appeal No(s). 6750 of 2021
(Arising out of SLP(Civil) No(s). 14733 of 2020)
Civil Appeal No(s). 6751 of 2021
(Arising out of SLP (Civil) No(s). 2647 of 2021)
Civil Appeal No(s). 6752 of 2021
(Arising out of SLP (Civil) No(s). 3185 of 2021)
Civil Appeal No(s). 6753 of 2021
(Arising out of SLP(Civil) No(s). 3426 of 2021)
Civil Appeal No(s). 6754 of 2021
(Arising out of SLP(Civil) No(s). 6199 of 2021)
Civil Appeal No(s). 6755 of 2021
(Arising out of SLP(Civil) No(s). 6671 of 2021)
Civil Appeal No(s). 6756 of 2021
(Arising out of SLP(Civil) No(s). 6711 of 2021)
Civil Appeal No(s). 6757 of 2021
(Arising out of SLP(Civil) No(s). 1670 of 2021)
Civil Appeal No(s). 6745 - 6749 of 2021 (Arising out of SLP (Civil)
No(s). 3711-3715 of 2021), Civil Appeal No(s). 6750 of 2021
(Arising out of SLP(Civil) No(s). 14733 of 2020), Civil Appeal No
(s). 6751 of 2021 (Arising out of SLP (Civil) No(s). 2647 of 2021),
Civil Appeal No(s). 6752 of 2021 (Arising out of SLP (Civil) No(s).
3185 of 2021), Civil Appeal No(s). 6753 of 2021 (Arising out of SLP
(Civil) No(s). 3426 of 2021), Civil Appeal No(s). 6754 of 2021
(Arising out of SLP(Civil) No(s). 6199 of 2021), Civil Appeal No(s).
6755 of 2021 (Arising out of SLP(Civil) No(s). 6671 of 2021), Civil
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Appeal No(s). 6756 of 2021 (Arising out of SLP(Civil) No(s). 6711

of 2021) and Civil Appeal No(s). 6757 of 2021 (Arising out of SLP
(Civil) No(s). 1670 of 2021)
Decided on November 11, 2021
The Judgment of the Court was delivered by
AJAY RASTOGI, J.:— Leave granted.
2. The present batch of appeals are filed at the instance of
promoter/real estate developer assailing the common issues and certain
provisions of The Real Estate(Regulation and Development) Act, 2016
(hereinafter being referred to as “the Act”), The Uttar Pradesh Real
Estate(Regulation and Development) Rules, 2016 (hereinafter referred
to as “the Rules”) and the functioning of the Uttar Pradesh Real Estate
Regulatory Authority (hereinafter referred to as “the Authority”),
although being decided by separate orders by the High Court of
Allahabad, since the self-same questions are involved with the consent
are being decided by the present judgment.
3. The respondents herein are the allottees/home buyers who have
made their substantial investment from their hard earned savings
under the belief that the promotor/real estate developer will hand over
possession of the unit in terms of home buyer's agreement but their
bonafide belief stood shaken when the promotors failed to hand over
possession of a unit/plot/building in terms of the agreement and
complaints were instituted by the home buyers for refund of the
investment made along with interest under Section 31 of the Act.
4. The impugned orders came to be passed by the single member of
the authority on the complaint instituted at the instance of the home
buyers/allottees after hearing the parties with the direction to refund
the principal amount along with interest(MCLR + 1%) as prescribed by
the State Government under the Act. In the ordinary course of
business, the order passed by the authority is appealable under Section
43(5) of the Act provided the statutory compliance of pre-deposit being
made under proviso to Section 43(5) before the Appellate Tribunal but
the promoter/real estate developers approached the High Court by
filing a writ petition under Articles 226 and 227 of the Constitution
questioning the order passed by the authority holding it to be without
jurisdiction as it has been passed by a single member of the authority
who according to the appellants holds no jurisdiction to pass such
orders of refund of the amount as contemplated under Section 18 of the
Act and have also challenged the condition of pre-deposit as envisaged
under proviso to Section 43(5) of the Act for filing of a statutory appeal
and raised certain ancillary questions for consideration in writ
jurisdiction of the High Court of Allahabad. Being aggrieved by the
orders passed by the High Court dismissing their writ petitions, the
present batch of appeals have been preferred at the instance of the
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promoters/real estate developers.

5. Before adverting to the legal submissions made before us, we
consider it appropriate to take a bird's-eye view of the scheme of the
Act 2016 which may be apposite for proper appreciation of the
submissions made by the parties.
Object and Reasons of the Act 2016
6. Over the past two decades, with the growth of population and the
attraction of the people to shift towards urbanization, the demand for
housing increased manifold. Government also introduced various
housing schemes to cope with the increasing demand but the
experience shows that demands of the housing sector could not be
meted out by the Government at its own level for various reasons to
meet the requirement, the private players entered into the real estate
sector in meeting out the rising demand of housing. Though availability
of loans, both from public and private banks, become easier, still the
High rate of interest and the EMI has posed additional financial burden
on the people.
7. At the given time, the real estate and housing sector was largely
unregulated and the consequence was that consumers were unable to
procure complete information for enforced accountability towards
builders and developers in the absence of an effective mechanism in
place. Though, The Consumer Protection Act, 1986 was available to
cater the demand of home buyers in the real estate sector but the
experience shows that this mechanism was inadequate to address the
needs of the home buyers and promoters in the real estate sector.
8. At this juncture, the need for Real Estate(Regulation) Bill was
badly felt for establishing an oversight mechanism to enforce
accountability to the real estate sector and providing an adjudicating
machinery for speedy dispute redressal mechanism and safeguarding
the investments made by the home buyers through legislation to the
extent permissible under the law.
9. The statement of object and reasons of the Act indicates that the
primal position of the regulatory authority is to regulate the real estate
sector having jurisdiction to ensure compliance with the obligation cast
upon the promoters. The opening statement of objects and reasons
which has a material bearing on the subject reads as follows:—
“The real estate sector plays a catalytic role in fulfilling the need
and demand for housing and infrastructure in the country. While this
sector has grown significantly in recent years, it has been largely
unregulated, with absence of professionalism and standardisation
and lack of adequate consumer protection. Though the Consumer
Protection Act, 1986 is available as a forum to the buyers in the real
estate market, the recourse is only curative and is not adequate to
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address all the concerns of buyers and promoters in that sector. The
lack of standardisation, has been a constraint to the healthy and
orderly growth of industry. Therefore, the need to regulating the
sector has been emphasised in various forums.
2. In view of the above, it becomes necessary to have a Central
legislation, namely, the Real Estate (Regulation and Development)
Bill, 2013, in the interest of the effective consumer protection,
uniformity and standardisation of business practices and transactions
in the real estate sector. The proposed Bill provides for the
establishment of the Real estate Regulatory Authority (the Authority)
for regulation and promotion of real estate sector and to ensure sale
of plot, apartment or building, as the case may be, in an efficient
and transparent manner and to protect the interest of consumers in
real estate sector and establish the Real Estate Appellate Tribunal to
hear appeals from the decisions, directions or orders of the
Authority.”
10. It was introduced with an object to ensure greater accountability
towards consumers, to significantly reduce frauds & delays and also the
current high transaction costs, and to balance the interests of
consumers and promoters by imposing certain responsibilities on both,
and to bring transparency of the contractual conditions, set minimum
standards of accountability and a fast-track dispute resolution
mechanism. It also proposes to induct professionalism and
standardization in the sector, thus paving the way for accelerated
growth and investments in the long run.
11. Some of the relevant Statement of Objects and Reasons are
extracted as under:—
“4…
(d) to impose liability upon the promoter to pay such
compensation to the allottees, in the manner as provided under the
proposed legislation, in case if he fails to discharge any obligations
imposed on him under the proposed legislation;
(f) the functions of the Authority shall, inter alia, include - (i) to
render advice to the appropriate Government in matters relating to
the development of real estate sector; (ii) to publish and maintain a
website of records of all real estate projects for which registration
has been given, with such details as may be prescribed; (iii) to
ensure compliance of the obligations cast upon the promoters, the
allotees and the real estate agents under the proposed legislation.
…
(i) to appoint an adjudicating officer by the Authority for
adjudging compensation under sections 12, 14 and 16 of the
proposed legislation.
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…”
12. The Bill provides for establishment of the authority for regulation
and promotion of real estate sector, to ensure sale of plot, apartment or
building or sale of real estate project in an efficient and transparent
manner and to protect the interest of consumers in the real estate
sector and provide the adjudicating mechanism for speedy dispute
redressal mechanism by establishing the regulatory authority and the
adjudicating officer and in hierarchy, the Appellate Tribunal for early
and prompt disposal of the complaint being instituted primarily by the
home buyers for whom this Act has been enacted by the Parliament in
2016.
13. To examine the matter in this perspective, consider what a
house means in India. The data shows that about more than 77% of
total assets of an average Indian household are held in real estate and
it's the single largest investment of an individual in his lifetime. The
real estate in India has a peculiar feature. The buyer borrows money to
pay for a house and simultaneously plays the role of a financer as
building projects collect money upfront and this puts the buyer in a
very vulnerable position-the weakest stakeholder with a high financial
exposure. The amendment to the Insolvency and Bankruptcy Code,
2018 recognised the home buyers as financial creditors and the present
enactment is the most important regulatory intervention in favour of
the home buyers and it's had an impact and with passage of time, has
become a yardstick of laying down minimum standards in the market.
Earlier, the real estate sector was completely unregulated and there
was no transparency in their business profile and after the present
enactment, it is open for the potential home buyers to check if a project
is approved under the Act, 2016 that at least gives a satisfaction to a
person who is coming forward in making a lifetime investment.
14. That apart from the project being statutorily regulated, it
attaches certain authenticity with regard to completion of the project
and a statutory obligation upon the developer and home buyer to abide
by the terms and conditions of the home buyers agreement and
statutory compliance to the mandate of law. In addition, any project
which is approved under the Act, 2016 helps the promoter in raising
funds from banks and statistics shows that buyers express their
satisfaction in approved projects which is beneficial not only to the
home buyers but to the promoters and real estate agents as well.
15. Chapter II of the Act relates to the registration of real estate
projects. Section 3 mandates prior registration of real estate projects
including ongoing projects with the Real Estate Regulatory Authority.
Section 4 prescribes the ingredients of application by the promotor for
registration of real estate projects. In particular, the promotor is
required to state in the application under subsection 2(L)(c) of Section
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4, the timelines for completion of the project. Section 5 relates to the

grant of registration by the authority and inter alia states that no
application shall be rejected unless the applicant has been given an
opportunity of being heard in the matter. As per Section 5(3) of the
Act, the registration is co-terminus with the completion of the project.
Under Section 6, the authority can extend registration based on the
facts of each case or the occurrence of the force majeure. Section 7
pertains to revocation of registration. As per Section 8, the authority is
under obligation to inter alia carry out the remaining development work
where there is lapse or revocation of the registration.
16. Chapter III lays down, ‘functions and duties of promotor’ which
is relevant for the purpose of the present case. Section 11 thereof
elaborates on the functions and duties of the promoters. Under sub-
Section (4) of Section 11, several obligations have been casted upon
the promoters. Under sub-section (5) of Section 11, the promoter may
cancel the allotment if the allottee/home buyer commits any breach of
the terms of the agreement for sale, and in such case, the aggrieved
allottee has the right to approach the authority.
17. Section 12 provides that if any default being committed by the
promoter, either in reference to the information contained in the notice,
advertisement or prospectus or on the basis of the model apartment,
plot or building which causes any loss or damage to the allottee/home
buyer by reason of any incorrect or false statement or wants to
withdraw from the project, he shall be compensated by the promoter in
the manner as prescribed under the Act.
18. Section 14 relates to adherence to Sanctioned Plans & Project
specification by the promoters and Section 14(3) empowers the allottee
to receive compensation in the event where there is any structural
defect.
19. Section 18(1) of the Act spells out the consequences if the
promoter fails to complete or is unable to give possession of an
apartment, plot or building either in terms of the agreement for sale or
to complete the project by the date specified therein or on account of
discontinuance of his business as a developer either on account of
suspension or revocation of the registration under the Act or for any
other reason, the allottee/home buyer holds an unqualified right to seek
refund of the amount with interest at such rate as may be prescribed in
this behalf.
20. Section 18(2) of the Act mandates that in case, loss is caused to
allottee due to defective title of the land, on which the project is being
developed or has been developed, the promoter shall compensate the
allottee and such claim for compensation under Section 18(2) shall not
be barred by limitation provided under any law for the time being in
force.
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21. Section 18(3) of the Act states that where the promoter fails to
discharge any other obligation under the Act or the rules or regulations
framed thereunder or in accordance with the terms and conditions of
the agreement for sale, the promoter shall be liable to pay ‘such
compensation’ to the allottees, in the manner as prescribed under the
Act.
22. If we take a conjoint reading of sub-sections (1), (2) and (3) of
Section 18 of the Act, the different contingencies spelt out therein, (A)
the allottee can either seek refund of the amount by withdrawing from
the project; (B) such refund could be made together with interest as
may be prescribed; (C) in addition, can also claim compensation
payable under Sections 18(2) and 18(3) of the Act; (D) the allottee has
the liberty, if he does not intend to withdraw from the project, will be
required to be paid interest by the promoter for every months' delay in
handing over possession at such rates as may be prescribed.
23. Correspondingly, Section 19 of the Act spells out “Rights and
duties of allottees”. Section 19(3) makes the allottee entitled to claim
possession of the apartment, plot or building, as the case may be.
Section 19(4) provides that if the promoter fails to comply or being
unable to give possession of the apartment, plot or building in terms of
the agreement, it makes the allottees entitled to claim the refund of
amount paid along with interest and compensation in the manner
prescribed under the Act.
24. Section 19(4) is almost a mirror provision to Section 18(1) of
the Act. Both these provisions recognize right of an allottee two distinct
remedies, viz, refund of the amount together with interest or interest
for delayed handing over of possession and compensation.
25. The unqualified right of the allottee to seek refund referred
under Section 18(1)(a) and Section 19(4) of the Act is not dependent
on any contingencies or stipulations thereof. It appears that the
legislature has consciously provided this right of refund on demand as
an unconditional absolute right to the allottee, if the promoter fails to
give possession of the apartment, plot or building within the time
stipulated under the terms of the agreement regardless of unforeseen
events or stay orders of the Court/Tribunal, which is in either way not
attributable to the allottee/home buyer, the promoter is under an
obligation to refund the amount on demand with interest at the rate
prescribed by the State Government including compensation in the
manner provided under the Act with the proviso that if the allottee does
not wish to withdraw from the project, he shall be entitled for interest
for the period of delay till handing over possession at the rate
prescribed.
26. If we turn to the power of the authority, it envisages under
Section 31, the complaints can be filed either with the authority or
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adjudicating officer for violation or contravention of the provisions of

the Act or the rules and regulations framed thereunder. Such complaint
can be filed against “any promoter, allottee or real estate agent”, as the
case may be, and can be filed by “any aggrieved person”, and it has to
be read with an explanation, “person” includes an association of
allottees or any voluntary consumer association registered under any
law for the time being in force. The form and manner in which
complaint is to be instituted has been provided under sub-section(2) of
Section 31.
27. Section 32 refers to functions of the authority for promotion of
real estate sector and Sections 34 to 38 of the Act recognize different
nature of powers and functions of the authority regarding compliance of
its regulations cast upon the promoters, allottee or the real estate
agents and to appoint one or more persons to make an inquiry into the
affairs of any promoter, allottee or the real estate agent and to pass any
interim orders, if the promoter, allottee or real estate agent is failing in
discharging of its functions under the Act, rules or regulations, and to
issue directions from time to time to the promoter, allottee or real
estate agents, if considered necessary can impose penalty or interest if
failed to carry out its obligations.
28. At the same time, Chapter VIII of the Act talks about offences,
penalties and adjudication. Various kinds of penalties are set out in
Sections 59 to 68. Each of these provisions clearly states that the
penalty thereunder is required to be determined by the authority.
29. We are concerned with Section 71 of the Act titled ‘power to
adjudicate’ which is specific to the adjudicating officer. Subsection(1)
of Section 71 opens with the words “for the purpose of adjudging
compensation under Sections 12, 14, 18 and 19”, the Authority has to
appoint in consultation with the appropriate Government, a judicial
officer not below the rank of the District Judge, as an adjudicating
officer, to hold inquiry in the prescribed manner after giving a person
concerned a reasonable opportunity of hearing. At the same time, sub-
section (2) casts an obligation upon the adjudicating officer that while
adjudging compensation under sub-section (1), the application has to
be dealt with expeditiously as possible and to be disposed of within 60
days. If there is a delay being caused exceeding the statutory period of
60 days, in disposal of the application, reasons are to be recorded for
extension of the period.
30. Under sub-section (3) of Section 71, the adjudicating officer has
been empowered not only to summon and enforce the attendance of
persons acquainted with the facts and circumstances of the case to give
evidence or to produce any document which may be useful and relevant
for adjudication, is supposed to take note of the various parameters as
referred to under Section 72 which still is illustrative and not
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exhaustive while adjudging the quantum of compensation payable to

the person aggrieved and interest, as the case may be.
31. After we have heard learned counsel for the parties at length,
the following questions emerges for our consideration in the present
batch of appeals are as under:—
1. Whether the Act 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?
2. Whether the authority has jurisdiction to direct return/refund of
the amount to the allottee under Sections 12, 14, 18 and 19 of
the Act or the jurisdiction exclusively lies with the adjudicating
officer under Section 71 of the Act?
3. Whether Section 81 of the Act authorizes the authority to delegate
its powers to a single member of the authority to hear complaints
instituted under Section 31 of the Act?
4. Whether the condition of pre-deposit under proviso to Section 43
(5) of the Act for entertaining substantive right of appeal is
sustainable in law?
5. Whether the authority has power to issue recovery certificate for
recovery of the principal amount under Section 40(1) of the Act?
Question 1 : - Whether the Act 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?
32. The issue concerns the retroactive application of the provisions
of the Act 2016 particularly, with reference to the ongoing projects. If
we take note of the objects and reasons and the scheme of the Act, it
manifests that the Parliament in its wisdom after holding extensive
deliberation on the subject thought it necessary to have a central
legislation in the paramount interest for 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, and accordingly intended to balance the interests of
consumers and promoters by imposing certain duties and
responsibilities on both. The deliberation on the subject was going on
since 2013 but finally the Act was enacted in the year 2016 with effect
from 25th March, 2016.
33. Under Chapter II of the Act 2016, registration of real estate
projects became mandatory and to make the statute applicable and to
take its place under sub-Section (1) of Section 3, it was made statutory
that without registering the real estate project with a real estate
regulatory authority established under the Act, no promoter shall
advertise, market, book, sell or offer for sale, or invite persons to
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purchase in any manner a plot, apartment or building, as the case may

be in any real estate project but with the aid of proviso to Section 3(1),
it was mandated that such of the projects which are ongoing on the
date of commencement of the Act and more specifically the projects to
which the completion certificate has not been issued, such promoters
shall be under obligation 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. With certain exemptions being
granted to such of the projects covered by sub-section (2) of Section 3
of the Act, as a consequence, all such home buyers agreements which
has been executed by the parties inter se has to abide the legislative
mandate in completion of their ongoing running projects.
34. The term “ongoing project” has not been so defined under the
Act while the expression “real estate project” is defined under Section 2
(zn) of the Act which reads as under:—
“2(zn) “real estate project” means the development of a building
or a building consisting of apartments, or converting an existing
building or a part thereof into apartments, or the development of
land into plots or apartments, as the case may be, for the purpose of
selling all or some of the said apartments or plots or building, as the
case may be, and includes the common areas, the development
works, all improvements and structures thereon, and all easement,
rights and appurtenances belonging thereto;”
35. The Act is intended to comply even to the ongoing real estate
project. The expression “ongoing project” has been defined under Rule
2(h) of the Uttar Pradesh Real Estate (Regulation and Development)
Rules, 2016 which reads as under:—
“2(h) “Ongoing project” means a project where development is
going on and for which completion certificate has not been issued
but excludes such projects which fulfil any of the following criteria on
the date of notification of these rules:
(i) where services have been handed over to the Local Authority
for maintenance.
(ii) where common areas and facilities have been handed over to
the Association for the Residents' Welfare Association for
maintenance.
(iii) where all development work have been completed and
sale/lease deeds of sixty percent of the apartment/houses/plots
have been executed.
(iv) where all development works have been completed and
application has been filed with the competent authority for
issue of completion certificate.”
36. The expression “completion certification” has been defined under
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Section 2(q) and “occupancy certificate” under Section 2(zf) of the Act
which reads as under:—
“2(q) “completion certificate” means the completion certificate, or
such other certificate, by whatever name called, issued by the
competent authority certifying that the real estate project has been
developed according to the sanctioned plan, layout plan and
specifications, as approved by the competent authority under the
local laws;
2(zf) “occupancy certificate” means the occupancy certificate, or
such other certificate, by whatever name called, issued by the
competent authority permitting occupation of any building, as
provided under local laws, which has provision for civic infrastructure
such as water, sanitation and electricity;”
37. Looking to the scheme of Act 2016 and Section 3 in particular of
which a detailed discussion has been made, all “ongoing projects” that
commence prior to the Act and in respect to which completion
certificate has not been issued are covered under the Act. It manifests
that the legislative intent is to make the Act applicable not only to the
projects which were yet to commence after the Act became operational
but also to bring under its fold the ongoing projects and to protect from
its inception the inter se rights of the stake holders, including
allottees/home buyers, promoters and real estate agents while
imposing certain duties and responsibilities on each of them and to
regulate, administer and supervise the unregulated real estate sector
within the fold of the real estate authority.
38. The emphasis of Mr. Kapil Sibal, learned senior counsel for the
appellant is that the agreement of sale was executed in the year 2010-
11, i.e. much before the coming into force of the Act and the present
Act has retrospective application and registration of ongoing project
under the Act would be in contravention to the contractual rights
established between the promoter and allottee under the agreement for
sale executed which is impermissible in law and further submits that
Sections 13, 18(1), 19(4) of the Act 2016 to the extent of their
retrospective application is in violation of Articles 14, 19(1)(g) of the
Constitution of India.
39. Mr. Tushar Mehta, learned Solicitor General, on the other hand,
submits that a bare perusal of the object and reasons manifest that the
Act does not take away the substantive jurisdiction, rather it protects
the interest of homebuyers where project/possession is delayed and
further submits that the scheme of the Act has retroactive application,
which is permissible under the law. The provisions make it clear that it
operates in future, however, its operation is based upon the character
and status which have been done earlier and the presumption against
retrospectivity in this case is ex-facie rebuttable. The literal
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interpretation of the statute manifest that it has not made any

distinction between the “existing” real estate projects and “new” real
estate projects as has been defined under Section 2(zn) of the Act.
40. Learned counsel further submits that the key word, i.e.,
“ongoing on the date of the commencement of this Act” by necessary
implication, ex-facie and without any ambiguity, means and includes
those projects which were ongoing and in cases where only issuance of
completion certificate remained pending, legislature intended that even
those projects have to be registered under the Act. Therefore, the ambit
of Act is to bring all projects under its fold, provided that completion
certificate has not been issued. The case of the appellant is based on
“occupancy certificate” and not of “completion certificate”. In this
context, learned counsel submits that the said proviso ought to be read
with Section 3(2)(b), which specifically excludes projects where
completion certificate has been received prior to the commencement of
the Act. Thus, those projects under Section 3(2) need not be registered
under the Act and, therefore, the intent of the Act hinges on whether or
not a project has received a completion certificate on the date of
commencement of the Act.
41. 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 sale of plot, apartment or
building, 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 Sections 13, 18(1) and 19(4) are all
beneficial provisions for safeguarding the pecuniary interest of the
consumers/allottees. In the given circumstances, if the Act is held
prospective then the adjudicatory mechanism under Section 31 would
not be available to any of the allottee for an on-going project. Thus, it
negates the contention of the promoters regarding the contractual
terms having an overriding effect over the retrospective applicability of
the Act, even on facts of this case.
42. What the provision further emphasizes is that a promoter of a
project which is not complete/sans completion certificate shall get the
project registered under the Act but while getting the project
registered, promoter is under an obligation to prescribe fresh timelines
for getting the remaining development work completed and from the
scheme of the Act, we do not find that the first proviso to Section 3(1)
in any manner is either violative of Articles 14 and 19(1)(g) of the
Constitution of India. The Parliament is always competent to enact any
law affecting the antecedent events under its fold within the
parameters of law.
43. In State of Bombay (Now Maharashtra) v. Vishnu Ramchandra1 ,
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this Court observed that if the part of requisites for operation of the
statute were drawn from a time antecedent to its passing, it did not
make the statute retrospective so long as the action was taken after the
Act came into force.
44. To meet out different nature of exigencies, it was noticed by the
Parliament that Pan India, large number of real estate projects where
the allottees did not get possession for years together and complaints
being filed before different forums including under the Consumer
Protection Act has failed to deliver adequate/satisfactory results to the
consumer/allottees and their life savings is locked in and sizable
sections of allottees had invested their hard-earned money, money
obtained through loans or financial institutions with the belief that they
will be able to get a roof in the form of their apartments/flats/unit.
45. At the given time, there was no law regulating the real estate
sector, development works/obligations of promoter and allottee, it was
badly felt that such of the ongoing projects to which completion
certificate has not been issued must be brought within the fold of the
Act 2016 in securing the interests of allottees, promoters, real estate
agents in its best possible way obviously, within the parameters of law.
Merely because enactment as prayed is made retroactive in its
operation, it cannot be said to be either 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.
46. The consequences for breach of such obligations under the Act
are prospective in operation and in case ongoing project, of which
completion certificate is not obtained, are not to be covered under the
Act, there is every likelihood of classifications in respect of
underdeveloped ongoing project and the new project to be commenced.
47. The legislative power to make the law with
prospective/retrospective effect is well recognized and it would not be
permissible for the appellants/promoters to say that they have any
vested right in dealing with the completion of the project by leaving the
allottees in lurch, in a helpless and miserable condition that at least
may not be acceptable within the four corners of law.
48. The distinction between retrospective and retroactive has been
explained by this Court in Jay Mahakali Rolling Mills v. Union of India2 ,
which reads as under:—
“8. “Retrospective” means looking backward, contemplating what
is past, having reference to a statute or things existing before the
statute in question. 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.
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Retroactive statute means a statute, which creates a new obligation

on transactions or considerations or destroys or impairs vested
rights.”
49. Further, this Court in Shanti Conductors Private Limited v.
Assam State Electricity Board3 , held as under:—
“67. Retroactivity in the context of the statute consists of
application of new rule of law to an act or transaction which has been
completed before the rule was promulgated.
68. In the present case, the liability of buyer to make payment
and day from which payment and interest become payable under
Sections 3 and 4 does not relate to any event which took place prior
to the 1993 Act, it is not even necessary for us to say that the 1993
Act is retroactive in operation. The 1993 Act is clearly prospective in
operation and it is not necessary to term it as retroactive in
operation. We, thus, do not subscribe to the opinion dated 31-8-
2016 [Shanti Conductors (P) Ltd. v. Assam SEB, (2016) 15 SCC 13]
of one of the Hon'ble Judges holding that the 1993 Act is
retroactive.”
50. In the recent judgment of this Court rendered in the case of
Vineeta Sharma v. Rakesh Sharma4 wherein, this Court has interpreted
the scope of Section 6(1) of the Hindu Succession Act, 1956, the law of
retroactive statute held as under:—
“61. The prospective statute operates from the date of its
enactment conferring new rights. The retrospective statute operates
backwards and takes away or impairs vested rights acquired under
existing laws. A retroactive statute is the one that does not operate
retrospectively. It operates in futuro. However, its operation is based
upon the character or status that arose earlier. Characteristic or
event which happened in the past or requisites which had been
drawn from antecedent events. Under the amended Section 6, since
the right is given by birth, that is, an antecedent event, and the
provisions operate concerning claiming rights on and from the date
of the Amendment Act.”
51. Thus, it is clear that the statute is not retrospective merely
because it affects existing rights or its retrospection because a part of
the requisites for its action is drawn from a time antecedent to its
passing, at the same time, retroactive statute means a statute which
creates a new obligation on transactions or considerations already
passed or destroys or impairs vested rights.
52. The Parliament intended to bring within the fold of the statute
the ongoing real estate projects in its wide amplitude used the term
“converting and existing building or a part thereof into apartments”
including every kind of developmental activity either existing or
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upcoming in future under Section 3(1) of the Act, the intention of the
legislature by necessary implication and without any ambiguity is to
include those projects which were ongoing and in cases where
completion certificate has not been issued within fold of the Act.
53. 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. The clauses have imposed the
applicability of subsequent legislations to be applicable and binding on
the flat buyer/allottee and either of the parties, promoters/home buyers
or allottees, cannot shirk from their responsibilities/liabilities under the
Act and implies their challenge to the violation of the provisions of the
Act and it negates the contention advanced by the appellants regarding
contractual terms having an overriding effect to the retrospective
applicability of the Authority under the provisions of the Act which is
completely misplaced and deserves rejection.
54. From the scheme of the Act 2016, its application is retroactive 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. At the same time, it will apply after getting the on
-going projects and future projects registered under Section 3 to
prospectively follow the mandate of the Act 2016.
Question no. 2 : Whether the authority has jurisdiction to direct
return/refund of the amount to the allottee under Sections 12,
14, 18 and 19 of the Act or the jurisdiction exclusively lies with
the adjudicating officer under Section 71 of the Act?
55. Before examining the question, we have to take a holistic view of
the scheme of the Act along with the rules/regulations framed by the
Authority in exercise of its powers under Sections 84 and 85 of the Act
that postulates certain functions and duties to the promoter of the real
estate project and its entailing consequences if the promoter fails to
fulfil his obligations defined under Chapter III. Some of the obligations
are spelt out in Sections 12, 14, 18 and 19 of the Act.
56. Section 12 which falls for consideration in these petitions reads
as follows:
“12. Where any person makes an advance or a deposit on the
basis of the information contained in the notice advertisement or
prospectus, or on the basis of any model apartment, plot or building,
at the case may be, and sustains any loss or damage by reason of
any incorrect, false statement included therein, he shall be
compensated by the promoter in the manner as provided
under this Act:”
Provided that if the person affected by such incorrect, false
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statement contained in the notice, advertisement or prospectus,

or the model apartment, plot or building, as the case may be,
intends to withdraw from the proposed project, he shall be
returned his entire investment along with interest at such rate as
may be prescribed and the compensation in the manner
provided under this Act.”
57. Section 14 relates to adherence to sanctioned plans and project
specifications by the promoter. Section 14(3) empowers the allottee to
receive compensation in the event there is any structural defect or any
other defect in workmanship etc. Section 14(3) reads as under:
“(3) In case any structural defect or any other defect in
workmanship, quality or provision of services or any other obligations
of the promoter as per the agreement for sale relating to such
development is brought to the notice of the promoter within a period
of five years by the allottee from the date of handing over
possession, it shall be the duty of the promoter to rectify such
defects without further charge, within thirty days, and in the event
of promoter's failure to rectify such defects within such time, the
aggrieved allottees shall be entitled to receive appropriate
compensation in the manner as provided under this Act.”
58. Section 18 starts with the marginal note “Return of amount and
compensation”. The two aspects namely ‘return of amount’ and
‘compensation’ are distinctly delineated. Section 18 reads as follows:
18.(1) If the promoter fails to complete or is unable to give
possession of an apartment, plot or building,-
(a) in accordance with the terms of the agreement for sale or, as
the case may be, duly completed by the date specified therein;
or
(b) due to discontinuance of his business as a developer on
account of suspension or revocation of the registration under
this Act or for any other reason,
he shall be liable on demand to the allottees, in case the
allottee wishes to withdraw from the project, without
prejudice to any other remedy available, to return the amount
received by him in respect of that apartment, plot, building, as
the case may be, with interest at such rate as may be
prescribed in this behalf including compensation in the
manner as provided under this Act:
Provided that where an allottee does not intend to withdraw
from the project, he shall be paid, by the promoter, interest for
every month of delay, till the handing over of the possession, at
such rate as may be prescribed.
(2) The promoter shall compensate the allottees in case of any
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loss caused to him due to defective title of the land, on which the
project is being developed or has been developed, in the manner as
provided under this Act, and the claim for compensation under this
subsection shall not be barred by limitation provided under any law
for the time being in force.
(3) If the promoter fails to discharge any other obligations
imposed on him under this Act or the rules or regulations made
thereunder or in accordance with the terms and conditions of the
agreement for sale, he shall be liable to pay such compensation to
the allottees, in the manner as provided under this Act.
(emphasis supplied)
59. Chapter IV deals with the rights and duties of the allottees and
in particular, Section 19(4) entitles the allottees to a refund of the
amount paid. Section 19(4) reads as follows:—
“(4) The allottee shall be entitled to claim the refund of amount
paid along with interest at such rate as may be prescribed and
compensation in the manner as provided under this Act from
the promoter, if the promoter fails to comply or is unable to give
possession of the apartment, plot or building, as the case may be, in
accordance with the terms of agreement for sale or due to
discontinuance of his business as a developer on account of
suspension or revocation of his registration under the provisions of
this Act or the rules or regulations made thereunder.”
60. Section 31 relates to the filing of complaints to the authority and
reads as follows:
Filing of complaints with the Authority or the adjudicating
officer—
(1) Any aggrieved person may file a complaint with the Authority
or the adjudicating officer, as the case may be, for any violation
or contravention of the provisions of this Act or the rules and
regulations made thereunder, against any promoter, allottee or
real estate agent, as the case may be.
Explanation—For the purpose of this sub-section “person”
shall include the association of allottees or any voluntary
consumer association registered under any law for the time
being in force.
(2) The form, manner and fees for filing complaint under
subsection (1) shall be such as may be prescribed.
61. Section 71 relates to Power to Adjudicate vested with the
adjudicating officer while adjudging compensation which reads as
follows:
71. Power to adjudicate.—
(1) For the purpose of adjudging compensation under
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sections 12, 14, 18 and section 19, the Authority shall

appoint, in consultation with the appropriate
Government, one or more judicial officer as deemed
necessary, who is or has been a District Judge to be an
adjudicating officer for holding an inquiry in the prescribed
manner, after giving any person concerned a reasonable
opportunity of being heard:
Provided that any person whose complaint in respect of
matters covered under sections 12, 14, 18 and section 19 is
pending before the Consumer Disputes Redressal Forum or
the Consumer Disputes Redressal Commission or the
National Consumer Redressal Commission, established
under Section 9 of the Consumer Protection Act, 1986 (68 of
1986), on or before the commencement of this Act, he may,
with the permission of such Forum or Commission, as the
case may be, withdraw the complaint pending before it and
file an application before the adjudicating officer under this
Act.
(2) The application for adjudging compensation under
subsection (1), shall be dealt with by the adjudicating officer
as expeditiously as possible and dispose of the same within a
period of sixty days from the date of receipt of the application :
Provided that where any such application could not be disposed
of within the said period of sixty days, the adjudicating officer
shall record his reasons in writing for not disposing of the
application within that period.
(3) While holding an inquiry the adjudicating officer shall have
power to summon and enforce the attendance of any person
acquainted with the facts and circumstances of the case to give
evidence or to produce any document which in the opinion of
the adjudicating officer, may be useful for or relevant to the
subject matter of the inquiry and if, on such inquiry, he is
satisfied that the person has failed to comply with the
provisions of any of the sections specified in sub-section (1),
he may direct to pay such compensation or interest, as the
case any be, as he thinks fit in accordance with the provisions
of any of those sections.
62. The broad factors to be considered while adjudging
compensation have been provided under Section 72 which reads as
under:—
“72. While adjudging the quantum of compensation or
interest, as the case may be, under section 71, the
adjudicating officer shall have due regard to the following
factors, namely:—
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(a) the amount of disproportionate gain or unfair advantage,

wherever quantifiable, made as a result of the default;
(b) the amount of loss caused as a result of the default;
(c) the repetitive nature of the default;
(d) such other factors which the adjudicating officer considers
necessary to the case in furtherance of justice.”
63. The Uttar Pradesh Real Estate Regulatory Authority in exercise of
its power under Section 85 of the Act 2016 has framed its regulations
on 27th February, 2019 called as Uttar Pradesh Real Estate Regulatory
Authority(General) Regulations, 2019 (hereinafter being referred to as
“Regulations 2019”).
64. Regulations 18 to 23 deal with meetings of the authority, other
than adjudication proceedings. Regulation 24 falls in the chapter of
“Adjudicatory Proceedings” and reads as follows:—
“24(a) For adjudication proceedings with respect to complaints
filed with the Authority, the Authority may, by order, direct that
specific matters or issues be heard and decided by a single bench of
either the Chairperson or any Member of the Authority.
(b) The Authority, in consultation with the state government, will
appoint Adjudicating Officers on the Panel of U.P. RERA for the
purposes of adjudicating the matters of compensation admissible
under the Act.
(c) The aggrieved persons will be required to file complaints
before the Authority online in form - M. The Claims of compensation
will also be included in form - M itself. While the Authority will
decide all the questions of breaches of the Act, Rules and
Regulations, it will refer the question relating to the adjudication of
compensation to one of the Adjudicating Officers on the Panel of U.P.
RERA who will then decide the matter expeditiously and preferably
within 60 days.
(d) The Adjudicating Officers on the Panel of U.P. RERA will hold
their courts at Lucknow or Gautam Buddhnagar as decided by the
chairman. The complaints relating to the districts of NCR will be
heard at Gautam Buddhnagar whereas complaints from the
remaining districts of the State will be heard at Lucknow.
65. The complaint before the regulatory authority for any violation of
the Act or rules or regulations made thereunder by an aggrieved person
has to be submitted in Form (M) as per the procedure prescribed under
Rule 33(1) which the regulatory authority has to follow. At the same
time, any person who is aggrieved to claim compensation under
Sections 12, 14, 18 and 19 has to submit his compliant in Form (N) for
adjudging compensation as per the procedure provided under Section
71(3) of the Act taking into consideration the factors indicated under
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Section 72 and in the manner provided under Rule 34(1) of the Rules
2016.
66. Rules 33(1) and 34(1) of the Uttar Pradesh Real Estate
(Regulation and Development) Rules, 2016 which is relatable to the
adjudicatory powers of the regulatory authority/adjudicating officer
reads as follows:—
“33(1) Any aggrieved person may file a complaint with the
regulatory authority for any violation under the Act or the rules and
regulations made thereunder, save as those provided to be
adjudicated by the adjudicating officer, in Form ‘M’ which shall be
accompanied by a fee of rupees one thousand in the form of a
demand draft drawn on a nationalized bank in favour of regulatory
authority and payable at the main branch of that bank at the station
where the seat of the said regulatory authority is situated.
Explanation : - For the purpose of this sub-rule “person” shall
include the association of allottees or any voluntary consumer
association registered under any law or the time being in force.
34(1) Any aggrieved person may file a complaint with the
adjudicating officer for compensation under Sections 12, 14, 18 and
19 in Form N which shall be accompanied by a fee of rupees one
thousand in the form of a demand draft drawn on a nationalized
bank in favour of regulatory authority and payable at the main
branch of that bank at the station where the rest of the said
regulatory authority is situated.”
(emphasis supplied)
67. Rule 33(2) of the Rules 2016 delineates the procedure which the
authority has to follow in making inquiry to the allegations or violations
of the provisions of the Act, rules and regulations. At the given time,
Rule 34(2) delineates the procedure to be followed by the adjudicating
officer while adjudging quantum of compensation and interest which
the person aggrieved is entitled for under the provisions of the Act.
68. Mr. Kapil Sibal, learned senior counsel for the appellants submits
that both the ‘authority’ and the ‘adjudicating officer’ operate in
completely distinct spheres. The authority and the adjudicating officer
are defined under Sections 2(i) and 2(a) of the Act and are, therefore,
creature of statute and their powers and respective jurisdiction(s) are
explicitly delineated in the statute itself.
69. The adjudicating officer under Section 71 is specifically vested
with the jurisdiction to adjudicate complaints under Sections 12, 14, 18
& 19 of the Act 2016. In disposing of such complaints, the adjudicating
officer alone is empowered under Section 71(3) to conduct enquiry and
direct the payment of refund as well as compensation and interest, as
the case may be, in taking note of the broad parameters enumerated in
Section 72 and such complaints are to be statutorily disposed of within
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60 days failing which the reasons are to be recorded.

70. According to the learned counsel for the appellants, proviso to
Section 71(1), the jurisdiction to adjudicate complaints under Sections
12, 14, 18 and 19 which were earlier pending before the authority
established under the Consumer Protection Act, 1986 stands vested
with the adjudicating officer. According to him, the legislative intent is
clear and unambiguous that the complaints emanating from the bundle
of rights which flow from Sections 12, 14, 18 and 19 including the
cause of action for refund and interest be withdrawn from the forums
established under the Consumer Protection Act and in turn be filed
before and adjudicated by the Adjudicating Officer under this Act and
that being the legislative intent, matters arising under Sections 12, 14,
18 and 19 would be examined and adjudicated exclusively by the
adjudicating officer as mandated by law.
71. Per contra, Ms. Madhavi Divan, learned senior counsel for the
respondents while supporting the findings recorded by the High Court
in the impugned judgment submits that the Act provides distinct
remedies, i.e., ‘return of amount/investment’ on the one hand and
‘compensation’ on the other, to be determined separately. According to
her, the right to refund on demand is a statutory right, fundamentally,
contextually and conceptually distinct from the right to receive
compensation. While the right to refund emanates from the
Legislature's recognition of the fact that homebuyers are “out of
pocket” financial creditors, the right to compensation seeks to make
amends for injury or loss.
72. Thus, refund and compensation are two distinct rights under the
Act and cannot be conflated. The manner in which the two are to be
determined would require a different process and involve different
considerations. According to her, the determination of compensation
involves a full-fledged adjudicatory process which is more complex than
that involved in determining refund. To do so, it would tantamount to
regressing into the very malaise that the legislature intended to liberate
the allottees-homebuyers. The result of conflating the rights and/or
relegating the allottees to the adjudicating officer would amount to a
compromise of the timeliness of the right to refund on demand. It
would also deter and daunt allottees from seeking compensation
because in the process the remedies would be clubbed and the
availability of refund would get relatively delayed as compensation
requires a more elaborate adjudication process (even though the same
is required to be completed in 60 days). The authority to determine a
claim for refund on demand while the adjudicating officer to determine
the claim for compensation.
73. The expression “on demand” which follows the right to “return of
amount” is indicative of the priority, immediacy and expediency which
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is accorded to the right to refund. Thus, according to her, the

expressions “refund” and “return of amount” is an act of restitution,
and the obligation to restitute lies on the person or the authority that
has received unjust enrichment or unjust benefit.
74. Learned counsel further submits that in order to give full effect
to the letter and spirit of the right to refund in the context explained
above, there can be no doubt that the determination of the right to
refund must be left to the authority whereas the adjudication for
adjudging compensation with the adjudicating officer as reflected under
Section 71 of the Act. According to the learned counsel, the authority is
fully seized with the standard agreements entered into between the
promoters and the allottees, and therefore, is best equipped to
determine the extent of delay, if any. Therefore, refund claims can most
conveniently and effectively be dealt with by the authority and interest
on refund is available at the rate prescribed by the appropriate
Government. In the instant batch of matters, the prescribed rate of
interest is (MCLR + 1%), which has been notified by the Government of
Uttar Pradesh.
75. The legislature in its wisdom has made a specific provision
delineating power to be exercised by the regulatory
authority/adjudicating officer. “Refund of the amount” and
“compensation” are two distinct components which the allottee or the
person aggrieved is entitled to claim if the promoter has not been able
to hand over possession with a nature of enquiry and mechanism
provided under the Act. So far as the claim with respect to refund of
amount on demand under Sections 18(1) and 19(4) of the Act is
concerned, it vests within the jurisdiction of the regulatory authority.
Section 71 carves out the jurisdiction of the adjudicating officer to
adjudge compensation under Sections 12, 14, 18 and 19 after holding
enquiry under Section 71(3) of the Act keeping in view the broad
contours referred to under Section 72 of the Act.
76. The submission made by learned counsel for the appellants that
the proviso under Section 71(1) empowers the adjudicating officer to
examine the complaints made under Sections 12, 14, 18 and 19
pending before the Consumer Disputes Redressal Forum/Commission is
in different context and it was one time mechanism to provide a
window to the consumers whose composite claims are pending before
the Consumer Forum/Commission to avail the benevolent provision of
the Act 2016 for the reason that under the Consumer Protection Act,
there is no distinction as to whether the complaint is for refund of the
amount or for compensation as defined under Section 71(1) of the Act,
but after the Act 2016 has come into force, if any person aggrieved
wants to make complaint for refund against the promotor or real estate
agent other than compensation, it is to be lodged to the regulatory
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authority and for adjudging compensation to the adjudicating officer,

and the delineation has been made to expedite the process of
adjudication invoked by the person aggrieved when a complaint has
been made under Section 31 of the Act to be adjudicated either by the
authority/adjudicating officer as per the procedure prescribed under the
Act.
77. The further submission made by the learned counsel for the
appellants is that the return of the amount adversely impacts the
promotor and such a question can be looked into by the adjudicating
officer in the better prospective. The submission has no foundation for
the reason that the legislative intention and mandate is clear that
Section 18(1) is an indefeasible right of the allottee to get a return of
the amount on demand if the promoter is unable to handover
possession in terms of the agreement for sale or failed to complete the
project by the date specified and the justification which the promotor
wants to tender as his defence as to why the withdrawal of the amount
under the scheme of the Act may not be justified appears to be
insignificant and the regulatory authority with summary nature of
scrutiny of undisputed facts may determine the refund of the amount
which the allottee has deposited, while seeking withdrawal from the
project, with interest, that too has been prescribed under the Act, as in
the instant case, the State of Uttar Pradesh has prescribed MCLR + 1%
leaving no discretion to the authority and can also claim compensation
as per the procedure prescribed under Section 71(3) read with Section
72 of the Act.
78. This Court while interpreting Section 18 of the Act, in Imperia
Structures Ltd. v. Anil Patni5 held that Section 18 confers an unqualified
right upon an allottee to get refund of the amount deposited with the
promoter and interest at the prescribed rate, if the promoter fails to
complete or is unable to give possession of an apartment as per the
date specified in the home buyer's agreement in para 25 held as under:
—
“25. In terms of Section 18 of the RERA Act, if a promoter fails to
complete or is unable to give possession of an apartment duly
completed by the date specified in the agreement, the promoter
would be liable, on demand, to return the amount received by him in
respect of that apartment if the allottee wishes to withdraw from the
Project. Such right of an allottee is specifically made “without
prejudice to any other remedy available to him”. The right so given
to the allottee is unqualified and if availed, the money deposited
by the allottee has to be refunded with interest at such rate as may
be prescribed. The proviso to Section 18(1) contemplates a situation
where the allottee does not intend to withdraw from the Project. In
that case he is entitled to and must be paid interest for every month
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of delay till the handing over of the possession. It is up to the

allottee to proceed either under Section 18(1) or under proviso to
Section 18(1). The case of Himanshu Giri came under the latter
category. The RERA Act thus definitely provides a remedy to an
allottee who wishes to withdraw from the Project or claim return on
his investment.”
(emphasis supplied)
79. To safeguard the interests of the parties, on being decided by
the regulatory authority/adjudicating officer, it is always subject to
appeal before the Tribunal under Section 43(5) provided condition of
pre-deposit being complied with can be further challenged in appeal
before the High Court under Section 58 of the Act and, thus, the
legislature has put reasonable restriction and safeguards at all stages.
80. The further submission made by learned counsel for the
appellants that if the allottee has defaulted the terms of the agreement
and still refund is claimed which can be possible, to be determined by
the adjudicating officer. The submission appears to be attractive but is
not supported with legislative intent for the reason that if the allottee
has made a default either in making instalments or made any breach of
the agreement, the promoter has a right to cancel the allotment in
terms of Section 11(5) of the Act and proviso to sub-section 5 of
Section 11 enables the allottee to approach the regulatory authority to
question the termination or cancellation of the agreement by the
promotor and thus, the interest of the promoter is equally safeguarded.
81. The opening words of Section 71(1) of the Act make it clear that
the scope and functions of the adjudicating officer are only for
“adjudging compensation” under Sections 12, 14, 18 and 19 of the Act.
If the legislative intent was to expand the scope of the powers of the
adjudicating officer, then the wording of Section 71(1) ought to have
been different. On the contrary, even the opening words of Section 71
(2) of the Act make it clear that an application before the adjudicating
officer is only for “adjudging compensation”. Even in Section 71(3) of
the Act, it is reiterated that the adjudicating officer may direct “to pay
such compensation or interest” as the case may be as he thinks fit, in
accordance with provisions of Sections 12, 14, 18 and 19 of the Act.
This has to be seen together with the opening words of Section 72 of
the Act, which reads “while adjudging the quantum of compensation or
interest, as the case may be, under Section 71, the adjudicating officer
shall have due regards” to the broad parameters to be kept in mind
while adjudging compensation to be determined under Section 71 of
the Act.
82. The further submission made by the learned counsel for the
appellants that if the authority and the adjudicating officer either come
to different conclusions on the same questions or in a single complaint,
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the person aggrieved is seeking manifold reliefs with one of the relief of
compensation and payment of interest, with the timelines being
provided for the adjudicating officer to decide the complaint under
Section 71 of the Act. At least, there is no provision which could be
referred to expedite the matter if filed before the regulatory authority.
The submission may not hold good for the reason that there is a
complete delineation of the jurisdiction vested with the regulatory
authority and the adjudicating officer. If there is any breach or violation
of the provisions of Sections 12, 14, 18 and 19 of the Act by the
promoter, such a complaint straightaway has to be filed before the
regulatory authority. What is being referable to the adjudicating officer
is for adjudging compensation, as reflected under Section 71 of the Act
and accordingly rules and regulations have been framed by the
authority for streamlining the complaints which are made by the
aggrieved person either on account of violation of the provisions of
Sections 12, 14, 18 and 19 or for adjudging compensation and there
appears no question of any inconsistency being made, in the given
circumstances, either by the regulatory authority or the adjudicating
officer.
83. So far as the single complaint is filed seeking a combination of
reliefs, it is suffice to say, that after the rules have been framed, the
aggrieved person has to file complaint in a separate format. If there is a
violation of the provisions of Sections 12, 14, 18 and 19, the person
aggrieved has to file a complaint as per form (M) or for compensation
under form (N) as referred to under Rules 33(1) and 34(1) of the Rules.
The procedure for inquiry is different in both the set of adjudication and
as observed, there is no room for any inconsistency and the power of
adjudication being delineated, still if composite application is filed, can
be segregated at the appropriate stage.
84. So far as submission in respect of the expeditious disposal of the
application before the adjudicating officer, as referred to under sub-
section (2) of Section 71 is concerned, it pre-supposes that the
adjudicatory mechanism provided under Section 71(3) of the Act has to
be disposed of within 60 days. It is expected by the regulatory
authority to dispose of the application expeditiously and not to restrain
the mandate of 60 days as referred to under Section 71(3) of the Act.
85. The provisions of which a detailed reference has been made, if
we go with the literal rule of interpretation that when the words of the
statute are clear, plain and unambiguous, the Courts are bound to give
effect to that meaning regardless of its consequence. It leaves no
manner of doubt and it is always advisable to interpret the legislative
wisdom in the literary sense as being intended by the legislature and
the Courts are not supposed to embark upon an inquiry and find out a
solution in substituting the legislative wisdom which is always to be
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avoided.
86. From the scheme of the Act of which a detailed reference has
been made and taking note of power of adjudication delineated with the
regulatory authority and adjudicating officer, what finally culls out is
that although the Act indicates the distinct expressions like ‘refund’,
‘interest’, ‘penalty’ and ‘compensation’, a conjoint reading of Sections
18 and 19 clearly manifests that when it comes to refund of the
amount, and interest on the refund amount, or directing payment of
interest for delayed delivery of possession, or penalty and interest
thereon, it is the regulatory authority which has the power to examine
and determine the outcome of a complaint. At the same time, when it
comes to a question of seeking the relief of adjudging compensation
and interest thereon under Sections 12, 14, 18 and 19, the
adjudicating officer exclusively has the power to determine, keeping in
view the collective reading of Section 71 read with Section 72 of the
Act. If the adjudication under Sections 12, 14, 18 and 19 other than
compensation as envisaged, if extended to the adjudicating officer as
prayed that, in our view, may intend to expand the ambit and scope of
the powers and functions of the adjudicating officer under Section 71
and that would be against the mandate of the Act 2016.
Question no. 3 : Whether Section 81 of the Act authorizes the
authority to delegate its powers to a single member of the
authority to hear complaints instituted under Section 31 of the
Act?
87. It is the specific stand of the respondent Authority of the State
of Uttar Pradesh that the power has been delegated under Section 81 to
the single member of the authority only for hearing complaints under
Section 31 of the Act. To meet out the exigency, the authority in its
meeting held on 14th August 2018, had earlier decided to delegate the
hearing of complaints to the benches comprising of two members each
but later looking into the volume of complaints which were filed by the
home buyers which rose to about 36,826 complaints, the authority in
its later meeting held on 5th December, 2018 empowered the single
member to hear the complaints relating to refund of the amount filed
under Section 31 of the Act.
88. Mr. Gopal Sankarnarayanan, learned counsel for the appellants
submits that if this Court comes to the conclusion that other than
adjudging compensation wherever provided all other
elements/components including refund of the amount and interest etc.
vests for adjudication by the authority, in that event, such power vests
with the authority constituted under Section 21 and is not open to be
delegated in exercise of power under Section 81 of the Act to a single
member of the authority and such delegation is a complete abuse of
power vested with the authority and such orders passed by the single
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member of the authority in directing refund of the amount with interest

are wholly without jurisdiction and is in contravention to the scheme of
the Act.
89. Learned counsel further submits that the order passed by the
single member of the authority is without jurisdiction and it suffers
from coram non-judice. Section 21 of the Act clearly provides that the
authority shall consist of a Chairperson and not less than two whole
time members to be appointed by the Government. Regulation 24(a) of
the Regulations 2019 framed by the authority is in clear contravention
to the parent statute that the delegation of power can be of class,
category of cases, specific to the member of the authority but a general
delegation of power to the single member of the authority in exercise of
power under Section 81 is not contemplated under the Act and
delegation to a single member of the authority in adjudicating the
disputes under Sections 12, 14, 18 and 19 is without jurisdiction and
that is the reason for which the appellants have approached the High
Court by filing a writ petition under Article 226 of the Constitution and
in furtherance to this Court.
90. Learned counsel further submits that from the plain reading of
the statute itself, the role of the authority is of a quasi-judicial body
forms its underpinning. The adjudicatory role of the authority is
specifically recognized under Sections 5, 6, 7(2), 9(3) and 31 where
the authority is supposed to hear the other side, after compliance of the
principles of natural justice, is supposed to pass an order in accordance
with law.
91. Section 31 allows the aggrieved person to file a complaint with
the authority or the adjudicating officer for any violation or breach or
contravention to the provisions of the Act or the rules and regulations
made thereunder and this being a quasi-judicial power to be exercised
by the authority could not be delegated to a single member of the
authority under the guise of Section 81 of the Act, that apart, there are
certain provisions where authority alone holds power to initiate action
or make inquiries like Sections 35(1), 35(2), 36 or 38, the powers are
exclusively exercised by the authority and the tests for determining
whether an action is quasi-judicial or not are laid down in Province of
Bombay v. Kushaldas S Advani6 which has been consistently followed
by the Constitution Bench in its decision in Shivji Nathubhai v. Union of
India7 ; Harinagar Sugar Mills Limited v. Shyam Sunder Jhunjhunwala8 .
92. Learned counsel further submits that according to him, the
powers which have been exercised by the authority under Sections 12,
14, 18 and 19 of the Act have the trappings of the judicial function
which in no manner can be delegated without being expressly
bestowed. Placing reliance on two decisions of the Queen's Bench in
Barnard v. National Dock Labour Board9 and Vine v. National Dock
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Labour Board10 and taking assistance thereof, learned counsel submits

that the judgments indicated above makes it clear that the delegation
of judicial power must be express; that a provision of quorum for a
quasi-judicial body is distinguishable from the delegation of power to
the exclusion of other members of that body; and the reasons of
workload cannot trump the legal requirement. These principles have
been adopted by this Court consistently in Bombay Municipal
Corporation v. Dhondu Narayan Chowdhary11 ; Sahni Silk Mills(P) Ltd. v.
Employees State Insurance Corporation12 ; Jagannath Temple Managing
Committee v. Siddha Math13 .
93. Learned counsel submits that it has been consistently held by
this Court that the power being quasi-judicial in nature, the
presumption is that it ought to be exercised by the authority competent
and no other, unless the law expressly or by clear implication permits
it.
94. Learned counsel further submits that even by necessary
implication, the judicial power of the authority cannot be delegated by
the multi-member authority to any of its members. If at all there are
practical considerations of workload, the Government can always
establish more than one authority in terms of the second proviso to
Section 20(1).
95. Per contra, Mr. Devadatt Kamat, learned senior counsel for the
respondents submits that the complaint of the appellants has been
primarily on the issue that a single member is not competent to
exercise power to hear complaints under Section 31 of the Act and the
delegation of its power by the authority invoking Section 81 is beyond
jurisdiction.
96. Learned counsel submits that as a matter of fact the entire
functioning of the authority has not been delegated to the single
member. It is only the hearing of complaints under Section 31 that the
single member of the authority has been empowered to deal with such
complaints, keeping in view the overall object of speedy disposal of
such complaints mandated under the law. According to him, it is
factually incorrect to say that the other functions of the authority like
imposition of penalty under Section 38, revocation of registration under
Section 7 or functions of the authority under Sections 32 or 33 have
been delegated to a single member of the authority.
97. Learned counsel further submits that the question is not whether
the delegation per se to a single member is bad, but the question is
whether the power to hear complaints in reference to Sections 12, 14,
18 and 19 delegated to a single member is permissible under the law.
It may be noticed that the authority has been vested with several other
powers and functions under the Act, which the authority has
consciously not delegated to a single member.
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98. Learned counsel further submits that pursuant to the delegation

of power under Section 81 by the special order dated 5th December,
2018 read with Regulation 24, a single member has been authorized by
the authority to hear the matters related to refund of the amount under
Section 31 of the Act.
99. Learned counsel further submits that almost in a pari materia
scheme, Section 29-A of the SEBI Act gives the power to delegate and
Section 19 of the SEBI Act empowers the board to delegate its power to
any member of the Board has been examined by this Court in
Saurashtra Kutch Stock Exchange Ltd. v. Securities and Exchange
Board of India14 . This Court has approved the power of delegation to a
single member of the respective authority and held that such
delegation is always permissible in law unless specifically prohibited
and as long as there is a legislative sanction for delegation of even
judicial power, there is no illegality as held in Bombay Municipal
Corporation (supra); State of Uttar Pradesh v. Batuk Deo Pati Tripathi15
Heinz India Private Limited v. State of Uttar Pradesh16 ; and taking
assistance thereof, learned counsel submits that such delegation of
power to a single member of the authority in deciding application for
refund of the amount and interest under Section 18 of the Act is well
within the jurisdiction of the authority to its delegatee more so when
the power to delegate under Section 81 has not been questioned in
either of the pending appeals before the Court.
100. Learned counsel further submits that Section 21 of the Act
relates to the composition of the authority and does not deal with
minimum bench strength. At the given time, the legislature has
consciously avoided prescribing any minimum bench/quorum strength
to hear complaints by the authority. At the same time, the Act only
prescribes a bench/quorum only of the Appellate Tribunal under Section
43(3) of the Act and further submits that in the absence of the
minimum bench/quorum strength being fixed by statute, it is
impermissible to treat the composition of the authority itself as a
minimum bench strength.
101. Learned counsel further submits that Sections 29 and 81 are
not in derogation to each other and operate in different fields. Section
29 is concerned with the meetings of the authority and does not
envisage in its fold the quasi-judicial functions which the Act casts
upon the authority. The term “meetings” under Section 29 does not
deal with the performance of quasi-judicial functions which are referred
to the authority under Section 31. It can only refer to meetings on
policy/regulatory issues and invited attention to Sections 32 and 33 of
the Act which are in the nature of policy/regulatory decisions the
authority is mandated under the Act. It can be further noticed from
Section 29(3) and (4) which talks about ‘questions’ before the
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authority, to be disposed off within 60 days of receiving the

‘application’ and there is no reference to any ‘complaints’ as indicated
in Section 31 of the Act.
102. To examine the scheme of the Act it may be relevant to take
note of certain provisions add infra:—
“21. The Authority shall consist of a Chairperson and not less than
two whole time Members to be appointed by the appropriate
Government.
29. (1) The Authority shall meet at such places and times, and
shall follow such rules of procedure in regard to the transaction of
business at its meetings, (including quorum at such meetings), as
may be specified by the regulations made by the Authority.
(2) If the Chairperson for any reason, is unable to attend a
meeting of the Authority, any other Member chosen by the Members
present amongst themselves at the meeting, shall preside at the
meeting.
(3) All questions which come up before any meeting of the
Authority shall be decided by a majority of votes by the Members
present and voting, and in the event of an equality of votes, the
Chairperson or in his absence, the person presiding shall have a
second or casting vote.
(4) The questions which come up before the Authority shall be
dealt with as expeditiously as possible and the Authority shall
dispose of the same within a period of sixty days from the date of
receipt of the application:
Provided that where any such application could not be disposed
of within the said period of sixty days, the Authority shall record
its reasons in writing for not disposing of the application within
that period.
31. (1) Any aggrieved person may file a complaint with the
Authority or the adjudicating officer, as the case may be, for any
violation or contravention of the provisions of this Act or the rules
and regulations made thereunder against any promoter allottee or
real estate agent, as the case may be.
Explanation.—For the purpose of this sub-section “person” shall
include the association of allottees or any voluntary consumer
association registered under any law for the time being in force. (2)
The form, manner and fees for filing complaint under sub-section (1)
shall be such as may be specified.
81. The Authority may, by general or special order in writing,
delegate to any member, officer of the Authority or any other person
subject to such conditions, if any, as may be specified in the order,
such of its powers and functions under this Act (except the power to
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make regulations under section 85), as it may deem necessary.

103. Section 21 of the Act relates to the composition of the authority
which consists of a Chairperson and not less than two whole time
members to be appointed by the appropriate Government but
conspicuously it does not mention minimum bench strength at the
same time consciously prescribes minimum bench/quorum while
constituting the Real Estate Appellate Tribunal as reflected under
Section 43(3) of the Act.
104. The emphasis of the appellants was on Section 29 of the Act
which indicates the quorum of meetings of the authority. There is a
specific provision that there shall be a meeting of the authority with the
minimum quorum being prescribed, such business of the meeting of
the authority indeed could not be delegated to a single member of the
authority in exercise of power under Section 81 of the Act.
105. The term meeting under Section 29 of the Act does not deal
with the performance of the authority in quasi-judicial matters which
are referred to under Section 31 of the Act. It only refers to meetings,
policy/regulatory issues that the authority is mandated to discharge
under the Act. It may be noticed that Sections 32 and 33 are in the
nature of policy/regulatory directions which the authority is mandated
to be discharged indisputably have to be undertaken by the authority
while functioning as a whole body under Section 29 of the Act.
106. To add it further, Section 29(3) and (4) of the Act talks about
the questions before the authority which are to be disposed of within 60
days on receiving the applications. It may be noticed that there is no
reference to any complaint referred to under Section 31 of the Act. To
buttress it further, Section 29 and Section 81 of the Act are not in
derogation to each other. To the contrary, both operate in different
fields. Section 29 deals with the meetings of the authority to be held
for taking policy/regulatory decisions in the interest of the stake holders
and does not envisage in its fold quasi-judicial functions which the Act
casts upon the authority. The legislative intention as reflected from
Section 29 is a recognition of the rationale that policy matters ought to
be considered and decided by the entire strength of the authority so
that the policy decisions reflect the acquired experience of the
members and Chairman of the authority.
107. It may be relevant to note that the authority in its meeting
held on 5th December, 2018 in exercise of its power under Section 81 of
the Act for disposal of complaints under Section 31 delegated its power
to a single member of the authority. The extract of the minutes of the
meeting dated 5th December, 2018 relevant for the purpose is extracted
as under:—
Sl. No. Agenda
5.01 Both the benches of Uttar Pradesh
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Real Estate Regulatory Authority

in the month of December 2018
and subsequently also while
working as single benches as per
the requirement, proposal for
disposal of complaint cases at
Lucknow and Gautambudh Nagar
on same dates
- -
- -
Point wise decision on agenda is as under:—
Agenda point no. 1:
Regarding hearing by both the benches of Uttar Pradesh Real
Estate Regulatory Authority in the month of December 2018 and
subsequently also while working as single benches as per the
requirement, for disposal of complaint cases at Lucknow and
Gautambudh Nagar on same dates.
Decision:
Proposal was approved by the authority.
..
..”
108. Pursuant to the delegation of power to the single member of
the authority, complaints filed by the allottees/home buyers for refund
of the amount and interest under Section 31 of the Act came to be
decided by the single member of the authority after hearing the parties
in accordance with the provisions of the Act.
109. This Court, while examining the pari materia provisions of
delegation of power under Section 29A and Section 19 of the SEBI Act
which empowered the board to delegate its power to any member of
the Board held that the board may in writing delegate its power to any
member of the board and such is valid in law as held by this Court in
Saurashtra Kutch Stock Exchange Ltd. (supra) as under:—
“6. The High Court dismissed the special civil application vide
order dated 19-11-2007 [Saurashtra Kutch Stock Exchange Ltd. v.
SEBI, Special Civil Application No. 23902 of 2007, decided on 19-11-
2007 (Guj)] and considered the submission of the appellant in the
following manner:
“Section 29-A is reproduced hereunder:
‘29-A. Power to delegate.—The Central Government may,
by order published in the Official Gazette, direct that the
powers (except the power under Section 30) exercisable by it
under any provision of this Act shall, in relation to such matters
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and subject to such conditions, if any, as may be specified in

the order, be exercisable also by the Securities and Exchange
Board of India or Reserve Bank of India constituted under
Section 3 of the Reserve Bank of India Act, 1934 (2 of 1934).’
Notification dated 13-9-1994 issued by the Central Government
reads as under:
‘In exercise of powers conferred by Section 29-A of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956), the
Central Government hereby directs that the powers exercisable by
it under Section 3, sub-sections (1), (2), (3) and (4) of Section 4,
Section 5, sub-section (2) of Section 7-A, Section 13, sub-section
(2) of Section 18, Section 22 and sub-section (2) of Section 28 of
the Act shall also be exercisable by the Securities and Exchange
Board of India.’
110. Section 19 of the SEBI Act, 1992 reads as under:
‘19. Delegation.—The Board may, by general or special order in
writing delegate to any member, officer of the Board or any other
person subject to such conditions, if any, as may be specified in the
order, such of its powers and functions under this Act (except the
powers under Section 29) as it may deem necessary.’
Thus, the above Notification dated 13-9-1994 issued in exercise of
power under Section 29-A of the SCR Act of 1956, read with Section
19 of the SEBI Act, would mean that the Board may in writing
delegate its power to any member of the Board and, therefore, the
power exercised by the Full-Time Member of the Board under Section
11 of the SEBI Act, 1992, or even withdrawal or recognition under
Section 5 of the SCR Act of 1956, cannot be said to be unjust or
arbitrary or dehors the provisions of the statute and, therefore, the
contention of Mr. Shelat that no remedy of appeal is available to the
petitioner cannot be accepted.”
9. In Para 2 of the civil appeal, the following question of law has
been framed:
“Whether the whole-time single member of SEBI has no
jurisdiction to cancel or withdraw recognition granted to a stock
exchange on the principle that delegate cannot further delegate
its power, and whether the order under challenge is without
jurisdiction?”
In our view, it is not necessary to go into the above question as
we find that this very question was raised by the appellant before
the High Court in extraordinary jurisdiction under Article 226 of
the Constitution of India. The High Court, as noted above, in its
order dated 19-11-2007 [Saurashtra Kutch Stock Exchange Ltd.
v. SEBI, Special Civil Application No. 23902 of 2007, decided on
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19-11-2007 (Guj)] held that the withdrawal of recognition under

Section 5 of the 1956 Act by the Full-Time Member of SEBI under
Section 11 of the Securities and Exchange Board of India Act,
1992 cannot be said to be dehors the provisions of the Act. The
special leave petition from the above order of the High Court came
to be dismissed by this Court on 10-3-2008 [Saurashtra Kutch
Stock Exchange Ltd. v. SEBI, SLP (C) No. 5197 of 2008, decided
on 10-3-2008 (SC)]. The same question cannot be allowed to be
reopened in the present appeal.”
111. The express provision of delegation of power under the SEBI
Act is akin to Section 81 of the Act 2016. This Court observed that if
the power has been delegated by the competent authority under the
statute, such action, if being exercised by a single member cannot be
said to be dehors the provisions of the Act.
112. In Heinz India Private Limited (supra), the revisional powers
were conferred upon the State Agricultural Market Board under Section
32 of the state law to examine the orders passed by the market
committee. Section 33 thereof empowered the Board to delegate its
powers to the Director. In the facts of the case, an objection was taken
to the exercise of revisional powers not by the Director himself but by
some officer lower in the hierarchy. This Court, while taking note of the
definition of ‘Director’ as provided in Section 2(h) to include “any other
officer authorized by the Director to perform all or any of his functions
under this Act” held as under:—
“34. Now, it is true that the stakes involved in the present batch
of cases are substantial and those called upon to satisfy the
demands raised against them would like their cases to be heard by a
senior officer or a committee of officers to be nominated by the
Board. But in the absence of any data as to the number of cases that
arise for consideration involving a challenge to the demands raised
by the Market Committee and the nature of the disputes that
generally fall for determination in such cases, it will not be possible
for this Court to step in and direct an alteration in the mechanism
that is currently in place. The power to decide the revisions vests
with the Board who also enjoys the power to delegate that function
to the Director. So long as there is statutory sanction for the Director
to exercise the revisional power vested in the Board, any argument
that such a delegation is either impermissible or does not serve the
purpose of providing a suitable machinery for adjudication of the
disputes shall have to be rejected.”
113. Section 81 of the Act 2016 empowers the authority, by general
or special order in writing, to delegate its powers to any member of the
authority, subject to conditions as may be specified in the order, such
of the powers and functions under the Act. What has been excluded is
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the power to make regulations under Section 85, rest of the powers
exercised by the authority can always be delegated to any of its
members obviously for expeditious disposal of the
applications/complaints including complaints filed under Section 31 of
the Act and exercise of such power by a general and special order to its
members is always permissible under the provisions of the Act.
114. In the instant case, the authority by a special order dated 5th
December, 2018 has delegated its power to the single member for
disposal of complaints filed under Section 31 of the Act. So far as
refund of the amount with interest is concerned, it may not be
considered strictly to be mechanical in process but the kind of inquiry
which has to be undertaken by the authority is of a summary procedure
based on the indisputable documentary evidence, indicating the
amount which the allottee/home buyer had invested and interest that
has been prescribed by the competent authority leaving no discretion
with minimal nature of scrutiny of admitted material on record is
needed, if has been delegated by the authority, to be exercised by the
single member of the authority in exercise of its power under Section
81 of the Act, which explicitly empowers the authority to delegate
under its wisdom that cannot be said to be dehors the provisions of the
Act.
115. What is being urged by the learned counsel for the appellants
in interpreting the scope of Section 29 of the Act is limited only to
policy matters and cannot be read in derogation to Section 81 of the
Act and the interpretation as argued by learned counsel for the
promoters if to be accepted, the very mandate of Section 81 itself will
become otiose and nugatory.
116. It is a well-established principle of interpretation of law that
the court should read the section in literal sense and cannot rewrite it
to suit its convenience; nor does any canon of construction permit the
court to read the section in such a manner as to render it to some
extent otiose. Section 81 of the Act positively empowers the authority
to delegate such of its powers and functions to any member by a
general or a special order with an exception to make regulations under
Section 85 of the Act. As a consequence, except the power to make
regulations under Section 85 of the Act, other powers and functions of
the authority, by a general or special order, if delegated to a single
member of the authority is indeed within the fold of Section 81 of the
Act.
117. The further submission made by learned counsel for the
promoters that Section 81 of the Act empowers even delegation to any
officer of the authority or any other person, it is true that the authority,
by general or special order, can delegate any of its powers and
functions to be exercised by any member or officer of the authority or
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any other person but we are not examining the delegation of power to
any third party. To be more specific, this Court is examining the limited
question as to whether the power under Section 81 of the Act can be
delegated by the authority to any of its member to decide the
complaint under Section 31 of the Act. What has been urged by learned
counsel for the promoters is hypothetical which does not arise in the
facts of the case. If the delegation is made at any point of time which is
in contravention to the scheme of the Act or is not going to serve the
purpose and object with which power to delegate has been mandated
under Section 81 of the Act, it is always open for judicial review.
118. The further submission made by learned counsel for the
appellants that Section 81 of the Act permits the authority to delegate
such powers and functions to any member of the authority which are
mainly administrative or clerical, and cannot possibly encompass any of
the core functions which are to be discharged by the authority, the
judicial functions are non-delegable, as these are the core functions of
the authority. The submission may not hold good for the reason that
the power to be exercised by the authority in deciding complaints under
Section 31 of the Act is quasi-judicial in nature which is delegable
provided there is a provision in the statute. As already observed,
Section 81 of the Act empowers the authority to delegate its power and
functions to any of its member, by general or special order.
119. In the instant case, by exercising its power under Section 81 of
the Act, the authority, by a special order dated 5th December, 2018 has
delegated its power to the single member of the authority to exercise
and decide complaints under Section 31 of the Act and that being
permissible in law, cannot be said to be de hors the mandate of the
Act. At the same time, the power to be exercised by the adjudicating
officer who has been appointed by the authority in consultation with the
appropriate Government under Section 71 of the Act, such powers are
non-delegable to any of its members or officers in exercise of power
under Section 81 of the Act.
120. That scheme of the Act, 2016 provides an in-built mechanism
and any order passed on a complaint by the authority under Section 31
is appealable before the tribunal under Section 43(5) and further in
appeal to the High Court under Section 58 of the Act on one or more
ground specified under Section 100 of the Civil Procedure Code, 1908,
if any manifest error is left by the authority either in computation or in
the amount refundable to the allottee/home buyer, is open to be
considered at the appellate stage on the complaint made by the person
aggrieved.
121. In view of the remedial mechanism provided under the scheme
of the Act 2016, in our considered view, the power of delegation under
Section 81 of the Act by the authority to one of its member for deciding
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applications/complaints under Section 31 of the Act is not only well

defined but expressly permissible and that cannot be said to be dehors
the mandate of law.
Question no. 4 : - Whether the condition of pre-deposit under
proviso to Section 43(5) of the Act for entertaining substantive
right of appeal is sustainable in law?
122. Before we examine the challenge to the proviso to Section 43
(5) of the Act of making pre-deposit for entertaining an appeal before
the Tribunal, it may be apposite to take note of Section 43(5) of the
Act, 2016. Section 43(5) reads as follows:—
“43. Establishment of Real Estate Appellate Tribunal-
…….
(5) Any person aggrieved by any direction or decision or order
made by the Authority or by an adjudicating officer under this Act
may prefer an appeal before the Appellate Tribunal having
jurisdiction over the matter:
Provided that where a promoter files an appeal with the
Appellate Tribunal, it shall not be entertained, without the
promoter first having deposited with the Appellate Tribunal at
least thirty per cent of the penalty, or such higher percentage as
may be determined by the Appellate Tribunal, or the total amount
to be paid to the allottee including interest and compensation
imposed on him, if any, or with both, as the case may be, before
the said appeal is heard.
Explanation - For the purpose of this sub-section “person” shall
include the association of allottees or any voluntary consumer
association registered under any law for the time being in force.”
123. It may straightaway be noticed that Section 43(5) of the Act
envisages the filing of an appeal before the appellate tribunal against
the order of an authority or the adjudicating officer by any person
aggrieved and where the promoter intends to appeal against an order of
authority or adjudicating officer against imposition of penalty, the
promoter has to deposit at least 30 per cent of the penalty amount or
such higher amount as may be directed by the appellate tribunal.
Where the appeal is against any other order which involves the return
of the amount to the allottee, the promoter is under obligation to
deposit with the appellate tribunal the total amount to be paid to the
allottee which includes interest and compensation imposed on him, if
any, or with both, as the case may be, before the appeal is to be
instituted.
124. The plea advanced by the learned counsel for the appellants is
that substantive right of appeal against an order of
authority/adjudicating officer cannot remain dependent on fulfilment of
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pre-deposit which is otherwise onerous on the builders alone and only

the builders/promoters who are in appeal are required to make the pre-
deposit to get the appeal entertained by the Appellate Tribunal is
discriminatory amongst the stakeholders as defined under the
provisions of the Act.
125. Learned counsel further submits that if the entire sum as has
been computed either by the Authority or adjudicating officer, is to be
deposited including 30 per cent of the penalty in the first place, the
remedy of appeal provided by one hand is being taken away by the
other since the promoter is financially under distress and incapable to
deposit the full computed amount by the authority/adjudicating officer.
The right of appreciation of his defence at appellate stage which is
made available to him under the statute became nugatory because of
the onerous mandatory requirement of pre-deposit in entertaining the
appeal only on the promoter who intends to prefer under Section 43(5)
of the Act which according to him is in the given facts and
circumstances of this case is unconstitutional and violative of Article 14
of the Constitution of India.
126. The submission in the first blush appears to be attractive but is
not sustainable in law for the reason that a perusal of scheme of the Act
makes it clear that the limited rights and duties are provided on the
shoulders of the allottees under Section 19 of the Act at a given time,
several onerous duties and obligations have been imposed on the
promoters i.e. registration, duties of promoters, obligations of
promoters, adherence to sanctioned plans, insurance of real estate,
payment of penalty, interest and compensation, etc. under Chapters III
and VIII of the Act 2016. This classification between consumers and
promoters is based upon the intelligible differentia between the rights,
duties and obligations cast upon the allottees/home buyers and the
promoters and is in furtherance of the object and purpose of the Act to
protect the interest of the consumers vis-a-viz., the promoters in the
real estate sector. The promoters and allottees are distinctly
identifiable, separate class of persons having been differently and
separately dealt with under the various provisions of the Act.
127. Therefore, the question of discrimination in the first place does
not arise which has been alleged as they fall under distinct and
different categories/classes.
128. It may further be noticed that under the present real estate
sector which is now being regulated under the provisions of the Act
2016, the complaint for refund of the amount of payment which the
allottee/consumer has deposited with the promoter and at a later stage,
when the promoter is unable to hand over possession in breach of the
conditions of the agreement between the parties, are being instituted
at the instance of the consumer/allotee demanding for refund of the
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amount deposited by them and after the scrutiny of facts being made
based on the contemporaneous documentary evidence on record made
available by the respective parties, the legislature in its wisdom has
intended to ensure that the money which has been computed by the
authority at least must be safeguarded if the promoter intends to prefer
an appeal before the tribunal and in case, the appeal fails at a later
stage, it becomes difficult for the consumer/allottee to get the amount
recovered which has been determined by the authority and to avoid the
consumer/allottee to go from pillar to post for recovery of the amount
that has been determined by the authority in fact, belongs to the
allottee at a later stage could be saved from all the miseries which
come forward against him.
129. At the same time, it will avoid unscrupulous and uncalled for
litigation at the appellate stage and restrict the promoter if feels that
there is some manifest material irregularity being committed or his
defence has not been properly appreciated at the first stage, would
prefer an appeal for re-appraisal of the evidence on record provided
substantive compliance of the condition of pre-deposit is made over,
the rights of the parties inter se could easily be saved for adjudication
at the appellate stage.
130. There are multiple statutes which provide a condition of pre-
deposit of a stipulated statutory amount to be deposited before an
appeal is entertained by an appellate forum/tribunal for reappraisal of
facts and law at the appellate stage and it has been examined by this
Court as well. Proviso to Section 18 of SARFAESI Act, 2002 of the Act
which provides pre-deposit is as follows:—
“18. Appeal to Appellate Tribunal
…….
Provided further that no appeal shall be entertained unless the
borrower has deposited with the Appellate Tribunal fifty per cent of
the amount of debt due from him, as claimed by the secured
creditors or determined by the Debts Recovery Tribunal, whichever is
less:
Provided also that the Appellate Tribunal may, for the reasons to
be recorded in writing, reduce the amount to not less than twenty-
five per cent. of debt referred to in the second proviso.”
131. The intention of the legislature appears to be to ensure that the
rights of the decree-holder (the successful party) is to be protected and
only genuine bona fide appeals are to be entertained. While
interpretating Section 18 of SARFAESI Act, this Court in Narayan
Chandra Ghosh v. UCO Bank17 observed as under:—
“8. It is well-settled that when a statute confers a right of appeal,
while granting the right, the legislature can impose conditions for
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the exercise of such right, so long as the conditions are not so

onerous as to amount to unreasonable restrictions, rendering the
right almost illusory. Bearing in mind the object of the Act, the
conditions hedged in the said proviso cannot be said to be onerous.
Thus, we hold that the requirement of pre-deposit under subsection
(1) of Section 18 of the Act is mandatory and there is no reason
whatsoever for not giving full effect to the provisions contained in
Section 18 of the Act. In that view of the matter, no court, much less
the Appellate Tribunal, a creature of the Act itself, can refuse to give
full effect to the provisions of the statute. We have no hesitation in
holding that deposit under the second proviso to Section 18(1) of
the Act being a condition precedent for preferring an appeal under
the said section, the Appellate Tribunal had erred in law in
entertaining the appeal without directing the appellant to comply
with the said mandatory requirement.”
132. In Har Devi Asnani v. State of Rajasthan18 , the validity of
proviso to Section 65(1) of the Rajasthan Stamp Act, 1998 came up for
consideration in terms of which no revision application could be
entertained unless it was accompanied by a satisfactory proof of
payment of 50 per cent of the recoverable amount. Relying on the
earlier decisions of this Court including in Government of Andhra
Pradesh v. P. Laxmi Devi (Smt.)19 , the challenge was repelled and the
view expressed in P. Laxmi Devi (supra) was repeated in Har Devi
Ashani (supra) wherein this Court held as under:—
“In our opinion in this situation it is always open to a party to file
a writ petition challenging the exorbitant demand made by the
registering officer under the proviso to Section 47-A alleging that the
determination made is arbitrary and/or based on extraneous
considerations, and in that case it is always open to the High Court,
if it is satisfied that the allegation is correct, to set aside such
exorbitant demand under the proviso to Section 47-A of the Stamp
Act by declaring the demand arbitrary. It is well settled that
arbitrariness violates Article 14 of the Constitution vide Maneka
Gandhi v. Union of India [(1978) 1 SCC 248]. Hence, the party is not
remediless in this situation.”
133. At the same time, Section 19 of the Consumer Protection Act,
1986 prescribes a condition for pre-deposit which provides that an
appeal shall not be entertained unless 50 per cent of the amount
awarded by the State Commission or Rs. 35,000/- whichever is less is
deposited before the National Consumer Disputes Redressal
Commission(NCDRC). This Court while placing reliance on State of
Haryana v. Maruti Udyog Ltd.20 ; in Shreenath Corporation v. Consumer
Education and Research Society21 held that such a condition is imposed
to avoid frivolous appeals.
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“7. Section 19 of the Consumer Protection Act, 1986 deals with

the appeals against the order made by the State Commission in
exercise of its power conferred by sub-clause (i) of clause (a) of
Section 17 and the said section reads as follows:
“19. Appeals.—Any person aggrieved by an order made by the
State Commission in exercise of its powers conferred by sub-
clause (i) of clause (a) of Section 17 may prefer an appeal against
such order to the National Commission within a period of thirty
days from the date of the order in such form and manner as may
be prescribed:
Provided that the National Commission may entertain an appeal
after the expiry of the said period of thirty days if it is satisfied that
there was sufficient cause for not filing it within that period:
Provided further that no appeal by a person, who is required to
pay any amount in terms of an order of the State Commission, shall
be entertained by the National Commission unless the appellant has
deposited in the prescribed manner fifty per cent of the amount or
rupees thirty-five thousand, whichever is less.”
On plain reading of the aforesaid Section 19, we find that the
second proviso to Section 19 of the Act relates to “pre-deposit”
required for an appeal to be entertained by the National Commission.
9. The second proviso to Section 19 of the Act mandates pre-
deposit for consideration of an appeal before the National
Commission. It requires 50% of the amount in terms of an order of
the State Commission or Rs. 35,000, whichever is less for
entertainment of an appeal by the National Commission. Unless the
appellant has deposited the pre-deposit amount, the appeal cannot
be entertained by the National Commission. A pre-deposit condition
to deposit 50% of the amount in terms of the order of the State
Commission or Rs. 35,000 being condition precedent for entertaining
appeal, it has no nexus with the order of stay, as such an order may
or may not be passed by the National Commission. The condition of
pre-deposit is there to avoid frivolous appeals.”
134. Similarly, under Section 19 of the Micro, Small and Medium
Enterprises Development Act, 2006, any appellant, other than the
supplier, is required to make a pre-deposit of 75 per cent to maintain
an appeal against any decree, award or order made either by the Micro
and Small Enterprises Facilitation Council or by any institution or center
providing alternate dispute resolution services to which a reference is
made by the Council. Section 19 reads as follows:—
“19. Application for setting aside decree, award or order.—
No application for setting aside any decree, award or other order
made either by the Council itself or by any institution or centre
providing alternate dispute resolution services to which a reference is
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made by the Council, shall be entertained by any court unless the

appellant (not being a supplier) has deposited with it seventy-five
per cent. of the amount in terms of the decree, award or, as the case
may be, the other order in the manner directed by such court :
Provided that pending disposal of the application to set aside the
decree, award or order, the court shall order that such percentage of
the amount deposited shall be paid to the supplier, as it considers
reasonable under the circumstances of the case, subject to such
conditions as it deems necessary to impose.”
135. Similarly, the condition of pre-deposit has been examined
recently by this Court in Tecnimont Pvt. Ltd. (Formerly Known As
Tecnimont ICB Private Limited) v. State of Punjab22 , where the validity
of Section 62(5) of the Punjab Value Added Tax Act, 2005 (PVAT) which
imposes a condition of 25 per cent of pre-deposit for hearing of first
appeal has been upheld. Section 62(5) of the PVAT Act reads as
follows:—
“62. First Appeal
……
(5) No appeal shall be entertained, unless such appeal is
accompanied by satisfactory proof of the prior minimum payment of
twenty-five per cent of the total amount of tax, penalty and interest,
if any.
……..”
136. To be noticed, the intention of the instant legislation appears to
be that the promoters ought to show their bona fides by depositing the
amount so contemplated.
137. It is indeed the right of appeal which is a creature of the
statute, without a statutory provision, creating such a right the person
aggrieved is not entitled to file the appeal. It is neither an absolute
right nor an ingredient of natural justice, the principles of which must
be followed in all judicial and quasi-judicial litigations and it is always
be circumscribed with the conditions of grant. At the given time, it is
open for the legislature in its wisdom to enact a law that no appeal
shall lie or it may lie on fulfilment of precondition, if any, against the
order passed by the Authority in question.
138. In our considered view, the obligation cast upon the promoter
of pre-deposit under Section 43(5) of the Act, being a class in itself,
and the promoters who are in receipt of money which is being claimed
by the home buyers/allottees for refund and determined in the first
place by the competent authority, if legislature in its wisdom intended
to ensure that money once determined by the authority be saved if
appeal is to be preferred at the instance of the promoter after due
compliance of pre-deposit as envisaged under Section 43(5) of the Act,
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in no circumstance can be said to be onerous as prayed for or in

violation of Articles 14 or 19(1)(g) of the Constitution of India.
Question No. 5 : -Whether the authority has the power to issue
recovery certificates for recovery of the principal amount under
Section 40(1) of the Act?
139. To examine this question, it will be apposite to take note of
Section 40 that states regarding the recovery of interest or penalty or
compensation to be recovered as arrears of land revenue, and reads as
under:—
40. Recovery of interest or penalty or compensation and
enforcement of order, etc.—
(1) If a promoter or an allottee or a real estate agent, as the case
may be, fails to pay any interest or penalty or compensation
imposed on him, by the adjudicating officer or the Regulatory
Authority or the Appellate Authority, as the case may be, under
this Act or the rules and regulations made thereunder, it shall
be recoverable from such promoter or allottee or real estate
agent, in such manner as may be prescribed as an arrears of
land revenue.
(2) If any adjudicating officer or the Regulatory Authority or the
Appellate Tribunal, as the case may be, issues any order or
directs any person to do any act, or refrain from doing any act,
which it is empowered to do under this Act or the rules or
regulations made thereunder, then in case of failure by any
person to comply with such order or direction, the same shall
be enforced, in such manner as may be prescribed.”
140. The submission of the appellants/promoters is that under
Section 40(1) of the Act only the interest or penalty imposed by the
authority can be recovered as arrears of land revenue and no recovery
certificate for the principal amount as determined by the authority can
be issued. If we examine the scheme of the Act, the power of authority
to direct the refund of the principal amount is explicit in Section 18 and
the interest that is payable is on the principal amount in other words,
there is no interest in the absence of a principal amount being
determined by the competent authority. Further the statute as such is
read to mean that the principal sum with interest has become a
composite amount quantified upon to be recovered as arrears of land
revenue under Section 40(1) of the Act.
141. It is settled principle of law that if the plain interpretation does
not fulfil the mandate and object of the Act, this Court has to interpret
the law in consonance with the spirit and purpose of the statute. There
is indeed a visible inconsistency in the powers of the authority
regarding refund of the amount received by the promoter and the
provision of law in Section 18 and the text of the provision by which
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such refund can be referred under Section 40(1). While harmonising

the construction of the scheme of the Act with the right of recovery as
mandated in Section 40(1) of the Act keeping in mind the intention of
the legislature to provide for a speedy recovery of the amount invested
by the allottee along with the interest incurred thereon is self-
explanatory. However, if Section 40(1) is strictly construed and it is
understood to mean that only penalty and interest on the principal
amount are recoverable as arrears of land revenue, it would defeat the
basic purpose of the Act.
142. Taking into consideration the scheme of the Act what is to be
returned to the allottee is his own life savings with interest on
computed/quantified by the authority becomes recoverable and such
arrear becomes enforceable in law. There appears some ambiguity in
Section 40(1) of the Act that in our view, by harmonising the provision
with the purpose of the Act, is given effect to the provisions is allowed
to operate rather running either of them redundant, noticing purport of
the legislature and the above-stated principle into consideration, we
make it clear that the amount which has been determined and
refundable to the allottees/home buyers either by the authority or the
adjudicating officer in terms of the order is recoverable within the ambit
of Section 40(1) of the Act.
143. The upshot of the discussion is that we find no error in the
judgment impugned in the instant appeals. Consequently, the batch of
appeals are disposed off in the above terms. However, we make it clear
that if any of the appellant intends to prefer appeal before the Appellate
Tribunal against the order of the authority, it may be open for him to
challenge within 30 days from today provided the appellant(s) comply
with the condition of pre-deposit as contemplated under the proviso to
Section 43(5) of the Act which may be decided by the Tribunal on its
own merits in accordance with law. No costs.
144. Pending application(s), if any, stand disposed of.
———
1 AIR 1961 SC 307

2 (2007) 12 SCC 198

3
(2019) 19 SCC 529

4 (2020) 9 SCC 1

5 (2020) 10 SCC 783

6
1950 SCC 551 : 1950 SCR 621

7 (1960) 2 SCR 775

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8 (1962) 2 SCR 339

9
[1953] 2 Q.B. 18

10 [1956] 1 Q.B. 658

11 (1965) 2 SCR 929

12
(1994) 5 SCC 346

13
(2015) 16 SCC 542

14 (2012) 13 SCC 501

15
(1978) 2 SCC 102

16 (2012) 5 SCC 443

17 (2011) 4 SCC 548

18 (2011) 14 SCC 160

19 (2008) 4 SCC 720

20 (2000) 7 SCC 348

21 (2014) 8 SCC 657

22
AIR 2019 SC 4489

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