Does Law Require Personal Hearing Before Revocation of RERA Registration? Allahabad HC

The Allahabad High Court at Lucknow while dismissing a Second Appeal has decided significant questions of law relating to interpretation of RERA Act. The Court laid down the law on requirement of personal hearing before revocation of RERA registration and whether the RERA authority is quasi judicial or otherwise.

Background:

The Promoter had got the Project registered as Sampada Livia under Sections 3 and 4 of the Act. The commencement date for the Project was mentioned as 01.12.2014 and date of completion was mentioned as 30.11.2019.

Aggrieved by  the non completion of project 24 allottees had approached the Authority by filing complaints against the violations of the Builder Buyers Agreement. Since no regular updates were uploaded on portal by the builder, therefore the authority decided to get an on the spot inspection done of the Project site.

A team was constituted of the Chief Engineer as the Technical Adviser, along with another Junior Engineer. It was found by the said team that although the Project was registered as “Sampada Livia” and the Promoter’s name was given as PSA Impex Private Limited, the board on the site showed the name as “Alturio Residency”. 

The approved plan had not been uploaded on the R.E.R.A. website. The Project completion date was 30.11.2019, however, on 24.2.2019 the committee found that that there was no likelihood of the Project being completed within time and the flats being handed over to the allottees.

Further, on the request of the Authority, an audit of the Project was got conducted by the Chief Executive Officer of Greater Noida through M/s. Currie and Brown Auditors, who submitted a report that about Rs.47 Crores of allottees‘ money had been diverted.

What did authority do?

The Authority had come to a, prima facie, satisfaction that the Promoter had violated the conditions of registration and the conditions for revocation of registration under Section 7(1)a, 7b, 7c and 7d existed for the Authority to issue a show cause notice under Section 7(2) of the Act to the Promoter to show cause why its registration may not be revoked. 

After considering the reply and relevant reports, the Authority directed that the registration of the Promoter be revoked under Section 7 of the Act and various consequences would follow as a result of this revocation. The Authority decided to proceed as per Section 8 of the Act to ensure the completion of the  Project.

Feeling aggrieved, the builder filed an appeal, which was dismissed.

Second Appeal before the High Court

Senior Counsel appearing on behalf of the Appellant raised mainly two questions of law to be decided by the Court. It was the case of theAppellant who is the Promoter of the Real Estate Project named as Sampada Livia that :

(a) the Authority had not given oral/personal hearing to the Appellant while deciding the case of deregistration/revocation of registration of the Appellant. Even if the language of Section 7 of the Act only provided for issuance of a show cause notice and consideration of reply given to it by the Promoter, the act of revocation of registration had civil consequences and therefore the right of personal/oral hearing should be read into the procedure prescribed by the Act.

 (b) it was argued that the Authority acted in a quasi-judicial capacity while ordering revocation of registration under section 7 of the Act and therefore it could not have sub-delegated its power to decide the issue in the case of the Appellant, the Authority had only approved the draft of the order passed by the Secretary, R.E.R.A. The Secretary, R.E.R.A. is only an officer appointed by the State Government to assist the Authority in the exercise of its duties and responsibilities under the Act. The Secretary, R.E.R.A. had passed the order dated 30.09.2019 revoking the registration of the  Appellant which order was passed without jurisdiction as the jurisdiction lies only with the Authority.

It was been submitted by Sri Shobhit Mohan Shukla that the Appellant had earlier taken the plea that the order passed by the Authority under Section 38 had been passed by a single Member, which was turned down by the High Court in Writ-C No.3259 of 2020.

Sri Shobhit Mohan Shukla has further emphasized that in the instant case, the decision had been taken by the Authority, not by a single Member, and it had only been communicated by the Secretary

Decision of High Court

Hon’ble Justice Sangeeta Chandra of Allahabad High Court at Lucknow, while dismissing the Second Appeal observed:

The only requirement under Section 7(2) of the Act is that the registration shall not be revoked unless the Authority has given the Promoter not less than 30 days’ notice in writing stating the grounds, on which it is proposed to revoke the registration and has considered any cause shown by the Promoter within the period of that notice, against the proposed revocation. There is no requirement of giving repeated notice or giving unlimited time at the request of the Promoter. There is also no requirement of giving personal/oral hearing. The Rules of natural justice are not a straight jacket formula that have to be adopted in all cases, even dehors the intent of the Legislature and in violation to the specific and clear language of the Act.

Whether R.E.R.A. is a Court or a Quasi-Judicial body and has to act Quasi-Judicially when taking a decision under Section 7 of the Act?

The Court held:

Where there are two or more parties contesting each other’s claim and the statutory authority is required to adjudicate the rival claims between the parties, such a statutory authority was held to be quasi judicial and the decision rendered by it a quasi judicial order. Where there is a lis or two contesting parties are making rival claims and the statutory authority under the statutory provision is required to decide such a dispute, in the absence of any other attributes of a quasi judicial authority, such statutory authorities acquire the quasi judicial authority. There are other cases where there is no lis or two contending parties before statutory authority, yet such a statutory authority has been held to be quasi judicial and the decision rendered by it as quas ijudicial decisions when such a statutory authority is required to act judicially.

The language of Section 7 of the Act and the procedure applicable to the Authority while taking decision under Section 7 does not require the Authority to act judicially. The Act only requires that where the Authority is satisfied that condition for the exercise of its power of revocation of registration of the Promoter or real estate agent exist viz. it is established that the Promoter/ Real Estate Agent is adopting corrupt practices then the Authority may pass an order revoking the registration and the consequences mentioned under the Section would follow. The Authority may issue show-cause notice and consider any reply submitted to it within thirty days of issuance of notice. The Authority therefore is only required to issue notice to “further inform its mind” with regard to  action proposed to be taken by it, in this case Suo Moto. The power under Section 7 is an Administrative Power. Therefore, the power given under Section 81 of the Act to sub delegate the actual drafting of the order giving detailed reasons for invoking its power under Section 7 of the Act against the promoter, the appellant herein, was rightly exercised by the Authority.

Ultimately the Court dismissed the Appeal.

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