SC strikes down Bengal law on regulating real estate sector, holds it unconstitutional

In a setback to Mamata Banerjee led Trinamool Congress Party government in West Bengal, the Supreme Court on Tuesday struck down a law regulating and promoting real estate sector in the State holding it to be unconstitutional and repugnant to Centre’s Real Estate (Regulation and Development) Act (RERA).

The top court said that by enacting West Bengal Housing Industry Regulation Act (WB-HIRA), 2017, what the legislature of the State has attempted to achieve is to set up its parallel legislation involving a “parallel regime’.

It said that the State legislature has encroached upon the legislative authority of Parliament which has supremacy within the ambit of the subjects falling within the Concurrent List of the Seventh Schedule.

The top court also said a significant and even overwhelmingly large part of WB-HIRA overlaps with the provisions of RERA and some of these provisions have been lifted bodily, word for word and enacted into the state’s law.

A bench of Justices DY Chandrachud and M R Shah said, “we have come to the conclusion that WB-HIRA is repugnant to the RERA, and is hence unconstitutional”.

The bench said, “We also hold and declare that as a consequence of the declaration by this Court of the invalidity of the provisions of WB-HIRA, there shall be no revival of the provisions of the WB 1993 Act (West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993), since it would stand impliedly repealed upon the enactment of the RERA.”

The bench clarified that its striking down of the provisions of WB-HIRA in the present judgment will not, in any manner, revive the WB 1993 Act, which was repealed upon the enactment of WB-HIRA as it is repugnant to the RERA.

The top court in its 190-page verdict took note of the fact that since its enforcement in the state, the WB-HIRA would have been applied to building projects and implemented by the authorities constituted under the law in the state.

“In order to avoid uncertainty and disruption in respect of actions taken in the past, recourse to the jurisdiction of this Court under Article 142 is necessary. Hence, in exercise of the jurisdiction under Article 142, we direct that the striking down of WB-HIRA will not affect the registrations, sanctions and permissions previously granted under the legislation prior to the date of this judgment,” the bench said.

The top court said that there is a repugnancy between WB-HIRA and RERA- as several provisions of the State enactment are directly in conflict with the Central enactment.

“Undoubtedly, as Article 254(1) postulates, the legislation enacted by the State legislature is void to the extent of the repugnancy,” the top court said.

It added that WB-HIRA has failed to incorporate “valuable institutional safeguards” and provisions intended to protect the interest of home-buyers and the silence of the State legislature in critical areas indicates that important safeguards which have been enacted by Parliament in the public interest have been omitted in the State enactment.

“There is, in other words, not only a direct conflict of certain provisions between the RERA and WB-HIRA but there is also a failure of the State legislature to incorporate statutory safeguards in WB-HIRA, which have been introduced in the RERA for protecting the interest of the purchasers of real estate. In failing to do so, the State legislature has transgressed the limitations on its power and has enacted a law which is repugnant to Parliamentary legislation on the same subject matter,” the top court said.

The top court which disposed of a plea filed by an NGO–Forum for People’s Collective Efforts said that what the State legislature in the present case has done is not to enact cognate or allied legislation but legislation which, insofar as the statutory overlaps is concerned is identical to and bodily lifted from the Parliamentary law.

“This plainly implicates the test of repugnancy by setting up a parallel regime under the State law. The State legislature has encroached upon the legislative authority of Parliament which has supremacy within the ambit of the subjects falling within the Concurrent List of the Seventh Schedule. The exercise conducted by the State legislature of doing so, is plainly unconstitutional,” the top court said.

It said that Parliament envisaged in RERA that its provisions would be in addition to and not in derogation of other laws for the time being in force.

“True enough, this provision is an indicator of the fact that Parliament has not intended to occupy the whole field so as to preclude altogether the exercise of legislative authority whether under other Central or State enactments,” the bench said.

The top court said that despite lifting of the provisions word-by-word and incorporating it in the state enactment, WB-HIRA does not complement the RERA by enacting provisions which may be regarded as in addition to or fortifying the rights, obligations and remedies created by the Central enactment.

It said, “what the legislature of the State of West Bengal has attempted to achieve is to set up its parallel legislation involving a parallel regime” and the overlap between the provisions of WB-HIRA and the RERA is so significant as to leave no manner of doubt that the test of repugnancy based on an identity of subject matter is clearly established.