Constitutional Validity: West Bengal Housing Industrial Regulation Act, 2017

RERA was effective before the state of West Bengal enacted HIRA. Both HIRA & RERA were enacted to ensure better accountability to consumers and to promote and regulate the real estate sector. The HIRA Act attempts to focus on providing explicit guidelines for the regulation and promotion of housing facilities or real estate in West Bengal.

A civil writ petition was filed by Forum for People’s Collective Efforts on 17th January 2019 challenging the constitutional validity of West Bengal Housing Industrial Regulation, 2017.

The Court Admitted the PIL and asked the State of West Bengal to reply to a file. The major issue framed by Supreme Court was that ‘can the state in the name of cooperative federalism enact legislation under the concurrent list to occupy the same field that Parliament has occupied?’

A bench of justices D Y Chandra Hud and M R Shah said the West Bengal Housing Industry Regulation Act (HIRA), 2017 is more or less identical to the Centre’s RERA and hence repugnant to Parliament law. The Court has observed that it does not matter whether there is an overlap or no overlap because if Parliament intends to occupy a field, then you cannot legislate at the state level at all. The Court was hearing the submissions made by parties involved within the matter.

Justice Chandrachud said, under Article 254, even if the state law has received the presidential assent, it will to the extent of repugnancy prevail over the Central government and does not prevent Parliament from subsequently enacting a law, by granting presidential assent Parliament is not deprived of its power to legislate again and overwrite the state act.

WB-HIRA has failed to incorporate valuable institutional safeguards and provisions intended to guard the interest of home buyers. The silence of the State Legislature in critical areas indicates that the safeguard enacted by the Parliament in the public interest have been omitted in the State enactment. The petitioner also bought to the notice that there is a direct conflict between State Act i.e., HIRA, and Central Act i.e., RERA. The petitioner clarified that such instances create chaos and confusion that whether a particular subject should be followed under RERA or WB HIRA. For, example regulatory authority, real estate agents and most importantly the builders and real estate agents have to abide by to stay in business and register under the HIRA.

The counsel said, “So far as the real estate sector is concerned, it was felt that these laws are not adequate for protecting the interest of the consumers and also the interest of the builders. Both sides though there were factual relationships between them, governed by the terms and conditions neither was any clarity or infirmity concerning those terms and conditions nor the redressal mechanism was found to be adequate, so far as the real estate system is concerned.”

The counsel further mentioned that Maharashtra Housing Regulation and Development Act 2012, were substantially similar but that was repealed by RERA under Section 92. So far as Kerala is concerned, it also has Kerala Real Estate Regulation and Development Act 2015, which was repealed by Kerala itself in 2017. Jammu and Kashmir Real Estate Regulation and Development Act also stood repealed by Jammu and Kashmir Reorganisation Act 2019.

The SC said Section 88 and Section 89 of RERA does not permit the states to create their own legislation creating a parallel regime that would have not required president assent. Hence, it’s clear that WB-HIRA did not have presidential assent and was repugnant to RERA under article 254.

It, however, said that the homebuyers who purchased the property under the state law before the verdict do not have to worry about the sanction permission. This power was exercised to safeguard past decisions and prevent chaos among the buyers as well as builders.

Author: Monika Nahata, Corporate Paralegal at Saltee Group.

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