04 May 2121

The State Government can only make laws on subject matter which is distinct in relation to Central legislation under Article 254 of the Indian Constitution - Supreme Court of India

Case : Forum for People‘s Collective Efforts (FPCE) & Anr. v. The State of West Bengal & Anr. Writ Petition (C) No. 116 of 2019

Court : Supreme Court of India

Bench : Justice Dr. Dhananjaya Y Chandrachud and Justice M. R. Shah

Decided on : 04 May 2121

Relevant Statutes  

Article 32, 142 and  254 of the Indian Constitution

Section 88 & 89 of the Real Estate (Regulation and Development) Act, 2016

The West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993

The West Bengal Housing Industry Regulation Act, 2017

Brief Facts and Procedural History

1. The State legislature had enacted many laws to regulate the relationship between purchasers and the promoters of real estate. One of the Acts was The West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993 which was passed. Further, On 14th August 2013, the bill for the enactment of The Real Estate (Regulation and Development), 2013 was introduced and received the President assent on 25th August 2016.

2. The rules were drafted in The Real Estate (Regulation and Development), but no progress was made regarding this and after this, the West Bengal Housing Industry Regulation Act, 2017 adopted in state assembly ad received the governor assent on 17th October 2017. Later, the Real Estate (Regulation and Development) Act, 2013 was introduced in Rajya Sabha and referred to Select Committee. After the report of the Select Committee, The Real Estate (Regulation and Development) Act, 2016 was introduced with an objective to maintain uniformity and standardization of business practices and transactions in the real estate sector and for the interest in consumer protection.

3. The Petitioner challenged the validity of the West Bengal Housing Industry Regulation Act, 2017 as it is ultra vires to the Central legislation made i.e.  The Real Estate (Regulation and Development) Act, 2016.

The Issue of the Case

Whether the West Bengal Housing Industry Regulation Act, 2017 is constitutionally valid?

The Observations of the Court 

1. The Honorable Supreme Court observed in one of the Judgments Tika Ramji vs. State of U.P (1956 SCR 393), in this case, the Court held that process of manufacture or production is covered under Entry 24 List II except where the industry is controlled industry then it would come under Entry 52 of List I and held that both the legislation i.e. Real Estate (Regulation and Development) 2016 Act, and The West Bengal Housing Industry Regulation Act, 2017 falls under the Entry 6 and 7 of List III of the Seventh Schedule. In Another judgment, Zaverbhai Amaldas vs. State of Bombay (1955 (1) SCR 799), It was held that If the state legislation deals with any matter of the central legislation to extend which they are repugnant then it will be void, but if the state legislation covers the distinct matter, then there would be no repugnancy.

2. The Honourable Supreme Court observed that the Real Estate (Regulation and Development) Act, 2016 has followed the distribution of the legislative powers. Some of the provisions of the Real Estate (Regulation and Development) Act, 2016 relate to the construction projects which are governed by municipal and local legislation i.e. the control over the development activities under the local laws are governed by the state legislation. Some of the provisions are entrusted to the appropriate government, meaning the state government. 

3. The Honourable Supreme Court held that “The Expression law for the time being in force'' in Section 89 means if any expression is defined in municipal or local laws but not in this act, then shall have the same meaning expressed in those laws. The Honourable Supreme Court applied the three tests of repugnancy Section 88 of The Real Estate (Regulation and Development) Act, 2016 stating that Parliament did not oust the power of the state legislature to enact legislation on cognate subjects. The Honourable Supreme Court held that the power exercised by the state government is unconstitutional. 

4. There is not only the direct conflict between state and Centre legislation but also the state legislation failed in providing the safeguards to protect the interest of the purchasers of the real estate under Article 254 (1). The Honorable Supreme Court referred on of the judgment i.e. Rajiv Sarin vs. State of Uttarakhand ((2011) 8 SCC 708) and held that The West Bengal Housing Industry Regulation Act, 2017 did not have the presidential assent the under Article 254 of Indian Constitution and also repugnant to the Real Estate (Regulation and Development) Act, 2016.

The Decision Held by the Court

1. The writ petition is allowed and the pending application connected withstands disposed of.

2. The Honourable Supreme Court also held that there shall be no revival of The West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993.

3. As per Article 142 of the Indian Constitution, the striking down of the West Bengal Housing Industry Regulation Act, 2017 will not affect the registrations, sanctions and permission which were granted under the legislation before the judgment.

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