The Supreme Court on May 4th 2021 in Forum for Peoples Collective Efforts v. State of West Bengal, ruled on the constitutional validity of the West Bengal Housing Industry Regulation Act, 2017 (WB-HIRA). The Bench of Justice DY Chandrachud and Justice MR Shah heard the challenge on the grounds that the WB-HIRA heavily overlapped with, and often simply included identical provisions from, the parallel Central legislation:Real Estate (Regulation and Development) Act, 2016 (RERA). As both Acts dealt with subjects from the Concurrent List, the petitioner claimed that the State enactment (WB-HIRA) was constitutionally impermissible. The Court agreed with the petitioner and ruled that the entire WB-HIRA was unconstitutional.
The RERA in its inception was meant as a tool to bridge the gap in information between the consumer and the real estate sector. The sector, according to J Chandrachud, was lacking in professionalism and standardization. This resulted in a need for a more robust legislation built upon efficiency and transparency in order to benefit all parties and incentivize further investment.
The respondent (State of West Bengal) had initially submitted that the WB-HIRA was covered by Entries under the State List. However, in the Supreme Court the counsel for the respondent agreed that the subject area of the WB-HIRA fell under Entries 6 & 7 of the Concurrent List.
If the initial submission that the legislation was under the State List was accepted, it would bypass the need for Presidential assent to enact the law. This assent is necessitated by Article 254(2) of the Constitution when dealing with subjects legislated upon both at the State and the Central level. However, as the petitioners had changed their submission, the argument on this issue then became that Sections 88 and 89 of the RERA impliedly allowed the WB-HIRA to pass without Presidential oversight. This was rejected by the Bench rather summarily.
The judgment then applied the rules of interpretation based on Article 254 in order to determine ‘repugnancy’ between State and Central legislations. A statute is deemed ‘repugnant’ when it covers the same subject area as another statute but contains contradictory provisions.
The Court considered Professor Nicholas Aroney’s ‘three tests of repugnancy’ (relied on in Tika Ramji) since the Australian Constitution identifies repugnancy in similar terms to the Indian Constitution. The three-pronged test formulated by Professor Aroney was adjusted for the Indian context in Deep Chand v. State of U.P. by Justice K Subba Rao:
“Repugnancy between two statutes may thus be ascertained on the basis of the following three principles:
Whether there is direct conflict between the two provisions;
Whether Parliament intended to lay down an exhaustive code in respect of the subject-matter replacing the Act of the State Legislature and
Whether the law made by Parliament and the law made by the State Legislature occupy the same field…”
The respondent urged the Court to give import to the WB-HIRA as it took account of the diversity of issues in the State. In response, J Chandrachud first pointed out that the RERA imposed the duty of compliance upon the ‘appropriate’ government. With matters relating to the State and adjudicating upon diverse State issues, the ‘appropriate’ government is the State Government. J Chandrachud also mapped out a series of provisions that provided the States with the power of a primary authority to deal with diverse issues, indicating that Parliament was fully aware of the limits of their reach and understanding.
The RERA is not meant to interfere with the workings of local government and authorities (such as Municipal Corporations) and state legislation regarding construction and land development.
J Chandrachud then looked at the interpretation of Sections 88 and 89 of the RERA.The meanings of the phrases “…in addition to and not in derogation of any other law” and “…law for the time being in force” were clarified with reference to previous decisions of the Supreme Court. The former phrase allows for later enactments to take precedence over the RERA in cases of conflict.
The latter phrase has been interpreted by the Court and this Bench in order to account for two important factors. Firstly, “Rules for the time being in force” does not only mean RERA takes precedence over laws that already existed at the time of its enactment. It includes rules and laws that were instituted on a later date (similar to the interpretation of the first phrase). Secondly, the RERA (or any other act with such a clause) cannot be considered devoid of context. Depending on the case, this section must be seen as accounting for all provisions of other Acts.
Vacuums in subject matter left by the RERA, due to its residing in the Concurrent list, can be legislated upon by State Governments so long as it is “…allied to, incidental or cognate to the exercise of Parliaments legislative authority”. However, in the present case the Bench ruled that the State enactment was virtually identical to the Central RERA. Impliedly referring to the third “prong” of Justice Subba Rao’s guidelines for repugnancy, the Bench ruled that the subject matter covered by both Acts occupied the same field and in the absence of presidential assent, the WB-HIRA was unconstitutional.