States can't enact housing law to set up a parallel regime: SC

NEW DELHI: TMC government's attempt to run a parallel regime on regulating the real estate industry can unstuck on Tuesday as the Supreme Court quashed West Bengal Housing Industry Regulation Act (WB-HIRA), 2017 as unconstitutional for being either a copy or in conflict with central legislation Real Estate (Regulation and Development) Act (RERA), 2016.
Slamming the WB government's attempt, a bench of Justices D Y Chandrachud and M R Shah in a 190-page judgment said, "The state law fits, virtually on all fours, with the footprints of the law enacted by Parliament.This is constitutionally impermissible. What the West Bengal legislature has attempted to achieve is to set up its parallel legislation involving a parallel regime."
After carrying out an exhaustive clause by clause comparison between the two laws, the bench said not only was the state legislature barred from copying a central legislation to attempt a parallel regime, but an additional reason why there is a repugnancy between WB-HIRA and RERA is that many provisions of the state law are directly in conflict with the central enactment.
Writing the judgment, Justice Chandrachud said, "WB-HIRA has failed to incorporate valuable institutional safeguards and provisions intended to protect the interest of home-buyers. 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," Justice Chanrachud said.
Another ground for striking down the state law was that WB-HIRA had not received the President’s assent under Article 254(2) of the Constitution, which was necessary since it was going to occupy the same field as the RERA, a law which had been enacted by the Parliament, the bench said accepting arguments of advocate Devashish Bharuka for petitioner and additional solicitor general Aishwarya Bhati for the Union government.
The WB government initially took the stand before the SC that the law was enacted on an issue that fell squarely within the ambit of List II (state list) and not List III as claimed by the union government as well as the petitioner. However, on intense questioning by the SC, the state through senior advocate Rakesh Dwivedi conceded that the issue covered under WB-HIRA fell within the ambit of concurrent list.
The SC said, "Sections 88 and 89 of the RERA did not implicitly permit the States to create their own legislation creating a parallel regime alongside the RERA which would have not required presidential assent. Hence, it is clear that WB-HIRA did not have presidential assent and was repugnant to RERA under Article 254."
Scotching possibility of the West Bengal government reviving its 1993 law on the issue of regulating the housing sector, when RERA was non-existent, the bench said, "We clarify with abundant caution that our striking down of the provisions of WB-HIRA in the present judgment will not, in any manner, revive the West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993, which was repealed upon the enactment of WB-HIRA. Since the1993 Act is itself repugnant to the RERA, it would stand impliedly repealed."
Lucidly explaining the concept of repugnancy of state laws vis-a-vis the central law, Justice Chandrachud said, the first test covers aspects "where the provision of a State enactment is directly in conflict with a law enacted by Parliament, so that compliance with one is impossible along with obedience to the other."
"The second test of repugnancy is where Parliament through the legislative provisions contained in the statute has enacted an exhaustive code. The second test of repugnancy is based on an intent of Parliament to occupy the whole field covered by the subject of its legislation. In terms of the second test of repugnancy, a State enactment on the subject has to give way to the law enacted by Parliament on the ground that the regulation of the subject matter by Parliament is so complete as a code, so as to leave no space for legislation by the State. The third test of repugnancy postulates that the subject matter of the legislation by the State is identical to the legislation which has been enacted by Parliament, whether prior or later in point of time."
It said, "Once Parliament has enacted a law, it is not open to the State legislature to legislate on the same subject matter and, as in this case, by enacting provisions which are bodily lifted from and verbatim the same as the statutory provisions enacted by Parliament... 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."
NEW DELHI: The Supreme Court on Tuesday struck down West Bengal's law on regulating the real estate sector in the state, and said it was “unconstitutional” as the statute encroached upon the Centre's Real Estate (Regulation and Development) Act,.
A bench of justices D Y Chandrachud 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's law.
”The state law has encroached upon domain of Parliament,” the verdict said.
It, however, said that homebuyers', who purchased properties under the state law before today's verdict, will not have to worry as their registration and other acts would remain valid.
The judgement came on a plea of ‘Forum For People's Collective Efforts' , an homebuyers association, challenging the constitutional validity of the West Bengal Housing Industry Regulation Act, 2017, which is more or less identical to the Centre's RERA.