MP High Court Held Procedure of the MP Real Estate Appellate Tribunal Contrary to MP RERA Act 2016

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The High Court of Madhya Pradesh (Bench at Indore) answered three important substantial questions of law with related to constitution of the Madhya Pradesh Real Estate Appellate Tribunal, Bhopal, (in short “Appellate Tribunal”) and administrative power of the Chairperson under M.P. Real Estate Regulatory Authority Act, 2016 (in short Act) while deciding M/s. G. S. Enterprises & Ors. v. Yogesh Agrawal, an appeal against an order passed by a single member of the Appellate Tribunal. Advocates in Indore

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The facts of the case were that the respondent (allottee) booked a unit in April 2016 in the corporate park which was to be developed by the appellant firm (developer). The dispute was regarding the cost of the unit i.e., both the parties were claiming different prices for the booked unit. Therefore, a complaint was filed by the allottee before the M.P. Real Estate Regulatory Authority, Bhopal (in short “RERA”) which was decided in favour of the allottee. Being aggrieved by this, the developer preferred an appeal before the Madhya Pradesh Real Estate Appellate Tribunal at Bhopal who remanded the matter back to RERA to decide the matter afresh on the merits of the case. After it was remanded back, the RERA passed the order in favour of the developers. The aforesaid new order passed by RERA was challenged by the allottee in an appeal before the Appellate Tribunal. After the matter was heard by a bench of Judicial Member and Administrative member of the Appellate Tribunal, the Chairman/President has assigned the matter only to the Judicial Member for preparation of the final order. The Appellate Tribunal has allowed the appeal in favour of the allottee. Being aggrieved by the final order passed by the Appellate Tribunal, the developer filed an appeal before the High Court challenging the aforesaid order. The High Court has framed and decided the following three substantial questions of law: Advocates in Indore

i) Whether the judgement is valid which is passed by one Member of the Appellate Tribunal, against the requirement of one Chairperson and not less than two whole time Members to be present in the Appellate Tribunal as per Section 45 of the M.P. Real Estate (Regulatory Authority) Act, 2016?

ii) Whether the chairman is empowered under Section 25 of the Real Estate (Regulation and Development) Act, 2016 to interfere in the judicial process of a bench of Appellate Tribunal while having administrative authority?

iii) Whether the impugned order passed by single member of the bench, be said to be an order passed by Appellate Tribunal under section 43(3) of the Real Estate (Regulation and Development) Act, 2016?

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It was argued by the appellant that the impugned order suffers from error as it has been passed by only one member of the Appellate Tribunal, which runs contrary to Section 45 of the Act of 2016, which provides that the Tribunal shall consist of a Chairperson and not less than two whole time Members of which one shall be Judicial Member, and the other shall be a Technical or Administrative Member. It was further argued that a bare perusal of the impugned order reveals that it has been signed by only the Judicial Member, whereas the other Member has signed jointly with the Judicial Member, in the flag sheet only. The respondent argued that the impugned judgement does not suffer from any illegality as the original order may have been signed by the Judicial Member only, however, in the flag sheet, it has been signed by both the Members, which clearly reflects that the other member had also consented with the order passed by the Judicial Member. The respondent also relied on Section 55 of the Act which provides that vacancies etc. shall not invalidate the order. Thus, it was argued that even accepting the fact that the Chairman of the Appellate Tribunal was not a member of the quorum, it is merely an irregularity in the proceedings and has no impact on the final outcome. The High Court has noted that the impugned order has been signed by one Member judicial only, but in the flag sheet, the Member-(Adm.) has also signed and therefore, held that when a matter is heard by a bench of two members, merely because the final order is signed by one member only, and the accompanying flag sheet is signed by both the members, it would not be an illegality but merely an irregularity not affecting the merits of the case.

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To decide the first question, the High Court has compared the provisions of the Act relating to the constitution of the Appellate Tribunal etc. viz. Sections 43, 45, 52, 54 and 55 along with the provisions related to the Real Estate Regulatory Authority. viz., Sections 20, 21, 29 and 30 of the Act. The High Court come to conclusion that the presence of the Chairperson alongwith the two members is necessary to constitute an Appellate Tribunal under Section 45 of the Act. Any reading of Section 55 which provides that vacancies or defect in the constitution of the Tribunal etc. not invalidate the proceedings of the Appellate Tribunal in isolation would frustrate the purpose of Section 45. In the present case since there was no vacancy in the Appellate Tribunal nor any defect in the constitution, therefore, the High Court while answering the first question in negative held that only two members could not have passed the final order.

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The court at this point elucidated an imbroglio existing in the Act. The court noted that Section 45 of the Act provides for the constitution of the Appellate Tribunal with a Chairperson alongwith two members, meanwhile, Section 43 provides for the constitution of one or more benches of the Appellate Tribunal which shall consist of only two members. The High Court while noting such an anomaly called for the attention of the Legislature towards this.

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The court observed that the matter was heard by two members one being a Judicial Member and the other being a Technical Member and there was an endorsement by the Chairperson "Place the record of the preparation of the final order before the learned Member (J)" Thus, this raised the second question that if it is assumed that two members could have passed the final order, the Chairman could have directed one such member to pass the order?

The appellant argued that the Chairman of the Appellate Tribunal has exceeded its jurisdiction and ought not to have specifically directed that the matter be decided by a judicial member only when the matter was heard by both the learned Members of the Tribunal. It was further argued that the aforesaid direction by the Chairman is contrary to law.

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The High Court observed that such direction by the Chairman of the Tribunal is not an administrative function and is defeating the purpose for which the Tribunal is constituted. The administrative power of the Chairperson under Section 54 for general superintendence and direction in the conduct of the affairs of the Appellate Tribunal would not empower a Chairperson, who did not participate in the hearing of a case, to delegate powers to pass the final order to one particular member only out of the two members who have heard the matter. The decision as to who would pass the order would be the discretion of the members who have heard the matter and also, they can pass two different separate orders either agreeing with each other or disagreeing with each other. The High Court concluded that the direction on the part of the Chairman to only one member of the bench of two members, to pass the final order, cannot be sustained in the eyes of law. Therefore, answering in negative, it was held that the chairman is not empowered under Section 25 of the Real Estate (Regulation and Development) Act, 2016 to interfere in the judicial process of a bench of Appellate Tribunal while having administrative authority.

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