West Bengal Housing Industry Regulation Act (WB HIRA) is Unconstitutional: SC

Synopsis: The court struck down the West Bengal Housing Industry Regulation Act (WB HIRA), 2017 as unconstitutional. The court also clarified that the legislations by the Parliament and the state government are on the concurrent list.

Introduction:

The central government enacted the Real Estate (Regulation and Development) Act to regulate the Real Estate sector in India. West Bengal government also enacted a parallel Act known as the West Bengal Housing Industry Regulation Act (WB HIRA), 2017. Recently the Supreme Court held the West Bengal legislation Unconstitutional.

Background of both legislations:

Contracts and the transfer of property falls under the Concurrent List of the Seventh Schedule.

• In 1993 the West Bengal government enacted the West Bengal Housing Industry Regulation Act on the above two subjects.
• But, to bring transparency and safety in the market for consumers of residential and commercial projects, the Central government enacted RERA in 2016. With the enactment of RERA, the 1993 Act was repealed.
• In the same year, West Bengal notified the draft Real Estate (Regulation and Development) Rules, 2016.
• Instead of finalizing the rules the state government went ahead and enacted West Bengal Housing Industry Regulation Act (WBHIRA) in 2017.
• Forum for Peoples Collective Efforts filed a case against the State of West Bengal regarding the WB HIRA

Recent Supreme Court Judgement on West Bengal Housing Industry Regulation Act:

The Supreme Court held in Forum for Peoples Collective Efforts v. State of West Bengal case held that the WB HIRA was unconstitutional. Further, the court also mentioned the following things.

• Both the statutes refer to the same subjects (contracts and the transfer of property) in the concurrent list.
• Article 254 (2) allows for a conflicting State law on a concurrent list subject to prevail over a central law if it receives the assent of the President. But the WB HIRA neither reserved for the consideration of the President nor the Presidential assent was obtained.
• The court also held that if any areas have been left out in the central legislation, the state legislatures can provide cognate(related) legislation. Such State legislation can incidentally deal with the provisions of Central legislation. But, The HIRA encroaches upon the authority of the Parliament.
• But in the case of clause-by-clause comparison between the two laws, the court observed that 95 to 98%, the WB HIRA is a complete copy-paste of the RERA. This is an attempt to establish a parallel regime by the State government.
• Furthermore, the court also observed that in a few critical aspects, WB HIRA is in direct conflict with RERA.
• The court also observed that there was a “doctrine of repugnancy” between WB-HIRA and RERA. (Repugnancy –  inconsistency or contradiction between two or more parts of a legal instrument.) Such as,
  1. WB HIRA has failed to incorporate valuable institutional safeguards
  2. The WB HIRA does not have provisions intended to protect the interest of homebuyers
  3. The court observed these repugnancies of the state legislature as against the public interest.
• The court also elaborated on the tests of repugnancy. The three tests of Repugnancy as stated by the court are
  1. Where the provision of State legislation is directly in conflict with a law enacted by Parliament. In such cases, compliance with one is impossible along with obedience to the other.
  2. The second test of repugnancy is based on the intent of Parliament to occupy the whole field(contracts and the transfer of property) covered by the legislation.
  3.  The subject of the legislation enacted by the State is identical to Parliament, then does the State law enacted prior or later to the central law.
• Since the State law is completely repugnant to the Central law, it was constitutionally impermissible

Conclusion:

The court based on the above explanations struck down the West Bengal Housing Industry Regulation Act (WB HIRA), 2017, as unconstitutional. Further, the court also held that striking down the present law will not result in the revival of the 1993 WB HIRA. This is because the 1993 Act was repealed after the enactment of RERA.

The Court also clarified that the striking down of WBHIRA will not affect the sanctions permissions granted prior to the delivery of the judgement.

Source: The Times of India