In a recent decision in Forum for People’s Collective Efforts (FPCE) v. State of West Bengal, the Supreme Court declared the West Bengal Housing Industry Regulation Act, 2017 (HIRA) and the West Bengal (Regulation of Promotion of Construction and Transfer by Promoters) Act, 1993 unconstitutional.
The Court reasoned that both these legislations were repugnant to the Real Estate (Regulation and Development) Act, 2016 (RERA), and therefore, void under Article 254(1) of the Constitution of India.
In this piece, we argue that the Court’s decision in FPCE necessarily means that the Maharashtra Ownership of Flats (Regulation of the Promotion, Construction, Sale, Management and Transfer) Act, 1963 (MOFA) has also been impliedly repealed.
Article 254 and the Doctrine of Repugnance
Article 254 of the Constitution lays down the rules for adjudicating upon a conflict between a Central legislation and a State legislation in instances where both the legislations have been enacted under entries in List III of the Seventh Schedule to the Constitution. The general rule is that the Central legislation will prevail over the State Act [Article 254(1)], except where the State Act has received Presidential assent [Article 254(2)]. Further, even where the State Act has received Presidential asset, Parliament can enact a law adding to, amending, varying or repealing the State Act [proviso to Article 254(2)].
The Court in FPCE surveyed the jurisprudence on the doctrine of repugnance and reiterated the three instances in which a State legislation would be repugnant to a Central legislation under Article 254(1): first, where there exists a direct and irreconcilable conflict between the two legislations; second, where Parliament intended to deal with the subject-matter of the legislation in an exhaustive manner and occupy the relevant field in List III; or third, where the two legislations govern the same subject-matter.
In the third scenario, though there is no conflict between the two enactments, those aspects of the State legislation which are covered by the Central act are deemed to be impliedly repealed by the latter.
The Repugnancy in FPCE v. State of West Bengal
The Supreme Court in FPCE cited two grounds for declaring HIRA as unconstitutional, viz. HIRA was in direct conflict with RERA, and that its provisions had been “bodily lifted” from RERA. The contention of the State of West Bengal that Section 88 of RERA allowed HIRA and RERA to co-exist was rejected on the ground that Section 88 only permits states to enact legislations which are “allied to, incidental or cognate to” RERA.
The Court then proceeded to hold that even the 1993 Act was unconstitutional, as it had been impliedly repealed by RERA. It arrived at this conclusion based on an examination of the provisions of the 1993 Act, which were found to be contained in RERA. Therefore, the Court relied on the third category of repugnancy referred to above to hold that the 1993 Act, which had been repealed by HIRA, would not be revived as a result of HIRA being declared unconstitutional.
Implications of FPCE on the Constitutional validity of MOFA
Both MOFA (a State legislation) and RERA (a Central legislation) regulate the rights and obligations of builders/promoters and purchasers of real estate. RERA, as held in FPCE, was enacted under Entries 6 and 7 of List III. MOFA is also traceable to these two entries of List III. RERA is the more recent of the two legislations and is more exhaustive in nature. The table below demonstrates that most of the aspects of MOFA are dealt with in RERA:
The limited provisions of MOFA which are excluded from the ambit of RERA include the effect of non-registration of an agreement for sale (Section 4A), the right of flat purchasers to have a society formed in case the promoter fails to do so [proviso to Section 10(1)] and the right of the society to apply for deemed conveyance in the event of the promoter’s failure to transfer title in the land and building to the society [Section 11(3)].
Given the extensive overlap between the provisions of MOFA and RERA, it is submitted that MOFA has been impliedly repealed by RERA as per the third test of repugnancy, since it governs the same subject matter as RERA. Almost all the issues regulated by MOFA have been included in RERA. Indeed, the issues regulated by the 1993 Act (except the provisions on registration of promoters) are virtually identical to those included in MOFA.
Therefore, the Supreme Court’s finding on the implied repeal of the 1993 Act by RERA would squarely apply to MOFA as well. The limited provisions of MOFA (listed above) which are not covered under the RERA regime do not have any efficacy on their own and once the common provisions are declared unconstitutional, the other provisions cannot survive either.
The Bombay High Court in a recent ruling in Hubtown Solaris Premises CHSL v. MCGM & Ors relied on Section 88 of RERA to hold that MOFA continues to be valid even after the enactment of RERA (para 28). With respect, it is submitted that this reasoning does not hold good after the Supreme Court’s decision in FPCE, where the Court has construed Section 88 to mean that “spaces which are left in the RERA can be legislated upon by the State legislature by enacting a legislation” and there cannot be a “statutory overlap” between RERA and the state legislation. Barring some provisions, most of the provisions of MOFA overlap with RERA and there is a clear ‘statutory overlap’ between the two. Therefore, Section 88 cannot be a ground to uphold the constitutional validity of MOFA.
The possibility of compliance with the provisions of both RERA and MOFA also cannot save the constitutionality of MOFA. As the Supreme Court recently reiterated in Innoventive Industries Ltd. v. ICICI Bank, the rule of implied repeal renders a State law repugnant to a Central law even if it is possible to obey both the laws, if the subject-matter of the State legislation is identical to the Central legislation.
The fact that MOFA received Presidential assent on December 12, 1963 is also inconsequential, as Parliament is empowered under the proviso to Article 254(2) of the Constitution to enact a law with respect to the same subject matter and repeal MOFA, notwithstanding the Presidential assent.
So far, it has virtually been assumed in practice that despite the enactment of RERA, MOFA continues to be in force [the counsel in Hubtown also conceded this (see paragraph 16)]. This is primarily due to Section 88 of RERA. However, the Supreme Court’s decision in FCPE v. State of West Bengal has dispelled this contention in the context of two West Bengal legislations. There is no reason why the same rationale should not extend to MOFA. The Bombay High Court in Hubtown did not have the benefit of the decision in FCPE, as it was delivered a day prior to FCPE. It remains to be seen as to whether the Court applies FCPE on a future occasion.
The authors are lawyers practicing at the Bombay High Court.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Bar & Bench.