Madhya Pradesh High Court
M/S G.S. Enterprises Represented ... vs Yogesh Agrawal on 29 August, 2023
Author: Subodh Abhyankar
1
IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE SUBODH ABHYANKAR
SECOND APPEAL No. 1053 of 2021
BETWEEN:-
1. M/S G.S. ENTERPRISES REPRESENTED BY
PARTNERS MR. GOVIND CHAWALA S/O LATE
JETHANANDJI CHAWAL PLOT NO. 25,
SCHEME NO. 78, PART-2 A.B. ROAD INDORE
(MADHYA PRADESH)
2. M/S G.S. ENTERPRISES REPRESENTED BY
PARTNERS SMT. NIMMI CHAWLA W/O SHRI
GOVIND CHALWAL PLOT NO. 25, SCHEME NO.
78 , PART 2 A.B. ROAD INDORE (MADHYA
PRADESH)
3. M/S G.S. ENTERPRISES REPRESENTED BY
PARTNERS SAGAR CHAWLA S/O SHRI GOVIND
CHAWLA PLOT NO. 25, SCHEME NO. 78, PART-2
A.B. ROAD INDORE (MADHYA PRADESH)
.....APPELLANTS
(BY SHRI YOGESH MITTAL, ADVOCATE )
AND
YOGESH AGRAWAL AGED ABOUT 37 YEARS,
OCCUPATION: CHARTERED ACCOUNTANT
311/E SILCE-4 SCHEME NO. 78 VIJAY NAGAR
(MADHYA PRADESH)
.....RESPONDENTS
(BY SHRI VINAY SARAF, SENIOR ADVOCATE WITH SHRI RIZWAN
KHAN, ADVOCATE )
..................................................................................................................................
Reserved on : 23.06.2023
Pronounced on : 29.08.2023
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2
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This appeal having been heard and reserved for judgement, com-
ing on for pronouncement this day, the court passed the following:
JUDGEMENT
1] Heard finally, with the consent of the parties.
2] This civil second appeal has been filed under Section 58 of
the Real Estate (Regulation and Development) Act, 2016 (in short
'the Act of 2016') and under Section 100 of the Code of Civil
Procedure, 1908 against the judgement dated 07.06.2021, passed by
Member, Madhya Pradesh Real Estate Appellate Tribunal at Bhopal
in Appeal No.A-135/2019, thereby reversing the order dated
10.06.2019, passed by the M.P. Real Estate Regulatory Authority
(in short, RERA) in Case No.M-IND-17-0761 of 2017.
3] This appeal was admitted by this Court vide order dated
05.10.2021, on the following substantial question of law:-
"1) Whether the impugned judgment can be sustained in
the eyes of law, as it has been passed by one Member
(Judicial) of the Appellate Tribunal, despite the fact
that, as per Section 45 of the M.P. Real Estate
(Regulatory Authority) Act, 2016 the Appellate
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."
4] Counsel for the appellants has filed an application I. A. No.
3758 of 2023 under proviso to Section 100 (5) of C.P.C. Raising
additional substantial questions of law, which read as under:-
"(2) Whether the chairman is empowered
under Section 25 of the Real Estate (Regulation
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and Development) Act, 2016 to interfere in the
judicial process of a bench of Appellate Tribunal
while having administrative authority?
(3) 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?"
5] The aforesaid application is allowed, and the aforesaid
substantial questions of law are also here by framed. Since a copy
this application was already served to the Sr. counsel for the
respondent, who has also advanced his submissions on the said
substantial questions of law as well.
6] In brief, the facts of the case are that the appellants are a
registered partnership firm and are engaged in the business of
construction and development of Real Estate Projects, whereas the
respondent is the practicing Chartered Accountant in Indore, who
had paid a sum of Rs.3,70,000/- on 16.04.2016, to the appellants as
a part payment towards its booking for unit No.414 to the
forthcoming project of the appellants, namely, "Sky Corporate Park"
to be developed on plot No.25, Scheme No.78-II, A.B. road, Indore.
7] The dispute between the parties was that according to the
respondent, the cost of the unit was Rs.37 lakhs, whereas according
to the appellants, it was Rs.42, 65,000/-, and other charges. Thus, a
complaint was filed by the respondent before the Madhya Pradesh
Real Estate Regulatory Authority (hereinafter referred to as 'RERA')
in which a reply was also filed by the appellants. The RERA has
decided the complaint vide its order dated 16.04.2018, in favour of
the respondent, and being aggrieved of the same, the Appeal
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No.34/2018 was preferred by the appellants before the Madhya
Pradesh Real Estate Appellate Tribunal at Bhopal (hereinafter
referred to as 'Appellate Tribunal'), who vide its judgement dated
23.01.2019, remanded the matter back to RERA to decide afresh on
merits of the case. After it was remanded back, the RERA has
passed the order on 10.06.2019, now, in favour of the appellants.
The aforesaid order was again challenged by the respondent in an
appeal before the Appellate Tribunal, which has been allowed by
the Tribunal vide its impugned order dated 07.06.2021, and being
aggrieved of the same, the present appeal has been filed under
Section 58 of the Act of 2016.
8] Counsel for the appellants has submitted that the impugned
order suffers from the apparent errors which go to the root of the
matter for the reason that the impugned order 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 is submitted that
a bare perusal of the impugned order reveals that it has been signed
by only Judicial Member, whereas the other Member has signed
jointly with the Judicial Member, the flag sheet only.
9] Counsel has also drawn the attention of this Court to the
proceedings of the Appellate Tribunal wherein, after the matter was
heard by a bench of Judicial Member and an administrative
member of the Appellate Tribunal, the Chairman/President, vide its
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order dated 21.01.2021, has assigned the matter only to the Judicial
Member for preparation of the final order. Thus, it is submitted that
the Chairman of Appellate Tribunal has exceeded its jurisdiction
and ought not to have specifically directed that the matter to be
decided by judicial member only, when the matter was heard by
both the learned Members of the Tribunal. It is also submitted that
the aforesaid direction by the Chairman was uncalled for and runs
contrary to law.
10] Shri Vinay Saraf, learned senior counsel for the respondent,
on the other hand, has opposed the prayer and it is submitted that
no illegality has been committed by the Appellate Tribunal in
passing the order 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.
11] So far as the impugned order having not passed by the
quorum, Shri Saraf has also drawn the attention of this court to s.55
of the Act of 2016 which provides that vacancies etc. shall not
invalidate the order. Thus, it is submitted that even accepting the
fact that the Chairman of the Appellate Tribunal was not the
member of the quorum, it is merely an irregularity in the
proceedings and has no impact on the final outcome.
12] So far as the endorsement made by the Chairman of the
Appellate Tribunal in the order dated 21.01.2021 is concerned, it is
submitted that it is the discretion of the Chairman and this practice
is followed in a routine manner for the proper functioning of the
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Appellate Tribunal, and as such no illegality has been committed
by the Chairman of the Appellate Tribunal. It is submitted that no
substantial question of law arises for the consideration of this court,
and the appeal is liable to be dismissed.
13] Heard counsel for the parties and perused the record.
14] On perusal of the documents filed on record as also the
provisions of the Act of 2016, it is found that the substantial
questions of law involved in this case relate to the regulation of
power by the Real Estate Appellate Authority under the Act of 2016.
15] So far as the first and third substantial questions of law are
concerned, i.e., "1) Whether the impugned judgment can be
sustained in the eyes of law, as it has been passed by one Member
(Judicial) of the Appellate Tribunal, despite the fact that, as per
Section 45 of the M.P. Real Estate (Regulatory Authority) Act,
2016 the Appellate 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." and "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?" are concerned, it is found that that
although the impugned order has been signed by one Member-
judicial only, but in the flag sheet, the Member-(Adm.) has also
signed.
16] In the considered opinion of this court, when a matter is
heard by a bench of two members, merely because the final order is
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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. Thus,
the third substantial question of law is answered against the
appellant. However, the larger question is whether in the first place,
the matter could have been heard by a bench of two members only,
or it was required to be heard and decided by the Appellate
Tribunal consisted of Chairman and the two members.
17] To appreciate the controversy involved, it would be fruitful to
refer to the relevant provisions of the Act of 2016 regarding the
constitution of the Appellate Tribunal etc. which are s.43, 45, 52, 54
and 55 along with the other provisions, viz., ss.20, 21, 29 and 30 of
the Act of 2016 which refer to Real Estate Regulatory Authority.
18] The aforesaid provisions (relevant excerpts only), in
juxtaposition to each other read as under:-
Real Estate Regulatory Authority Real Estate Appellate Tribunal
20. Establishment and 43. Establishment of Real Estate
incorporation of Real Estate Appellate Tribunal.--(1) The
Regulatory Authority. - (1) The appropriate Government shall,
appropriate Government shall, within within a period of one year from the
a period of one year from the date of date of coming into force of this
coming into force of this Act, by Act, by notification, establish an
notification, establish an Authority to Appellate Tribunal to be known as
be known as the Real Estate the -- (name of the State/Union
Regulatory Authority to exercise the territory) Real Estate Appellate
powers conferred on it and to perform Tribunal.
the functions assigned to it under this
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Act:
(2) The appropriate Government
Provided that appropriate may, if it deems necessary, establish
the
Government of two or more States or one or more benches of the
Union territories may, if it deems fit, Appellate Tribunal, for various
establish one single Authority: jurisdictions, in the State or Union
territory, as the case may be.
Provided further that, the appropriate
Government may, if it deems fit, (3) Every bench of the Appellate
establish more than one Authority in a Tribunal shall consist of at least one
State or Union territory, as the case Judicial Member and one
may be: Administrative or Technical
Member.
Provided xxxx
(4) xxxx
Provided xxxx
(5) xxxx
(2) xxxx
45. Composition of Appellate
21. Composition of Authority.--The Tribunal.--The Appellate Tribunal
Authority shall consist of a shall consist of a Chairperson and
Chairperson and not less than two not less than two whole time
whole time Members to be appointed Members of which one shall be a
by the appropriate Government. Judicial member and other shall be
a Technical or Administrative
Member, to be appointed by the
appropriate Government.
Explanation.--xxxx
54. Administrative powers of
25. Administrative powers of
Chairperson of Appellate
Chairperson.--The Chairperson shall
Tribunal.--The Chairperson shall
have powers of general
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superintendence and directions in the have powers of general
conduct of the affairs of Authority and superintendence and direction in
he shall, in addition to presiding over the conduct of the affairs of
the meetings of the Authority, exercise Appellate Tribunal and he shall, in
and discharge such administrative addition to presiding over the
powers and functions of the Authority meetings of the Appellate Tribunal,
as may be prescribed. exercise and discharge such
administrative powers and
functions of the Appellate Tribunal
as may be prescribed.
29. Meetings of Authority.--(1) The
Authority shall meet at such places
and times, and shall follow such rules
of procedure in regard to the
transaction of business at its meetings,
(including quorum at such meetings),
as may be specified by the regulations
made by the Authority.
52. Vacancies. - If, for reason other
(2) If the Chairperson for any reason,
than temporary absence, any
is unable to attend a meeting of the
vacancy occurs in the office of the
Authority, any other Member chosen
Chairperson or a Member of the
by the Members present amongst
Appellate Tribunal, the appropriate
themselves at the meeting, shall
Government shall appoint another
preside at the meeting.
person in accordance with the
provisions of this Act to fill the
(3) All questions which come up
vacancy and the proceedings may
before any meeting of the Authority
be continued before the Appellate
shall be decided by a majority of votes
Tribunal from the stage at which
by the Members present and voting,
the vacancy is filled.
and in the event of an equality of
votes, the Chairperson or in his
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absence, the person presiding shall
have a second or casting vote.
(4) xxxxx
55. Vacancies, etc., not to
30. Vacancies, etc., not to invalidate
invalidate proceeding of
proceeding of Authority.--No act or
Appellate Tribunal.--No act or
proceeding of the Authority shall be
proceeding of the Appellate
invalid merely by reason of-- (a) any
Tribunal shall be invalid merely by
vacancy in, or any defect in the
reason of-- (a) any vacancy in, or
constitution of, the Authority; or (b)
any defect in the constitution of, the
any defect in the appointment of a
Appellate Tribunal; or (b) any
person acting as a Member of the
defect in the appointment of a
Authority; or (c) any irregularity in the
person acting as a Member of the
procedure of the Authority not
Appellate Tribunal; or (c) any
affecting the merits of the case.
irregularity in the procedure of the
Appellate Tribunal not affecting the
merits of the case.
(emphasis supplied)
19] A perusal of Section 43 of the Act of 2016 clearly reveals that
Sub-section (1) of Section 43 provides for the establishment of
Appellate Tribunal in the State or the Union Territory to be known
as Real Estate Appellate Tribunal, Sub-section (2) provides for one
or more benches of the Appellate Tribunal for various jurisdiction
in the State or Union Territory as the case may be, and Sub-section
(3) which is important, provides that every Bench of the Appellate
Tribunal shall consist of at least one Judicial Member and one
Administrative or Technical Member, meaning thereby that
whenever a Bench of the Appellate Tribunal is constituted apart
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from the Appellate Tribunal, it should have at least one Judicial
Member in addition to one Administrative or Technical Member.
20] From the aforesaid provisions of Real Estate Regulatory
Authority, namely, Section 21 it is found that it provides for
composition of Real Estate Regulatory Authority, and Section 29
provides for meeting of the Authority, it is apparent that while
Section 29(2) clearly provides that if the Chairperson, for any
reason is unable to attend the meeting of the Authority, any other
Member chosen by the Members present amongst themselves at the
meeting shall preside at the meeting. On the contrary, s.52 which
provides for the Vacancies of appellate tribunal, makes it clear that
even when a vacancy occurs in the office of the Chairperson or a
Member of the Appellate Tribunal, the appropriate Government
shall appoint another person in accordance with the provision of
this Act to fill the vacancy and the proceedings may be continued
before the Appellate Tribunal from the stage at which the vacancy
is filled. Thus, an Appellate Tribunal cannot continue to operate in
case of a vacancy which has to be filled before proceeding any
further in any particular case, and they cannot act on their own by
way of implication only.
21] This court is also of the considered opinion that Section 30
which provides that any vacancy or defect in the constitution of the
Authority not to invalidate proceedings of the Authority is in line
with the provisions of s.29(2).
22] Thus, it can be safely concluded that when it comes to
composition of Appellate Tribunal, the presence of the Chairperson
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is necessary along with the two members as provided under Section
45 of the Act of 2016. In such circumstances, Section 55 which
provides that vacancies or defect in the constitution of the Tribunal
etc. not to invalidate the proceedings of the Appellate Tribunal, if
read in isolation would frustrate the very purpose of Section 45 of
the Act, which provides for composition of Appellate Tribunal with
a Chairman and two members, and thus, it has to be held that the
Appellate Tribunal must consist of one Chairman and two
members, which is sine qua non for its constitution.
23] In the considered opinion of this court, the controversy
involved in the present case has already been answered by the four
judges bench of the Supreme Court in the case of Ram Bharosey
Agarwal v. Har Swarup Maheshwari, (1976) 3 SCC 435 where a
similar controversy arose before the Supreme Court in the case
of wherein the similar provisions under s.9 and s.13 of the
Advocates Act, 1961 were pressed into service and s.13 is in pari
materia with s.55 of the Act of 2016, and while holding in favour of
the appellant who had challenged the constitution of the
Disciplinary Committee of the Bar Council, comprising of two
members only instead of three members, it was held as under:-
"9. Thirdly, it has been argued by Mr Sen that although Section
9 of the Advocates Act provided that the Bar Council shall
constitute one or more Disciplinary Committees, each of which
"shall consist of three persons", only two persons were present
on July 21, 1974 when the appellant's defence was closed and
arguments were heard in the case. Mr Sharma appearing on
behalf of the respondent has not been able to deny that this was
so. He has argued that, by virtue of Section 13 of the Act, no
act done by the Bar Council or its committee could be called
in question on the ground merely of the existence of any
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vacancy in, or any defect in the constitution of the Council or
committees, as the case may be. We have gone through Section
13, but it is inapplicable to the present controversy as it cannot
be said that there was any "vacancy" in the Disciplinary
Committee. It is nobody's case that any of the three members of
the committee ceased to be a member thereof at any time
during the course of the proceedings before the committee. It is
also nobody's case that there was any defect in the constitution
of the committee or that it was permissible to function with two
members only. There is therefore justification for the third
argument of Mr Sen also.
10. In these circumstances, we are constrained to allow the
appeal and to set aside the appellate order dated December 10,
1974. In the circumstances of the case, we would direct that the
parties shall pay and bear their own costs."
(emphasis supplied)
24] In view of the aforesaid dictum of the Supreme Court, it
leaves no room for any further interpretation of s.45 and 55 of the
Act of 2016. And thus, it is held that a Real Estate Appellate
Tribunal shall consist of Chairman and two members as aforesaid,
and any defect in the constitution would not mean that it is
permissible to function with two members only. In the case at hand,
as there was neither any vacancy in the Appellate Tribunal nor any
defect in its constitution, thus, only two members could not have
passed the final order. In such circumstances, the first substantial
question of law is answered in favour of the appellant and the
impugned order is hereby set aside.
25] At this juncture, it would also be necessary to point out that
the constitution of a Bench, and constitution of the Appellate
Tribunal, is two different concepts used in the Act of 2016. While
the constitution of Bench is provided u/s.43 which is under the
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domain of the State Government, whereas, the constitution of Real
Estate Appellate Tribunal is provided under s.45. There can be one
or more benches of the Appellate Tribunal, which shall consist of
two members as provided u/s.43, whereas, the Appellate Tribunal
shall consist of a Chairperson and not less than two whole time
Members of which one shall be a Judicial member and other shall
be a Technical or Administrative Member, to be appointed by the
appropriate Government. Thus, there appears to be some anomaly
between these two sections, viz., s.43 and 45, because on one hand
s.45 provides for constitution of appellate tribunal with three
persons, whereas the benches can consist of two members only,
which needs urgent attention of the Legislature.
26] So far as the second substantial question of law i.e., 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? is concerned, on perusal of the
proceedings of the Appellate Tribunal, it is found that the matter
was finally heard by only two members, namely, Shri A. M. Saxena
Member Judicial, and Shri J. S. Mathur, Member Administrative on
23.02.2021, and the matter was reserved for orders. However, just
below the proceedings, a hand written endorsement has been made
by the Chairman. Order dated 23.02.2021 reads as under:-
"(Hearing Through Video Conferencing)
Shri Vishnu Agrawal, CA, connected for the Appellant.
Shri Animesh Agrawal, CA connected for the
Respondent.
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Matter heard finally.
Case reserved for order
Sd/- Sd/-
(A. M. Saxena) (J. S. Mathur)
Member (J) Member (A)
Place the record of the preparation of the final Order
before learned Member (J).
Sd/-
Chairman"
27] A perusal of the proceedings of the Tribunal, it is found that
initially it was listed before all the three Members of the Appellate
Tribunal, including the Chairman, but on 23.02.2021, it was heard
by a bench of two members only viz., the Judicial and the
Administrative. And in the order sheet dated 23.02.2021, an
endorsement as aforesaid was made by the Chairman as a postscript
that the record be placed before the learned Member, Judicial for
final order. Thus, even assuming for the sake of arguments that two
members could have passed the final order, the question is whether
the Chairman could have directed one such member to pass the
order?
28] From the aforesaid proceedings, two facts emerge, firstly, on
23.02.2021, the Chairman did not participate in the final hearing,
and secondly, the Chairman, without even hearing the matter, and
without being a part of the bench comprising of only two members,
has directed that the record be placed before the learned Member,
Judicial, for final order.
29] In the considered opinion of this Court such a direction on the
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part of the Chairman of the Tribunal cannot be said to be an
administrative function and defeats the very purpose for which the
Tribunal is constituted. It is true that as per S.54 of the Act of
2016 provides that the Chairperson shall have powers of general
superintendence and direction in the conduct of the affairs of
Appellate Tribunal and he shall, in addition to presiding over the
meetings of the Appellate Tribunal exercise and discharge such
administrative powers and functions of the Appellate Tribunal as
may be prescribed, but, in the considered opinion of this court, this
provision does not empower the Chairman, 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 heard
the matter. This court is of the considered opinion that when a
matter is placed before a two members of Appellate Tribunal, it is
presumed that it is heard by both the members of the bench, and it
is up to their discretion as to who would pass the orders, or at times,
they may also pass two different orders separately, either
disagreeing with each other or even agreeing with each other but
for different reasons. Thus, it is intrinsic that both the members are
entitled to form their opinion in the matter, and there can also be
difference of opinion between them.
30] In such circumstances, 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.
31] Counsel for the respondent has also placed on record the
other similar orders passed by the Chairman in other cases in which
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such directions have also been issued to one Member, only for
passing the final order. These cases are, Navin Kumar Gupta Vs.
M.P. Housing & Infrastructure Development Board, Through
Commissioner in Appeal No.08 of 2019; M.P. Housing &
Infrastructure Development Board Through Commissioner Vs.
Navin Kumar Gupta in Appeal No.A-166 of 2018 dated
14.06.2021; and Annapoorna Developers Partnership Firm,
through its Partners Vs. Vijay Kumar Chourasiya in Appeal
No.A-109/2019 dated 25.06.2021. However, this court again
reiterates that when the matter is heard by the Bench of two
members, it should be left to the discretion of those members only
as to who will pass the final order, after the matter is heard by them,
in such circumstances, the earlier precedence would be of no help
to the respondent. Thus, the second substantial question of law
i.e., 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? is also answered as aforesaid, in favour
of the appellant.
32] In view of the aforesaid discussion, the Second Appeal stands
allowed and the impugned judgment/order dated 07.06.2021,
passed by the Appellate Tribunal is hereby set aside and the matter
is remanded back to the Appellate Tribunal for its reconsideration
in accordance with law, in the light of the observations made as
aforesaid in this order. It is made clear that this court has not
reflected on the merits of the case.
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33] Let the original record be sent back to the Real Estate
Appellate Tribunal, Bhopal at the earliest. Parties are also directed
to appear before the Appellate Tribunal on 25.09.2023.
34] Appeal stands allowed and disposed of, accordingly.
(Subodh Abhyankar)
Judge
Pankaj
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