Supreme Court Declares West Bengal Housing Industry Regulation Act 2017 Unconstitutional for Repugnancy to RERA

Introduction

In the landmark case of Forum For People's Collective Efforts (FPCE) And Another v. State Of West Bengal And Another (2021 INSC 283), the Supreme Court of India addressed the constitutional validity of the West Bengal Housing Industry Regulation Act, 2017 (WB-HIRA). The petitioners challenged WB-HIRA under Article 32 of the Indian Constitution, arguing that it was repugnant to the Real Estate (Regulation and Development) Act, 2016 (RERA), a central legislation enacted by Parliament. The core issue was whether the State Act, WB-HIRA, which regulated the housing industry in West Bengal, contradicted RERA and thereby violated the principles laid down in the Constitution's Seventh Schedule concerning the Concurrent List.

Summary of the Judgment

The Supreme Court held that WB-HIRA was unconstitutional as it was repugnant to RERA. The Court analyzed the overlap between the central and state legislations, focusing on Entries 6 and 7 of the Concurrent List in the Seventh Schedule, which pertain to the transfer of property and contracts, including real estate transactions. The Court observed that RERA was a comprehensive, exhaustive code intended to create uniformity and protect consumer interests across the nation. WB-HIRA, enacted by the State of West Bengal, mirrored RERA's provisions verbatim, creating a parallel regulatory framework within the state. This duplication, without Presidential assent as required under Article 254(2), led to a direct conflict between the central and state laws. Consequently, WB-HIRA was declared void to the extent of its repugnant provisions, reinforcing the central supremacy in matters under the Concurrent List.

Analysis

Precedents Cited

The Court referenced several key judgments to establish the framework for determining repugnancy between central and state laws:

Tika Ramji vs State of UP (1956) SCR 393: Established that when both central and state legislatures enact laws on the same concurrent subject matter, and if the central law is meant to be an exhaustive code, the state law becomes repugnant.
Calcutta Gas Co. Ltd. vs State of West Bengal (1962) Supp. 3 SCR 1: Reinforced the principle that central legislation intending to occupy the entire field precludes state laws from encroaching upon it.
Innoventive Industries Ltd. vs ICICI Bank (2018) 1 SCC 166: Highlighted that when a central law explicitly overrides conflicting state provisions, the latter must yield.
Rajiv Sarin vs State of Uttarakhand (2011) 8 SCC 708: Clarified the conditions under Article 254(1) for repugnancy, emphasizing the necessity of both conflict and lack of legislative competence.
Sasanka Sekhar Maity vs Union of India (2020) 13 SCC 521: Discussed the interpretation of "law for the time being in force," affirming its applicational breadth to both existing and subsequent laws.

Legal Reasoning

The Court meticulously examined the definitions and provisions of both RERA and WB-HIRA. It identified that WB-HIRA's definitions of terms like "common areas," "car parking area," and "garage" were either identical or directly conflicted with those in RERA. For instance, RERA clearly defines "common areas" to include open parking areas, thereby preventing their sale, a provision mirrored and contradicted by WB-HIRA's approach.

Moreover, WB-HIRA lacked critical safeguards present in RERA, such as the appointment of adjudicating officers from the judiciary, adherence to sanctioned plans, and specific provisions for compensation and dispute resolution. The absence of these elements not only created inconsistencies but also tilted the regulatory balance in favor of promoters over consumers.

The Court further emphasized that RERA, under Sections 88 and 89, was designed to coexist with other laws without derogating them, except where repugnancy existed. However, WB-HIRA did not comply with these provisions, as it replicated RERA without the necessary Presidential assent and disregarded the overriding intent of central legislation. This blatant duplication and omission of essential components led to the determination that WB-HIRA was constitutionally impermissible.

Impact

This judgment has profound implications for real estate regulation in India. It unequivocally asserts the supremacy of central legislation like RERA over state laws under the Concurrent List, especially when such state laws mirror central provisions without adding substantive value or adhering to constitutional protocols. States aiming to regulate the real estate sector must ensure that their laws do not conflict with or duplicate central statutes, thereby preserving the uniformity and effectiveness intended by RERA.

Additionally, the decision reinforces the constitutional mandate under Article 254, emphasizing that where central and state laws on the same concurrent subject conflict, the central law prevails. This ensures a standardized regulatory environment across the country, enhancing consumer protection and promoting transparency in real estate transactions.

Complex Concepts Simplified

Concurrent List: Part of the Seventh Schedule of the Indian Constitution, the Concurrent List includes subjects on which both the central and state governments can legislate. However, central laws have precedence over state laws in case of any conflict.

Repugnancy: A legal term referring to the conflict between two laws on the same subject matter. Under Article 254, if a state law is repugnant to a central law on a concurrent subject, the central law prevails.

Overriding Effect: A legal principle where central legislation supersedes conflicting state laws, ensuring uniformity in national policies and regulations.

Presidential Assent: Before enacting laws on certain subjects, especially those under the Concurrent List, state legislatures must obtain the President's assent to prevent conflicts with central laws.

Section 88 & 89 of RERA:

Section 88: Clarifies that RERA is in addition to other laws and does not derogate them, allowing coexistence and complementarity.
Section 89: Provides RERA with an overriding effect over any inconsistent central or state law, reinforcing its dominance in regulating real estate.

Conclusion

The Supreme Court's verdict in FPCE v. State Of West Bengal solidifies the central government's authoritative role in regulating the real estate sector through RERA. By nullifying WB-HIRA for its repugnancy, the Court has fortified the constitutional hierarchy where central laws on concurrent subjects supersede conflicting state legislations. This ensures a uniform regulatory framework nationwide, enhancing consumer protection and streamlining real estate governance. States must now align their housing regulations with central mandates, avoiding duplication and ensuring compliance with constitutional provisions to foster a transparent and efficient real estate market.

Moreover, this judgment serves as a pivotal reference for future challenges concerning legislative overlaps, emphasizing the need for legislative harmony and adherence to constitutional directives in India's federal structure.