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Concurrent Remedies under RERA and Consumer Protection Act: Which is more effective?

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”

–Franklin D. Roosevelt, U.S. President

By stating a quote said by the then-former U.S. President, we come to an understanding that owning a house that can be called your own is something that every individual dreams of. But, in most cases, the hurdles that a buyer has to overcome in achieving his dream lead to a lot of financial and mental distress. This distress can be caused by a variety of factors, the most common of which is fraud or cheating by unscrupulous builders and real estate agents.

Hence, it is vital for a buyer to know about the various legal remedies at his disposal. Furthermore, it is crucial to understand which of the various legal remedies is the best approach. This article analyses the various legal recourses available and the forum that would best redress the buyers’ concerns.

The Real Estate (Regulation and Development) Act, 2016

RERA prescribes that the promoter shall not accept more than 10% (ten percent) of the total value of the real estate property before entering into the agreement for sale[1]. Further, the promoter is required to maintain a separate account with 70% (seventy percent) of the project funds. If the builder wants to modify the sanction plan under RERA, he requires the consent of two-thirds of the allottees. Under RERA, if any defect is brought to the attention of the promoter within a period of 5(five) years of handing over possession of the property, it shall be the duty of the promoter to rectify the defect[2].

RERA mandates that every real estate project be registered with the Real Estate Regulatory Authority. Without the registration of the real estate project, the promoter is not allowed to book, sell, or invite any person to purchase the project[3]. The applications must be filed addressing it to RERA with the necessary approvals from the local authorities, along with a development plan, proforma of all agreements that are signed by the company, details relating to contractors, real estate agents, architects, structural engineers, and other people concerned with the project, the details of the total carpet area of the apartments for sale in the project and a declaration signed with an affidavit confirming that it is free from all encumbrances. The following provisions bind the promoters as well as the real estate agents, providing the buyers with holistic protection.

Non-compliance or default with any of the aforementioned provisions resulted in a penalty of up to 10% (ten percent) of the total project cost and up to three years in prison[4]. The builders are also mandated to deposit 70% (seventy percent) of the project funds into a separate bank account to avoid the problem of builders diverting the funds of the project to another new project[5].

Grievances with regard to violations of the RERA can be filed on the RERA website, which acts as a single repository for all real estate project data and filing grievances[6]. The Real Estate regulatory authority has been prescribed a resolution time of 60 (sixty) days from the date of receipt of the application[7]. Further, the tribunal can hear appeals of the authority’s rulings within 60 (sixty) days[8]. Any appeal from the tribunal lies before the High Court and must be filed within a period of 60 (sixty) days of the decision. If there is a pending case before the Consumer Forum pertaining to the damages caused by the false advertisements and non-adherence to the project specification, approved plan, or failure to complete the project on the specified date, the case can be withdrawn and filed before the RERA adjudicating officer[9].

Overview of the Consumer Protection Act, 2019

The Consumer Protection Act of 1986 and the new Act of 2019 were enacted to provide a simple and quick solution to consumers’ grievances against any deficiency in services or defect in goods. It is organised into three levels: the District Forum, the State Commission, and the National Commission (“Consumer Forum”). The Act defines “product seller,” and it includes a seller of immovable property only if that person is engaged in the construction of flats or homes or the sale of constructed homes[10]. As a result, builders and real estate agents are covered by the Act.

Under the said Act, only consumers can file a complaint, the term consumer is defined as a person who buys goods for consideration but doesn’t include a person who obtains such goods for commercial or resale purposes[11]. As a result, for the purposes of this article, those individuals are considered consumers who purchase a home or other property for personal use rather than commercial use.

In case of any defect or deficiency in the product or services, the consumer can file a complaint before the consumer forum within a period of 2 (two) years from the date on which the cause of action arose[12]. The consumer forums have a pecuniary limit. Hence, the District forum entertains complaints where the value of goods and services is not more than 1 crore rupees[13], State Commissions can entertain complaints that are above 1(one) crore and below 10 (ten) crore[14] and all complaints above 10 (ten) crores need to be filed with the National Commission[15].

Under the Act, the complaint is disposed of within a period of 3 (three) months from the date of receipt of the notice by the opposite parties[16]. The Act empowers the forums to grant compensation for loss incurred and punitive damages in appropriate cases.

Does RERA Reduce the Scope of CPA?

Before the enactment of the RERA, the Consumer Forum used to deal with matters relating to allottees. Following the enactment, the Consumer Forum’s jurisdiction to deal with allottee-related issues was not barred by the RERA. The standing committee also clarified that the jurisdiction of the Consumer Forums was not taken away by the establishment of the Real Estate Tribunal. Further, the consumer also has the discretion to withdraw the complaint pending before the Consumer Forum, with the permission of the said forum, and file an application before the adjudicating officer under RERA[17].

In Experion Developers Pvt. Ltd. v. State of Haryana and Ors.[18] the court referred to Section 71 of the RERA, which enables the consumer whose complaint is pending before the Consumer Forum to withdraw and go before the adjudicating officer. But the court held that the said provision has to be read with Section 88 of the said act, which explicitly states that the provision of RERA is in addition to and not in derogation of any other law. As a result, the court concluded that the complainant was not required to withdraw and transfer the complaint before the adjudicating officer. The complainant was empowered to simultaneously pursue remedies in both the forum on the strength of section 88 of the act.

The Apex Court, in Pioneer Urban Land and Infrastructure Ltd v. Union of India and Ors [19], held that buyers of flats could avail concurrent remedies under Consumer Protection Act and RERA.

In M3M India Pvt Ltd v. Dinesh Sharma[20] the court considered the question of whether the proceedings before the consumer forum can commence after the commencement of the RERA. It was held that the remedies that are provided under RERA and the Consumer Protection Act are concurrent in nature and the jurisdiction of the commission or the Consumer Forum will not be ousted by RERA, specifically Section 79 of the Act.

In Malay Kumar Ganguly v. Dr. Sukumar Mukherjee[21] the Supreme Court held that even though the proceeding in the National Commission is a judicial proceeding, within the definition of the Civil Procedure Code it is not a Civil Court. Although the National Commission has the trappings of a Civil Court, it cannot be termed a Civil Court. Therefore, the bar that has been provided under Section 79 of RERA is not applicable to the Consumer Forum. This judgement was strongly relied on in the below-mentioned judgement.

Further, in M/s Imperia Structures Ltd v Anil Patni & Another[22] Section 79 of the RERA bars the civil court from entertaining any suit or proceeding in respect of any matter over which the Authority, the adjudicating officer or the Appellate Tribunal is empowered by the RERA. The Apex Court held that it did not bar the complainant from filing complaints under the Consumer Protection Act. The section only imposes limitations on the Civil Courts’ ability to try issues that the adjudicating authority is empowered to entertain. As the Consumer Forum is not the same as the Civil Court the limitation does not apply.

Section 18 of the Act states that there is no bar to any aggrieved party from pursuing any other remedy that is available. Section 88 of the Act states that the provisions of the Act are in addition to and not in derogation of any other laws in force. However, on the contrary, Section 89 of the act provides that RERA shall have an overriding effect. The court cleared up the confusion by stating that even though Section 89 states that the Act shall have an overriding effect, the buyers can still approach the other forums under Section 18 of the Act. Thus, it is clear that parallel proceedings in different forums can exist. The court established that the aggrieved party could avail of parallel remedies under RERA as well as under the Consumer Protection Act.

A Comparative Study of RERA and Consumer Protection Act

The following are the requisite pointers that can be considered to determine which forum best serves the needs of homebuyers.

Limitation Period

RERA has not provided any limitation period within which a complaint needs to be filed. However, according to the Consumer Protection Act, the complaint must be filed within two years of the cause of action. Hence, if the time period since the cause is more than 2 years, then the complainant can’t file a complaint before the Consumer Forum; the only remedy available at the complainant’s disposal is adjudication under the RERA.

Filing of a Complaint

Under RERA, any person who has been aggrieved by the builder or developer can file a complaint. However, under the Act, only a person who is a consumer can file a complaint. As a result, if a person does not fall within the definition of “consumer,” or if he has purchased a property for commercial purposes, or if any other person is dissatisfied with the developer, the only recourse is to approach RERA for adjudication.

Under RERA, the complaints are filed on the RERA website, and the process is simplified with minimal to no opportunity for modification because many States have distinct prescribed methods for filing complaints under RERA (including the format). However, under the Act, the complaint must be submitted in writing to the relevant authorities; it involves a complex procedure and includes documentation evidence; as a result, it appears to be a more time-consuming process.

Pecuniary Limitations

The Act has prescribed pecuniary limitations based on the value of the property. Suppose the complainant’s property is above Rs. 1 crore, then he has to approach the State Commission and if its above Rs. 10 crores, he has to approach the National Commission for filing a complaint. Whereas RERA does not have any pecuniary limitations based on the value of the property. Hence, the complaint can be filed before the regulatory authority of the state in which the property is situated. Suppose the value of the property is more than Rs. 10 crores, then it is convenient for the buyer to adjudicate the dispute before RERA as the National Commission that is given jurisdiction under the Consumer Protection Act is situated in New Delhi.

Penalty

The Act is empowered only to grant pecuniary compensation. It doesn’t enforce any preventive measures nor does it provide for any specific performance or imprisonment of the defaulting party. RERA, however, is exclusively empowered to provide certain non-compensatory remedies. Further, it is also empowered to impose imprisonment for up to 3 (three) years on the defaulting developers. If the consumer is only seeking compensatory relief, then the consumer forum is the right forum to approach. But if the buyer is looking for a deterrent remedy, then filing a complaint before RERA is a better option.

Commercial Dispute

The Consumer Forum doesn’t deal with commercial issues. RERA has no such bar on the adjudication of commercial issues. Therefore, if an individual doesn’t fall within the definition of “Consumer” as defined under the Act, then the best and only recourse available in the hands of the buyer is to file a complaint under RERA.

Time Period for Disposal of Dispute

The resolution time specified under RERA is 60 (sixty) days[23]. Similarly, the Act states that every complaint shall be disposed of as expeditiously as possible within a period of 3(three) months from the date of receiving notice from the other party[24]. However, in practice, disposing of matters in both forums takes much longer.

Conclusion

For regulating the “real estate” sector, the “Real Estate Regulatory Authority Act” is a landmark piece of legislation imposing time-bound obligations on promoters. Consumers’ or homebuyers’ rights are intended to be protected by ensuring fair play.

It is worth noting that RERA has not only been actively involved in maintaining transparency and accountability in the real estate sector, but has also assisted consumers and homebuyers in obtaining possession quickly and easily.

From the above analysis, we can deduce that RERA has finally ended up being an extension of the “Consumer Protection Act” which helps to address the growing need for transparency in favour of consumers as well as builders.

In light of the preceding comparative study and judicial pronouncements, we can safely conclude that it is entirely up to the allottee to choose either a concurrent remedy or a single forum to resolve his or her disputes. But it is a tedious process for a common man to simultaneously approach two different forums, the RERA or the Consumer Forum.

The concurrent remedy has broadened the range of remedies available to home buyers. Both acts have their benefits and drawbacks in terms of resolving the buyers’ issues. The most effective forum for the buyer to approach for resolving his issue is highly dependent on the facts of the case and the remedy that the aggrieved party is seeking from the respective forum.

Concurrent Remedies under RERA and Consumer Protection Act: Which is more effective?

References:

[1] Section 13 of the Real Estate (Regulation and Development) Act, 2016

[2] Section 14(3) of the Real Estate (Regulation and Development) Act, 2016

[3] Section 3 of the Real Estate (Regulation and Development) Act, 2016

[4] Section 59 of the Real Estate (Regulation and Development) Act, 2016

[5] Section 4(d) of the Real Estate (Regulation and Development) Act, 2016

[6] Section 31(1) of the Real Estate (Regulation and Development) Act, 2016

[7] Section 29(4) of the Real Estate (Regulation and Development) Act, 2016

[8] Section 44 of the Real Estate (Regulation and Development) Act, 2016

[9] Section 71 of the Real Estate (Regulation and Development) Act, 2016

[10] Section 1(37) of Consumer Protection Act, 2019

[11] Section 1(7) of Consumer Protection Act, 201

[12] Section 69(1) of Consumer Protection Act, 2019

[13] Section 34 of Consumer Protection Act, 2019

[14] Section 47 of Consumer Protection Act, 2019

[15] Section 58 of Consumer Protection Act, 2019

[16] 38(7) of of Consumer Protection Act, 2019

[17] Section 71 of the Real Estate (Regulation and Development) Act, 2016

[18] Experion Developers Pvt. Ltd. v. State of Haryana CWP No. 38144 of 2018

[19] Pioneer Urban Land and Infrastructure Ltd v. Union of India and Ors 2019 SCC OnLine SC 1005

[20] M3M India Pvt Ltd v. Dinesh Sharma W.P.(C)43/2019

[21] Malay Kumar Ganguly vs. Dr. Sukumar Mukherjee AIR 2010 SC 1162

[22] M/s Imperia Structures Ltd v Anil Patni & Another (Civil Appeal No. 3581-3590 of 2020)

[23] Section 29(4) of the Real Estate (Regulation and Development) Act, 2016

[24] Section 38(7) of the of Consumer Protection Act, 2019

Image Credits: Photo by energepic.com

The concurrent remedy has increased the scope of remedy that the home buyer can avail. Both acts have their benefits and drawbacks in terms of resolving the buyers’ issues. The most effective forum for the buyer to approach for resolving his/her issue is highly dependent on the facts of the case and the remedy that the aggrieved party is seeking from the respective forum.

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Thinking through Timelines: Acceptance of Rent Amounts to Waiver of Termination of Lease?

On June 24, 2022, the Supreme Court of India while deciding the matter of Sri K.M. Manjunath Vs. Sri Erappa G,[i] held that mere acceptance of rent by landlord after the expiry of lease would not amount to waiver of termination of lease.

Background

The dispute in this matter arose in connection with unregistered lease agreements for the lease of shop premises at Banaswadi Main Road, Bengaluru. Pursuant to the expiry of the last lease deed executed between the parties, the respondent-lessor filed a suit for ejectment before the Small Causes Court against the petitioner-lessee to obtain vacant possession of the shop premises. The Small Causes Court dismissed the suit for ejectment on the grounds that the suit was not maintainable as there was no valid termination of tenancy under section 106 of the Transfer of Property Act, 1882 (“ToP Act”) (detailed hereinbelow).

Aggrieved by the aforesaid dismissal, the respondent-lessor preferred a revision petition before the Karnataka High Court (“High Court”). Upon appreciation of the evidence on record, which inter alia consisted of unregistered lease agreements executed between the parties during the period of 1989 to 1995, the High Court noted that the duration of the lease agreements could be inferred to be for a period of 11 (eleven) months each, and thus the lease granted thereunder stood terminated by efflux of time. Hence, the petitioner-lessee was not entitled to notice under section 106 of the ToP Act. The High Court thus set aside the judgement of the Small Causes Court.

The petitioner-lessee thereafter filed a special leave petition (“Special Leave Petition”) before the Supreme Court challenging the judgment and final order of the High Court.

Applicable Provisions and Contentions

The primary contention in the matter was the applicability of section 106 of the ToP Act, which provides that where there is no written contract for the lease of immovable property, not being leased for agricultural or manufacturing purposes, the period of the lease shall be deemed to be from month to month and terminable by 15 (fifteen) days’ notice. The contention of the petitioner-lessee before the Small Causes Court was that no valid notice was served by the respondent-lessor as per this provision. On the basis of the aforesaid, the Small Causes Court ruled in favour of the petitioner-lessee. However, based on the aforementioned evidence evaluation, the High Court determined that the lease in this case stood determined by virtue of section 111(a) of the ToP Act, which provides that a lease may come to an end by efflux of time limited therein.

The Supreme Court, in the Special Leave Petition, took note of the contention of the petitioner-lessee that after the expiry of the period of the last lease agreement, the petitioner-lessee was continuing as a tenant in sufferance and had paid the rent till the date of the filing of the suit for ejectment.

Verdict

Considering the above provisions and contentions, the Supreme Court appreciated the reiteration of the High Court, based on the precedents relied upon by the High Court, that mere acceptance of the rent does not amount to a waiver of the termination of the tenancy. The Supreme Court, however, granted the request of the petitioner-lessee for a grant of time to vacate the shop premises by allotting a period of 6 (six) months from the date of its judgement to hand over the possession of the shop premises to the respondent-lessor. The aforesaid extension was granted subject to the petitioner-lessee submitting an undertaking on affidavit to pay the arrears of rent at the rate of INR 1400/- (Indian Rupees One Thousand Four Hundred only) per month for the arrears pending from the year 2017 (as determined by the High Court) and extending to the aforesaid period of 6 (six) months.

Accordingly, the Supreme Court upheld the decision of the High Court and dismissed the Special Leave Petition for being devoid of merit.

The Takeaway

The reaffirmation of the Supreme Court on non-waiver of termination in this matter reinforces the significance of capturing the duration of the lease in crystal clear terms in lease agreements. Detailing timelines for termination and notice period is just as important. As seen in the facts of the discussed case, the absence of such agreed timelines can further complicate disputes arising between the parties. Hence, customising such timelines on a case-specific basis is critical, while adopting timelines based merely on common practice is best avoided.

References:

[i]Petition For Special Leave To Appeal (C) NO.10700 OF 2022 filed before the Supreme Court Of India, Civil Original Jurisdiction.

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Land Acquisition in India – A Tough Balancing Act

10 December, 2019
Akshay Vasist

Sovereigns across the globe have relied upon the doctrine of eminent domain to acquire land for public use. Consent of those who own the land takes a backseat when the greater good is at stake. Guided by this utilitarian principle and to usher a sense of equality among the economically weaker citizens of this nation, ‘right to property’ was removed as a fundamental right through the 44^th amendment. However, democracy demands people-pleasing and power mongers have to give in once in a while for a euphoric sense of justice to prevail. Consequently, the doctrine of eminent domain was balanced through the introduction of the Right to Fair Compensation and Transparency in Land Acquisition Rehabilitation and Resettlements Act, 2013 (RFCTLARR Act). The act empowered central and state governments to acquire lands for the development of public good with ‘consent’.

However, acquisition of land comes under Schedule VII i.e. the concurrent list which means both state and central governments can devise laws under it. This provided scope for abuse by states which enacted similar laws on land acquisition suiting their specific requirements. While doing this, the states remained undeterred by ‘Article 21’ that ensures the right to personal liberty and dignity, thus clearly defying the ‘basic structure’ of the constitution. Further, land acquisition under the said state laws was in blatant violation of the requirement that central laws enacted on subjects under the concurrent list must take precedence over the state laws. Federalism in this regard didn’t favour the distressed population. This misuse of power has caused negative externalities to the marginalized populations and the role of the capitalist class and private players in connection to the political establishment has been visible. This paper seeks to examine the impact of the state legislation which has resulted in exploitative conditions and varying judgments by high courts across the country.

The 2013 Act and 2014 Amendment Ordinance

The reasons for the introduction of the RFCTLARR Act in 2013 included lack of standing for the people displaced, lack of participation in the acquisition decision, inadequate compensation, insufficient coverage of families affected by the acquisition, procedural delays, and inequities as well as non-use of the land acquired. To some extent, the new law acted as a huge relief for marginalized landowners but it did not go down well with the state governments or industry participants who started protesting against the cumbersome process and the acquisition cost that, according to them, would hinder developmental activities.

To plug the vehement protests, an ordinance was promulgated that substantially altered the provisions of the RFCTLARR Act by exempting five categories of projects from the consent and social impact assessment provisions i.e. defense, rural infrastructure, affordable housing, industrial corridors, and infrastructure projects including Public-Private Partnership (PPP).[i] However, the ordinance lapsed after a few re-promulgation and law to replace the ordinance has not and most likely would not see the light of the day due to the sensitive nature of the subject and intense contestations by the stakeholders. A Joint Parliamentary Committee (JPC) is now shouldering the responsibility of bringing about the amendments.

Dilution of Key Provisions by States

In the meanwhile, several states have already brought about changes through Rules under Section 109 of the Act or have enacted their own state-level land acquisition legislations. At least six state governments have enacted their own land acquisition laws by seeking Presidential consent using Article 254 (2) of the constitution. These new state laws directly adopt the amendments proposed by the 2014 land ordinance and exclude acquisitions for certain purposes from the purview of the central law. State-level rules are diluting the applicability of progressive clauses like prior consent, public hearings, or Social Impact Assessment (SIA).

In Jharkhand, the state rules reduce the quorum of the gram sabha consent to one-third from half as required in the central rule. In Odisha and Jharkhand, unused acquired lands are repatriated into land banks rather than returning it to the original owners as required by the central law. The Tamil Nadu law allows unused land to be taken for any other purpose, provided the District Collector certifies the same. State Rules are reducing the amount of compensation to be paid against acquisitions. In states like Haryana, Chhattisgarh, and Tripura the multiplying factor for rural land is fixed at 1.00 as against 2.00 as specified in the central law.[ii]

Judicial Developments

While the states have been busy bypassing the law, courts have had to deal with a bombardment of litigation requiring interpretation of key provisions of the RFCTLARR Act as well as determining the constitutional validity of the state enactments. Key pronouncements have been made with regards to Section 24(2) of the RFCTLARR Act which states that after initiating land acquisition for a project under the 1894 law if the physical possession has not been taken by the developer or the compensation not paid to the landowners for more than five years, the acquisition process would lapse. In such cases, the government would have to initiate fresh acquisition under the Act.

A three-judge bench of the apex court had held in Pune Municipal Corporation v Harakchand Misirimal Solanki that mere deposit of compensation in government treasury cannot be regarded as a payment made to the landowner and acquisition proceedings under the 1894 Act will lapse in such cases. The decision was overruled by another three-judge bench in Indore Development Authority vs Shailendra holding that deposit of the award in treasury should be regarded as payment to the landowner who is refusing to accept compensation. Following the contradictory stand, a bench has been constituted by the CJI to end the controversy and all compensation matters in land acquisition cases pending in high courts have stayed till the issue is settled.

In another stark turn of events, the Madras High Court declared as “illegal” the amendment made by the Tamil Nadu government to the Centre’s Land Acquisition Act, exempting three state legislations from its purview. The court said, “In order to revive these acts, the State must re-enact these statutes, in accordance with Article 254(2) of the Constitution of India and obtain the assent of the President. Merely, by inserting Section 105-A and the 5th Schedule, in the new Act, these impugned enactments do not get revived. Since this had admittedly not been done, the Acts remain repugnant, and Article 254(1) renders them inoperative.”

Alternative to Acquisition

As far as the issue of developmental activities being hindered because of difficulty in land acquisition is concerned, the centre should look at encouraging land leasing and land pooling as is already being practiced in Haryana and UP. In such arrangements, the landowner lends the land to the government for a steadily increasing rent, or through an annuity-based system or through land development by a government agency, it said. Under pooling, the group of landowners gives their land to a government agency for developing the land with infrastructure and amenities and later they get a part of it back in return.

Achieving a balance

While RFCTLARR has completed six years, it has brought in radical awareness among the advocates of fair acquisition. This has led to increasing land litigations and a gradual rise in the intervention by courts. The progress of RFCTLARR is instrumental in shaping economic revival considering India’s fluctuating growth rates in recent years. There are more than 13,000 cases of land acquisition pending in courts. This raises concerns about the efficacy of the Act and the recent amendments. A conducive relation between fair compensation and economic development is essential in achieving a balance to boost not only economic growth but to aid the overall development of the nation.

References:

[i] Section 10A of the LARR Ordinance, 2014

[ii] https://cprindia.org/sites/default/files/working_papers/MAPPING%20DILUTIONS%20-%20Exec%20Summary.pdf

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Housing Apartheid In Urban Areas: A Constitutional Challenge

28 October, 2019
Neha Kamat

“Excellent brand new 2bhk fully furnished flat, cross ventilation, natural light, cosmopolitan society, no Muslims; with car-parking, on immediate sale, 5^th floor. If interested, pls call___” read the controversial 99acres.com advertisement for a flat in Dadar (East), Mumbai.[1] This generated a furore and resulted in the removal of the advertisement from the website and a statement from them claiming that they were opposed to any kind of discriminatory practice.[2]

Jayanagar is one of the largest residential areas in Bangalore. The population is mostly dominated by upper-class Hindus and is extremely notorious in its treatment towards Muslims and sometimes to Christians too, with respect to letting outhouses.[3] They mask their prejudice mostly in the garb of not letting houses out to non-vegetarians (which is problematic on its own). The tolerance level is higher for Hindu non-vegetarians (preferably non-SC/ST), then Christians, then SC/STs and then Muslims.

These incidents and many more in addition to them provide a propitious opportunity to discuss housing apartheid, which is not peculiar to a particular area or city. The examples stated above display instances of housing apartheid in most cosmopolitan cities in the country. They illustrate discrimination and prejudice, either overtly or covertly, and, in my opinion, are in direct violation of Article 15 of the Constitution of India[4].

The concept of housing apartheid is elucidated herein by first discussing the infamous Supreme Court case, Zoroastrian Co-operative Housing Society Limited v. District Registrar Co-operative Societies (Urban),[5] which allowed for setting up of segregated housing societies, and then proceed to evaluate the constitutional provisions in the context of right to housing, for Muslims in particular, and finally query into the feasibility of regulating the private sphere in this context.

The case

In the Zoroastrian Co-operative Housing Society Limited case,[6] members of the Parsee community established a housing society and limited membership to the co-operation, through a bye-law, only to persons belonging to that community. The Respondent applied to the society, seeking permission to demolish the building and use the space for construction of a commercial building. Permission was not granted as the bye-laws of the society did not allow for the use of the property for commercial purposes. Subsequently, when he applied for permission to construct residential flats to be sold to Parsees, he was permitted to go ahead. When he entered into negotiations with a builders’ association for sale of property, he violated the restriction placed upon him with respect to not allowing membership of non-Parsees in the co-operative society. The matter reached the High Court of Gujarat when the society challenged such a violation. The High Court rejected the claim of the society and held that restricting membership would amount to a violation of the right to property and Article 300A. Subsequently, the society went on appeal to the Supreme Court of India, wherein the claim was upheld and the court held that the bye-law was not in contravention with Section 4 of the Gujarat Co-operative Societies Act which laid down that any bye-law which contravenes public policy would not be recognised. The court’s understanding of this provision was that public policy has to be located within the confines of the Act and not look for constitutional principles or provisions unless explicitly provided by the Act. This judgement also held that a co-operative society does not come under the fold of a ‘state’ under Article 13 of the Constitution of India[7] and accordingly, a fundamental rights challenge cannot be held valid as they are attracted only when a state action contravenes these rights.

This is an extremely verticalist interpretation of the Constitution[8] and potentially bad in law. By taking this approach, the court has completely disregarded the obligation of non-state actors in not violating fundamental rights. For example, Article 17 of the Constitution[9] would be rendered a toothless provision if it is not enforceable against non-state actors. Another example that is closer to the topic in discussion is the case of Vishaka v. State of Rajasthan,[10] wherein, the Supreme Court issued guidelines and norms to be followed in order to prevent instances of sexual harassment against women at workplaces. Observance of these guidelines would not have been effective if state actors were the only bodies expected to do so. Horizontal application of fundamental rights, i.e., a rights challenge enforceable against both state and non-state actors, was etched out clearly in this case.

Right to housing

The Supreme Court has endorsed a segregationist view by allowing community based housing, despite religion being an explicitly mentioned ground for non-discrimination.[11] The Indian society has undergone the trauma of partition, and in this framework, it is important and would be a highly mature approach if consideration is given to what it means for a minority community to practice, profess and propagate their religion, without having the fear of being discriminated against, and the degree to which the right to dignity may enable an individual or a group of persons to enjoy the right to freedom of religion without the expectation and fear of either implicit or visible manifestations of hate and incitement to religious hatred.

The ease with which the Supreme Court allowed for such a discriminatory practice based on a specified ground to pass gives a huge leeway for other discriminatory practices based on non-specified grounds to be carried out, such as refusing housing on grounds such as HIV status, sexual orientation, disability, language etc.[12]

What can be done about it?

The Justice Sachar Committee Report (Report on Social, Economic and Educational Status of the Muslim Community of India), 2006 was submitted by the expert level group set by the Ministry of Minority Affairs.[13] It was recommended by this report that an Equal Opportunities Commission (EOC) be set up to keep a check on discrimination against minorities. The Madhava Menon Committee was set up in order to examine and analyse the structure and functioning of the EOC. This committee proposed the draft EOC Bill in 2008.[14] The Union Cabinet on 20 February 2014 gave its nod to the setting up of this Commission.[15]

While this Commission seeks to make a paradigm shift in the way equality is understood in the traditional sense, it is also onerous on the Commission to not exclude the housing sector from its immediate scope. Several critics have opined that such an Act would pervade into the private sphere of the landlord with respect to the choices that he/she would want to make about who to let out the house to. However, with the horizontal application of fundamental rights, such a problem would not arise as a violation of Article 15 would be enforceable against a private party too.

In arguendo, if such an application of fundamental rights were not allowed then, such a restriction on the choice of the landlord should be considered as a reasonable restriction as a direct co-relation can be made to increasing ghettoization of certain communities due to the practice of housing apartheid.[16]

Conclusion

The Zoroastrian Co-operative Housing Society Limited case narrowed down the scope of constitutional interpretation. However, with the coming of the EOC, the right to housing has to be construed as a constitutional guarantee and only when this is done can the principle of minority protection, which is one of the foremost responsibilities of the Constitution, be said to have been achieved to an extent.

References:

[1] Saurabh Gupta, Mumbai: No Muslims, said online ad for a flat, NDTV, 8 November 2013, available at: http://www.ndtv.com/article/cities/mumbai-no-muslims-said-online-ad-for-a-flat-443130 (Last visited on 18 March 2014).

[2] Mumbai property broker posts online ad, says no to Muslims, IBN Live, 7 November 2013, available at: http://ibnlive.in.com/news/mumbai-property-broker-posts-online-ad-says-no-to-muslims/432717-3-237.html (Last visited on 18 March 2014).

[3] Zainab Bawa, The Shame of a Name, Kafila, 20 March 2009, available at: http://kafila.org/2009/03/20/the-shame-of-a-name/ (Last visited on 18 March 2014).

[4] Prohibition of discrimination on grounds of religion, race, caste, sex or place of birth

(1) The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them

(2) No citizen shall, on grounds only of religion, race, caste, sex, place of birth or any of them, be subject to any disability, liability, restriction or condition with regard to

(a) access to shops, public restaurants, hotels and palaces of public entertainment; or

(b) the use of wells, tanks, bathing ghats, roads and places of public resort maintained wholly or partly out of State funds or dedicated to the use of the general public

(3) Nothing in this article shall prevent the State from making any special provision for women and children

(4) Nothing in this article or in clause ( 2 ) of Article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes

[5] AIR 2005 SC 2306.

[6] Ibid.

[7] Laws inconsistent with or in derogation of the fundamental rights:

(1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void

(2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void

(3) In this article, unless the context otherwise requires law includes any Ordinance, order, bye law, rule, regulation, notification, custom or usages having in the territory of India the force of law; laws in force includes laws passed or made by Legislature or other competent authority in the territory of India before the commencement of this Constitution and not previously repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas

(4) Nothing in this article shall apply to any amendment of this Constitution made under Article 368 Right of Equality

[8] Ashish Chugh, Fundamental Rights: Vertical or Horizontal?, (2005) 7 SCC (J) 9.

[9] Abolition of Untouchability: Untouchability is abolished and its practice in any form is forbidden. The enforcement of any disability arising out of Untouchability shall be an offence punishable in accordance with law

[10] AIR 1997 SC 3011.

[11] Under Article 15 of the Constitution of India.

[12] Tarunabh Khaitan, Reading Swaraj into Article 15: A New Deal for all the Minorities, 2 NUJS L. Rev. 419 (2009).

[13] Justice Sachar Committee Report on the Social, Economic and Educational Status of the Muslim Community of India, available at: http://www.minorityaffairs.gov.in/sites/upload_files/moma/files/pdfs/sachar_comm.pdf (Last visited on 18 March 2014).

[14] Madhav Menon Committee Report on Equal Opportunity Commission: What, Why and How?, available at: http://usindiapolicy.org/documents/inclusion/EOC-Report-MMA.pdf (Last visited on 18 March 2014).

[15] Govt clears Panel to check Discrimination against Minority, The Indian Express, 20 February 2014, available at: communitieshttp://indianexpress.com/article/india/india-others/govt-clears-panel-to-check-discrimination-against-minority-communities/ (Last visited on 18 March 2014).

[16] Rafiq Dossani, The Future of Indian Muslims, Stanford Journal of Muslim Affairs, available at: http://iis-db.stanford.edu/pubs/23275/2011Spring_Avicenna_DossaniRafiq.pdf (Last visited on 18 March 2014).

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Property Rights of an Unborn Child in India

01 August, 2019
Poojith A

While most debates surrounding the existence of a person before birth and after death are theological or philosophical in nature which could go on endlessly, the debate concerning the right of a yet-to-be-existent person needs to be settled conclusively. Especially, ascertaining property rights of an unborn is essential as it has a direct implication on the rights of other existent individuals. Although the Indian laws recognize the existence of an unborn as a legal person, rights are not granted until the birth of the child. Further, while a child in a mother’s womb is considered as a person for many purposes, the extent of the unborn child’s personal or proprietary rights has not been categorically determined. The unborn is regarded by legal fiction as already born for creation of interest in a property.

Moreover, the right to life has been guaranteed as a fundamental right to everyone under Article 21 of the constitution of India, which may be deemed to include an unborn child. Renowned scholars have also opined that ‘the State should not discriminate between persons who have taken birth and persons who are still in the womb of a mother’. Therefore, the State is under an obligation under Article 21 not only to protect the life of an unborn child from arbitrary and unjust destruction but also not to deny it equal protection under Article 14.i

Further, judicial pronouncements have tried to shed some light on the status and rights of an unborn child. In the case of Tagore V. Tagoreii, the Supreme Court observed that foetus/infant in a womb is a person in existence for the purpose of making a gift to an unborn child. Subsequently, in the case of Jabbar V. Stateiii, the Court has also held that the term ‘person’ would include an unborn child in the mother’s womb after seven months of pregnancy. This would mean that it is capable of being spoken of as a person if its body is developed sufficiently.

Property Rights of an Unborn under the Transfer of Property Act, 1884 (“TP Act”):

Under the Transfer of Property Act, 1882, any property (movable or immovable) can be bequeathed in favour of an unborn child. However, an interest created in favour of an unborn is contingent on the occurrence of birth. Further, interest cannot be transferred directly to an unborn, it must be transferred to another living person or a trust must be created for the purpose.

Section 13 of the Transfer of Property Act reads as follows:

‘Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transfer in the property.’

As the above provision defines an unborn child is a child or a baby in its mother’s womb. A person yet to be born does not have any existence and is not counted as a living person, still the property can be transferred to the unborn child/baby.

Section 20 of the Transfer of Property Act reads as under:

‘Where, on a transfer of property, an interest therein is created for the benefit of person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.’

Therefore, an unborn child i.e. an Infant En Ventre Sa mere can attain definite rights and inherit property only if he/she is born alive and such rights can be vested in the hands of his/her trustees.  

Conditions required for the transfer of property to an unborn child:

Absolute interest must be made in the favour of unborn child;

Creation of prior life interest in favour of a person who is in existence on the transfer date.

As soon as the unborn child takes birth, the property rights immediately get transferred in his/her name. Post which he or she will be the sole owner of the property.

Property Rights of an Unborn under the Hindu Succession Act, 1956:

According to the Mitakshara school of law, a son by birth acquires an interest in the ancestral property of the joint family. Whereas, under the Dayabhaga school, the son has no automatic ownership right by birth but acquires it on the demise of his father.iv

The conflict has been somewhat resolved by the express acknowledgment under Section 20 of the Hindu Succession Act, 1956 which recognises the rights of a child in the womb;

‘A child who was in the womb at the time of the death of an intestate and who is subsequently born alive shall have the same right to inherit to the intestate as if he or she had been born, before the death of the intestate, and the inheritance shall be deemed to vest in such a case with effect from the date of the death of the intestate.’

In the case of FM Devaru Ganapati Bhat V. Prabhakar Ganapati Bhatv, the Court held that ‘There is no ban on the transfer of an interest in favour of an unborn person. Section 20 permits an interest being created for the benefit of an unborn person who acquires interest upon his birth. Where the donor gifted the property in favour of the appellant, then living, and also stipulated that if other male children are later born to her brother they shall be joint holders with the appellant, the court also held that such stipulation is not hit by Section 13 of the Act. Creation of such a right is permissible under Section 20 of the Act.

Mulla on Hindu Law, Fifteenth Edition, contains a commentary by the author while dealing with Section 20 of the Hindu Succession Act, 1956 The commentary reads thus:

“It is by fiction or indulgence of the law that the rights of a child born justo matrimonio are regarded by reference to the moment of conception and not of birth and the unborn child in the womb if born alive is treated as actually born for the purpose of conferring on him benefits of inheritance. The child in embryo is treated as in esse for various purposes when it is for his benefit to be so treated. This view is not peculiar to the ancient Hindu law but one which is adopted by all mature systems of jurisprudence. This section recognises that rule of beneficent indulgence and the child in utero although subsequently born is to be deemed to be born before the death of the intestate and inheritance is to be deemed to vest in the child with effect from the date of the death of the intestate.”

Therefore, it is pertinent that the status of a human being in the making and the related rights are expressly clarified through adequate legislation. Judicial pronouncements, though binding, have been varying and evolving. In a country where even a defamed deceased has right to sue, it is essential that the property rights of future citizens are secured adequately.

Image Credits: Photo by Ashton Mullins on Unsplash

It is pertinent that the status of a human being in the making and the related rights are expressly clarified through adequate legislation. Judicial pronouncements, though binding, have been varying and evolving.

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