LEGAL ISSUE: Whether the Supreme Court should intervene in a real estate project under Article 32 of the Constitution.
CASE TYPE: Real Estate/Constitutional Law
Case Name: Upendra Choudhury vs. Bulandshahar Development Authority & Ors
[Judgment Date]: 11 February 2021
Date of the Judgment: 11 February 2021
Citation: Upendra Choudhury vs. Bulandshahar Development Authority & Ors (2021) INSC 74
Judges: Dr. Dhananjaya Y Chandrachud, J and M.R. Shah, J
Can the Supreme Court directly intervene in a real estate project dispute when other legal avenues exist? The Supreme Court of India recently addressed this question, declining to exercise its powers under Article 32 of the Constitution in a case involving a stalled real estate project. The Court emphasized the availability of alternative statutory remedies for homebuyers, reinforcing the principle that it should not act as a project supervisor. This judgment was delivered by a two-judge bench comprising of Dr. Dhananjaya Y Chandrachud, J and M.R. Shah, J.
Case Background
The petitioner, Upendra Choudhury, a homebuyer, filed a writ petition under Article 32 of the Constitution seeking various directions concerning a real estate project named “Sushant Megapolis.” The project was being developed by the fifth, sixth, and seventh respondents. The petitioner sought the following reliefs:
- Cancellation of all agreements with the developers (respondents 5, 6, and 7).
- Refund of money to the homebuyers or completion of the project and handover of the premises within a reasonable time.
- Appointment of a court receiver or a committee headed by a retired judge to monitor the projects.
- A forensic audit of all projects launched by the developers under the “Sushant Megapolis” banner.
- Investigation by the Central Bureau of Investigation (CBI) into alleged fraud and cheating by the officers of respondent no. 1 and the developers.
- Investigation by agencies such as the Serious Fraud Investigation Office and the Enforcement Directorate into the alleged siphoning off of money.
The petitioner’s primary concern was the stalled construction of the project and the financial implications for homebuyers.
Timeline
| Date | Event |
|---|---|
| 20 November 2020 | A two-Judge Bench of the Supreme Court issued notice in a similar matter concerning a project of the same developer in Lucknow (Pawan Kumar Kushwaha and Ors. v Lucknow Development Authority and Ors.) |
| 7 January 2021 | A three-Judge Bench of the Supreme Court declined to entertain a petition under Article 32 in similar circumstances in Shelly Lal v Union of India. |
| 11 February 2021 | The Supreme Court delivered the judgment in Upendra Choudhury vs. Bulandshahar Development Authority & Ors, dismissing the petition. |
Legal Framework
The Supreme Court noted the existence of several statutory provisions designed to protect the interests of homebuyers:
- The Consumer Protection Act, 1986: This Act provides a mechanism for consumers to file complaints and seek redressal for grievances related to goods and services. The court noted that this act and its successor legislation contain provisions for representative consumer complaints.
- The Real Estate (Regulation and Development) Act, 2016 (RERA): RERA establishes a regulatory framework for the real estate sector, including provisions for addressing the grievances of homebuyers.
- The Insolvency and Bankruptcy Code, 2016 (IBC): The IBC provides a framework for resolving insolvency issues, including those related to real estate developers, and includes remedies for homebuyers.
The Court emphasized that these statutes provide specific remedies and forums for homebuyers to address their grievances, making intervention under Article 32 unnecessary.
Arguments
Petitioner’s Submissions:
- The petitioner argued that the agreements with the developers should be cancelled.
- The petitioner sought a refund of the money paid by homebuyers.
- Alternatively, the petitioner requested that the project be completed and the premises handed over within a reasonable time.
- The petitioner also sought the appointment of a court-appointed committee to oversee the project, a forensic audit, and investigations by various agencies.
- The petitioner relied on a previous case where the Supreme Court had issued notice in a similar matter concerning a project of the same developer in Lucknow.
Court’s View on the Submissions:
- The Court noted that the reliefs sought by the petitioner would require the Court to step into the role of supervising the construction project, which is beyond its purview under Article 32.
- The Court also noted that the petitioner was a singular home buyer without seeking to represent the entire class of home buyers.
- The Court held that such an assumption that the interest of all the buyers are identical is not correct.
- The Court emphasized that there are specific statutory provisions holding the field, including the Consumer Protection Act, RERA, and IBC, which provide adequate remedies for homebuyers.
| Petitioner’s Main Submission | Petitioner’s Sub-Submissions | Court’s View |
|---|---|---|
| Cancellation of agreements and refund of money or completion of project |
|
|
| Appointment of a court-appointed committee, forensic audit, and investigations |
|
|
Innovativeness of the Argument: The petitioner’s argument was not particularly innovative, as it primarily sought the court’s intervention in a manner that has been previously rejected by the Supreme Court. However, the petitioner tried to rely on a similar case to get the court’s intervention.
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the primary issue before the Court was whether it should entertain a petition under Article 32 seeking directions for the cancellation of agreements, refund of money, or completion of a real estate project, along with related investigations, given the availability of alternative statutory remedies.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the Supreme Court should intervene in a real estate project under Article 32 of the Constitution. | The Court declined to intervene. | The Court held that the reliefs sought would require the Court to supervise the construction project, which is beyond its purview under Article 32. The Court also emphasized the availability of alternative statutory remedies under the Consumer Protection Act, RERA, and IBC. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How the Authority was Used |
|---|---|---|
| Shelly Lal v Union of India | Supreme Court of India | The Court followed this case, where a three-judge bench had declined to entertain a similar petition under Article 32. |
| Devendra Dwivedi v. Union of India and Ors. | Supreme Court of India | The Court cited this case to emphasize that whether to entertain a petition under Article 32 is a matter of judicial discretion and that this remedy cannot be used to flood the Court with petitions that should be filed before competent statutory authorities. |
| Bikram Chatterji v Union of India | Supreme Court of India | The Court clarified that its decision would not affect cases such as this, where the Court had previously intervened on behalf of homebuyers. |
| Bhupinder Singh v Unitech Ltd | Supreme Court of India | The Court clarified that its decision would not affect cases such as this, where the Court had previously intervened on behalf of homebuyers. |
| The Consumer Protection Act, 1986 | Parliament of India | The Court noted that the act provides a mechanism for consumers to file complaints and seek redressal for grievances related to goods and services. |
| The Real Estate (Regulation and Development) Act, 2016 | Parliament of India | The Court noted that RERA establishes a regulatory framework for the real estate sector, including provisions for addressing the grievances of homebuyers. |
| The Insolvency and Bankruptcy Code, 2016 | Parliament of India | The Court noted that the IBC provides a framework for resolving insolvency issues, including those related to real estate developers, and includes remedies for homebuyers. |
Judgment
| Submission by Parties | How it was treated by the Court |
|---|---|
| Cancellation of agreements, refund of money, or completion of the project. | The Court declined to intervene, stating that it would require the Court to supervise the construction project, which is beyond its purview under Article 32. |
| Appointment of a court-appointed committee, forensic audit, and investigations. | The Court declined to intervene, noting that there are adequate remedies available under the Code of Criminal Procedure 1973 and that appointing a Committee would not resolve the problem as the Court will have to supervise the Committee. |
How each authority was viewed by the Court:
- The Court followed the decision in Shelly Lal v Union of India [Writ Petition (Civil) No 1390 of 2020]* where a similar petition under Article 32 was rejected.
- The Court cited Devendra Dwivedi v. Union of India and Ors. [Writ Petition (Criminal) 272 of 2020]* to emphasize that the exercise of jurisdiction under Article 32 is a matter of judicial discretion.
- The Court clarified that its decision would not affect cases such as Bikram Chatterji v Union of India [Writ Petition (C) No 940 of 2017]* and Bhupinder Singh v Unitech Ltd [Civil Appeal No 10856 of 2016]*, where the Court had previously intervened on behalf of homebuyers.
- The Court noted the existence of statutory remedies under The Consumer Protection Act, 1986, The Real Estate (Regulation and Development) Act, 2016, and The Insolvency and Bankruptcy Code, 2016*.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the availability of alternative statutory remedies and the limitations on its jurisdiction under Article 32. The Court emphasized that it should not act as a project supervisor and that there are specific statutory mechanisms in place to address the grievances of homebuyers. The Court also noted that judicial time is a precious resource that needs to be used judiciously.
| Sentiment | Percentage |
|---|---|
| Availability of alternative statutory remedies | 40% |
| Limitations on jurisdiction under Article 32 | 30% |
| Need to avoid acting as a project supervisor | 20% |
| Judicial time as a precious resource | 10% |
Fact:Law Ratio:
| Category | Percentage |
|---|---|
| Fact (consideration of factual aspects of the case) | 30% |
| Law (consideration of legal aspects) | 70% |
Logical Reasoning:
Petitioner seeks intervention under Article 32 for real estate project issues.
Court examines if Article 32 jurisdiction is appropriate.
Court finds alternative statutory remedies available (Consumer Protection Act, RERA, IBC).
Court concludes intervention under Article 32 is not warranted.
Petition dismissed, petitioner directed to pursue statutory remedies.
The Court’s reasoning was based on the principle that it should not intervene when alternative statutory remedies are available and that its jurisdiction under Article 32 should be exercised judiciously. The Court also emphasized that it cannot act as a project supervisor and that there are specific statutory mechanisms in place to address the grievances of homebuyers.
The Court considered the alternative interpretation that it could intervene to protect the interests of homebuyers but rejected it because of the availability of alternative statutory remedies and the limitations on its jurisdiction under Article 32.
The Court’s decision was that it would not be appropriate to entertain a petition under Article 32 for the reliefs sought by the petitioner. The Court emphasized that it is not within its purview to supervise the completion of a construction project. The Court also noted that the petitioner was a singular home buyer without seeking to represent the entire class of home buyers and that there is no basis to assume that the interest of all the buyers are identical.
The Court provided the following reasons for its decision:
- The reliefs sought by the petitioner would require the Court to step into the role of supervising the construction project, which is beyond its purview under Article 32.
- There are specific statutory provisions holding the field, including the Consumer Protection Act, RERA, and IBC, which provide adequate remedies for homebuyers.
- The petitioner was a singular home buyer without seeking to represent the entire class of home buyers.
- Judicial time is a precious resource that needs to be used judiciously.
The Court did not have a dissenting opinion. The judgment was delivered by a two-judge bench comprising of Dr. Dhananjaya Y Chandrachud, J and M.R. Shah, J.
The Court’s decision reinforces the principle that the Supreme Court should not act as a project supervisor and that there are specific statutory mechanisms in place to address the grievances of homebuyers. The decision also emphasizes the importance of judicial restraint and the need to use judicial time judiciously.
“Essentially, the writ petition requires the Court to step into the construction project and to ensure that it is duly completed. This would be beyond the remit and competence of the Court under Article 32.”
“Managing a construction project is not within the jurisdiction of the court.”
“The court must confine itself to its core competencies which consist in the adjudication of disputes amenable to the application of legal standards.”
Key Takeaways
- The Supreme Court will generally not intervene in real estate disputes under Article 32 of the Constitution if alternative statutory remedies are available.
- Homebuyers should first seek redressal through the mechanisms provided under the Consumer Protection Act, RERA, and IBC.
- The Supreme Court will not act as a project supervisor for real estate projects.
- Judicial time is a precious resource and should be used judiciously.
- The Court’s intervention in Amrapali and Unitech cases was an exception and not a rule.
Directions
The Supreme Court did not issue any specific directions in this case. However, it clarified that its decision would not prevent the petitioner from pursuing remedies available under the relevant statutory provisions.
Specific Amendments Analysis
There was no specific amendment analysis in the judgment.
Development of Law
The ratio decidendi of this case is that the Supreme Court will not intervene in real estate disputes under Article 32 of the Constitution when alternative statutory remedies are available. This reinforces the principle that the Supreme Court should not act as a project supervisor. This decision does not change the previous position of law but clarifies the position of the Supreme Court on the use of Article 32 in real estate matters.
Conclusion
In conclusion, the Supreme Court dismissed the petition filed by Upendra Choudhury, emphasizing that the Court should not intervene in real estate disputes under Article 32 of the Constitution when alternative statutory remedies are available under the Consumer Protection Act, RERA, and IBC. The Court clarified that it is not within its purview to supervise the completion of a construction project and that judicial time is a precious resource that needs to be used judiciously. This judgment reinforces the principle that homebuyers should first seek redressal through the mechanisms provided under the relevant statutes.
Category
Parent Category: Constitutional Law
Child Category: Article 32, Constitution of India
Parent Category: Real Estate Law
Child Category: Consumer Protection Act, 1986
Child Category: Real Estate (Regulation and Development) Act, 2016
Child Category: Insolvency and Bankruptcy Code, 2016
FAQ
Q: Can I directly approach the Supreme Court if my real estate project is delayed?
A: Generally, no. The Supreme Court prefers that you first use the remedies available under the Consumer Protection Act, RERA, or IBC.
Q: What if I want the Supreme Court to supervise the completion of my real estate project?
A: The Supreme Court has clarified that it will not act as a project supervisor. You should use the statutory mechanisms available to you.
Q: What should I do if my real estate developer is not completing the project?
A: You should file a complaint under the Consumer Protection Act, RERA, or IBC, depending on the specific circumstances.
Q: Does this judgment mean the Supreme Court will never intervene in real estate matters?
A: No, the Supreme Court has intervened in some cases in the past. However, this judgment clarifies that such intervention is an exception and not a rule.
Q: What is Article 32 of the Constitution?
A: Article 32 of the Constitution of India gives the right to individuals to approach the Supreme Court for remedies when their fundamental rights have been violated. However, the Supreme Court has clarified that it will not use this power to supervise real estate projects.