Real estate regulation upheld for ongoing projects, but tribunal qualification for Judicial Member was struck down and severed.

The Real Estate (Regulation and Development) Act, 2016 was upheld in substantial part as a valid regulatory framework for ongoing projects: registration, disclosure of timelines, escrow-related deposits, extension, revocation, interest, compensation and penalties were treated as prospective regulatory obligations aimed at protecting allottees and ensuring completion, not as unconstitutional retrospective or confiscatory measures. The Court held that no vested right existed to continue an unregulated project, that the restrictions were reasonable, and that interest under Section 18 was compensatory. However, the provision allowing an Indian Legal Service officer who had served as Additional Secretary to be treated as a Judicial Member of the Appellate Tribunal was invalid; that portion was severed to preserve the Tribunal's requirement of a genuine Judicial Member.

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Issues: (i) Whether the impugned provisions of the Real Estate (Regulation and Development) Act, 2016 applying to ongoing projects and related obligations, including registration, disclosure of timelines, deposit of funds, extension of registration, revocation consequences, interest, compensation and penalties, were unconstitutional as retrospective or retroactive and as violating Articles 14, 19(1)(g), 20 and 300A of the Constitution of India; (ii) Whether the exclusion in Section 46(1)(b) permitting a member of the Indian Legal Service who had held the post of Additional Secretary to be treated as a Judicial Member of the Appellate Tribunal was valid.

Issue (i): Whether the impugned provisions of the Real Estate (Regulation and Development) Act, 2016 applying to ongoing projects and related obligations, including registration, disclosure of timelines, deposit of funds, extension of registration, revocation consequences, interest, compensation and penalties, were unconstitutional as retrospective or retroactive and as violating Articles 14, 19(1)(g), 20 and 300A of the Constitution of India.

Analysis: The statutory scheme was read as a whole and in the light of the object of regulating the real estate sector, protecting allottees and ensuring completion of projects in a time-bound manner. The requirement that ongoing projects without completion certificates be registered was held to operate prospectively from the date the relevant provisions came into force, even though antecedent facts were used to attract the new regulatory regime. The provisions concerning declaration of completion timelines, deposit of amounts in a separate account, extension of registration, revocation, continuation of the project under supervision, and payment of interest or compensation were treated as part of a balanced regulatory framework rather than as confiscatory or penal measures. The Court held that the restrictions were reasonable, that no vested right of the promoter to continue an unregulated project was taken away, and that the interest payable under Section 18 was compensatory in character. The penalties under Chapter VIII were also held to be prospective and not to offend Article 20.

Conclusion: The challenge to the impugned provisions on the grounds of retrospectivity, arbitrariness, unreasonable restriction, expropriation and violation of Article 20 failed; those provisions were upheld as constitutionally valid.

Issue (ii): Whether the exclusion in Section 46(1)(b) permitting a member of the Indian Legal Service who had held the post of Additional Secretary to be treated as a Judicial Member of the Appellate Tribunal was valid.

Analysis: The Tribunal under the Act was held to require a real Judicial Member in view of the appellate adjudicatory function entrusted to it. The Court accepted that a person from the Indian Legal Service who had held the post of Additional Secretary did not satisfy the concept of a Judicial Member for this purpose. Applying the principle of severability, the offending part of the definition was separated from the rest of the provision rather than striking down the entire section. The remaining framework of the Tribunal was preserved, and the requirement that the Tribunal must consist of a Judicial Member was emphasized.

Conclusion: The impugned portion of Section 46(1)(b) was struck down, and the Tribunal was required to be constituted with a Judicial Member.

Final Conclusion: The regulatory scheme of the Act was substantially upheld, with the challenge to the principal provisions rejected, but the Tribunal qualification allowing an Indian Legal Service Additional Secretary to be treated as a Judicial Member was invalidated and severed.

Ratio Decidendi: A statute regulating ongoing commercial activity may validly apply to existing projects when it operates prospectively on future conduct and is structured to protect public interest by imposing reasonable, compensatory and balanced obligations; however, a tribunal entrusted with appellate adjudication must include a genuine Judicial Member, and any contrary qualification may be severed as unconstitutional.

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