M/s. T. Bhimjyani Realty Pvt. Ltd. v. Mr. Vineet Sachdeva & Anr.

(i) It is the case of the Respondents that he booked Flat No. C-

802, 8th Floor in Tower C Olivia, Neelkanth Woods, Thane for total consideration of Rs.1,78,57,918/-. Accordingly, allotment letter dated 11th November 2014 was issued. The allotment letter specifically acknowledges receipt of an amount of Rs.18,52,009/-. It is the case of the Respondent that the aggregate payment of Rs.1,58,74,604/- has been made to the Appellant, who is the promoter. The said payment is more than 85% of the consideration. In fact, it is the case of the Respondents-allottee that on the basis of details of amount as annexed to the Certificate dated 10th June 2019 issued by Mr. Jayesh Vora, Chartered Accountant of the Appellant that the total payment made by the Respondents-Allottee to the Appellant is to the extent of Rs.1,65,43,821/-.

(ii) It is the case of the Respondents that inspite of making said payment, the Appellant-promoter failed to handover possession of the said flat. The Respondents have also relied on reminder emails from the Appellant asking the Respondents to pay the stamp duty for the agreement for sale and registration. These emails are on Pages No.19 and 20 of the Compilation of Documents filed by the Appellant. By the said emails, the Appellant had sent reminders to the Respondent No.1 to complete the necessary formalities of stamp duty and registration with respect to the said Flat No.802 booked with the Appellant by the Respondents. The said emails are dated 8th May 2018, 18th July 2018, 19th December 2018 and 20th December 2018. Accordingly the stamp duty of Rs.10,71,600/- and registration charges of Rs.30,000/- were paid by the Respondents on 29th December 2018.

(iii) Thereafter the Respondent sent email on 2nd April 2019 and

(iv) The Respondents i.e. allottee in or about May 2019, filed a complaint under Section 31 of the RERA (pages 8 to 20 of the compilation).

(v) The present Appellant i.e. the promoter filed Reply dated

11th June 2019 to the said complaint. The contentions raised by the Appellant is that the Respondent-Complainant is not an allottee within the meaning of RERA and consideration purportedly made by the Complainant is nothing but an amount diverted from various sister concerns of the Appellant. The contention raised is that the money advanced as consideration of the subject flat is that of the Appellant and not that of the Complainant. It is the case of the Appellant that the Appellant has not received any consideration towards the subject flat and therefore the RERA Authority has no jurisdiction to try, entertain and dispose of the said complaint. It is the contention of the Appellant that various amounts transferred to the Respondent No.1 by various sister concern companies, was towards services to be offered by the Complainant which he never offered. However, as at the relevant time the Respondent No.1 was in the office of Appellant – Company, he misused his position and sent emails to create false case of the allotment of subject flat by the Appellant in favour of the Respondents. It is contended by the Appellant that the huge siphoning of funds and other financial irregularities were committed by the Respondents and after coming to know about the same, it was noticed that the fraud has been committed. The relevant contentions are raised in Paragraph Nos.7(i) to 7(s) of the said reply, which reads as under:- “(7)...

(i) The Respondents state that the Respondents through T. Bhimjyani Warehousing Cold Chain Pvt. Ltd. which was formerly known as Tiger Warehousing Cold Chain Pvt. Ltd. used to hold own 80% of the equity and over a period of time, it got diluted to 34.22%. The Respondent further states that the Respondents group company is a part owner of the said SLI Pvt. Ltd. and therefore the Respondent is very much concerned in respect of the state of affairs and financial propriety of the said company. The Complainant was given 26.14% equity, majority of which was given against the consultancy fees and the complainant was given the said apartment in lieu of the performance in managing the various private equity investments. (j) The Respondents state that the Respondents time and again enquired about the shareholding in the said company but the complainant never informed about the same to the Respondent. (k) The Respondents state that the Respondents were never informed about the Forensic Audit Report by the Complainant and when the Respondents noticed the huge siphoning of funds and other irregularities by the Complainant and the other management who were involved in criminal wrong doing, the Respondent started enquiring for the same.

(l) The Respondents states that the Respondents enquired for the Forensic Report and the details of the fraudulent activities. Hereto annexed and marked as "Exhibit A" is the copy of Forensic Auditor BDO India LLP.

(m) The Respondent further states that in Chapter 7 of the aforesaid report, the Auditor has observed that they had received the MIS statements as provided to them for the review period of 17 months during the tenure of the complainant. The MIS statements and the letter of the Complainant with the trial balance and have summarised that an under-reported loss of Rupees 945/- lakhs has occurred in review period. (n) The Respondent states that the aforementioned audit report clearly show that operations in the said company have been consciously and systematically mismanaged. The Respondent further states that the Complainant is the key Managerial Personnel in the said company and is responsible for the affairs of the said company during the relevant period in which the audit has been conducted. The Respondent further states that the Complainant has systematically embezzled the aforementioned sums for his personal gain at the expense of the company. (o) The Respondent states that the Complainant has misused the position as director of the said company and has conspired to undervalue the profits made by the company and show exaggerated expenses in order to cause loss to the said company and its shareholders. The Respondent further states that the Complainant had made false representations within the books of accounts of the company and had forged and fabricated same in order to suppress the Complainant's misdeeds within the company. (p) The Respondent states that the complainant, Mr. Vineet Sachdeva was functioning as a consultant for the group companies such as T Bhimjyani Realty Pvt. Ltd., T Bhimjyani Warehousing Cold Chain Pvt. Ltd. and Neelkanth Propinfra LLP. The Complainant Mr. Vineet Sachdeva, by misusing his position as a consultant had asked the Group Companies of the Respondent to make certain payments to several companies. The total amount of money paid at the behest of the Complainant was to the tune of Rs.3.50 crores approximately. The Respondent states that the Complainant represented to the Respondent that all these payments are in lieu of consultancy charges against which the Complainant would secure the Respondent's group companies interests in the respective company viz. SLI Pvt. Ltd. The Respondent states that the Respondent is annexing C.A Certificates of the aforementioned payments made at the behest of the Complainant amounting to Rs.3.50 Crores approximately. The Respondent further states that the Complainant turned the amount of Rs.1,65,43,821/- towards the consideration of the said apartment but the Respondent neither received the services nor the consideration for the said apartment since the Complainant has failed his fiduciary capacity as a consultant of Respondent's group company and has partaken in the deliberate systematic loss and embezzlement within SLI Pvt. Ltd. Hereto annexed and marked as "Exhibit b" Colly is the copy of C.A. Certificates certifying Payment to the Complainant and Entities in which the Complainant is interested and payments received from the Complainant towards the said apartment respectively. (q) So also the Complainant had asked the Respondent's Group Company T Bhimjyani Warehousing Cold Chain Pvt. Ltd. to make payments to the tune of Rs.20 lakh to JSV Enviro Farms Pvt. Ltd. The Complainant Vineet Sachdeva had represented that the said Company was the owner of a Large tract of land for an Agro Business. On the basis of the said representation, a sum of about Rs.50,00,000/- was made by the Respondent's Group Company T Bhimjyani Warehousing Cold Chain Pvt. Ltd. to JSV Enviro Farms Pvt. Ltd. and the Respondent received entire shareholding of the Company. It then transpired that the Complainant Vineet Sachdeva had used Respondent's sister concerns funds to purchase the said land but did not bring it into JSV Enviro Farms Pvt. Ltd. and purchased the said land for his own purposes. Therefore the Complainant used the Respondent's funds to purchase a land for his own personal benefit. (r) The Respondent further states that out of the amount of Rs.3.50 crores, an amount of Rs.78,75,000/is being paid by the Respondent itself which is again being diverted to the Respondent as can be seen through the attached statement. (s) The Respondent further states that the Respondent sent a legal notice to the Directors of the said company including the Complainant on 27/05/2019. Hereto annexed and marked as "Exhibit C" is the copy of the Legal Notice dated 27/05/2019.” (Emphasis added) Thus in effect it is the contention of the Appellant that the Respondents have not paid any consideration for acquisition of subject flat and by siphoning the money from the sister concern of the Appellant show is made of payment of consideration.

(vi) The learned Authority passed Order dated 11th September

2019 in the said complaint. The Authority has inter alia held that on review of certificates of the Chartered Accountant (Form No.3) uploaded by the Respondent i.e. the present Appellant, it is observed that the amount shown in the said Form No.3, collected against the Apartment C-802 tallies with the information provided by the Complainant regarding the amount paid. Therefore, the plea of the Respondent i.e. the present Appellant that the Complainant is not an allottee, is not tenable. It is further observed that the criminal proceedings initiated by the Respondent against the Complainant cannot be a matter of jurisdiction under the RERA and the Respondent has failed to prove that the Complainant is not an allottee in the said project.

(vii) The said Order of Authority dated 11th September 2019

(viii) By Order dated 17th February 2021, the said Appeal was dismissed inter alia on the ground that the learned Appellate Tribunal cannot go into examination of the allegation of the promoter that the transaction of sale of flat has nexus with the position of allottee as consultant with sister concerns of promoter. Thus, in effect what has been held by the learned Appellate Tribunal is that the learned Appellate Tribunal will not go into the aspect of the fraud. The said order of the learned Appellate Tribunal is challenged in these Second Appeals.

(ix) As noted hereinabove, this Court has framed above substantial question of law.

6. In the light of above facts, it is necessary to set out the submissions of the respective Counsels

SUBMISSIONS OF MR.

VISHAL KANADE, LEARNED AMICUS

CURIAE:

7. Mr. Vishal Kanade, learned Amicus Curiae made following submissions:

(i) At the outset, Mr. Kanade, learned Amicus Curiae submitted that he would be addressing only on the substantial question of law framed by this Court and he would not make any submissions on the merits of the case.

(ii) He pointed out Statement of Objects and Reasons of the

(iii) He pointed out provisions of Section 7(1)(d) and Section

9(7) of the RERA, where it is provided that the registration of promoter / real estate agency can be revoked for indulging in fraudulent practices. He submitted that therefore the Authority has been vested with jurisdiction and the Appellate Authority is specifically vested with the jurisdiction to investigate and render finding on allegations of fraud, and the only question is whether the allegation of fraud can only be urged against a Promoter. The issue would be whether the Authority and the Appellate Authority can examine fraud only committed by the promoter or the scope of the same is very wide and the same also includes the fraud committed by the allottee.

(iv) He pointed out various provisions of the RERA, including

Section 31 concerning filing of complaints with the Authority or the Adjudicating Officer. Section 35 concerns powers of Authority to call for information and conduct investigations. He submitted that Section 35 of the RERA gives wide powers to the Authority for the purpose of calling for information and examining witnesses. He submitted that these provisions along with Section 38 of RERA which is concerning powers of Authority, indicates that the Authority has wide powers to issue commissions or summoning / enforcing attendance of persons and then examining them on oath. He submitted that the Authority has wide discretion and based upon facts of a particular case, the Authority can go into issues which may require leading of evidence and examining persons on oath. Section 38 of the RERA provides that the Authority shall be guided by the principles of natural justice. Thus, in a given case, a party would be entitled to seek cross-examination of the person who is examined on oath as well.

(v) He pointed out the provisions of Chapter VII of the RERA and submitted that even the Appellate Authority has been empowered of summoning and enforcing attendance of any person and examining him on oath. Section 53 clarifies that the Appellate Authority would not be bound by the strict provisions of the Code of Civil Procedure, 1908 (“CPC”) and the Indian Evidence Act, 1872 (“Evidence Act”), but have powers as are vested in a Civil Court under CPC inter alia for the purpose of receiving evidence on affidavits or issuing commissions for the examinations of witnesses or documents.

(vi) He pointed out Section 58 of the RERA, which provides that an Appeal challenging the Order of the Appellate Tribunal can lie only to the High Court on any one or more of the grounds specified in Section 100 of CPC.

(vii) He submitted that thus the scheme of the Act shows that:

(a) The Act provides a comprehensive dispute resolution mechanism in proceedings filed by/against allottee, promoter or real estate agent. (b) The Authority is the court of first instance. The Appellate Authority is bound by principles of natural justice and in appropriate cases and summon a witness/examine him/her on oath. Thus, it is submitted that the appellate authority is akin to a first appellate court having powers to re-appreciate evidence and in a given case, can permit additional evidence to be brought on record in appeal. The same is in sync with provisions of Order XL Rule 27 of the CPC.

(c) Lastly, the High Court shall exercise jurisdiction only in cases where the appeal raises substantial question of law as contemplated by Section 100 of CPC. It is submitted that this is an important marker, which shows that the Appellate Authority is the last fact-finding forum.

(viii) He submitted that there are no fetters put on the Authority or Appellate Authority while adjudicating complaints brought before it. The width of the powers vested in the Authority or Appellate Authority show that the intention of the legislature was not bound the Authority or Appellate Authority in a summary investigation and refuse to look into issues which require a more detailed scrutiny or even require leading of evidence. He submitted that the intention of the legislature appears to be that the Authority or Appellate Authority should exercise their powers judiciously and as necessary on a case to case basis.

(ix) He pointed out Section 79 of the RERA which bars the jurisdiction of Civil Courts in respect of matters which the Authority under the Act are empowered to adjudicate. He submitted that the Authority or Appellate Authority are well within their jurisdiction to adjudicate case of the Applicant and the rival defence of the Respondent and the same will include a plea of fraud raised either by the Applicant or Respondent.

(x) He submitted that the RERA does not also have any Section which restricts the scope of enquiry, like Section 24 of the Maharashtra Rent Control Act, 1999 (“Rent Act”). He submitted that Explanation (b) to Sub Section 3 of Section 24 of the Rent Act, prohibits the Competent Authority from going behind the contents of an agreement of license in writing that is presented for. He submitted that there is no such restriction before the Authority established under the said Act. If any party contends that a forged document is produced or the transaction is fraudulent, then the Authority is well empowered to look into such defense.

(xi) Mr. Kanade, learned Amicus Curiae relied on the decision of this Court in Neelkamal Realtors Suburban (P) Ltd. v. Union of India[1] and more particularly on Paragraph Nos.206 to 209 and submitted that the intention of legislature must be found by reading the statute as a whole and that every clause of a statute should be construed with reference to the context and other clauses of the Act so that as far as possible to make consistent enactment of the whole statute or series of statutes relating to the subject matter. He submitted that it cannot be the intention of the legislature that complaints against promoters involving allegations of fraud can be looked into by the Authority but a converse situation is not contemplated under the Act. He submitted that the scope of Section 7 and Section 9 of the said Act make a specific reference to fraud / fraudulent practice.

(xii) Mr. Vishal Kanade, learned Amicus therefore submitted that the

Authority constituted under Section 20 of the RERA and RERA 1 2017 SCC OnLine Bom 9302: (2018) 1 AIR Bom R 558 Appellate Tribunal constituted under Section 43 of the RERA, has jurisdiction to examine whether the transaction which is the subject matter of the complaint is fraudulent.

V. SUBMISSIONS OF MR.

HARSHAD BHADBHADE, LEARNED

COUNSEL FOR THE APPELLANT:

8. Mr. Bhadbhade, learned Counsel on behalf of the Appellant raised following submissions:-

(i) He submitted that if the scheme of the Act is seen, then it is clear that the Act provides mechanism for dispute redressal between the Promoter and Allottee. He pointed out Sections 11(5), 13, 18, 19 and 31 of the Act along with Rule 10 of the Maharashtra Real Estate (Regulation And Development) (Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest And Disclosures on Website), Rules, 2017 (“Said Rules”). He submitted that as per the provisions of the said Act various responsibilities cast on Developer as well as Allottee. He submitted that relief sought in the complaint filed by the Respondent is that the Appellant be forthwith directed to enter into register Agreement for Sale for Flat No.802, C Wing, Olivia project with date of possession as May 2019 and that the Respondent be directed to compensate the Complainant for an amount of Rs.1,00,000/-. He submitted that the said Agreement for Sale is to be executed in the format provided under Rule 10 of said Rules and the contents of draft AFS are binding on both the parties. He submitted that in such circumstances it was incumbent upon the Allottee to prove that the contract is legal, valid and subsisting and that the consideration of the contract is also valid. He submitted that while allowing the complaint and passing relief in favour of the Respondent, the Authority will have to go into the question whether the consideration for the contract is legal, valid and subsisting or not. He relied on Section 23 of the Indian Contract Act, 1872 (“Contract Act”). He submitted that the effect of the Order passed by the learned Authority as confirmed by the learned Appellate Tribunal is that it has been held that the Agreement is legal, binding, valid and required to be executed and on the other hand it has been held that it has no jurisdiction to see whether the consideration for such Agreement is valid or not.

(ii) He submitted that if this is the correct approach, then the result is that the legality of an agreement without holding an inquiry in respect of legality of its consideration gets decided. He submitted that in fact in this particular case the money which was supposed to have been paid by the Respondent was actually the money of the present Appellant and secured by the Respondent by playing fraud on the Appellant and other sister concern companies of the Appellant.

(iii) He submitted that the contention of the Respondent that only fraud played by the promoter can be looked into and not by the Respondent is incorrect. He submitted that if the said argument is accepted, then the Authority has powers to investigate, however, the same is restricted to investigation against the promoter. He submitted that reading of the provisions of the Act do not show that all power of enquiry is restricted only with respect to the fraud committed by the promoter. He submitted that Section 31 of the Act contemplates filing of complaints with the Authority or the Adjudicating Officer for any violation or contravention of the provisions of this Act or the Rules and Regulations made thereunder against any promoter, allottee or real estate agent.

(iv) He relied on Section 79 of the RERA and submitted that there is bar of jurisdiction to the Civil Court. He submitted that if the contention raised by the Respondent is accepted as the jurisdiction of the Civil Court is barred, then in that case if the promoter’s contention is that allottee has created some documents by playing fraud and on the basis of said documents if allottee is seeking prayer in the complaint filed, then the Authority will have no jurisdiction to investigate whether the claim of the allottee can be allowed and its jurisdiction to investigate the fraud played by the allottee and the same will affect the administration of justice. He submitted that in the interest of justice it will have to be held that the Authority as well as Appellate Authority has power to investigate to the full extent if it is the contention of the promoter that the allottee has played fraud. He submitted that fraud vitiates everything and that contract becomes voidable at the instance of the Appellant. He relied on the decision of the Supreme Court in the case of Meghmala v. G. Narasimha Reddy[2].

(v) He pointed out detailed contentions raised by the present

Appellant in Reply dated 11th June 2019 filed in said Complaint and particularly on Paragraph Nos.7(i) to 7(s) of the same. He submitted that therefore the Competent Authority can adjudicate the contention of the Appellant that the Respondent has played fraud and the suit transaction is fraudulent. He submitted that the Authority as well as the RERA Appellate Tribunal have powers and authority to inquire into the fraud alleged by the promoter.

(vi) He submitted that as in this case the Authority as well as

Appellate Tribunal has not considered the contention of the Appellant regarding fraudulent nature of the transaction, it is necessary to remand back the matter to the Authority.

SUBMISSIONS OF MR.

KUNAL MEHTA, LEARNED COUNSEL FOR

THE RESPONDENTS:

9. Mr. Kunal Mehta, learned Counsel for the Respondents raised following contentions:

(i) He submitted that the Respondent/Allottee had purchased from the Appellant, Flat No. 802, on 8th floor in Tower C Olivia having carpet area of 1350 sq.ft. (“said premises”). This was in the Neelkanth Woods Olivia, a project consisting of a building having three separate wings A, B and C. After receiving an aggregate sum of Rs.1,65,43,821/from the Respondent out of total consideration of Rs.1,78,57,918/-, the Appellant has sought to wrongfully deprive the Respondent of his entitlement on legally untenable grounds. He submitted that issuance of allotment letter, issuance of receipt by the Appellant acknowledging receipt of Rs.1.67 Crores from the Respondent and letter from the Appellant calling upon the Respondent to pay stamp duty on the agreement for sale, are undisputed facts. He submitted that the case of the Appellant is that the Respondent had committed fraud upon the Appellant’s sister concerns since he had advised them to invest money in a company known as “Schedulers Logistics India Private Limited” and thereafter it had been discovered that the said company was being mismanaged. Therefore, the Appellant is seeking to recover damages and losses allegedly suffered by the sister concern company of the Appellant from the Respondents. He pointed out the correspondence on record and submitted that the documents clearly show that no case of fraud has been made out. He submitted that the factual position clearly shows that the Respondent is an allottee and paid Rs.1.67 Crores towards the said premises. He submitted that in spite of making more than 85% of the payment, the Appellant had failed to execute the Agreement for Sale and hand over the possession of the suit premises and is not paying interest for delayed possession, which is absolute and unqualified right of the allottee.

(ii) As far as the question of law framed by this Court, he relied on Paragraph Nos.9, 10 and 11 of the decision of the Supreme Court in Newtech Promoters & Developers (P) Ltd. v. State of U.P.3. He also relied on paragraph Nos. 106, 107, 113 and 114 of the decision of the Supreme Court in Bikram Chatterji v. Union of India 4. He submitted that the Supreme Court in the decision of Newtech (Supra) has held that the procedure to be followed by the Authority is a summary procedure and that the right of an allottee under Section 18 is an indefeasible and unqualified right [Paragraphs 77 and 78].

(iii) He submitted that the word “fraud” occurs in RERA in only two places i.e. in Section 7(1) (d) and secondly in Section 9(7). He submitted that on the basis of these provisions, it becomes apparent that the Authority has the power to take notice of fraudulent practices committed by a promoter or a fraud committed by a real estate agent. He submitted that the exercise of power upon becoming aware of a fraud being committed by a promoter is very different from the

(iv) He submitted that on the basis of the factual position, in this case the Authority in its Order dated 11th September 2019 has held that the criminal proceedings initiated by the Respondent against the Complainant cannot be a matter of jurisdiction under the RERA. He submitted that the Appellate Tribunal in its Order dated 17th February 2021 in Paragraph No.15 on the basis of factual position that the Promoter has accepted 85% price of the flat including registration charges from the Allottees and issued allotment letter to the Allottee in that context has held that for reliefs under Section 18 of RERA, it is immaterial to find out about the source of money raised by the Allottees to purchase the apartment in the promoter’s project and the promoter can pursue appropriate legal remedy. He pointed out various provisions of the RERA including Sections 13(1), 19, 11, 12, 14, 18, 31, 35, 37, 38, 53, 54, 71, and 79. He submitted that when the above statutory provisions are appreciated, it becomes apparent that the only limited issue a promoter can call upon the Authority to decide is whether: a) the allottee has defaulted in its payment obligations and is liable to pay interest and b) whether the promoter is justified in cancelling the allotment. For this, the promoter can only justify the cancellation if the same is in terms of the agreement for sale.

(v) He submitted that overwhelming objective of RERA is to benefit allottees / consumers and protect them against the frauds committed by promoters in real estate projects. Nature of jurisdiction of Authority and Appellate Tribunal contemplates a summary scrutiny of undisputed facts.

(vi) Right of an Allottee under Section 18 is an indefeasible and also unqualified right. A claim for compensation / damages is not even a debt until adjudicated and decreed by a Civil Court. He submitted that the same would not constitute a valid defense to a proceeding seeking relief on undisputed facts. He relied on the following decisions:

(i) Union of India v. Raman Iron Foundry 5

(ii) Suraj Sanghi Finance Ltd. v. Credential Finance Ltd. 6

(iii) SICOM Limited v. Shree Marathwada Paper Mills Pvt.

(vii) He submitted that in the present case the Respondent as an allottee has been given relief since the Respondent has proved the facts necessary for grant of relief. He further submitted that whatever claim the Appellant may have on the Respondent, the same would only be in terms of money. That has to be independently proved since it does not constitute a debt until proved and granted by a decree of a Civil Court. The Appellant can establish the same in a Civil Court. The claim of the Appellant does not take away the status of the Respondent of being an

6 (2002) 4 Mah LJ 770 allottee. He submitted that undisputed position show that an amount of Rs.1.65 Crores have been accepted by the Appellant as money towards allotment of the said premises.

(viii) He submitted that allegation of fraud has to be pleaded and specific particulars have to be provided. Fraud has to be proved beyond reasonable doubt even in civil proceedings. He relied on the following decisions of the Supreme Court:

(i) Union of India v. Chaturbhai M. Patel & Co. 8

(ii) Electrosteel Castings Ltd. v. UV Asset Reconstruction

(ix) He submitted that the allegation raised by the Appellant to contend that fraud has been played, are so absurd that the same can never constitute a fraud. He submitted that law recognizes different degrees of fraud and, considering the allegation of fraud made in the defense to the complaint, the Appellant’s claim against the Respondent would only be in damages. He relied on the decision of the Supreme Court in Avitel Post Studioz Ltd. v. HSBC PI Holdings (Mauritius) Ltd.10. He submitted that the allegations made by the Appellant do not even constitute fraud, which affect the consent of the promoter at the time of entering into of the contract. He submitted that the contention raised by the Appellant cannot be considered even in a counter claim filed by the promoter.

(x) He submitted that jurisdiction of the RERA Authority or

RERA Appellate Tribunal is limited only to granting the relief in the promoter’s favour as contemplated by Sections 11(5), 19(6) and 19(7) of RERA. He submitted that there is no termination of allotment letter given in favour of the Respondent.

(xi) He submitted that in the light of the relevant legal and factual aspects the position is as under: i) Jurisdictionally, there is no scope for the Authority or the Appellate Authority to decide whether the allottee has committed a fraud by misappropriating the promoters funds or embezzlement etc. The Authority, given the aims and objectives of the RERA and considering the clear statutory limitations on its adjudicatory powers has to only satisfy itself if the Complainant was an allottee and if the promoter is in default of obligations under Section 18. In the present case, the promoter does not dispute: (a) the allotment letter; (b) receipt of Rs.1.67 Crores; (c) issuance of letter to the Respondent; and (d) the Appellant’s letter to the Respondent to pay stamp duty. This is also recorded in this Hon’ble Court’s Order dated 2nd August 2022.

(ii) As such, the Appellant whilst accepting that it has received monies from the Respondent pursuant to an allotment letter and for the suit premises, is seeking to back out of its obligation to execute agreement for sale only because it alleges that the Respondent has allegedly played a fraud on the Appellant’s group companies. A perusal of the correspondence from its group company as well as stand taken by it in reply plainly demonstrates that the Appellant at best and even if its allegations against the Respondent are meritorious (which they are plainly not) can only have a money claim for compensation / damages. Firstly, the Authority cannot decide such a claim because it does not have the jurisdiction to do so. This is apparent from Sections 11, 19, 31 and 71 of RERA. Secondly, it is settled law that a claim for compensation and damages is not a debt until it has been adjudicated upon and decided by a civil court in a suit.

(iii) Moreover, the right of an allottee is indefeasible. As held by the Supreme Court in Bikram Chatterji’s case, homebuyers rights are paramount and will be given preference over all other claims.

(iv) With respect to the question of law framed by this Court,

Mr.Mehta, learned Counsel submitted as follows: (a) The answer to the question of law framed must be that the Authority and Appellate Authority do not have the jurisdiction to decide, whether a transaction which is the subject matter of a complaint is fraudulent, if the flat purchaser before the authority is held to be an allottee of a flat in a real estate project. Whatever counter claims a promoter may have whether it be on the allegation that the allottee has committed a fraud or otherwise, those may be agitated in an appropriate forum. Since RERA mandates a summary procedure and confers limited jurisdiction on the Authority for achieving a specific purpose, no question arises a promoter defending a claim under Section 18 on the basis of a counter-claim which has no connection whatsoever with the terms of the agreement for sale. (b) This however cannot be an absolute proposition. In a given case, if a Complainant approaches RERA on the basis of forged documents, forged signatures on an allotment letter and claims entitlement of an allottee to a unit, obviously, the promoter would be entitled to dispute the status of the Complainant as an allottee and can resist the application. Hence, the fraud must be of such a degree that the Authority can sustain a challenge to the status of a Complainant being an allottee. That however, is a hypothetical scenario. All adjudicatory courts and tribunals have inherent power to reject relief where perjury is committed. In the present case, such a situation does not arise.

(xii) He submitted that the Complainant is admittedly an allottee.

Monies aggregating to 1.67 Crores have been taken from the Respondent and therefore in such case, it would be a travesty of justice, if the Authority refuses relief to the Complainant as Appellant raises the contention of fraud. He submitted that in fact RERA is enacted to avoid such a situation. It is for this reason Section 11(5) of RERA specifies that a promoter can cancel an allotment only in terms of the agreement for sale. No extraneous factors and claims can be cited. Those can be agitated elsewhere. The relief which RERA mandates be given to an allottee must be given irrespective of the counter-claim of the promoter whatever it may be. He submitted that the basic contention of the Appellant / promoter regarding source of funds utilised by the Allottee to pay for the said premises is absurd. Fundamentally, money is fungible. It is not the concern of RERA whether the allottee has used his own funds, funds received from a finance / loan or funds received from the promoter towards legitimate fees for other services provided. If the promoter is unhappy with the services otherwise provided by an allottee, it can claim compensation and damages. It cannot in law contend that its money has been used to pay for a flat. If such an argument were to be accepted, it would be contrary to all settled principles of law and also defeat the very purpose of RERA which is a beneficial legislation to protect flat purchasers from such dishonest claims being made by promoters. Thus, he submitted that the Second Appeals be dismissed.

VII. Fraud Vitiates every solemn Act/ Fraud and Justice Never Dwell

10. Before considering the substantial questions of law raised in this Second Appeal, it is required to be noted that as per the settled legal position fraud vitiates even the most solemn proceedings in any civilised system of jurisprudence. The said aspect is considered in great detail by the Supreme Court in the case of Commr. of Customs (Preventive) v. Aafloat Textiles (I) (P) Ltd. 11. The relevant Paragraphs reads as under:- “11. As noted above, Cestat has not gone into the question whether the SIL involved was genuine or not. It was of the view that the Department has not established that buyer had knowledge that there was any forgery involved. 12 ….

33. In that case it was observed as follows: (Shrisht Dhawan case [(1992) 1 SCC 534], SCC p. 553, para 20) ‘20. Fraud and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton's sorcerer, Comus, who exulted in his ability to, “wing me into the easy-hearted man and trap him into snares”. It has been defined as an act of trickery or deceit. In Webster's Third New International Dictionary fraud in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black's Law Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury's Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act defines fraud as act committed by a party to a contract with intent to deceive another. From dictionary meaning or even otherwise fraud arises out of deliberate active role of representator about a fact which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of the fact with knowledge that it was false. In a leading English case Derry v. Peek [(1889) 14 AC 337: (1886-90) All ER Rep 1 (HL)] what constitutes fraud was described thus: (AC p. 374) “… fraud is proved when it is shown that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false.”

34. This aspect of the matter has been considered recently by this Court in Roshan Deen v. Preeti Lal [(2002) 1 SCC 100: 2002 SCC (L&S) 97], Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [(2003) 8 SCC 311], Ram Chandra Singh case [(2003) 8 SCC 319] and Ashok Leyland Ltd. v. State of T.N. [(2004) 3 SCC 1]

35. Suppression of a material document would also amount to a fraud on the court. (See Gowrishankar v. Joshi Amba Shankar Family Trust [(1996) 3 SCC 310] and S.P. Chengalvaraya Naidu case [(1994) 1 SCC 1].)

36. ‘Fraud’ is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav case [(2003) 8 SCC 311].

37. In Lazarus Estate Ltd. v. Beasley [(1956) 1 QB 702: (1956) 2 WLR 502: (1956) 1 All ER 341 (CA)] Lord Denning observed at QB p. 712, ‘… No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.’ In the same judgment Lord Parker, L.J. observed that fraud vitiates all transactions known to the law of however high a degree of solemnity. (p. 722)” [Ed.: As observed in Commr. of Customs v. Essar Oil Ltd., (2004) 11 SCC 364, pp. 374-78, paras 29-37.] These aspects were highlighted in the State of A.P. v.

11. Thus, what is held by the Supreme Court is that fraud as is well known vitiates every solemn act. Fraud and justice never dwell together. In Black’s Legal Dictionary, fraud is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right. In Webster’s Third New International Dictionary ‘fraud’ in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another.

12. The Supreme Court in the case of S.P. Chengalvaraya Naidu v. Jagannath12, held that a fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is an deception in order to gain by another’s loss. It is a cheating intended to get an advantage. It has been held that a litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the Court as well as on the opposite party. It has been held that the courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. It has been held that a person, who’s case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation.

13. Thus, as per the settled legal position the litigant has to approach the Court with clean hands and a person who approaches the Court with the case based on falsehood, he can be summarily thrown out at any stage of the litigation.

14. Mr. Bhadbhade, learned Counsel for the Appellant has relied on the decision of Meghmala v. G. Narasimha Reddy 13 and more particularly on Paragraph Nos.28 to 33. The said Paragraphs are reproduced herein below: “28. It is settled proposition of law that where an applicant gets an order/office by making misrepresentation or playing fraud upon the competent authority, such order cannot be sustained in the eye of the law. “Fraud avoids all judicial acts, ecclesiastical or temporal.” (Vide S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1: AIR 1994 SC 853].) In Lazarus Estates Ltd. v. Beasley [(1956) 1 QB 702: (1956) 2 WLR 502: (1956) 1 All ER 341 (CA)] the Court observed without equivocation that: (QB p. 712) “No judgment of a court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.”

29. In A.P. State Financial Corpn. v. GAR Re-Rolling Mills [(1994) 2 SCC 647: AIR 1994 SC 2151] and State of Maharashtra v. Prabhu [(1994) 2 SCC 481: 1994 SCC (L&S) 676: (1994) 27 ATC 116] this Court observed that a writ court, while exercising its equitable jurisdiction, should not act as to prevent perpetration of a legal fraud as the courts are obliged to do justice by promotion of good faith. “Equity is always known to defend the law from crafty evasions and new subtleties invented to evade law.”

30. In Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534: AIR 1992 SC 1555] it has been held as under: (SCC p. 553, para 20) “20. Fraud and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It is a concept descriptive of human conduct.”

31. In United India Insurance Co. Ltd. v. Rajendra Singh [(2000) 3 SCC 581: 2000 SCC (Cri) 726: AIR 2000 SC

1165] this Court observed that “Fraud and justice never dwell together” (fraus et jus nunquam cohabitant) and it is a pristine maxim which has never lost its temper over all these centuries.

32. The ratio laid down by this Court in various cases is that dishonesty should not be permitted to bear the fruit and benefit to the persons who played fraud or made misrepresentation and in such circumstances the Court should not perpetuate the fraud. (See Vizianagaram Social Welfare Residential School Society v. M. Tripura Sundari Devi [(1990) 3 SCC 655: 1990 SCC (L&S) 520: (1990) 14 ATC 766], Union of India v. M. Bhaskaran [1995 Supp (4) SCC 100: 1996 SCC (L&S) 162: (1996) 32 ATC 94], Kendriya Vidyalaya Sangathan v. Girdharilal Yadav [(2004) 6 SCC 325: 2005 SCC (L&S) 785], State of Maharashtra v. Ravi Prakash Babulalsing Parmar [(2007) 1 SCC 80: (2007) 1 SCC (L&S) 5], Himadri Chemicals Industries Ltd. v. Coal Tar Refining Co. [(2007) 8 SCC 110: AIR 2007 SC 2798] and Mohd. Ibrahim v. State of Bihar [(2009) 8 SCC 751: (2009) 3 SCC (Cri) 929].)

33. Fraud is an intrinsic, collateral act, and fraud of an egregious nature would vitiate the most solemn proceedings of courts of justice. Fraud is an act of deliberate deception with a design to secure something, which is otherwise not due. The expression “fraud” involves two elements, deceit and injury to the person deceived. It is a cheating intended to get an advantage. [Vide Vimla (Dr.) v. Delhi Admn. [AIR 1963 SC 1572: (1963) 2 Cri LJ 434], Indian Bank v. Satyam Fibres (India) (P) Ltd. [(1996) 5 SCC 550], State of A.P. v. T. Suryachandra Rao [(2005) 6 SCC 149: AIR 2005 SC 3110], K.D. Sharma v. SAIL [(2008) 12 SCC 481] and Central Bank of India v. Madhulika Guruprasad Dahir [(2008) 13 SCC 170:

15. From the above decisions of the Supreme Court following principles emerges as regards jurisdiction of the Court and Tribunal when contentions raised is that the case put up by one party is fraudulent: i. A ‘fraud’ is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. ii. “Fraud” vitiates every solemn act. iii. “Fraud” and justice never dwell together. iv. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. v. “Fraud” is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine. vi. “Fraud” and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. vii. The colour of fraud in public law or administrative law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or Tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. The misrepresentation must be in relation to the conditions provided in a section on existence or nonexistence of which the power can be exercised. viii. In United India Insurance Co. Ltd. v. Rajendra Singh14 the Supreme Court observed that “Fraud and justice never dwell together” (fraus et jus nunquam cohabitant) and it is a pristine maxim which has never lost its temper over all these centuries. ix. The ratio laid down by this Court in various cases is that dishonesty should not be permitted to bear the fruit and benefit to the persons who played fraud or made misrepresentation and in such circumstances the Court should not perpetuate the fraud. The question of law framed in this Second Appeal is required to be decided on the touchstone of the above settled legal position.

VIII. The Scheme of Real Estate (Regulation and Development) Act,

2016:

16. Before considering the contentions raised before this Court, it is necessary to consider the scheme of RERA.

17. Mr. Mehta, learned Counsel for Respondent very vehemently submitted that basically the RERA has been enacted to safeguard the interests of the flat purchasers i.e. Allottees. He submitted that as the promoters were playing fraud on the flat purchasers, RERA has been 14 [(2000) 3 SCC 581: 2000 SCC (Cri) 726: AIR 2000 SC 1165] enacted to safeguard interest of the allottees. He pointed out the decision of the Supreme Court in Newtech Promoters (Supra). He submitted that overwhelming objective of RERA is to benefit allottee/promoters and protect them against the frauds committed by promoters in real estate projects.

18. To consider the scope of RERA, it is necessary to set out the Preamble of the RERA. Preamble of the RERA reads as under:

19. The preamble of RERA reads as under: “An Act to establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment of building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.” Thus, preamble of RERA is very significant and provides as follows:-

(i) To establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector.

(ii) To ensure sale of plot, apartment of building or sale of real estate project, in an efficient and transparent manner.

(iii) To protect the interest of consumers in the real estate sector.

(iv) To establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer.

OBJECT AND REASONS FOR ENACTING THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016

20. The Supreme Court in Newtech Promoters (supra) in Paragraph Nos.[6] to 14 discussed the object and reasons and also scope of the RERA. The said Paragraph Nos.[6] to 14 read as under: “Objects and Reasons of the 2016 Act

6. Over the past two decades, with the growth of population and the attraction of the people to shift towards urbanization, the demand for housing increased manifold. The Government also introduced various housing schemes to cope with the increasing demand but the experience shows that demands of the housing sector could not be meted out by the Government at its own level for various reasons to meet the requirement, the private players entered into the real estate sector in meeting out the rising demand of housing. Though availability of loans, both from public and private banks, become easier, still the high rate of interest and the EMI has posed additional financial burden on the people.

7. At the given time, the real estate and housing sector was largely unregulated and the consequence was that consumers were unable to procure complete information for enforced accountability towards builders and developers in the absence of an effective mechanism in place. Though the Consumer Protection Act, 1986 was available to cater the demand of homebuyers in the real estate sector but the experience shows that this mechanism was inadequate to address the needs of the homebuyers and promoters in the real estate sector.

8. At this juncture, the need for Real Estate (Regulation) Bill was badly felt for establishing an oversight mechanism to enforce accountability to the real estate sector and providing an adjudicating machinery for speedy dispute redressal mechanism and safeguarding the investments made by the homebuyers through legislation to the extent permissible under the law.

9. The Statement of Objects and Reasons of the Act indicates that the primal position of the Regulatory Authority is to regulate the real estate sector having jurisdiction to ensure compliance with the obligation cast upon the promoters. The opening Statement of Objects and Reasons which has a material bearing on the subject reads as follows: “The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardisation and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardisation, has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasised in various forums.

2. In view of the above, it becomes necessary to have a Central legislation, namely, the Real Estate (Regulation and Development) Bill, 2013, in the interests of the effective consumer protection, uniformity and standardisation of business practices and transactions in the real estate sector. The proposed Bill provides for the establishment of the Real Estate Regulatory Authority (the Authority) for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority.”

10. It was introduced with an object to ensure greater accountability towards consumers, to significantly reduce frauds and delays and also the current high transaction costs, and to balance the interests of consumers and promoters by imposing certain responsibilities on both, and to bring transparency of the contractual conditions, set minimum standards of accountability and a fast-track dispute resolution mechanism. It also proposes to induct professionalism and standardisation in the sector, thus paving the way for accelerated growth and investments in the long run.

11. Some of the relevant Objects and Reasons are extracted as under: “4. …..

(d) to impose liability upon the promoter to pay such compensation to the allottees, in the manner as provided under the proposed legislation, in case if he fails to discharge any obligations imposed on him under the proposed legislation; (f) the functions of the Authority shall, inter alia, include—

(i) to render advice to the appropriate Government in matters relating to the development of real estate sector; (ii) to publish and maintain a website of records of all real estate projects for which registration has been given, with such details as may be prescribed;

(iii) to ensure compliance of the obligations cast upon the promoters, the allottees and the real estate agents under the proposed legislation;***

(i) to appoint an adjudicating officer by the Authority for adjudging compensation under Sections 12, 14 and 16 of the proposed legislation;” …”

12. The Bill provides for establishment of the Authority for regulation and promotion of real estate sector, to ensure sale of plot, apartment or building or sale of real estate project in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and provide the adjudicating mechanism for speedy dispute redressal mechanism by establishing the Regulatory Authority and the adjudicating officer and in hierarchy, the Appellate Tribunal for early and prompt disposal of the complaint being instituted primarily by the homebuyers for whom this Act has been enacted by Parliament in 2016.

13. To examine the matter in this perspective, consider what a house means in India. The data shows that about more than 77% of total assets of an average Indian household are held in real estate and it is the single largest investment of an individual in his lifetime. The real estate in India has a peculiar feature. The buyer borrows money to pay for a house and simultaneously plays the role of a financer as building projects collect money upfront and this puts the buyer in a very vulnerable position—the weakest stakeholder with a high financial exposure. The amendment to the Insolvency and Bankruptcy Code, 2018 recognised the home-buyers as financial creditors and the present enactment is the most important regulatory intervention in favour of the homebuyers and it had an impact and with passage of time, has become a yardstick of laying down minimum standards in the market. Earlier, the real estate sector was completely unregulated and there was no transparency in their business profile and after the present enactment, it is open for the potential home-buyers to check if a project is approved under the Act, 2016 that at least gives a satisfaction to a person who is coming forward in making a lifetime investment.

14. That apart, from the project being statutorily regulated, it attaches certain authenticity with regard to completion of the project and a statutory obligation upon the developer and home-buyer to abide by the terms and conditions of the home-buyers agreement and statutory compliance to the mandate of law. In addition, any project which is approved under the Act, 2016 helps the promoter in raising funds from banks and statistics shows that buyers express their satisfaction in approved projects which is beneficial not only to the home-buyers but to the promoters and real estate agents as well.”

21. It is required to be noted that in Paragraph No.13 of the Newtech Promoters (supra), the Supreme Court has considered the peculiar nature of a real estate project, which is implemented by the promoters. On the basis of the available data, it has been observed by the Supreme Court that 77% of the total assets of an average Indian household are held in real estate and it’s the single largest investment of an individual in his lifetime. The peculiar feature of real estate in India has been set out i.e. the flat purchaser borrows money to pay for a house and simultaneously plays the role of a financer as building projects collect money upfront and this puts the buyer in a very vulnerable position – the weakest stakeholder with high financial exposure. The importance of the flat purchasers in the development of real estate project is highlighted by the Supreme Court. It is clear that the promoter develops the property by accepting consideration from the flat purchasers. Most of the flat purchasers pay the money by taking housing loan or loan from the financial institutions and repay the loan along with interest to the financial institutions. The real estate project is financed by the flat purchasers i.e. allottees. Various provisions in the RERA are required to be considered and appreciated from this very peculiar feature of the real estate.

22. From the above discussion of the Supreme Court in Newtech Promoters (supra), it is clear that the RERA has been enacted to achieve the following objects:-

(i) The real estate housing sector was largely unregulated. Consequently the consumers were unable to procure complete information for enforcing accountability towards builders and developers in the absence of an effective mechanism.

(ii) The real estate has been largely unregulated with absence of professionalism and standardization and lack of adequate consumer protection. It was necessary to enact a law for ensuring regulation and promotion of the real estate sector, to ensure sale of flat, apartment or building as the case may be in an efficient and transparent manner and to protect the interest of consumers in the real estate sector.

(iii) By establishing an oversight mechanism to enforce accountability to the real estate sector and providing an adjudicating machinery for speedy dispute redressal mechanism.

(iv) Safeguarding investments made by the home buyers through legislation to the extent permissible under the law.

(v) To ensure greater accountability towards the consumers.

(vi) To significantly reduce frauds and delays and also the current high transaction costs.

(vii) To balance the interests of the consumers and promoters by imposing certain responsibilities on both, and to bring transparency of the contractual conditions, set minimum standards of accountability and a fast track dispute resolution mechanism.

23. Thus, there is substance in the contention of Mr. Mehta, learned Counsel for the Respondent that the main purpose of enacting RERA is to safeguard the interests of the flat purchasers. However, the question is whether even if the main purpose of RERA is to achieve and protect the interests of home buyers whether the RERA Authority established under Section 20 of RERA and the RERA Appellate Tribunal established under Section 43 of the RERA are prohibited from examining the contention raised by the Promoter that fraud has been played.

IX. Whether the Real Estate Regulatory Authority constituted under

Section 20 of the Real Estate Regulation and Development Act, 2016 and Real Estate Appellate Tribunal constituted under Section 43 of the Real Estate (Regulation And Development) Act, 2016 has jurisdiction to examine whether the transaction which is subject matter of the complaint is fraudulent?”

24. It is the main contention of Mr. Mehta, learned Counsel that the enquiry which Authority has to conduct is whether the Complainant as an allottee and the Respondent as promoter had defaulted in performance obligations and then the relief has to be given to the allottee. It is the contention of Mr. Mehta, learned Counsel, as noted herein above, that the Authority and Appellate Authority do not have the jurisdiction to decide, whether a transaction which is the subject matter of a complaint is fraudulent, if the flat purchaser before the authority is held to be an allottee of a flat in a real estate project. Whatever counter claims a promoter may have whether it be on the allegation that the allottee has committed a fraud or otherwise, those may be agitated in an appropriate forum. Since RERA mandates a summary procedure and confers limited jurisdiction on the Authority for achieving a specific purpose, no question arises of promoter defending a claim under Section 18 on the basis of a counter-claim which has no connection whatsoever with the terms of the agreement for sale. As discussed in detail earlier “Fraud” as is well known vitiates every solemn act. “Fraud” and “Justice” never dwell together. “Fraud” is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved. Dishonesty should not be permitted to bear the fruit and benefit to the persons who played fraud or made misrepresentation and in such circumstances the Court should not perpetuate the fraud. If the submissions raised by Mr. Mehta, learned Counsel of the Respondents are examined on the touchstone of these well established principles, it is clear that there is no substance in the said contentions.

25. To examine the contentions raised by Mr. Mehta, learned Counsel it is necessary to consider certain provisions of the RERA. Section 2(c) defines “agreement for sale”. Section 2(d) defines “allottee” and Section 2(zk) defines “promoter”. The said definitions as contained in Sections 2(c), 2(d) and 2(zk) respectively read as under:- “2. Definitions.— In this Act, unless the context otherwise requires,— … (c) "agreement for sale" means an agreement entered into between the promoter and the allottee; (d) "allottee" in relation to a real estate project, means the person to whom a plot, apartment or buildings, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent; … (zk) "promoter" means,—

(i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or

(ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or

(iii) any development authority or any other public body in respect of allottees of— (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or

(iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or

(v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or

(vi) such other person who constructs any building or apartment for sale to the general public. Explanation.—For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made thereunder;”

26. Section 13 of RERA is also relevant, which reads as under: “Section 13: No deposit or advance to be taken by promoter without first entering into agreement for sale.

13. (1) A promoter shall not accept a sum more than ten per cent of the cost of the apartment, plot, or building as the case may be, as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and register the said agreement for sale, under any law for the time being in force. (2) The agreement for sale referred to in sub-section (1) shall be in such form as may be prescribed and shall specify the particulars of development of the project including the construction of building and apartments, along with specifications and internal development works and external development works, the dates and the manner by which payments towards the cost of the apartment, plot or building, as the case may be, are to be made by the allottees and the date on which the possession of the apartment, plot or building is to be handed over, the rates of interest payable by the promoter to the allottee and the allottee to the promoter in case of default, and such other particulars, as may be prescribed”.

27. Rule 10 of the said Rules is also relevant, which reads as under: “Rule 10. Agreement for Sale.- (1) For the purpose of subsection (2) of section 13, the agreements for sale shall be in conformity with the provisions, rules and regulations made there under and shall be in accordance with the model form of agreement at Annexure ‘A’. Nothing in this sub-rule shall be deemed to prevent the promoter to modify the model form of Agreement for Sale at Annexure ‘A’ provided that such agreement is in conformity with the provisions of sub-section (2) of section 13 of the Act and the rules and regulations made there under. (2) Any application letter, allotment letter or any other document signed by the allottee, in respect of the apartment, plot or building, prior to the execution and registration of the agreement for sale for such apartment, plot or building, as the case may be, shall not be construed to limit the rights and interests of the allottee under the agreement for sale under the Act or the rules or the regulations made there under.” Said Rule 10 inter alia specifies that the agreement for sale shall be in accordance with the model form of agreement of Annexure ‘A’.

28. The relevant portion of said model form of agreement at Annexure ‘A’ in the said Rules is as under: “..Anneure ‘A: Model Form of Agreement to be entered into between Promoter and Allottee(s) (See rule 10(1))

EXPLANATORY NOTE This is a model form of Agreement, which may be modified and adapted in each case having regard to the facts and circumstances of respective case but in any event, matter and substance mentioned in those clauses, which are in accordance with the statute and mandatory according to the provisions of the Act shall be retained in each and every Agreement executed between the Promoter and Allottee. Any clause in this agreement found contrary to or inconsistent with any provisions of the Act, Rules and Regulations would be void ab nitio. [In case of plotted development projects, only relevant clauses shall be apply.] MODEL FORM OF AGREEMENT This Agreement made at...........this …….. day of …….. in the year Two Thousand and …….. between ………. having address at ……… hereinafter referred to..........) as "the Promoter of the One Part and (…….…) having address at ……. hereinafter referred to as "the Allottee” (…….) of the Other Part. …….. ……. ……. AND WHEREAS, under section 13 of the said Act the Promoter is required to execute a written Agreement for sale of said Apartment with the Allottee, being in fact these presents and also to register said Agreement under the Registration Act, 1908. In accordance with the terms and conditions set out in this Agreement and as mutually agreed upon by and between the Parties, the Promoter hereby agrees to sell and the Allottee hereby agrees to purchase the (Apartment/Plot) and the garage/covered parking (if applicable) NOW THEREFOR, THIS AGREEMENT WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-

1. The Promoter shall construct the said building/s consisting of basement and ground/stilt,/............ podiums, and........ upper floors on the project land in accordance with the plans, designs and specifications as approved by the concerned local authority from time to time. Provided that the Promoter shall have to obtain prior consent in writing of the Allottee in respect of variations or modifications which may adversely affect the Apartment of the Allottee except any alteration or addition required by any Government authorities or due to change in law. 1(a) (i) The Allottee hereby agrees to purchase from the Promoter and the Promoter hereby agrees to sell to the Allottee Apartment No. …….. of the type …….. of carpet area admeasuring...........sq. mtrs. On ……… floor in the building ……. wing (hereinafter referred to as "the Apartment") as shown in floor in the Floor plan thereof hereto annexed and marked Annexures C-1 and C-2 for the consideration of Rs. including Rs............. being the proportionate price of the common areas and facilities appurtenant to the premises, the nature, extent and description of the common areas and facilities which are more particularly described in the Second Schedule annexed herewith. (the price of the Apartment including the proportionate price of the common areas and facilities and parking spaces should be shown separately).

(ii) The Allottee hereby agrees to purchase from the Promoter and the Promoter hereby agrees to sell to the Allottee garage bearing Nos ……………….. situate at ………... Basement and/or stilt and/or ………….. podium being constructed in the layout for the consideration of Rs. ………………./-.

(iii) The Allottee hereby agrees to purchase from the Promoter and the Promoter hereby agrees to sell to the Allottee covered parking spaces bearing Nos. ……………. situated at …………….. Basement and/or stilt and/or ……. podium being constructed in the layout for the consideration of Rs.___________ 1(b) The total aggregate consideration amount for the apartment including garages/covered parking spaces is thus Rs.---------/- 1(c) The Allottee has paid on or before execution of this agreement a sum of (Rupees …………….) (Rupees ---------------- only) (not exceeding 10% of Rs. the total consideration) as advance payment or application fee and hereby agrees to pay to that Promoter the balance amount of Rs.......) (Rupees ……..) in the following manner:i. (Amount of Rs………../- (…………..)(not exceeding 30% of the total consideration) to be paid to the Promoter after the execution of Agreement. ii. Amount of Rs/-(…......../-) (………….) (not exceeding 45% of the total consideration) to be paid to the Promoter on completion of the Plinth of the building or wing in which the said Apartment is located. iii. Amount of Rs............./- (………..) (not exceeding 70% of the total consideration) to be paid to the Promoter on completion of the slabs including podiums and stilts of the building or wing in which the said Apartment is located. iv. Amount of Rs………./-(……....) (not exceeding 75% of the walls, internal plaster, floorings doors and windows of the said Apartment. v. Amount of Rs…….../- (..............) (not exceeding 80% of the Sanitary fittings, staircases, lift wells, lobbies upto the floor level of the said Apartment. vi. Amount of Rs……….../- (………..) (not exceeding 85% of the external plumbing and external plaster, elevation, terraces with waterproofing, of the building or wing in which the said Apartment is located. vii. Amount of Rs/-(..............) (not exceeding 95% of the total consideration) to be paid to the Promoter on completion of the lifts, water pumps, electrical fittings, electro, mechanical and environment requirements, entrance lobby/s, plinth protection, paving of areas appertain and all other requirements as may be prescribed in the Agreement of sale of the building or wing in which the said Apartment is located. viii. Balance Amount of Rs………./- (…………….) against and at the time of handing over of the possession of the Apartment to the Allottee on or after receipt of occupancy certificate or completion certificate.

29. In view of the above relevant provisions of the REARA, it is necessary to see the relevant provisions of the Contract Act. The relevant provisions are as follows: (i) 13. “Consent” defined.—Two or more persons are said to consent when they agree upon the same thing in the same sense. (ii) 14. “Free consent” defined.—Consent is said to be free when it is not caused by— (1) coercion, as defined in section 15, or (2) undue influence, as defined in section 16, or (3) fraud, as defined in section 17, or (4) misrepresentation, as defined in section 18, or (5) mistake, subject to the provisions of sections 20, 21 and 22. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake. (iii) 17. “Fraud” defined.—“Fraud” means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto of his agent, or to induce him to enter into the contract:— (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief of the fact; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any such act or omission as the law specially declares to be fraudulent. Explanation.—Mere silence as to facts likely to affect the willingness of a person to enter into a contract is not fraud, unless the circumstances of the case are such that, regard being had to them, it is the duty of the person keeping silence to speak, or unless his silence is, in itself, equivalent to speech. (iv) 18. “Misrepresentation” defined.—“Misrepresentation” means and includes— (1) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; (2) any breach of duty which, without an intent to deceive, gains an advantage to the person committing it, or any one claiming under him; by misleading another to his prejudice, or to the prejudice of any one claiming under him; (3) causing, however innocently, a party to an agreement, to make a mistake as to the substance of the thing which is the subject of the agreement. (v) 19. Voidability of agreements without free consent.—When consent to an agreement is caused by coercion,1*** fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true. Exception.—If such consent was caused by misrepresentation or by silence, fraudulent within the meaning of section 17, the contract, nevertheless, is not voidable, if the party whose consent was so caused had the means of discovering the truth with ordinary diligence. Explanation.—A fraud or misrepresentation which did not cause the consent to a contract of the party on whom such fraud was practiced, or to whom such misrepresentation was made, does not render a contract voidable. (vi) 23. What considerations and objects are lawful, and what not.—The consideration or object of an agreement is lawful, unless— it is forbidden by law; or is of such a nature that if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. (vii) 25. Agreement without consideration, void, unless it is in writing and registered,or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.—An agreement made without consideration is void, unless — (1) it is expressed in writing and registered under the law for the time being in force for the registration of 1 [documents], and is made on account of natural love and affection between parties standing in a near relation to each other; or unless (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promiser, or something which the promiser was legally compellable to do; or unless; (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits. In any of these cases, such an agreement is a contract.

30. If the above referred provisions of the RERA and Contract Act are read together, it is clear that the relationship between the Appellant and the Respondents will be as “Promoter” and “Allottee” as per RERA, only if it is proved that the transaction is genuine transaction and not fraudulent transaction and the transaction is for valid and legal consideration and not fraudulent consideration.

31. What is important to note is that allottee in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold or otherwise transferred by the promoter. Thus, the person who has either been allotted, sold or transferred plot, apartment or building is the allottee. Thus, whether a particular person is an allottee is to be determined by the Authority or the Appellate Tribunal by determining whether plot, apartment or building as the case may be has been allotted, sold or otherwise transferred by the promoter and the inquiry necessarily has to be conducted in those aspects. In this particular case, it is the specific case of the Respondents that the Respondents have purchased the subject apartment from the Appellant. Thus, the inquiry necessarily contemplates whether the transaction of sale is a genuine transaction.

32. Thus, even accepting the submission of Mr. Mehta, learned Counsel for the Respondent that the RERA has been enacted to protect the interests of the flat purchasers and that the only question which the Authority / Appellate Tribunal has to record is that the Complainant is an allottee and the promoter has defaulted in performance obligations and then relief has to be granted, clearly show that positive finding is required to be recorded that the complainant is an “allottee”. When there is dispute raised whether the Complainant is an allottee or not, the determination of the question that the Complainant is an allottee, as noted herein above, necessarily includes inquiry and determination of the fact that plot, apartment or building has been allotted, sold or otherwise transferred by the promoter and the transaction is a genuine transaction and not fraudulent transaction. The said inquiry will necessarily include the inquiry whether the consideration or object of an agreement is lawful i.e. the same is not fraudulent. Thus, when a defence is raised by the promoter that the transaction is not a genuine transaction, transaction is without consideration or the transaction is fraudulent and that the Complainant is claiming to be an allottee on the basis of the fraudulent transaction, the Authority / Appellate Tribunal necessarily has to examine the said aspect.

33. It is well settled legal principle that fraud and justice never dwell together. The function of the Court and Tribunal is to impart justice. Thus, the proposition that only fraud committed by the promoter or Real Estate Agent can be examined by the Authority and Appellate Authority established under RERA and not the fraud committed by an allottee is not legal and cannot be accepted.

34. It is true that in the Newtech Promoters (Supra), the Supreme Court observed that nature and jurisdiction of the Authority and Appellate Tribunal is of a summary nature. However, as rightly pointed out by the learned Amicus Curiae that Section 31 which deals with filing of complaints with the Authority or the adjudicating officer, stipulates that complaint can be filed with the Authority or the Adjudicating Officer against any promoter, allottee or real estate agent as the case may be. Thus, Section 31 of the RERA contemplates that the Authority set up under the RERA can adjudicate upon the disputes that may be filed by the promoters also. Mr. Kanade, learned Amicus Curiae has also pointed out Section 35 of the RERA which deals with powers of Authority to call for information and conduct investigations. The said Sections 31 and 35 are quoted herein below for ready reference:- “31. Filing of complaints with the Authority or the adjudicating officer.— (1) Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter allottee or real estate agent, as the case may be. Explanation.— For the purpose of this sub-section "person" shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force. (2) The form, manner and fees for filing complaint under sub-section (1) shall be such as may be specified by the regulations.

35. Powers of Authority to call for information, conduct investigations.— (1) Where the Authority considers it expedient to do so, on a complaint or suo motu, relating to this Act or the rules or regulations made thereunder, it may, by order in writing and recording reasons therefor call upon any promoter or allottee or real estate agent, as the case may be, at any time to furnish in writing such information or explanation relating to its affairs as the Authority may require and appoint one or more persons to make an inquiry in relation to the affairs of any promoter or allottee or the real estate agent, as the case may be. (2) Notwithstanding anything contained in any other law for the time being in force, while exercising the powers under sub-section (1), the Authority shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit, in respect of the following matters, namely:—

(I) the discovery and production of books of account and other documents, at such place and at such time as may be specified by the Authority;

(ii) summoning and enforcing the attendance of persons and examining them on oath;

(iii) issuing commissions for the examination of witnesses or documents;

(iv) any other matter which may be prescribed.” “38: Powers of Authority--. (1) The Authority shall have powers to impose penalty or interest, in regard to any contravention of obligations cast upon the promoters, the allottees and the real estate agents, under this Act or the rules and the regulations made thereunder. (2) The Authority shall be guided by the principles of natural justice and, subject to the other provisions of this Act and the rules made thereunder, the Authority shall have powers to regulate its own procedure. (3) Where an issue is raised relating to agreement, action, omission, practice or procedure that— (a) has an appreciable prevention, restriction or distortion of competition in connection with the development of a real estate project; or (b) has effect of market power of monopoly situation being abused for affecting interest of allottees adversely, then the Authority, may suo motu, make reference in respect of such issue to the Competition Commission of India”

35. Mr. Kanade, learned Amicus Curiae is right in contending that Section 35 of the Act gives wide powers to the Authority for the purpose of calling for information and examine witnesses. He rightly submitted that Section 35 along with Section 38 indicates that Authority has wide power to issue commissions or summoning / enforcing attendance of persons and then examining them on oath which also includes conducting cross-examination of the witnesses. Thus, Section 35 read with Section 38 clearly show that the Authority has wide discretion based upon the facts of a particular case to decide the matter in which the inquiry is to be conducted. Sub Section 2 of Section 38 clearly provides that the Authority shall be guided by the principles of natural justice, and the Authority shall have powers to regulate its own procedure.

36. Thus, although Mr. Mehta, learned Counsel for the Respondent is right in submitting that the nature of inquiry to be conducted by the Authority is of a summary nature, however, Section 35 and Section 38 clearly contemplate, as rightly pointed out by the learned Amicus Curiae, that the nature of inquiry will depend on the facts of each case. In a case where the status of a Complainant is admitted by the promoter as an allottee, then the nature of inquiry will be only to find out whether the promoter has defaulted in performing his obligations or the said enquiry in a given case also may include non-performance of obligation by the allottee. The RERA also contemplates that in a particular case, Promoter also can file complaint. Thus, the nature of inquiry to be conducted by the Authority under RERA will depend on the facts and circumstances of a particular case and no straight jacket formula can be applied.

37. It is true that generally the nature of inquiry to be conducted by the Authority is of summary nature, however, the Authority has got wide powers to conduct the inquiry, to decide the issues which are raised before the Authority including in a given case like the present one, that the transaction which is the subject matter of the complaint is genuine transaction or otherwise to determine whether the Complainant is an allottee. If such contention is being raised, the said contention has to be decided by the Authority.

38. It is required to be noted that Section 32 specifies “Functions of Authority for Promotion of Real Estate Sector” and provides that protection of interest of the allottees, promoter and real estate agent is one of the function of the Authority. It is true that RERA has been enacted primarily to protect the interests of the allottee, however, that does not mean that the interests of the promoter is to be completely ignored, particularly when the promoter alleges fraud.

39. In fact, various provisions of RERA clearly indicate that the RERA Authority as well as the RERA Appellate Tribunal have wide powers to investigate the claim of any person i.e. allottee or of Promoter that other person has played fraud.

40. It is also required to be noted that Section 79 of the RERA clearly provides that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the Adjudicating Officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

41. Thus, the learned Amicus Curiae is right in contending that the scheme of the Act which prescribes power of the Authority as set out earlier, as well as the power of the Appellate Tribunal under Section 53, even the Appellate Tribunal is not bound by the strict rigours of the CPC or the Evidence Act, but shall same powers as are vested in a civil court under the CPC inter alia for the purpose of receiving evidence on affidavits or issuing commissions for the examinations of witnesses or documents. Section 53 of RERA reads as under:- “53. Powers of Tribunal.— (1) The Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908) but shall be guided by the principles of natural justice. (2) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure. (3) The Appellate Tribunal shall also not be bound by the rules of evidence contained in the Indian Evidence Act, 1872 (1 of 1872). (4) The Appellate Tribunal shall have, for the purpose of discharging its functions under this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) in respect of the following matters, namely:— (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents;

(c) receiving evidence on affidavits;

(d) issuing commissions for the examinations of witnesses or documents;

(e) reviewing its decisions; (f) dismissing an application for default or directing it ex parte; and (g) any other matter which may be prescribed. (5) All proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193, 219 and 228 for the purposes of section 196 of the Indian Penal Code (45 of 1860), and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).”

42. Thus, the powers of the Authority and the powers of the Appellate Tribunal clearly show that both, the Authority and the Appellate Tribunal are guided by the principles of natural justice and have powers to regulate its own procedure.

43. Section 58 of the RERA provides that Appeal lies to the High Court, aggrieved by any decision or order of the Appellate Tribunal and the said Appeal lies to the High Court on any one or more of the grounds specified in Section 100 of the CPC. In Paragraph No.18 of the written submissions filed by the learned Amicus Curiae the scheme of RERA relating to the Authority, Appellate Authority and the High Court is very succinctly set out. Said Paragraph No.18 reads as under:- “18. The aforesaid scheme of sections relating to the Authority, Appellate Authority and the High Court essentially exercising jurisdiction as a second appellate authority bound by rigors of section 100 of CPC indicates that: a) The Act provides a comprehensive dispute resolution mechanism in proceeding filed by/against allottee, promoter or real estate agent. b) The Authority is the court of first instance. The Appellate Authority is bound by principles of natural justice and in appropriate cases and summon a witness/examine him/her on oath. Thus, it is submitted that the appellate authority is akin to a first appellate court having powers to reappreciate evidence and in a given case, can permit additional evidence to be brought on record in appeal. The same is in syne with provisions of Order 41 Rule 27 of the CPC. c) Lastly, the High Court shall exercise jurisdiction only in cases where the appeal raises substantial question of law as contemplated by section 100 of CPC. It is submitted that this is an important marker, which shows that the Appellate Authority is the last fact-finding forum.”

44. Thus, a cumulative effect of all the relevant sections of RERA clearly shows that the Authority constituted under Section 20 of the Act and the Appellate Tribunal constituted under Section 43 of the RERA Act has jurisdiction to examine whether the transaction which is the subject matter of the complaint, is fraudulent one or otherwise.

45. Thus, there is no substance in the contention raised by Mr. Mehta, learned Counsel for the Respondent that on the basis various provisions of the RERA, the only limited issue a promoter can call upon the Authority to decide, whether the allottee has defaulted in its payment obligations and is liable to pay interest and whether the promoter is justified in cancelling the allotment and for this the promoter can only justify the cancellation if the same is in terms of the agreement for sale.

46. Mr. Mehta, learned Counsel also submitted that in a given case, if a complainant approaches RERA on the basis of forged documents, forged signatures on an allotment letter and claims entitlement of an allottee to a unit, obviously, the promoter would be entitled to dispute the status of the complainant as an allottee and can resist the application. Hence, the fraud must be of such a degree that the Authority can sustain a challenge to the status of a complainant being an allottee. All adjudicatory courts and tribunals have inherent power to reject relief where perjury is committed. In the present case, such a situation does not arise. If the said contention is accepted then, in a given case although the contention of the promoter is that the transaction has been entered into without free consent as the consent is caused inter alia by coercion, fraud, misrepresentation etc. then such contention cannot be adjudicated. If the said contention is accepted then the same will be contrary to the settled legal position that fraud vitiates every solemn act and “Fraud” and “Justice” never dwell together. “Fraud” is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine. The ratio laid down by this Court in various cases is that dishonesty should not be permitted to bear the fruit and benefit to the persons who played fraud or made misrepresentation and in such circumstances the Court should not perpetuate the fraud.

47. Mr. Mehta,learned Counsel relied on paragraph 46 of Avitel Post Studioz Limited (supra) which reads as under: “46. It has been held by the Bombay High Court in Fazal D. Allana v. Mangaldas M. Pakvasa [Fazal D. Allana v. Mangaldas M. Pakvasa, 1921 SCC OnLine Bom 122: AIR 1922 Bom 303], that Section 17 of the Contract Act only applies if the contract itself is obtained by fraud or cheating. However, a distinction is made between a contract being obtained by fraud and performance of a contract (which is perfectly valid) being vitiated by fraud or cheating. The latter would fall outside Section 17 of the Contract Act, in which the remedy for damages would be available, but not the remedy for treating the contract itself as being void (see pp. 311-12). This is for the reason that the words “with intent to deceive another party thereto or his agent” must be read with the words “or to induce him to enter into the contract”, both sets of expressions speaking in relation to the formation of the contract itself. This is further made clear by Sections 10, 14 and 19, which have already been referred to hereinabove, all of which deal with “fraud” at the stage of entering into the contract. Even Section 17(5) which speaks of “any such act or omission as the law specially deals to be fraudulent” must mean such act or omission under such law at the stage of entering into the contract. Thus, fraud that is practised outside of Section 17 of the Contract Act i.e. in the performance of the contract, may be governed by the tort of deceit, which would lead to damages, but not rescission of the contract itself.

48. Mr. Mehta, learned Counsel for the Respondent on the basis of Avitel Post (supra) submitted that law recognizes different degrees of fraud and considering the allegation of fraud made in the defense to the complaint by the promoter i.e. Appellant, the same will only in a nature of damage. However, while deciding the substantial question which has been raised in this Second Appeal, it is not necessary to decide the said point.

49. The Authority and Appellate Authority are duty-bound to determine the aspect raised by the Appellant i.e. Promoter that the transaction is without consideration and the same is fraudulent. As already noted herein above the Appellants have raised detail contentions about the fraud in paragraph Nos. 7(i) to 7(s) in the reply dated 11th June 2019. The Appellant inter alia has raised the contention that the Appellant has not received the said consideration of about Rs.1,65,43,821/- and only record of said payment is created by the Respondent-Mr. Vineet Sachdeva.

50. It is required to be noted that as already set out herein above the Supreme Court has held that “Fraud” and “Justice” never dwell together. All the Courts, Authorities and Tribunals constituted under various Acts like RERA, have been established to render justice and if the contention is accepted that the fraudulent nature of the transaction cannot be looked into by the Authority / Appellate Tribunal under RERA, then the same will be contrary to the basic principle that the Courts, Authorities and Tribunals have been established to render justice.

51. Mr. Vishal Kanade, learned Amicus rightly submitted in paragraph 26 in his written submissions as follows:- “26. It is submitted that section 7 and 9 of the said Act make a specific reference to "fraud/fraudulent practice", whereas section 31 provides that a complaint can be filed with by Allottee or a promoter. It is submitted that the mechanism provided under the Act is a comprehensive mechanism with robust powers to enquire and adjudicate into disputed questions of fact. Under such circumstances, it is humbly submitted that it cannot be the intention of the legislature that complaints against promoters involving allegations of fraud can be looked into by the authority but a converse situation is not contemplated under the Act. If such an interpretation is accepted, it would lead to a situation that the allottee would file a complaint against promoter, but the promoter would be precluded from raising a contention/defence of fraud under the said Act. This would lead to a situation, wherein on the same set of transaction arising from a letter of allotment/agreement, the allottee would approach the Authority, but a promoter, in order to establish his case of fraud would be relegated to another forum, such as a civil court. It is humbly submitted that this could not have been the intention of the legislature, since the said Act has given ample and wide powers to adjudicate into disputed questions of facts. Hence, based on the factual of each case, the Authority/Appellate Authority would be well within their jurisdiction to look into/adjudicate into the case/defense of fraud of promoter or allottee, as the case may be. It would not be appropriate for Authority/Appellate Authority to brush aside/ refuse to look a contention only on the ground that issues of fraud can not be gone into by it. In view of the aforesaid, it is respectfully submitted that the question framed by the Hon'ble High Court vide its order dated 17th February 2023 be answered in the affirmative”

52. In view of above submission of Mr. Kanade, learned Amicus it is also requested to be noted that Section 79 of RERA provides that: “79. Bar of jurisdiction - No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.”

53. It is required to be noted that even Mr. Mehta, learned Counsel has also submitted that in a given case, on the basis of forged documents, forged signatures on a allotment letter if on such documents the Complainant claims entitlement, then in that case the promoter would be entitled to dispute the status of the Complainant as an allottee and can resist the application and therefore the fraud which the Authority / Appellate Tribunal is empowered to decide of such a degree. However, it is required to be noted that the concept of fraud is very wide. Fraud is defined in Black’s Law Dictionary, as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon to his legal injury. It is the case of the Appellant that in fact the Appellant has not received any consideration and the Respondent by using in his position as consultant with sister concern, has created the record of payment. This Court is not considering the merits of the said contention. However, the same is only set out as it is the contention of Mr. Mehta, learned Counsel that only the type of fraud which he has contended, as noted herein above, those cases can only be looked into by the Authority.

54. In the above background of the matter it is required to be noted that the Authority in the impugned order dated 11th September 2019 noted very briefly the contentions raised by the Appellant in para 2 as follows: “2. The learned counsel for the Respondent submitted that the Complainant is not an allottee in the said project and that the consideration purportedly made by the Complainant was diverted from various sister concerns of the Respondent, as the Complainant was, then, a Consultant working for the Respondent and its various companies. He further submitted that the Respondent has initiated criminal proceedings against the Complainant for embezzlement of funds.” The contentions raised by the Appellant are dealt in paragraph Nos. 3,[4] and 5, which are as follows:

Thus, it is very clear that the Authority has failed to consider the detailed contentions raised by both the parties.

55. The Appellate Tribunal in Paragraph No.15 has inter alia held that the Appellate Tribunal cannot examine the allegation of promoter that transaction of sale of flat has nexus with the position of allottee as consultant with sister concerns of promoter. As noted in Paragraph No.15, it is not only regarding the source of money regarding which contention is raised by the Appellant. It is the main objection of the Appellant that the Appellant has not received any consideration and what is shown as received by the Appellant is not the actual money and by misusing the position of the Respondent in the sister concern record of payment has been created. The case which is being put up by Appellant may be accepted or may not be accepted, however, the RERA Authority as well as the RERA Appellate Tribunal while determining the question whether the Respondent is an allottee or not, has necessarily to decide the said contention raised by the Appellant. The Authority/Appellate Tribunal has failed to deal with the detailed contentions raised by both the parties and particularly by the Appellant.

56. The substantial question of law framed above is answered in affirmatively as follows: The Real Estate Regulatory Authority constituted under Section 20 of the Real Estate Regulation and Development Act, 2016 and Real Estate Appellate Tribunal constituted under Section 43 of the Real Estate (Regulation And Development) Act, 2016 has jurisdiction to examine aspect that the transaction which is subject matter of the complaint is fraudulent.

57. The Authority/Appellate Tribunal has failed to deal with the detailed contentions raised by the Appellant that the transaction on the basis of which Respondents are claiming to be the “Allottees” is fraudulent transaction.

58. Accordingly, the impugned Judgment and Orders of the Authority as well as of the Appellate Tribunal in both the Second Appeals are quashed and set aside.

59. Both the complaints i.e. Complaint No.CC006000000079091 and Complaint No. CC00600000096325 are remanded back to the Maharashtra Real Estate Regulatory Authority, Mumbai for deciding the same afresh by giving proper opportunity to all the parties as per the provisions of RERA.

60. It is clarified that this Court has not considered the contentions raised by both the parties on merits and Second Appeals are disposed of only by deciding the substantial question of law framed by this Court by order dated 17th February 2023.

61. Accordingly, the Second Appeals are disposed of in above terms with no order as to costs.

62. This Court places on record appreciation for assistance rendered by Mr. Vishal kanade, learned Amicus Curiae. [MADHAV J. JAMDAR, J.]