SUPREME COURT HOLDS THAT PRE-DEPOSIT FOR FILING AN APPEAL IN RERA MATTERS IS FAIR
Recently, a special Bench of the Hon’ble #SupremeCourt of India in the matter of M/s. Newtech Promoters and Developers Pvt. Ltd. vs State of UP and Others. Etc. (CIVIL APPEAL NO(S).6745 6749 /2021) vide its Judgment dated 11-11-2021 has decided the matter on several important issues pertaining to the Real Estate (Regulation and Development) Act, 2016 (Act). It has held that the condition of #predeposit imposed on #promoters/builders for filing #appeal under Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 (the “#RERA, 2016”) is neither discriminative nor violative of Articles 14 or 19(1)(g) of the Constitution of India.
Section 43(5) of the RERA, 2016, envisages the filing of an Appeal before the Appellate Tribunal against the order of an Authority or the Adjudicating Officer under the RERA, 2016 by any aggrieved person. It mandates a pre-deposit of the awarded amount, which is due to allottees by the promoters before consideration of an Appeal by the Appellate Tribunal.
Background
The Respondents herein are the Allottees/Home Buyers who have booked a Unit/Plot/Building and invested in a Project built up by the M/s. Newtech Promoters and Developers Pvt. Ltd. (the “Appellant”). However, the Appellant failed to hand over possession of a Unit/Plot/Building in terms of the Agreement between the Parties.
The Respondents instituted Complaints under Section 31 of the RERA, 2016 before the Uttar Pradesh Real Estate Regulatory Authority (“Authority”) for refund of their money invested along with interest. The Authority passed an Order against the Appellant and directed to refund the principal amount along with interest as prescribed by the State Government under the RERA, 2016.
The Appellants rather than filing an Appeal under Section 45(5) of the RERA, 2016 against the Order passed by the Authority approached the High Court by filing a Writ Petition under Articles 226 and 227 of the Constitution of India. The Appellants questioned the jurisdiction of the Single Member of the Authority for passing Orders of refund. The Appellants have also challenged the condition of predeposit of the amount as mandated under Section 43(5) of the RERA, 2016 for filing of a statutory Appeal in writ jurisdiction of the High Court of Allahabad (the “High Court”). The High Court dismissed the said Writ Petition.
Being aggrieved, the Appellants filed Appeals before the Supreme Court of India against the Judgment passed by the High Court.
The Supreme Court vide its Judgment dated 11-11-2021 analyzed the scheme of the RERA 2016 and several other issues that are raised by the Appellants. One of the contentions raised by the Appellants was that Appeal against an Order of Authority/Adjudicating Officer cannot remain dependent on fulfilment of predeposit condition, as it is onerous on the Builders and therefore discriminatory in nature.
Therefore, one of the main issues before the Supreme Court was whether the condition of predeposit under proviso to Section 43(5) of the RERA, 2016 for entertaining the substantive right of an Appeal is sustainable in law? In this regard, the Hon’ble Supreme Court observed and held that:
- Where appeal is against any other order which involves the return of the amount to an allottee, the promoter/builder is under an obligation to deposit with the Appellate Tribunal, the total amount to be paid to an allottee which includes interest and compensation imposed on him/it, before the Appeal is to be considered.
- The Court rejected the submissions of the Appellants as not sustainable in law for the reason that a perusal of scheme of the RERA, 2016 makes it clear that the limited rights and duties are provided on the shoulders of the allottees under Section 19 of the RERA, 2016 at a given time. Further, several onerous duties and obligations have also been imposed on the promoters/builders.
- It observed that the classification between consumers and promoters under the RERA 2016 is based upon the intelligible differentia between the rights, duties and obligations cast upon the allottees/home buyers and the promoters. The promoters and allottees are distinctly identifiable, separate class of persons having been differently and separately dealt with under the various provisions of the RERA, 2016. Therefore, there is no discrimination made between the two as per the provisions of the RERA, 2016.
- The Court said that the intention of the legislation, RERA, 2016 appears to be that the promoters ought to show their bona fides by depositing the amount so contemplated under the Order of the Authority. It further said that it will avoid unscrupulous and uncalled for litigation at the appellate stage and restricts the promoter to file an appeal only if it feels that there is some manifest material irregularity being committed at the first stage.
In view of the above, the Supreme Court held that an obligation to pre-deposit as envisaged under Section 43(5) of the RERA, 2016 is not onerous or is not violative of Articles 14 or 19(1)(g) of the Constitution of India. The Supreme Court further held that it is the intention of the Legislation that such obligation is necessary to ensure that money once determined by the Authority is to be safeguarded, if the Appeal is to be preferred at the instance of the promoter under Section 43(5) of the RERA, 2016.
Comments of the Editor
The above Supreme Court Judgment (Delivered by a Special Bench) is a big relief for all buyers as it can now put a stop of frivolous Appeals that builders by and large file for delaying refunds. As litigation in India is protracted, builders are more than happy to delay repayments or refunds to the hapless buyer. Earlier, the Hon’ble Supreme Court of India in the matter of M/s. Sana Realtors Pvt. Ltd. vs Union of India and Ors. (Special Leave to Appeal (C) No(s). 13005/2020) by Stay Order dated 18-01-2021 had directed a stay of execution cases filed pursuant to the Orders of the Regulatory Authorities. The said matter was on the issue of pre-deposit to be paid by builders when filing an Appeal. The said matter Sana Realtors is still pending Final Order. However, the Order passed in the Judgment under discussion is a big relief to buyers who had spent years, getting a decree or refund order in his favour only to be stuck in the rut of meaningless appeals that were filed by builders to delay the process of refunds.
Lakshmi Vishwakarma
Senior Legal Associate
The Indian Lawyer & Allied Services
Edited by
Sushila Ram
Chief Consultant and Editor
The Indian Lawyer & Allied Services