TNREAT - Appeal Before Appellate Tribunal Without Depositing Corpus Fund Is Not Maintainable

In real estate, the Corpus Fund is the initial capital collected by the developer for the maintenance of amenities and facilities. This fund is typically collected from homebuyers as pre-maintenance charges, which are not included in the total sale amount of the property. The corpus funds are kept in the bank, and the interest generated from these funds is used by the developer for maintenance purposes.

Background Fact

The Homebuyer Association (Respondent) filed a complaint before TNRERA, seeking for the Builder (Appellant) to fulfil promised amenities, transfer common facilities, and deposit the Corpus Fund.

In its order dated 29.01.24, TNRERA directed the Builder to transfer the Corpus Fund and other interest-free contributions to the Homebuyer Association by 31.03.2024. Additionally, TNRERA imposed a penalty of Rs.10 lakhs on the Builder. Aggrieved by this order, the Builder filed an appeal before TNREAT.

TNREAT Order

TNREAT dismissed the builder's appeal, holding it not maintainable due to the builder's failure to comply with the pre-deposit requirement outlined in Section 43(5) of RERA 2016.

TNREAT placed reference to the Section 43(5) The Real Estate (Regulation and Development) Act, 2016 which is read as follows:

Section 43 - Establishment of Real Estate Appellate Tribunal.

(5) Any person aggrieved by any direction or decision, or order made by the Authority or by an adjudicating officer under this Act may prefer an appeal before the Appellate Tribunal having jurisdiction over the matter:

Provided that where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained, without the promoter first having deposited with the Appellate Tribunal atleast thirty per cent. of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to the allottee including interest and compensation imposed on him, if any, or with both, as the case may be, before the said appeal is heard.

Further, TNREAT relied on the Supreme Court judgment in the case of New Tech Promoters and Developers Limited Vs. State of UP & Others, wherein it was held that the payment of pre-deposit requirement is mandatory for entertaining an appeal.

Case – M/s. Bahri Estates Pvt. Ltd., rep. by its Authorised Signatory & another vs Anandam Villa Owners Welfare Society (AVOWS)

Citation - Appeal (SR) No.149 of 2024