Compliance Of Pre-Deposit Under Section 43(5) Of The RERA Act Mandatory To Be Complied Before Entertainment Of Appeal In A Tribunal: Allahabad HC

A Single-judge Bench comprising Justice Ranjan Agarwal, by an order dated 12.04.2022, rendered this observation while dismissing an appeal that sought to assail an order of the Uttar Pradesh Real Estate Appellate Tribunal ("the Appellate Tribunal") which had originally dismissed the appellant's appeal on grounds of non-payment of the mandatory deposit before entertainment of appeal as mandated under Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 ("the Act").

Section 43(5) statutorily provides for a provision for any person, who is aggrieved by any direction or decision or order made by a Regulating Authority or by any adjudicating officer, to appeal before the respective Appellate Tribunal. However, the proviso to the clause provides that in case where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained, without the promoter depositing at least thirty percent of the penalty or such a higher percentage as the Appellate Tribunal may determine 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.

Factual Background

The Air Force Naval Housing Board ("AFNHB"), a welfare organisation comprising senior officers of the Air Force and Navy launched a project named AFNHB, Meerut in 2008 to provide suitable and affordable homes to the army and naval personnel, where, out 545 flats, 523 flats had been sold and 418 allottees had already taken possession. However, due to a delay in the completion of the project, some allottees approached the Real Estate (Regulation and Development) Authority where, by an order dated 10.04.2019, the allottees were either awarded interest on their deposited amount or a refund of the deposited amount with interest. As against this, an appeal was filed before the Tribunal under Section 44 of the Act. The Appellate Tribunal dismissed the appeal on the ground that the appellant had not complied with the mandate of Section 43(5) of the Act and had not deposited the balance amount.

The appellants had challenged the order of the Appellate Tribunal under Section 58 of the Act on the ground that the appellant, not being a 'promoter', is not required to comply with the condition of pre-deposit mandated under Section 43(5) of the Act. Against this backdrop, the Court had to primarily determine whether the appellant is included within the umbrella of the term 'promoter' as defined under Section 2(zk) of the Act as may enforce on the appellant in the condition of pre-deposit the entire disputed amount for the purpose of maintaining appeal under Section 43(5) of the Act against the order passed by the Appellate Tribunal.

Under the Act, the term 'Promoter' has been given a substantially wide composition. It comprises not only a person but also an apex housing financial society and a primary housing society that constructs apartments or buildings for its members. It further includes any other person who acts 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 land on which the building or apartment is constructed or colony is developed for sale, or such other person who constructs any building or apartment for sale to the general public. In regard to the legislative logic of the usage of the word 'promoter' in Section 43(5) that mandates the paying of a deposit prior to the entertainment of any appeal before a Tribunal, the Bench asserted:

"The word 'promoter' has been deliberately used by the legislature in the proviso to sub-section (5) of Section 43, as sub-section (5) provides a remedy of statutory appeal to any person aggrieved by the direction or decision of an authority to file appeal before the Tribunal, but in case of a 'promoter', the mandatory deposit has to be made prior to the entertainment of the appeal by the Tribunal. The purpose of insertion of such provision is to safeguard the innocent home buyer who has deposited his hard earned money with the developers/promoter and in case of failure of the project or the project getting delayed and on his complaint, the authority directing for refund of the amount with interest, the promoter is obliged to deposit the same before his appeal is heard."

Consequently, the Court held that the appellant is included in the definition of the term 'promoter', as defined under Section 2(zk) of Act which consequently imposes upon the appellant the condition of a pre-deposit for the purpose of maintaining an appeal under Section 43(5) of the Act against the order of Regulatory Authority. The Court further opined:

"…the appellants are working in real estate sector and their project having been registered on 15.8.2017 after enforcement of Act, 2016, comes under the purview of 'promoter', as defined under Section 2(zk) of Act, 2016, and necessary compliance of pre-deposit, as enshrined under Section 43(5) of Act, 2016, has to be made before the Tribunal before entertainment of their appeal."

Case Title:Air Force Naval Housing Board Air Force Station v. U.P. Real Estate Regulatory Authority

Citation: 2022 LiveLaw (All) 181

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