Condition of Pre Deposit For Filing Appeal under RERA Act Not Arbitrary: Allahabad HC

Recently, a Division Bench of the Allahabad High Court has held that condition of deposit by a promoter for Appeal as mentioned in Section 43 (5) of RERA Act, 2016 is neither unreasonable nor arbitrary.

Background of the case:-

In the instant case, a number of complaints were filed by allottees of properties against the petitioner(ATS Realty Pvt Ltd ).

RERA decided the above-mentioned complaints vide judgement dated 26.06.2020 wherein the petitioner was directed to provide possession to allottees latest by 31.03.2021 and to pay the complainants an interest @ MCLR + 1% from 13.11.2017 till the date of the offer of the possession excluding the lockdown period 24.3.2020 to 30.9.2020 due to COVID-19 pandemic.

Aggrieved by the judgement passed by the RERA, the petitioner moved Real Estate Appellate Tribunal. However, the appeals by the Authority on the ground that the petitioner had failed to comply with the mandatory condition contained u/s 43 (5) of the Real Estate (Regulation and Development) Act, 2016.

The Tribunal held that no power to permit the promoter(petitioner) to deposit only 30% of the total amount directed to be paid as compensation and interest to the allottees.

Judgement passed in the Appeals was challenged before the Allahabad High Court.

Arguments raised before the Hon’ble Allahabad High Court:-

Counsel for the petitioner argued that as the petitioner had already 30% of amount as mentioned in Section 43 (5) of the 2016 Act, the complaint should not have been dismissed.

It was further argued that the interpretation of the Tribunal was wrong, and condition mentioned under Sub-Section (5) of Section 43 of the 2016 Act was onerous and unreasonable.

In response, Counsel for the RERA argued that the language of Sub-Section (5) of Section 43 of the 2016 Act was direct and straightforward and it clearly states that f the promoter has not deposited with the Tribunal at least 30% of the penalty or the total amount payable to the allottee then Tribunal cannot entertain the case.

It was also submitted that the validity of Sub-Section (5) of Section 43 of 2016 Act had been upheld by various High Courts including High Court of Allahabad, High Court of Madras and High Court of Punjab and Haryana.

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Reasoning of the Court

Hon’ble Allahabad High Court observed that the proviso of providing deposit of 30% refers to the penalty amount only and not the total amount to be paid to the allottee.

The Court further observed that the Tribunal had not made any mistake while interpreting Sub-Section (5) of Section 43 of the 2016 Act and its findings were good in law.

On the other issue that the condition of predeposit of total deposit was unfair, unreasonable, arbitrary or onerous to make the Appeal to be an illusion, the Court held that the validity of Sub-Section (5) of Section 43 of 2016 Act had been upheld in Madras High Court’s judgement in T. Chitti Babu case, Punjab and Haryana’s judgement in M/s Lotus Realtech Pvt. Ltd case and by the Allahabad High Court in M/s Ansal Properties.

Hon’ble Court opined that even though the aforesaid cases were under challenge in the Supreme Court, they still existed in law books and the said decisions in clear and unequivocal manner lay down that the condition of depositing the amount as contemplated under Section 43 (5) of the 2016 Act was neither unreasonable nor onerous.

Condition of Pre Deposit For Filing Appeal under RERA Act Not Arbitrary-

The Hon’ble Allahabad High Court held that findings of the RERA and the Appellate Tribunal were correct and therefore the writ petition filed by the promoter(petitioner) deserves to be dismissed.

Case Details:

Title: M/S Ats Reality Pvt.Ltd vs U.P.Real Estate Appellate Tribunal Lko. & Ors

Case No.: MISC. BENCH No. – 23900 of 2020

Date of Order: 14.12.2020

Coram: Hon’ble Justice Saurabh Lavania and Hon’ble Justice Pankaj Mithal

Counsel for Petitioner:- Kunwar Sushant Prakash 

Counsel for Respondent:- CSC, Prashant Kumar, Shobhit Mohan Shukla

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