2024 (12) TMI 747 - HC - Companies Law

Dismissal of application filed by the appellant herein by which the appellant had offered the attachment of a flat in lieu of the requisite pre-deposit as mandated under Section 43 (5) of the RERA - Section 58 of the Real Estate (Regulation Development) Act, 2016 - HELD THAT - The learned NCLAT has clarified that the Insolvency Resolution Process is only with respect to one of the projects being undertaken by the appellant company, which, we are informed, is not the same as the one which is the subject matter of the proceedings before the Real Estate Appellate Tribunal. The appellant, therefore, cannot seek any benefit of the moratorium that has been issued by the learned NCLT for seeking an exemption from making the pre-deposit in terms of Section 43 (5) of the RERA. There are no merit in the submission of the learned senior counsel for the appellant that as the appellant is offering security of a flat, it should be granted an exemption from making the pre-deposit in terms of Section 43 (5) of RERA. The condition of making a pre-deposit as a pre-condition for the hearing of the appeal has been upheld by the Supreme Court in New Tech Promoters and Developers Pvt. Ltd. vs. State of Uttar Pradesh Ors. 2021 (12) TMI 892 - SUPREME COURT . The said provision does not leave any scope for granting an exemption from making the pre-deposit and instead accepting a security. There are no merit in the present appeal. The same is, accordingly, dismissed.

Summary

Issues:
Challenge to Real Estate Appellate Tribunal's order on pre-deposit under RERA, Moratorium granted by NCLT, Applicability of Section 43(5) of RERA, Appeal filed by Interim Resolution Professional, Offering security in lieu of pre-deposit.

Analysis:
The appellant challenged the Real Estate Appellate Tribunal's order requiring a pre-deposit under Section 43(5) of RERA, citing a moratorium granted by the NCLT in an insolvency case. The appellant argued that insisting on a pre-deposit contradicts the NCLT's order. The appellant also contended that as the appeal was filed by the Interim Resolution Professional, not a 'Promoter,' Section 43(5) of RERA should not apply. The appellant proposed offering security in place of the pre-deposit to fulfill the spirit of RERA.

The respondents countered, citing an NCLAT order clarifying that the insolvency proceedings were limited to a specific project and should not affect other projects. They referenced a Supreme Court judgment to argue against granting an exemption from the pre-deposit requirement under RERA. The respondents emphasized that the NCLT's moratorium did not extend to all projects of the appellant company.

The court examined the provisions of Section 43(5) of RERA and the Supreme Court's ruling in a related case, emphasizing the importance of pre-deposit as a safeguard for allottees. The court rejected the appellant's argument for special exemption based on the NCLT's moratorium, noting that the insolvency resolution was project-specific. The court also dismissed the contention that the appeal by the IRP should be treated differently from that of a Promoter under RERA.

Ultimately, the court found no merit in the appellant's plea for exemption from the pre-deposit requirement, as upheld by the Supreme Court. The court upheld the Real Estate Appellate Tribunal's decision and dismissed the appeal. The court left open the possibility for the appellant to seek relief regarding the penalty deposit before the Tribunal.