2024 (7) TMI 1451 - HC - Indian Laws

Requirement of pre-deposit towards compliance with proviso to Section 43 (5) of Real Estate (Regulation and Development) Act, 2016 (RERA) - liability of the Appellant to pay such interest is not in praesenti but in future - direction to deposit of the entire amount of interest when proviso to sub-Section (5) of Section 43 permits deposit of 30% of the penalty. Requirement of pre-deposit towards compliance with proviso to Section 43 (5) of Real Estate (Regulation and Development) Act, 2016 (RERA) - HELD THAT - The requirement of making pre-deposit under Proviso to Section 43 (5) is applicable only in respect of an appeal filed by the promoter. When the flat purchaser/allotee files an appeal, there is no requirement of making any pre-deposit. Since the appeals in the present case are filed by the promoter, Proviso to Section 43 (5) gets attracted. According to the Appellant, the total amount to be paid to the allotee including interest and compensation imposed on him within the meaning of the Proviso has to be the amount which is payable on the date of passing of Order by MahaRERA. That such total amount does not and cannot mean the amount which is payable to the complainant in future. It must be borne in mind that the special exemption for deferring the payment of interest by Appellant is given only for the purpose of ensuring that the entire project is not put in jeopardy and that other flat/office purchasers do not suffer. This dispensation is not granted to protect any interest of the promoter. Such deferment would therefore not mean that promoter would get a licence to treat the Order passed by MahaRERA as imposing no obligation as on the date of passing of the Order. If the promoter decides to challenge MahaRERA s order, the protection of deferment of payment of interest cannot be applied while deciding the issue of pre-deposit under Proviso to Section 43 (5). There is determination of the amount by the Regulatory Authority, the liability on promoter is fastened and only the time for making the payment is postponed. Therefore it cannot be countenanced that no liability is fixed at the present on Appellant. The objective behind making mandatory pre-deposit under proviso to Section 43 (5) is to put a deterrent on promoters from engaging flat purchasers in endless litigation without any consequences for him. If this objective is borne in mind, permitting Appellant to prosecute Appeals challenging MahaRERA s order without any consequence of making pre- deposit would destroy the very objective behind incorporation of Proviso to sub Section 5 of Section 43. Even if liability to pay interest is deferred by MahaRERA in the overall interest of the project, such deferment is granted only if the promoter is willing to be abide by the Order of the Regulatory Authority. Such deferment will have no effect on promoter s liability to make pre-deposit under Proviso to sub Section 5 of Section 43. Therefore, Appellant must deposit the amount quantified by the Appellate Tribunal as a pre-condition for entertainment of its Appeals. The Appellant must deposit the amount of interest as directed by MahaRERA as a pre-condition for entertainment of Appeals before the Appellate Tribunal, even though its liability to pay such interest is not in praesenti but in future. This would however be subject to deduction of amount of interest in respect of COVID-19 pandemic period as per Notifications/Order Nos. 13 and 14 dated 2 April 2020 and 18 May 2020. Deposit of 30% penalty under Proviso to sub-Section 5 of Section 43 - HELD THAT - It is fairly conceded that what is directed to be paid by MahaRERA is not penalty but interest, which would be covered by the expression the total amount to be paid to the allotee . In the light of the above, the second question formulated can be answered holding that the entire amount awarded by MahaRERA (subject to minor modification) must be deposited and issue of deposit of any penalty does not arise in the present case. The Appeals filed by Appellant are partly allowed to the limited extent of directing the Appellate Tribunal to deduct the amount of interest payable during the moratorium period covered by Notifications/Order Nos. 13 and 14 dated 2 April 2020 and 18 May 2020 issued by MahaRERA. The Judgment and Order of the Appellate Tribunal dated 31 October 2022 shall be modified to this limited extent and rest of the Order is maintained.

Summary

Issues Involved:
1. Requirement of pre-deposit under Section 43(5) of RERA.
2. Determination of the amount to be pre-deposited.
3. Applicability of moratorium period for interest calculation.
4. Conduct and bonafides of the Appellant.

Detailed Analysis:

1. Requirement of Pre-deposit under Section 43(5) of RERA:
The primary issue revolves around whether the Appellant, a promoter, is obligated to deposit the amount of interest as a pre-condition for entertainment of Appeals before the Appellate Tribunal, despite the liability being deferred to the future. The Court upheld the necessity of pre-deposit, emphasizing that the promoter's liability is established by MahaRERA's Order, and the deferment of payment does not nullify this obligation. The purpose of Section 43(5) is to ensure promoters do not engage in endless litigation without consequences, thus requiring them to deposit the determined amount to show bonafides.

2. Determination of the Amount to be Pre-deposited:
The Appellant contended that no immediate payment was due as per MahaRERA's Order, which deferred the interest payment until the occupancy certificate was obtained. However, the Court clarified that the deferment was granted to prevent jeopardizing the project and not to absolve the promoter of liability. Therefore, the Appellant must deposit the amount of interest determined by MahaRERA, even if the payment is deferred. The Court also noted that the Appellate Tribunal should have deducted the interest for the moratorium period due to COVID-19 when determining the pre-deposit amount.

3. Applicability of Moratorium Period for Interest Calculation:
The Court acknowledged that MahaRERA's Order allowed the promoter to claim the benefit of the moratorium period while computing interest. Thus, the Appellate Tribunal erred by not excluding the interest for the moratorium period from the pre-deposit calculation. The Court directed the Appellate Tribunal to recompute the pre-deposit amount after deducting the interest for the moratorium period.

4. Conduct and Bonafides of the Appellant:
The Court considered the Appellant's conduct, noting that the Appellant had previously sought quantification of the pre-deposit amount from the Court, indicating an acknowledgment of the obligation to make a pre-deposit. This conduct estopped the Appellant from later arguing that no pre-deposit was required. The Court emphasized that compliance with the pre-deposit requirement demonstrates the promoter's bonafides and aligns with the legislative intent to curb unnecessary litigation.

Conclusion:
The Court upheld the requirement for the Appellant to make a pre-deposit under Section 43(5) of RERA, subject to the deduction of interest for the moratorium period. The Appellate Tribunal was directed to recompute the pre-deposit amount accordingly. The Appeals were disposed of with instructions for the Appellate Tribunal to expedite the fresh computation and for the Appellant to deposit the revised amount by a specified date to restore the Appeals.