RERA - Mandatory nature of "Pre-Deposit" to file Appeal by Promoter - MahaRERA Appellate Tribunal - Yes

The Maharashtra RERA Appellate Tribunal recently adjudicated a matter claiming waiver of pre-deposit by the Promoter for preferring Appeal before the said authority only having to be disallowed by the said Appellate Tribunal in the matter of  Man Global Limited -vs- Jamal Mansuri dated 19th July 2021.

Issue:

Whether RERA Appellate Tribunal is fully competent to waive the condition of pre-deposit by exercising inherent powers?

Provision:

Section 43(5), RERA 2016:

"(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 jusrisdiction 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 at least thirty percent. 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." 

Grounds of Appeal

Appellant, the Promoter, sought exemption from compliance of Proviso to Section 43(5) primarily on following major grounds: 

i) Promoter was unable to complete and hand over possession as per agreed timelines due to unforeseen reasons beyond control of Promoter;

ii) Despite bringing to notice of the Authority the factors responsible for delay the Authority directed Promoter to pay lnterest from 01.02.2018 for Phase I and from 01'04 2018 onwards for Phase II till offer of possession with OC without any justification and without application of mind;

lii) The impugned order passed by the Authority is also without jurisdiction and therefore it is a nullity and incapable of execution, Hence prima facie Promoler has a strong case for complete waiver of condltion of pre-deposit;

iv) Respondent has already taken possession with Occupancy Ceftificate (OC). It puts embargo on compliance of Proviso to Sectlon 43(5). v) Due to outbreak of Covid 19, Appellant is facing financial hardships and the order directing to comply with Proviso to Section 43(5) would further drain the resources of Appellant.

v) The RERA Appellate Tribunal is fully competent to waive the condition of pre deposit by exercising the inherent powers as Promoter has good grounds to succeed.

Held

With regard thereto, it is made clear that those grounds cannot be considered and gone into untll Appeal is enteftained upon compliance of predeposit. It is also observed that adjudication of grounds challenging the lmpugned order on merlts would tantamount to entertaining the Appeal without pre-deposit in violation of Proviso 43(5) of RERA and hence not permissible.

"The Appeal cannot be entertained to consider grounds of challenge on merit until Promoter complies with the requirement of pre-deposit as per impugned order in terms of Proviso to Section 43(5) of RERA. Accordingly, the present Application seeking waiver of pre-deposit deserves to be dismissed."

Case Laws:

The said view also finds support from the specific view taken in this regard in the following landmark judgments delivered by the Division Bench of the Hon'ble Punjab and Haryana High Court in 

(i) CWP Nos. 14263 and 14689 of 2O2O (M/s. Landmark Apartments Pvt. Lt. vs. Union of India dated 06.10.2020);

(ii) CwP No. 38144 of 2018 and other connected matters (Experion Developers Pvt' Ltd. Vs. State of Haryana and others, dated 16.10.2020); and 

(iii) CWP No. 8548 of 2020 and other connected matters (Janta Land Promoters Pvt. Ltd. Vs. Union of India, dated 16.10.2020). 

In this regard, the Hon'ble High Court in para 17 of Janta Land Promoter (supra) observed thus:

"17. Yet another DB of this Court has in a judgment dated 6th October, 2020 in CWp Nos. 14623 and 14689 of 2020 (M/s. Landmark Apartments Pvt. Ltd. v. Union of India), come to the same conclusion viz., that it cannot be held that the condition of pre-deposit as set out in the Proviso to Section 43 (5) of the Act, is either illegal/ or onerous, thereby rendering the appeal illusory. The DB has also rejected the further contention that where the ground of appeal was that the order of the Authority was itself without jurisdiction since the complaint would lie only before the AO, the condition of pre-deposit would not apply. The Court in this regard has affirmed the view expressed by the learned Single Judge of this Court in Janta Land Promoters Pvt. Ltd. v. Abhimanyu Singh Vinayak, 2020 (1) RCR (Civil) 160, holding that even in a case where "the Appellate Authority proceeds to decide the appeal on the ground of maintainability of the proceeding before the RERA Authority, that will also amount to hearing and taking a decision in the appeal" and that "the promoter would be liable to deposit the pre-requisite amount as per proviso to the Section 43 (5) of the Act".

 Hon'ble Bombay High Court in M/s Renaissance Infrastructure through its Partners and Others Vs. Shri Parth B, Suchak and Anr.(Second Appeal (St.) No.92626 of 2020 with Interim Application No.92628 of 2020) at paragraph 6

"The two other grounds urged by Mr. Dani also do not support his case against pre-deposit under the proviso to sub-section (5) to Section 43 of the Act. Whether the original complaint before the adjudicating officer was premature and whether damages/compensation awarded by the adjudicating officer were within his jurisdiction, are but matters of merit in the appeal. These matters, even if some of them may go to the root of the order impugned in the appeal, do not call for dispension of pre-deposit under the proviso to sub-section (5) of Section 43, which is mandatory." 

With regard to contention of Appellant that the Tribunal has inherent powers to waive the condition of predeposit, it is observed that the aforesaid Proviso is mandatory and hence cannot be dispensed with by the Tribunal having no discretion to waive the same. 

 On this issue, the Hon'ble Punjab and Haryana High Court has observed in paras 15 and 16 of its judgment in the case of Experion Developers Pvt, Ltd. (supra) as under:

15. Typically, where the Appellate Tribunal rejects the plea of the Appellant for waiver of pre-deposit, then it grants one more opportunity to the Appellant to make the pre-deposit within a reasonable time failing which it will proceed to dismiss the appeal on the following date that is has fixed for the hearing of the appeal. This is what has happened in each of the cases here. There cannot be an indefinite postponement of the date by which the pre-deposit has to be made as that would defeat the very object of the Act providing a mechanism for expeditious redressal of the disputes. As explained by the Supreme Court in M/s. Technimont Pvt. Ltd. (supra), the Appellate Tribunal has no power to waive the requirement of the making of a pre-deposit as mandated by the proviso to Section 43 (5) of the Act. This Court has held likewise in Neo Developers Pvt. Ltd. v. Union of India (decision dated 19th August 2020 in CWP No. 12154 of 2020) and Shri Mohan Singh v. Haryana Real Estate Regulatory Authority (decision dated 6th March 2020 in RERA Appeal No. 6 of 2020). Further, as explained by the Supreme Court in Union Bank of India v. Rajat Infrastructure Pvt. Ltd. (decision dated 2nd March 2020 in CA No. 1902 of 2020), even the High Court cannot issue any direction in that regard contrary to the Act, since it does not have the powers vested in the Supreme Court under Article 142 of the Constitution of India. In other words, if the Appellant fails to make the pre-deposit within the time granted for that purpose once by the Appellate Tribunal, the Appellate Tribunal would be justified in proceeding to dismiss the appeal for failure to make the pre-deposit. 

16. Therefore, the challenge in these writ petitions on the abovementioned ground, to all such orders of the Appellate Tribunal, rejecting the request of Petitioners to be granted further time beyond the date as stipulated by the Appellate Tribunal or where the appeals have been rejected on account of the Petitioners’ failure to make the pre-deposit as directed, is hereby rejected."  

The Hon'ble Punjab-Haryana High Court in its judgment dated 23.09.2020 in M/S Lotus Realtech Pvt Limited vs State of Haryana And Others [CWP No. 15205 of 2020 l CWP No. 15205 of 2020 (O&M) paragraph 19:

"19. From the object and purpose of the Act of 2016, it is further evident that the Act seeks to reduce fraud and delays resorted to by the promoters. For this purpose, adjudication through an authority established under the Act has been provided and thereafter with a view to deter promoters from protracting the dispute by involving the allottees/consumers in lengthy litigation and with a view to discourage them to file frivolous appeals only with an intention of delaying the delivery of possession to the allottees, the onerous condition of pre-deposit has been imposed upon the promoters in case they file appeals before the Appellate Tribunal against the orders passed by the authorities. Evidently, the condition of pre-deposit imposed upon the promoters is inconsonance with and in furtherance of the object and purpose of the Act which seeks to eradicate fraud and delays and ensure prompt delivery of the real estate to the allottees within the time frame prescribed."

ASA Advocates