Sec.43(5) of RERA does not override High Court’s power under Article 226 of Constitution; HC can alter/modify/waive requirement of mandatory pre-deposit: P&H HC

Read Order: Ramprastha Promoters And Developers Pvt. Ltd. v. Union Of India And Others 

Monika Rahar

Chandigarh, January 31,  2022: While dealing with a case relating to the Real Estate (Regulatory and Development) Act 2016, the Punjab and Haryana High Court has held that the scheme of the Act entitles an allottee to seek the return of the amount along with interest and compensation and the Regulatory Authority would have the jurisdiction to entertain a complaint in such matter. 

The Division Bench of Justice Tejinder Singh Dhindsa and Justice Vindo S. Bhardwaj also opined that Section 43(5) of the Act of 2016 does not over-ride the powers of the High Court under Article 226 of the Constitution and there is no prohibition against the High Court in exercising its jurisdiction in an appropriate case and to alter/modify/waive the requirement of mandatory pre-deposit. 

In this case, the petitioners (real state developers) were aggrieved by the orders of the Haryana Real Estate Regulatory Authority and the ‘onerous’ condition of pre-deposit given under Section 43(5) of the Act of 2016. This condition requires the promoters (like petitioners) to deposit at least thirty per cent or more of the penalty or the total amount to be paid to the allottee including interest and compensation, before their appeal against the decision of RERA Authority or of adjudicating officer is heard by the Appellate Tribunal.

The Court addressed two broad issues, the first of which was, whether the Authority has jurisdiction to direct return/refund of the amount and/or interest to the allottee under Sections 12, 14, 18 and 19 of the Act of 2016.

To address it, the Court looked into the relevant provisions of the Act of 2016 and opined that the scheme of the Act entitles an allottee to seek the return of the amount along with interest and compensation. The Court referred to the provisions of Sections 12, 14, 18 and 19 to observe that the legislature used the word ‘interest on deposit/refund’ distinct from the use of the word ‘compensation’. 

“Thus, the award of prescribed rate of interest on the deposit/refund due to delay on the part of the promoter is not the same as adjudging compensation and award of interest thereupon by the Adjudicating Officer… Thus, the compensatory relief under the scheme of the Act has been kept separate and distinct and accrues in the event of occurrence of certain prerequisites and for which the determination is to be done by the Adjudicating Officer’’, opined the Court. 

According to Bench, per contra, the entitlement of the allottee to claim interest on the payment made in the event of his withdrawal from the project or for the period of delay in handing over the possession, is a part of the statutory scheme and is not part of interest by way of compensation. 

Lastly, while making reference to the decision of the Supreme Court in M/s NewTech Promoters and Developers Private Limited Vs. State of UP And Others etc (Civil Appeal Nos.6745-6749 of 2021), the Court concluded that the Haryana Real Estate Regulatory Authority would have the jurisdiction to entertain a complaint seeking a refund of the amount and interest on the refund amount as well as for payment of interest on delayed delivery of possession and/or penalty and interest thereon. The jurisdiction in such matters would not be with the Adjudicating Officer.

The second issue before the Court was if the condition of pre-deposit under Section 43(5) of the Act of 2016 can be waived by the High Court under Article 226 of Constitution for being onerous or on an established hardship. In this respect, it was observed that the powers under Article 226 of the Constitution can be exercised to ensure complete justice and that the statutory provision of the Act of 2016 cannot curtail the constitutional powers conferred upon the Writ Court.

The Court observed that a statutory provision cannot oust its jurisdiction which is recognized as a basic structure of the Constitution. However, the Court also stated that restraint must also be exercised in invoking its jurisdiction.

Thus, Court concluded that Section 43(5) of the Act of 2016 did not over-ride the powers of the High Court under Article 226 of the Constitution and that there was no prohibition on the High Court in exercising its jurisdiction in an appropriate case and to alter/modify/waive the requirement of mandatory pre-deposit. 

Then the Court went on to ascertain if sufficient grounds existed to establish that the compliance of the condition of pre-deposit by the petitioners, as provided in section  43(5) was harsh and/or onerous. Regarding this, the Court stated that a simpliciter argument that the condition of pre-deposit is onerous would not be sufficient for invoking the writ jurisdiction of the High Court, rather the petitioner has to prove that when complied with, this condition is onerous enough to prevent taking statutory recourse to appeal. 

After perusing petitioners’ pleading, the Court opined that the petitioners failed to discharge the burden placed on them. They were not able to demonstrate existence of any extreme hardship in complying with the statutory mandate or to perceive the condition of pre-deposit to be onerous in a way to effectively defeat the statutory remedy of appeal, held the Court. 

The contentions of the petitioners were thus held devoid of merit and writ petitions were dismissed. The petitioners were directed to make pre-deposits in a time-bound manner.