This report looks into a judgment of Punjab and Haryana High Court in the matter of a statutory provision contained in the Real Estate (Regulation and Development) Act 2016. The appellant wished that the deposit as stipulated by the provision should be waived off in light of the unique circumstances of his case. However, appeals of this sort are not new. Since its enactment, this provision of the Act has been a bone of contention for promoters and developers. The case will look into the reasoning of both sides, and why the statute insists upon the deposit keeping in view the intention of the Act itself.
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Judgment Digest: Mohan Singh vs Haryana Real Estate Regulatory Authority
Read the judgment at https://indiankanoon.org/doc/74843922/
Facts of the Case
The appellant challenged the order passed by the Haryana Real Estate Appellate Tribunal, Chandigarh dated 3rd January 2020. The order of the Tribunal had been passed on an application filed by the appellant, seeking “dispensation with the condition of pre-deposit of the penalty imposed by the Haryana Real Estate Regulatory Authority” vide its order dated 19th June 2019, that order was challenged before the Tribunal by the present appellant. The waiver of the pre-deposit was in fact a waiver in respect of what is stipulated in the proviso to sub-section (5) of Section 43 of the Real Estate (Regulation and Development) Act, 2016, which states that,
“(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 jurisdiction over the matter:
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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 per cent 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.
Explanation:- For the purpose of this sub-section “person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.”
The Tribunal, considering the application, had first observed that as per the said provision, unless at least 30 % of the penalty imposed upon the appellant is deposited, or any such higher percentage as may be determined by the Tribunal, an appeal cannot be heard. The appellant had raised a contention before the Tribunal that he was dealing with plots below an area of 500 sq. meters. and consequently, the provisions of the Act were not applicable, with the appellant also not being either a real estate agent or a promoter.
However, the application had been dismissed on the ground that whether the appellant was a real estate agent or a promoter was a question touching on the merits of the case, and if those issues were adjudicated upon at the stage of the application itself, seeking a waiver of the pre-deposit amount, it would virtually amount to the entertainment of the appeal, which was not permissible in terms of the aforesaid proviso.
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The Tribunal had observed that the appellant had described himself as a developer, and had admitted to being a builder, and therefore, in the prima facie view of the court, the admissions so made had implied that the appellant was covered by the definition of a ‘promoter’, and consequently was liable to comply with the condition imposed by the proviso. They relied on the judgment of the Supreme Court in Tecnimont’s case cited below, where it was held that an Appellate Tribunal had no jurisdiction to waive off the condition of a pre-deposit, in the absence of any specific provision of waiver in the Act.
They had further observed that the only discretion given to the Tribunal, as per the said provision, was whether the pre-deposit amount should be to the extent of 30% of the penalty imposed, or of any higher percentage. Thus, the appellant had been granted time to deposit 30% of the penalty amount, (the penalty imposed by the Authority being Rs.1 crore), the application had been dismissed.
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Issues of the case
- Whether the Real Estate Appellate Tribunal has the authority to waive off the pre-deposit of part or whole of penalty to be made by the developer as mandated by Section 4(5) of the 2016 Act?
Case Laws Cited
Tecnimont Pvt. Ltd. vs State of Punjab and others[1]
Findings of the Court
The court observed that on a previous hearing on 14th February 2020, the counsel for the appellant had submitted that he was neither a promoter in terms of clause (zk), nor a real estate agent in terms of clause (zm) of Section 2 of the Act. The ongoing construction advertised by him or his firm was also not a real estate project within the terms of clause (zm), because each building that had been advertised was each less than 500 sq. metres in area. Section 3(2)(a) of the Act provides that when the land proposed to be developed does not exceed five hundred square metres, or the number of apartments proposed to be developed does not exceed eight, inclusive of all phases, no registration of a project is required in the first place. Because of this, he did not fall within the ambit of the Act at all. Therefore, the notice issued by the Real Estate Regulatory Authority was wholly erroneous and without jurisdiction and consequently, the Tribunal should have allowed the waiver of the pre-deposit stipulated to be paid. At those proceedings, the court had directed to place on record the sanctioned plans of the properties in question and the advertisement made by him/his firm, leading to the notice issued by the Authority, invoking jurisdiction under Section 3(1) of the Act. The order contained the following grounds,
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“Ref: (i) Advertisement published by M/s EmEss Developers in the “Hindustan Times” newspaper on 26.05.2019 for the real estate project namely Heritage Royale, Sector 56, Gurugram (copy enclosed).
(ii) Pamphlet/hand bill/publication brochure as enclosed regarding real estate project ‘Heritage Royale’ Sector 56 Gurugram.”
The counsel had complied with the order and filed an application returnable in the present proceedings. The counsel had contended that simply because the advertisement described the houses as “Heritage Royale”, it did not negate the fact that the houses were being constructed on individual plots each less than 500 sq. mtrs. in area. They had been purchased by the individual owners thereof, from M/s AnsalBildwell Ltd. and simply because the appellant was advertising the plots, it did not make it into a single project being developed by a promoter.
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In the present proceedings, the counsel had contended upon Section 44 (3), which reads,
“(3) On receipt of an appeal under sub-section (1), the Appellate Tribunal may, after giving the parties an opportunity of being heard, pass such orders, including interim orders, as it thinks fit.”
This provision empowers the Tribunal to issue interim orders and the conclusion arrived at in the impugned order that it did not have the power to waive off the condition was erroneous.
Another argument was that the Supreme Court judgment referred to by the Tribunal was not applicable in this case. That was in the context of the Punjab Value Added Tax Act, 2005. The two were not parimateria to each other in light of Section 44(3) of the RERA Act, 2016.
The bench disagreed with the contentions of the appellant. The first reason given by the judge was that it is given in a statutory provision that a deposit has to be made before filing an appeal. There were no provisions for its waiver. Unless it could be proved that the Authority is wholly out of jurisdiction in passing such an order, this cannot be pleaded. Even if this is proved, it would be further a matter of question if this alone can be a ground for a waiver. Whether or not the Authority correctly exercised its jurisdiction, is a matter that the Tribunal would go into during the appeal.
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For the contention that Tecnimont’s case is not applicable, the court observed that it arose out of a Division Bench judgment which included three questions with regards to Section 62(5) of the PVAT Act. The relevant question was the third one which stated,
“(c) Whether the first appellate authority in its right to hear appeal has inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits?”
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The Supreme Court with regard to the third question observed that when an inherent power is specifically given in a provision, it has to be read with a limitation that it cannot be employed to do what is expressly prohibited. This limitation extends to the scope and width of the implied power of any appellate authority under a statute. “The reliance on the principle laid down in Kunhi cannot go to the extent, as concluded by the High Court, of enabling the Appellate Authority to override the limitation prescribed by the statute and go against the requirement of pre-deposit. The High Court was clearly in error in answering the question (c).” in genuine cases of hardship the party can seek refuge, but the Tribunal cannot grant such relief itself.
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The court also disagreed with the contention that these observations were in the context of the PVAT Act and here Section 44(3) also applies. The Tribunal had made a prima facie opinion on the contentions. It primarily held that it had no jurisdiction to decide so.
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The argument that simply because the appellant had erroneously submitted that he was a developer, the Tribunal should apply its judicious mind in the decision nonetheless, was also rejected. The question of the applicability of the Act would arise in the actual hearing. It had not erred in dismissing the prayer for waiver even on the merits of the case. They agreed that even on the merits of the case, whether or not he was a developer, or whether or not it was not a project, would have been a matter that could be considered wholly on the merits thereof. To say that the issue of pamphlets was a mistake and to take it on face value without the appeal being heard is invalid. The Tribunal could not do this, not only on the ground that it had no jurisdiction, but also on the merits of the contention. The court laid emphasis on Section 63(3) of the PVAT Act, which has a specific bar on staying the minimum pre-deposit, although no such bar is present in the RERA Act, the appellants contentions cannot be considered without going into the merits of the appeal, the question of waiver does not arise. Thus, the appeal was dismissed.
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Conclusion
The Court thus held that subject to an order being shown to be void ab initio due to lack of jurisdiction with the Authority, waiver of a pre-deposit could not be considered by the Tribunal in appeal as that would defeat the statutory provision of a pre-deposit itself.
In earlier appeals of a similar kind made by aggrieved developers, it was once contended that if a situation arises when the judgment of the Tribunal is outwardly unjust, should they still be required to pay the requisite pre-deposit even though they are not at fault and the amount involved may be huge. The total absence of any discretion over this condition being applied renders the remedy without any importance. This was opposed by the Additional Solicitor General who said that this condition has been included as protection to home buyers and investors. The weaker parties face the unproportionately stronger developers and builders, who should be imposed with stringent conditions when they have a right to appeal.
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This provision is thus consistent with the purpose of the Act which has been enacted to protect the home buyers from the exploitation of large developers.
References
As given in footnotes
https://www.centrik.in/blogs/rera-when-builder-does-not-deposit-the-30-amount-for-filing-an-appeal/
For case specific advice on real estate matters, one may contact top/best expert Punjab Haryana RERA Appeal Lawyers in Chandigarh Panchkula Mohali Zirakpur Derabassi Kharar Mullanpur Baltana
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This post is written by Jigyasa Kharbanda.
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[1]Civil Appeal no.7358 of 2019
