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Deposit of 30% of refund claimed obligatory and mandatory: RERA tribunal
Mumbai Mirror  |  February 18, 2019

Satish Nandgaonkar

The Maharashtra Real Estate Appellate Tribunal (MREAT) has ruled that the proviso of Section 43 (5) of Real Estate (Regulation and Development) Act (RERA) regarding deposit of minimum 30 per cent of the amount in contention before a promoter’s appeal is “entertained” by the Tribunal is “obligatory” and “mandatory”.


The ruling by Sumant Kolhe, Member, Judicial of the three-member Tribunal, now headed by retired High Court judge Justice Indira Jain, came during the hearing of an appeal filed by Avarsekar Realty Pvt Ltd against a MahaRERA order directing the company to refund L&T Financial Consultants Ltd an amount of Rs 5.28 crore each for four flats.


The flats, located on the 27th and 29th floor of Shristi Sea View, a 42-storied sea-facing highrise building at Mahim, were booked in July 2013 as per registered agreements and were to be delivered within 36 months. When the developer registered the project with MahaRERA, the possession was revised to December 31, 2019.


However, L&T Financial Consultants, which had paid first instalment of Rs 5.28 crore out of the flat cost of Rs 18.48 crore for each flat, had sought a refund with interest as the project had been delayed. Avarsekar Realty’s advocate Pulkit Sharma had blamed the delay in obtaining CRZ and environment clearances and NOC from the Airport Authority of India among other reasons for the delay. On May 22, 2018, MahaRERA Member Madhav Kulkarni directed the developer to refund the amounts with 10.05 per cent interest from the date of filing complaint till actual realization. Avarsekar Realty challenged the MahaRERA order before the Tribunal and sought an exemption from Section 43 (5) proviso of RERA. On December 13, 2018, the Tribunal rejected their request and asked them to deposit 40 per cent of the amount, or Rs 21 crore, before their appeals could be entertained and were given time till January 11, 2019. During the final hearing on January 21, 2019, advocate Sharma submitted that Section 43 (5) proviso of RERA was not “mandatory” and cited two Supreme Court orders of 1998 and 2006 and one 2009 Delhi High Court order to substantiate his submission.


Advocate Yash Mehta, appearing for L&T Financial Consultants, argued that Section 43 (5) proviso was mandatory in nature and non-compliance of the proviso were also clearly spelt out in the provision in RERA. He said the proviso was obligatory on the part of the promoter and there is no discretion left with the court or tribunal as far as its compliance is concerned.


Ruling on this aspect, Tribunal Member Sumant Kolhe pointed out that the cases cited have no “nexus” with the present case. He observed that it was important to look at the intent of the legislature behind enacting RERA legislation and the objects of the Act. He observed that the legislature felt that the existing consumer protection laws were curative, and not preventive. He said though Maharashtra Ownership of Flats Act (MOFA) exists, it was felt that it was not sufficient and hence RERA was enacted.


“It is the duty of courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statue to be considered. The Honorable Supreme Court has pointed out on many occasions that the question as to whether a statute is mandatory or directory depends upon the intent of the Legislature, and not upon the language in which the intent is clothed,” he said, ruling that proviso was obligatory and the promoter must make compliance of this obligation.


Stating that the developer had failed to perform the obligation under Section 43 (5) proviso of RERA, he dismissed all four appeals, upholding the original MahaRERA refund order.


He also dismissed appeals by other developers Reliance Enterprise, Conglome Techno Construction, Monarch and Qureshi Builders Ashar Space Pvt Ltd and SN Builders for similar non-compliance of Section 43(5) proviso and failure to deposit 40 to 50 per cent of the penalty amounts before the Tribunal.


Aggrieved parties can go in second appeal before the Bombay High Court only on a point of law.