The mandatory pre-deposit under Section 43(5) of the Real Estate Regulation and Development Act cannot be substituted with a bank guarantee, as the ordered amount is compensation.

JUDGMENT :

M.A. ABDUL HAKHIM, J.

1. The appellants in this Miscellaneous Second Appeal (MSA) filed under Section 43(5) of the Real Estate Regulation and Development Act, 2016 (the Act) are the Promoters/respondents in Complaint - CCP No. 50/2022 filed by the Allottee before the Adjudicating Officer.

2. The complaint filed by the Allottee before the Adjudicating Officer was allowed, declaring that the Allottee is entitled to get compensation of Rs. 1,69,80,000/- with interest at the rate of 14.85% per annum from 08.02.2021 till realization from the Promoters and their assets along with a cost of Rs. 25,000/-.

3. The Promoters filed the appeal as REFA No. 94/2023 before the Appellate Tribunal challenging the Order of the adjudicating Officer. Promoters filed I.A. No. 2/2024 seeking exemption from statutory deposit under the Proviso to Section 43(5) of the Act. The Appellate Tribunal its Order dated 03.05.2024 dismissed I.A. No. 2/2024 directing the Promoters to make deposit of the entire amount due under the impugned order by way of Fixed Deposit with the Appellate Tribunal for a period of one year drawn on any Nationalised Bank functioning within the Ernakulam District and to make such deposit within one month from the date of the said order. This MSA is filed by the Promoters challenging the said Order of the Appellate Tribunal in I.A. No. 2/2024 in REFA No. 94/2023.

4. This Court admitted the MSA on the Substantial Questions of Law formulated in the Memorandum of Appeal.

5. When this MSA came up for consideration today the learned Counsel for the respondent/Allottee Sri. Laya Mary Joseph pointed out that the issue raised in this Appeal is covered against the appellant by the recent judgment of this Court Artech Realtors Private Limited v. Savithri K. 2025 KHC Online 88 in which it is held that Pre-Deposit in Proviso to Section 43(5) is mandatory which could not be evaded by the Promoter and that the Appellate Tribunal has no discretion in reducing or exempting the Promoter from payment of Pre-Deposit contemplated under proviso to S.43(5) of the Act.

6. The learned counsel for the appellant, Sri. R. Surendran, tried to distinguish the said decision in Artech (supra) on the facts of the present case and advanced arguments.

7. The learned Counsel for the appellant contended that in the impugned order passed by the Adjudicating Officer, the amount found to be entitled by the Allottee is towards rent and not compensation. Proviso to Section 43(5) mandates pre-deposit of compensation alone and not rent. Learned Counsel invited my attention to Section 71, which provides for the appointment of the Adjudicating Officer for the purpose of adjudging compensation under S.12, 14, 18, and 19 of the Act. Sections 12, 14, 18, and 19 do not provide for rent, and hence the realization of rent is beyond the jurisdiction of the Adjudicating Officer. When the Adjudicating Officer passes an order allowing the realisation of rent, it does not come within the scope of Proviso to Section 43(5), and hence, the Appellate Tribunal cannot insist on pre-deposit of the rent ordered by the Adjudicating Officer.

8. On the other hand the learned Counsel for the respondent contended that it is clear from the impugned order passed by the Adjudicating Officer itself that the amount ordered therein is compensation and hence Proviso to Section 43(5) is clearly applicable to the Promoters and they are bound to deposit the entire compensation ordered by the adjudicating officer with the Appellate Tribunal for maintaining the Appeal.

9. The legality of the order passed by the Adjudicating Officer is a matter to be considered by the Appellate Tribunal in the appeal filed by the appellant. Whether the compensation ordered is in the nature of rent or whether the Adjudicating officer has jurisdiction to adjudicate rent are matters to be decided in the Appeal filed by the appellant before the Appellate Tribunal, if those grounds are taken. Going by the Order passed by the Adjudicat