IMPORTANT POINT
Pre-deposit under Section 43(5) of the Real Estate Act must be refunded post-appeal resolution, safeguarding allottee interests.

JUDGMENT :

The 1^st petitioner is a company engaged in the construction of apartments and non-residential buildings. The 2^nd petitioner is the Managing Director of the 1^st petitioner company. The 2^nd respondent is the allottee of an apartment in one of the projects. The 2^nd respondent had filed a complaint before the Kerala Real Estate Regulatory Authority (K-RERA), seeking compensation of Rs.5 lakhs for the loss and mental agony suffered by him due to the failure on the part of the petitioners to provide the promised facilities and amenities. The K-RERA partly allowed the complaint vide Ext.P1 order and directed the petitioners to pay Rs.4,28,368/- to the 2^nd respondent as compensation, with 14.85% interest from the date of complaint till realisation, along with litigation cost of Rs.5000/-. While filing the appeal against the order, petitioners deposited the entire amount of compensation along with interest and produced the Fixed Deposit receipts, as mandated by Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as 'the Act'). Further, the fee of Rs.1000/- stipulated in Rule 28 of the Kerala Real Estate (Regulation and Development) Rules, 2018 (the Rules for short) was also remitted. The 1^st respondent partly allowed the appeal as per Ext.P4, confirming the direction to pay compensation for inconvenience and mental agony, setting aside the direction to compensation of Rs.1.5 lakhs for the car parking area. Challenging Ext.P4, petitioners preferred M.S.A. No.8 of 2024 before the High Court and the operation of the impugned order is stayed by Ext.P5 interim order. Thereupon, petitioners preferred Ext.P6 application before the 1^st respondent, seeking return of the Fixed Deposit Receipts submitted along with the appeal. By Ext.P7 order, the K-RERA allowed refund of the pre-deposit commensurate with the reduction in compensation ordered in the appeal. Hence, this writ petition.

2. According to the learned Counsel for the petitioners, pre-deposit under Section 43(5) is insisted only to maintain the appeal and once the appeal is decided, appellant is entitled for refund of the deposited amount. The pre-deposit cannot be retained as security for the amount which the allottee may become entitled based on the orders of the K-RERA or the appellate authority. The legislature in its wisdom has included Section 40 providing for recovery of amounts due from the promoters as arrears of land revenue. It is contended that the statutory deposit under Section 43(5) cannot also be equated with Order XVI Rule 6 of CPC.

3. I heard the learned Standing counsel for the 1^st respondent and the learned Government Pleader also.

4. The contentions being centered around Section 43(5), the said provision has to be read carefully and for that purpose, is extracted hereunder;

“43. Establishment of Real Estate Appellate Tribunal.—(1) The appropriate Government shall, within a period of one year from the date of coming into force of this Act, by notification, establish an Appellate Tribunal to be known as the ……………………. (name of the State/Union Territory) Real Estate Appellate Tribunal.

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(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:

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