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2020 Supreme(P&H) 1862

IN THE HIGH COURT OF PUNJAB AND HARYANA
Ravi Shankar Jha, Arun Palli, JJ.
Lotus Realtech Pvt. Ltd. - Appellants
Vs.
State of Haryana and Ors. - Respondent
CWP No. 15205 of 2020 (O&M)
Decided On : 23-09-2020

Advocates Appeared:
For the Appellant : Abhishek Singh
For the Respondents:Deepak Balyan, Additional Advocate General, Satya Pal Jain, Additional Solicitor General of India, Dheeraj Jain, Senior Panel Counsel and Tanvi Jain

Headnote:

REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 - SECTION 43(5) - PROVISO - CONSTITUTIONALITY - PRE-DEPOSIT CONDITION FOR FILING APPEAL BY PROMOTER - VALIDITY - ARTICLE 14 - DISCRIMINATION - ARTICLE 226 - WRIT PETITION - GENUINE HARDSHIP - SCOPE.

Fact of the Case:

Petitioner, a company involved in developing a group housing complex, challenged the constitutional validity of the proviso to Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 (Act of 2016), which requires a promoter to deposit at least 30% of the penalty or such higher percentage as determined by the appellate authority, or the total amount to be paid to the allottee, including interest and compensation imposed on him, if any, before entertaining an appeal. The petitioner argued that the pre-deposit condition is arbitrary, violative of Article 14 of the Constitution of India, and amounts to denial of the right of appeal. The petitioner also challenged the order passed by the Haryana Real Estate Regulatory Authority (HRERA) allowing the complaint filed by the respondent allottee.

Finding of the Court:

The Court held that the condition of pre-deposit contained in the proviso to Section 43(5) of the Act of 2016 is valid and constitutional. The Court relied on the Supreme Court's decision in M/s. Technimont Pvt. Ltd. v. State of Punjab and others, which held that a statutory provision of appeal providing for a condition of pre-deposit is constitutionally valid. The Court also held that the classification between promoters and allottees is based on intelligible differentia and is in furtherance of the object and purpose of the Act to protect the interest of the consumers viz-a-viz. promoters in the real estate sector. Therefore, the imposition of the condition of pre-deposit upon the promoters satisfies the test of Article 14 of the Constitution of India. The Court further held that in cases where the statute does not confer any discretion on the Appellate Authority to waive or reduce the amount of pre-deposit, the High Court under Article 226 of the Constitution of India can interfere in exceptional cases of genuine hardship. However, the Court found that the present case is not one of genuine hardship or imposition of an exorbitant impossible to pay, amount calling upon this Court to interfere in the matter in exercise of its extraordinary jurisdiction under Article 226 of the Constitution of India.

Issues: 1. Whether the condition of pre-deposit contained in the proviso to Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 (Act of 2016) is arbitrary, violative of Article 14 of the Constitution of India, and amounts to denial of the right of appeal? 2. Whether the classification between promoters and allottees is based on intelligible differentia and is in furtherance of the object and purpose of the Act to protect the interest of the consumers viz-a-viz. promoters in the real estate sector? 3. Whether the High Court can interfere in exceptional cases of genuine hardship where the statute does not confer any discretion on the Appellate Authority to waive or reduce the amount of pre-deposit?

Ratio Decidendi: 1. The condition of pre-deposit contained in the proviso to Section 43(5) of the Act of 2016 is valid and constitutional as it is in furtherance of the object and purpose of the Act to protect the interest of the consumers viz-a-viz. promoters in the real estate sector. 2. The classification between promoters and allottees is based on intelligible differentia and is in furtherance of the object and purpose of the Act to protect the interest of the consumers viz-a-viz. promoters in the real estate sector. 3. The High Court can interfere in exceptional cases of genuine hardship where the statute does not confer any discretion on the Appellate Authority to waive or reduce the amount of pre-deposit.

Final Decision: The petition filed by the petitioner is dismissed with the aforesaid observations.

JUDGMENT :

Ravi Shankar Jha, J.

1. With the consent of learned counsel for the parties, the matter is being taken up and heard via video conferencing.

2. This petition has been filed by the petitioner, assailing the constitutional validity of the proviso to Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as 'the Act of 2016') which stipulates and lays 'down that any appeal filed by a promoter before the appellate authority against the order of the authority or adjudicating officer, shall not be entertained without the promoter first having deposited at least 30% of the penalty or such higher percentage as may be determined by the appellate authority, 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.

3. Brief facts leading to the filing of the present petition are that the petitioner, which is a company incorporated under the provisions of the Companies Act, 1956 and is involved in developing a group housing complex, had entered into an agreement with the private respondent on 04.10.2013 in respect of a flat admeasuring 1450 sq. feet for a total consideration of Rs. 55,23,950/- to be paid as per the construction linked payment plan incorporated in the agreement.

4. As the flat has not been delivered to the respondent, therefore, the respondent filed a complaint before the Haryana Real Estate Regulatory Authority (HRERA) alleging that he had already paid a sum of Rs. 44,84,346/- out of the total sale consideration as per the construction linked payment plan and the due date of delivery has lapsed, which was four years from the date of start of construction or execution of the agreement, whichever was later, as incorporated in clause 3.1 of the agreement and therefore, HRERA should direct the petitioner to pay interest for every months delay at the prescribed rate from the due date of delivery of possession till the date of handing over the possession of the same to the respondent and to further direct the petitioner to complete the construction and hand over the possession of the flat to the respondent.

5. The authority by order dated 04.02.2020, allowed the complaint and held that the complainant-respondent is entitled to the delayed possession charges at the prescribed rate of interest of 10.20% per annum w.e.f. 04.10.2017, which was the due date for delivery of possession, till the date of offer of possession and the said arrears of interest accrued till the date of passing of the order by the authority shall be paid to the complainant respondent within 90 days and thereafter monthly payment of interest shall be made to the respondent by the 10th of each month till the date of offer of possession.

6. The petitioner being aggrieved by the order dated 04.02.2020 passed by the HRERA filed an appeal before the Real Estate Appellate Tribunal, Haryana, on 28.06.2020. If is submitted by the petitioner that in accordance with the proviso to Section 43(5) of the Act of 2016, the petitioner is required to make certain pie-deposits for entertain ability of the appeal before the Appellate Tribunal. It is submitted that the Appellate Tribunal by an order dated 03.05.2019 passed in appeal No. 60/2019 Ansal Housing Ltd. v. Sushil Kumar Batra waived the condition of pre-deposit contained in the proviso to Section 43(5) of the Act of 2016 relying upon the decisions of this High Court rendered in the cases of Punjab State Power Corporation Ltd. v. State of Punjab and others, 2016 (2) RCR (C) 559, Maruti Suzuki India Ltd. v. Union of India and others CWP No. 2922 of 2014 decided on 27.10.2016 and M/s. Mahesh Kumar Singla and others v. Union of India and others CWP No. 23368 of 2015 decided on 27.03.2017. However, subsequently, the Appellate Tribunal vide order dated 29.07.2019 passed in appeal No. 74 of 2018 Ramprastha Promoters and Developers Pvt. Ltd. v. Ishwar Chand Garg and 94 connected matters, vide order da

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