MahaREAT Orders Builder to Pre-Deposit Total Amount Received from Homebuyer and Financer Under RERA Section 43(5)

July 31, 2024

The Maharashtra Real Estate Appellate Tribunal (MahaREAT) Bench, consisting of Chairperson SS Shinde J and Technical Member Dr. K. Shivaji, ruled that under Section 43(5) of the Real Estate (Regulation & Development) Act, 2016, a builder is required to pre-deposit the amount received from the homebuyer as well as the amount paid by the financer to the builder on behalf of the homebuyer.

Background facts

On June 9, 2018, the homebuyer (Respondent No. 1) lodged a complaint with the Authority, requesting a refund of the entire sum paid to the builder (Appellant), along with interest. On February 7, 2019, the Adjudicating Officer of the Authority directed the builder to repay ₹1,90,28,275 to the homebuyer, along with interest and a compensation of ₹2 lakhs.

Dissatisfied with this decision, the builder appealed to the Tribunal. After considering both parties’ arguments, the Tribunal issued an order on December 15, 2020, remanding the case back to the Authority for reconsideration.

Additionally, on February 24, 2022, the Authority issued an order directing the builder to refund the entire amount paid by the homebuyer, along with interest. The builder subsequently filed an application to review the February 24, 2022 order, which was dismissed by MahaRERA on July 20, 2023.

Feeling aggrieved by these decisions, the builder appealed to the Tribunal, seeking to quash and set aside the orders issued by the Authority on February 24, 2022, and July 20, 2023.

Tribunal Order

The Tribunal determined that the homebuyer is the primary borrower for whom the subvention loan was sanctioned to finance the purchase of the flat. The loan amount was disbursed to the builder on behalf of the homebuyer and in the homebuyer’s name. Consequently, the responsibility for repaying the outstanding loan rests primarily with the homebuyer.

MahaREAT cited Section 43(5) of The Real Estate (Regulation and Development) Act, 2016, which states:

(5) Any person aggrieved by any direction, decision, or order issued by the Authority or an adjudicating officer under this Act may file an appeal before the Appellate Tribunal with jurisdiction over the matter.

However, if a promoter files an appeal with the Appellate Tribunal, the appeal will not be entertained unless the promoter first deposits at least thirty percent of the penalty, or a higher percentage as determined by the Appellate Tribunal, or the total amount payable to the allottee, including interest and compensation, if applicable. This deposit must be made before the appeal can be heard.

Additionally, MahaREAT referred to the Supreme Court judgment in the case of New Tech Promoters and Developers Limited vs. State of UP & Others, which established that the requirement for a pre-deposit is mandatory for an appeal to be considered.

The Tribunal also noted that the Authority’s order dated 24.02.2022, which instructed the refund of the total amount received from the homebuyer, implied a refund of the entire amount received from both the homebuyer and the financer.

Therefore, the Tribunal ordered the builder to pre-deposit the entire amount received from both sources with the Tribunal, in accordance with Section 43(5) of RERA, 2016.

Posted and reproduced in Public Interest by

Adv. Sulaiman Bhimani Legal Consultant

Expert in RERA & Consumer Matters, Co-operative Scty Matters,

Deem Conveyance, Family Matters, and Property Disputes.

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President Citizens Justice Forum https://citizensjusticeforum.in