RERA – Clarifications by the Punjab and Haryana High Court on ambiguities

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RERA – Clarifications by the Punjab and Haryana High Court on ambiguities

Introduction

While the Real Estate (Regulation and Development) Act, 2016 (RERA) has come as a big relief for all the aggrieved home buyers across India protesting long delays in the delivery of their homes and other issues, it has left stakeholders unclear about certain provisions.

This alert covers clarifications provided by the Punjab and Haryana High Court on some of such issues.

Background

On 16 October 2020, the Punjab and Haryana High Court passed a judgment on forty-four writ petitions filed in relation to the different provisions of RERA (Judgment).

The Punjab and Haryana High Court has in detail discussed the provisions in relation to: (a) the condition of a pre-deposit for the appellate tribunal to entertain appeal under section 43(5) of RERA; (b) scope and powers of adjudicating officers and the authority under RERA; and (c) remedies available under the Consumer Protection Act, 1986 (CPA) and provided its views on these issues.

Summary of the key findings in the Judgment

(a) Pre-deposit for appeal to the appellate tribunal

A challenge was made against the constitutional validity of the condition for pre-deposit under the proviso to section 43(5) of the RERA for filing an appeal by the promoter before the appellate tribunal against any order of an adjudicating officer.

Proviso to section 43(5) prescribes 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 percent 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 them, if any, or with both as the case may be before the appeal is heard.

The division bench of the High Court in this regard relied on the view given by the Supreme Court of India in one if its judgments that the right to appeal was not a vested right and was a creature of the statute and that conditions can be imposed for filing appeal.

The Court further stated that the Appellate Tribunal is not obliged to proceed to “entertain” or hear an appeal that has been filed before it, if the promoter, who has filed such an appeal, fails to comply with the direction for making the pre-deposit in terms of the proviso to section 43 (5) of the RERA.

In light of the above, the High Court held that the condition to pre-deposit for appeal as provided under section 43(5) cannot be held as unreasonable or arbitrary.

(b) Scope and powers of the appellate tribunal and adjudicating officers

The Court discussed and cleared the ambiguity with regard to the issue of power to adjudicate the compensation under sections 12, 14, 18 and 19 of the RERA.

The High Court read section 71 of the RERA with sections 12, 14, 18 and 19 of the RERA. The Court stated that section 71 of the RERA titled “Power to adjudicate” is specific to the adjudicating officer. Further, section 71(1) opens with the words “For the purpose of adjudicating compensation under sections 12, 14, 18 and 19”.

The High Court held that the adjudicating officer could determine rates of compensation and interest payable on a default by a promoter. It further held that under section 71 the adjudicating officer has the power to adjudicate only the compensation and interest. If an allottee wished for other remedies, they would have to approach the authority, who was bestowed with a wider range of powers under the RERA.

It was further stated that RERA gave the authority the power of a court, and authorized it to issue directions and interim orders, the Court stated. Thus, in the case of compensation and interest alone the person should approach the adjudicating officer.

(c) Remedies under CPA can be pursued simultaneously

The High Court while dealing with various provisions of RERA observed that the remedies available to the allottees under RERA and CPA can also be pursued simultaneously.

The Court further observed that it is not mandatory that a person, whose complaint is pending before the consumer forum, should have it transferred to the adjudicating officer under the RERA.

The Court noted that the proviso to section 71(1) is an enabling proviso, which enables a person whose complaint is pending in the consumer forum under CPA to decide to withdraw such complaint to go before the adjudicating officer.

The judgment also refers to section 88 of RERA in this regard, which clarifies that the provisions of the RERA would be in addition to, and not in derogation of, the provisions of other laws in force.

The Court however clarified that if a complaint before the consumer forum is withdrawn and presented before the adjudicating officer, the scope of the relief would be limited to the compensation or interest. Therefore, the complainant withdrawing the complaint from the consumer forum should take a conscious decision, in light of the above clarification, i.e., they would only be entitled to compensation/interest, as opposed to obtaining a refund/other relief.

Conclusion

The judgment passed by the Punjab and Haryana High Court clarified crucial aspects of the real estate legislation.

By virtue of this Judgment, an appeal to the appellate tribunal cannot be filed by the promoter unless the condition for the pre- deposit under the proviso of the section 43(5) is satisfied.

The Judgment provided clarity to the stakeholders on the powers and scope of the authorities formed under RERA. This will reduce overlap of matters between the authority and adjudicating officer.

The consumers are not required to mandatorily withdraw their complaints from the consumer forum for filing any complaint before the adjudicating officer. Remedies available to the allottees under the RERA and CPA can be pursued simultaneously.