Deposit of 30% of refund claimed obligatory and mandatory

Last Updated On: April 5, 2019, 1:18 p.m.
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HIGHLIGHTS

  • The Maharashtra Real Estate Appellate Tribunal has lined that the proviso contained in Section 43(5) RERA regarding deposit of 30% of the amount is ‘obligatory’ and ‘mandatory’.
  • The flats were booked in July 2013 as per registered agreement and were to be delivered within 36 months.
  • The Hon’ble Supreme Court has pointed out on many occasions that the question as to whether a statute is mandatory or directory depends upon the intent of the Legislature, and not upon the language.

The Maharashtra Real Estate Appellate Tribunal (MREAT) has lined that the proviso contained in Section 43(5) of Real Estate (Regulation and Development) Act (RERA) regarding deposit of 30% of the amount is ‘obligatory’ and ‘mandatory’. The Promoter’s appeal was entertained by the Tribunal.  This ruling by Sumant Kolhe, a member of three members Tribunal, came during the hearing of an appeal filed by Avarsekar Realty Pvt. Ltd. against a MahaRERA order directing the company to refund L&T Financial Consultations Ltd an amount of Rs. 5.28 crore each for four flats.

The flats were booked in July 2013 as per registered agreement and were to be delivered within 36 months. But when the developer registered the project with MahaRERA, the possession was revised to 31st December, 2019. L&T Financial Consultants, who had paid 5.28 crore out of flat cost of Rs. 18.48 crore for each flat, asked for refund of the amount with interest. Avarsekar Realty advocate argued that the delay was because they could not obtain CRZ and environment clearances and NOC from Airport Authority of India.

On 22nd May, 2018, MahaRERA member Madhav Kulkarni, ordered the developer to refund the amount with interest of 10.5 percent. But the Avarsekar Realty challenged the order of MahaRERA before the tribunal and sought for the exemption under the proviso contained in Article 43(5) of RERA. On 13th December, 2018, the Tribunal rejected their request and asked them to deposit 40 percent of the amount, or Rs 21 crore, before their appeal could be entertained, and were given time till 11th January, 2019. On 21st January, 2019, the advocate on the behalf of Avarsekar Realty argued that proviso contained in Section 43(5) is not ‘mandatory’ in nature and cited the Supreme Court judgement of 1998 and 2006 and one Delhi High Court judgement of 2009.

To the contrary, advocate on the behalf of L&T consultants, argued that the proviso contained under Section 43(5) was ‘mandatory’ in nature and non-compliance of it will clearly violate the proviso of RERA. The members of the Tribunal noted that there was ‘no nexus’ between the present case and the cases cited. Sumant Kolhe, a member of the Tribunal noted that it is important to look at the intent of the legislature and object of the act. He further noted that beside MOFA (Maharastra Ownership of Flats Act), REFA was enacted as the MOFA did not fulfil the object.

“It is the duty of courts of justice to try to get at the real intention of the Legislature by carefully attending to the whole scope of the statue to be considered. The Hon’ble Supreme Court has pointed out on many occasions that the question as to whether a statute is mandatory or directory depends upon the intent of the Legislature, and not upon the language in which the intent is clothed,” he said, ruling that proviso was obligatory and the promoter must make compliance of this obligation. Stating this, he dismissed the appeal.

 

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