The Allahabad High Court on April 16, 2022 in the matter of Air Force Naval Housing Board Air Force Station v. U.P. Real Estate Regulatory Authority observed that the statutory compliance of a pre-deposit under Section 43(5) of the Real Estate (Regulation and Development) Act, 2016 (“the Act“) by a ‘promoter’ before the entertainment of an appeal in an appellate tribunal is mandatory.

In the instant matter, Air Force Naval Housing Board (“AFNHB“), a welfare organization comprising senior officers of the Air Force and Navy launched a project named AFNHB, Meerut in 2008 to provide suitable and affordable homes to the army and naval personnel, where out 545 flats, 523 flats had been sold and 418 allottees had already taken possession. However, due to a delay in the completion of the project, some allottees approached the Real Estate (Regulation and Development) Authority (“the Authority”) whereby an order the allottees were either awarded interest on their deposited amount or a refund of the deposited amount with interest. As against this, an appeal was filed before Uttar Pradesh Real Estate Appellate Tribunal (“the Appellate Tribunal”) under Section 44 of the Act. The Appellate Tribunal dismissed the appeal on the ground that the appellant had not complied with the mandate of Section 43(5) of the Act and had not deposited the balance amount.

In regard to the legislative logic of the usage of the word ‘promoter’ in Section 43(5) that mandates the paying of a deposit prior to the entertainment of any appeal before a Tribunal, the single judge bench asserted:

“The word ‘promoter’ has been deliberately used by the legislature in the proviso to sub-section (5) of Section 43, as sub-section (5) provides a remedy of statutory appeal to any person aggrieved by the direction or decision of an authority to file appeal before the Tribunal, but in case of a ‘promoter’, the mandatory deposit has to be made prior to the entertainment of the appeal by the Tribunal. The purpose of insertion of such provision is to safeguard the innocent home buyer who has deposited his hard earned money with the developers/promoter and in case of failure of the project or the project getting delayed and on his complaint, the authority directing for refund of the amount with interest, the promoter is obliged to deposit the same before his appeal is heard.”

The Court opined:

“…the appellants are working in real estate sector and their project having been registered on 15.8.2017 after enforcement of Act, 2016, comes under the purview of ‘promoter’, as defined under Section 2(zk) of Act, 2016, and necessary compliance of pre-deposit, as enshrined under Section 43(5) of Act, 2016, has to be made before the Tribunal before entertainment of their appeal.“