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Builders need to deposit amount ordered by RERA before challenging the order


New Delhi: The Supreme Court on Friday has upheld a provision in the real estate law, which makes it mandatory for builders to deposit full compensation and interest ordered by the regulator or at least 30% of the penalty as a pre-condition for challenging any such order before the appellate authority. The court also upheld the provision that the appellate authority has the freedom to increase the mandatory deposit beyond 30%.

The order comes as a relief for homebuyers and it will deter builders from the practice of resorting to lengthy legal course by challenging orders of RERA authorities.

The SC held that the condition of pre-deposit imposed on promoters for filing appeals under Section 43(5) of the Real Estate (Regulation and Development) Act is neither discriminatory nor a violation of constitutional provision. The court observed: “The intention of the legislature appears to be to ensure that the rights of the decree holder (the successful party) is to be protected and only genuine bona fide appeals are to be entertained the intention of the instant legislation appears to be that the promoters ought to show their bona fides by depositing the amount so contemplated.”

The purpose of the pre-deposit provision is that if the appellate authority passes order in favour of the buyers, they shall smoothly get the money which has been computed by the authority.

The court also upheld the retroactive application of RERA to the real estate projects which were ongoing at the time of the commencement of the Act. The Bombay HC had earlier passed a similar order.