Shriprop Dwellers Private Limited and Shriram Properties Limited fail to comply with pre-deposit requirement

In a recent ruling by the Karnataka Real Estate Appellate Tribunal, Shriprop Dwellers Private Limited and Shriram Properties Limited, two prominent real estate developers, have faced a setback in their legal battle. The tribunal dismissed their appeal against an order passed by the Karnataka Real Estate Regulatory Authority, citing their failure to comply with the pre-deposit requirement mandated by the Real Estate (Regulation and Development) Act, 2016. This ruling highlights the significance of adhering to legal obligations and the consequences that may arise when failing to meet them.

Case Background:

The case revolves around a real estate project called "SHRIRAM SUMMIT" located in Veerasandra Village and Hebbagodi Village, Attibele, Anekal Taluk, Bengaluru Urban. An agreement of sale was entered into between the developers and an allottee, who intended to purchase Apartment No. SMT No. 19.09.03 within the project. However, due to delays in the completion and possession of the flat, the allottee filed a complaint seeking compensation for the period of delay.

The Karnataka Real Estate Regulatory Authority issued a notice to the developers, who appeared before the authority and denied the allegations made by the allottee. They contended that the delay was caused by pending cases before the National Green Tribunal and the Supreme Court, emphasizing that the delay was not intentional or mala fide but due to force majeure.

The Impugned Order:

After considering the complaint, statement of objections, and hearing the parties involved, the Karnataka Real Estate Regulatory Authority passed an order on December 30, 2022. The authority allowed the complaint and directed the developers to pay a sum of Rs. 12,57,179/- (Rupees Twelve Lakh Fifty Seven Thousand One Hundred and Seventy Nine only) as interest for the delay period to the allottee. The payment was to be made within 60 days from the date of the order, calculated at the Marginal Cost of Funds Based Lending Rate (MCLR) plus 2%, from December 31, 2019, until June 10, 2022. The authority also granted the allottee the liberty to initiate recovery action if the developers failed to comply with the order.

Appeal and Failure to Comply:

In response to the order, Shriprop Dwellers Private Limited and Shriram Properties Limited filed an appeal before the Karnataka Real Estate Appellate Tribunal under Section 44 of the Real Estate (Regulation and Development) Act, 2016. However, the appellants were required to deposit the total amount payable to the allottee, as stated in the impugned order, before the appeal could be heard. This requirement is mandated by the proviso to Section 43(5) of the Act.

Despite being given multiple opportunities, the developers failed to comply with the pre-deposit requirement. Financial constraints were cited as the reason for their inability to make the mandated deposit. The tribunal, considering the developers' non-compliance and the Supreme Court's decision in M/s NEWTECH PROMOTERS AND DEVELOPERS PVT. LTD Vs. STATE OF U.P AND OTHERS, dismissed the appeal and rejected any pending interim applications.

Conclusion:

The dismissal of the appeal filed by Shriprop Dwellers Private Limited and Shriram Properties Limited serves as a reminder of the importance of fulfilling legal obligations in the real estate sector. The requirement to make pre-deposits before appealing an order is a provision established by the Real Estate (Regulation and Development) Act, 2016. This ruling demonstrates that non-compliance with such requirements can have serious consequences for developers.

The Karnataka Real Estate Appellate Tribunal's decision to dismiss the appeal emphasizes the significance of timely payment of compensation to allottees and the need for developers to honor their contractual obligations. This case also highlights the effectiveness of regulatory authorities in safeguarding the interests of homebuyers and maintaining transparency in the real estate industry.

Note: The information provided in this article about Karnataka Real Estate Regulatory Authority (KRERA) is for informational purposes only. It is not intended as legal or professional advice and readers should consult qualified professionals for advice specific to their circumstances. The information provided in this article is based on the FR No. (K-REAT) 55/2023 before the Karnataka Real Estate Regulatory Authority

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