Developer cannot substitute flat attachment for mandatory pre-deposit under RERA Section 43(5) despite insolvency proceedings

The Delhi HC dismissed appellant's application seeking to substitute a flat attachment for mandatory pre-deposit under Section 43(5) of RERA. The court held that appellant could not claim moratorium benefits from insolvency proceedings as they related to a different project than the one before the Real Estate Appellate Tribunal. The HC rejected appellant's argument that offering flat security should exempt them from pre-deposit requirements, citing SC precedent in New Tech Promoters case that upheld mandatory pre-deposit conditions without scope for exemptions or alternative securities.

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Issues:
Challenge to Real Estate Appellate Tribunal's order on pre-deposit under RERA, Moratorium granted by NCLT, Applicability of Section 43(5) of RERA, Appeal filed by Interim Resolution Professional, Offering security in lieu of pre-deposit.

Analysis:
The appellant challenged the Real Estate Appellate Tribunal's order requiring a pre-deposit under Section 43(5) of RERA, citing a moratorium granted by the NCLT in an insolvency case. The appellant argued that insisting on a pre-deposit contradicts the NCLT's order. The appellant also contended that as the appeal was filed by the Interim Resolution Professional, not a 'Promoter,' Section 43(5) of RERA should not apply. The appellant proposed offering security in place of the pre-deposit to fulfill the spirit of RERA.

The respondents countered, citing an NCLAT order clarifying that the insolvency proceedings were limited to a specific project and should not affect other projects. They referenced a Supreme Court judgment to argue against granting an exemption from the pre-deposit requirement under RERA. The respondents emphasized that the NCLT's moratorium did not extend to all projects of the appellant company.

The court examined the provisions of Section 43(5) of RERA and the Supreme Court's ruling in a related case, emphasizing the importance of pre-deposit as a safeguard for allottees. The court rejected the appellant's argument for special exemption based on the NCLT's moratorium, noting that the insolvency resolution was project-specific. The court also dismissed the contention that the appeal by the IRP should be treated differently from that of a Promoter under RERA.

Ultimately, the court found no merit in the appellant's plea for exemption from the pre-deposit requirement, as upheld by the Supreme Court. The court upheld the Real Estate Appellate Tribunal's decision and dismissed the appeal. The court left open the possibility for the appellant to seek relief regarding the penalty deposit before the Tribunal.

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