2025 (11) TMI 73 - HC - Indian Laws

Appellate award of delayed interest under Section 18(1)(a) automatic where completion and possession admitted; deposits appropriation allowed

Ratan Buildtech Private Limited Versus Anil Kumar, Devendra Singh Rawat, Rajesh Bajaj, Umesh Pal, Vijay Singh Jadon, Sandeep Verma, Narendra Singh Negi, Dipanjan Mukhopadhyay and Ors, Shubhi, Visnu Kumar Tiwari, Swati Maheshwari, Kaushik Kumar, Alok Soni, Radhika Bansal and Radhika Bansal Versus Ratan Buildtech Private Limited

HC upheld the Appellate Tribunal's award of delayed interest under Section 18(1)(a) as automatic where completion and possession dates were admitted, and ... RERA - Grant of delayed interest for a period which is mentioned in its impugned order without making any determination and without recording any reasons in respect thereof - direction made without considering the fact that the deposit made in terms of Section 43 (5) of the Act of 2016 is primarily for the purposes of satisfying the statutory requirement of maintaining the appeal - grant of interest requires any adjudication or can be granted automatically Whether the Appellate Tribunal was justified in granting delayed interest for a period which is mentioned in its impugned order dated 17.2.2025, para 18(ii), without making any determination and without recording any reasons in respect thereof? - Whether, grant of interest requires any adjudication or can be granted automatically as per Section 18(1) of the RERA Act? - HELD THAT:- In the present case, admittedly, there was no dispute with regard to the date prescribed in the agreement to sale for completion of the project that was 31.12.2019 and even as per the admission, as recorded in paragraph 13 of the impugned judgment, the offer of possession was made on 05.11.2022, which fact was also admitted by the learned Counsel for the appellant during the course of the hearing before the Tribunal, thus, the normal consequence of the agreement on the three dates would result in automatic award of interest in terms of the mandate of Section 18(1)(a) and was rightly awarded by the Tribunal. Heading of Section 44 of the RERA Act describes application for settlement of disputes and appeals to appellate tribunal, thus, the said Section has two parts, firstly prescribing for an appeal against an order of an Adjudicating Officer, which can be entertained and decided within the time prescribed and in the manner as prescribed, and the second power conferred on the Tribunal as mentioned in Section 44(6) which is basically revisional powers vested in the Appellate Tribunal for examining the legality and propriety and correctness of any order or direction of the Authority or the Adjudicating Officer on its own motion or otherwise, thus, the Tribunal is vested with appellate as well as revisional powers. Although not mentioned in strict sense, it is clearly well settled that the Appellate Authority, wherever prescribed, is entitled to exercise the powers of the authority, against whose order, the appeal has been preferred at the appellate stage, more so, when no appreciation of evidence is required and only a mechanical exercise is to be performed by the Regulatory Authority - the questions are decided against the appellant by holding that the Tribunal has rightly exercised its power in granting delayed interest. Power and the nature of deposit made under Section 43(5) and the power to direct the appropriation of the said amount as has been done by the Tribunal - HELD THAT:- A similar provisions came up for consideration before Hon’ble Supreme Court in the case of Axis Bank vs SBS Organics Private Limited and another [2016 (4) TMI 917 - SUPREME COURT], wherein, the prescription is contained under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) for a pre-deposit under Section 18. While preferring an appeal against any of the measures initiated under Section 13(4) of the SARFAESI Act, the Court after considering the prescriptions contained in Section 18 with regard to pre-deposit held that there was no quantification of dispute in the proceedings under Section 13(4) and thus, the pre-deposit prescribed under Section 18, cannot be adjudicated dues. On the plain interpretation of Section 43(5) read with the context in which, the appeal is prescribed under the RERA Act, it is clear that the interest and/ or compensation, awarded can be challenged before the Tribunal after making the pre-deposit as required for the entertainment of the appeal. The said amount can be appropriated towards the adjudicated amount decided by the authority or the adjudicating authority as the case may be and there is no entitlement of refund unless the appeal is allowed and the order impugned is quashed by the Tribunal - It is however directed that the amount so deposited before the Regulatory Authority in terms of the directions given by the Appellate Authority shall be returned to the appellant, where the amounts are found to be in excess of the interest to be awarded to the allottees. It is further clarified that any amount found to be in excess of the interest payable to the allottee shall be refunded to the appellant on his moving appropriate application. Whether, an appeal would lie against the grant of interest under Section 18(1) of the RERA Act, granted on the basis of admission in between the parties? - HELD THAT:- On plain reading of Section 58 of the RERA Act and Section 100 of C.P.C., it is clear that an appeal would lie only against a decree passed in appeal in any court when only substantial questions of law are involved. From the submissions as recorded in the appellate order, against which, the present RERA Appeals have been filed, it is clearly recorded that there was no dispute with regard to the date of delivering of possession and the offer of possession and the only ground taken with regard to the grant of interest is contained in paragraph 8 to the effect that where the allottee has taken possession without protest and thus he is not liable to any interest for the delay in terms of Section 18(1) of the Act, there being no other submission made before the Tribunal, it is not open for the appellant to canvas new issue as was tried to be done - Even if the submission of the Counsel for the appellant that the appellate court was wrong in recording that there was admission with regard to delay in delivery of possession and the admission was confined only to that effect that apartment could not be delivered to the allottee and there was no admission to liability to pay interest,would not alter the final out come as it is already held that the statutory interest is essentially a mathematical exercise and does not require any adjudicatory exercise. All the appeals filed by Promoter deserve to be dismissed and are accordingly dismissed. The Appeal preferred by the Allottee also deserves to be dismissed as no arguments were advanced for payment of compensation before the Tribunal and thus will not give rise to any substantial question of Law arising from the impugned judgment. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether the Appellate Tribunal was justified in granting delayed interest for the period specified in its impugned order without making any determination or recording reasons for the period and rate awarded. 2. Whether grant of interest under Section 18(1) of the RERA Act requires adjudication (inquiry and recording of reasons) or can be granted as a mechanical/automatic exercise where facts (date of completion/offer of possession) are admitted. 3. Whether an appeal lies against the grant of interest under Section 18(1) of the RERA Act when such grant is made on the basis of admissions between the parties. 4. Whether the pre-deposit made under Section 43(5) (as condition for entertaining an appeal) is a part-payment/discharge of the adjudicated liability and whether the Appellate Tribunal can direct appropriation/refund of such pre-deposit in favour of the allottee after deciding the appeal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2 (combined): Whether the Tribunal could award delayed interest without separate adjudication; whether grant of interest is automatic or requires inquiry. Legal framework: Section 18(1) of the RERA Act prescribes return of amount and compensation, and provides that where a promoter fails to give possession, the promoter shall be liable to return amounts with interest 'at such rate as may be prescribed' or, where allottee elects to continue, pay interest for every month of delay till handing over possession. Rule framework (RERA Rules/Regulations and directions) prescribes the applicable rate (practical source being RERA directions/Agreement Rules where Rule 15 of UP Rules was found to contain a drafting error). Precedent treatment: The Court considered and relied on principles distinguishing adjudicatory exercises from mechanical calculations; while recognizing authorities noting that appellate/revisional tribunals may exercise powers akin to final determination where no further appreciation of evidence is required. Relevant precedents on appellate power to 'pass such orders as it thinks fit' were cited (Walchand-type authority) for the proposition that appellate bodies must act judicially and record reasons when fact-finding is required. Interpretation and reasoning: The Court analyzed Section 18(1) and held that it contemplates two distinct eventualities (promoter fails to complete; promoter unable to give possession) and that the phrase 'as the case may be' operates to choose between those scenarios rather than import a wider discretion such as force majeure exceptions. Where the date of completion (or expected date) and date of offer of possession are uncontroverted or admitted, the computation of interest is essentially a mathematical/mechanical exercise under Section 18(1)(a). The Tribunal may, in exercise of appellate/revisional powers (Section 44(6) and Section 53(1)), pronounce the proper interest entitlement when the material on record suffices and no further fact-finding is necessary. The Court observed that the Tribunal's awarding interest from the contractual expected date to the date of offer of possession was consistent with Section 18(1)(a) and applicable prescribed rates (derived from RERA directions/Agreement Rules given Rule 15's drafting error). The Court rejected the promoter's contention that force majeure and problems in obtaining completion certificate absolve liability without specific adjudication; the statutory scheme does not require separate adjudicatory enquiry where dates are admitted and interest computation is straightforward. Ratio vs. Obiter: Ratio - where completion/possession dates are admitted, award of statutory interest under Section 18(1) is a mechanical exercise and may be granted by the Appellate Tribunal without a separate detailed adjudicatory inquiry; Tribunal may exercise powers to directly determine interest when record suffices. Obiter - observations on interpretation of 'as the case may be' in contexts not present in the record (e.g., detailed treatment of force majeure scenarios) and commentary on Rule 15 drafting error are persuasive but ancillary. Conclusion: The Tribunal was justified in awarding delayed interest for the period specified; grant of interest in such circumstances does not require additional adjudication and is properly characterized as a mechanical statutory computation. Issue 3: Whether an appeal lies against an interest award under Section 18(1) when based on admissions between the parties. Legal framework: Section 58 of the RERA Act permits appeal to the High Court from Appellate Tribunal orders on grounds specified in Section 100 CPC; Section 58(2) bars appeals against Tribunal orders made with consent of parties. Section 100 CPC requires a substantial question of law for second appeals. Precedent treatment: Principles that appeals are limited to issues raised and argued before the appellate forum and that admissions recorded before the authority constrain later challenges were applied. Interpretation and reasoning: The Court found that the promoter had admitted (in pleadings before the Tribunal) material facts regarding the contractual completion date and offer/possession dates; the sole ground argued before the Tribunal was lack of jurisdiction to award interest/compensation, not disputing the dates. Given that the statutory interest here is a mathematical exercise and the facts were admitted, there was no substantial question of law raised in the High Court beyond what had been argued below. The Court held it is impermissible to canvass new issues in the High Court that were not presented to the Tribunal. Even if the promoter disputed the characterization of its prior admission, the conclusion that interest is a statutory mechanical entitlement remains, so any challenge would not raise a substantial question of law warranting a second appeal. Ratio vs. Obiter: Ratio - an appeal to the High Court does not lie on matters beyond issues argued before the Tribunal; where interest is awarded on admitted facts and involves statutory computation, such awards do not ordinarily give rise to substantial questions of law for second appeal. Conclusion: An appeal against an interest award made on the basis of admissions does not ordinarily lie unless a substantial question of law is shown; in the present circumstances no such question existed and appeal was not maintainable on new grounds. Issue 4: Nature and treatment of pre-deposit under Section 43(5); whether the Appellate Tribunal can appropriate or direct release/appropriation of pre-deposit made to entertain appeal. Legal framework: Section 43(5) conditions entertainment of an appeal by pre-deposit (specified percentage/amount). General statutory law and precedents establish that pre-deposits required to entertain appeals function as part-payment/discharge of the liability assessed and are not mere security deposits unless the statute indicates otherwise. Execution, recovery and refund principles are governed by statutory scheme (including Section 40 recovery provisions) and precedents on pre-deposit in other statutes. Precedent treatment: The Court relied on Supreme Court authorities (e.g., Harinagar Sugar Mills; Axis Bank; Kut Energy) analyzing pre-deposit provisions in analogous statutory appeals; those cases hold pre-deposit is typically part-discharge of assessed liability, and refund/appropriation depends on appellate outcome and statutory context; where appeal succeeds deposit is refundable; where appeal fails deposit may be appropriated to satisfy liability. Interpretation and reasoning: Applying the principles, the Court held the pre-deposit under Section 43(5) operates to enable the Tribunal to entertain the appeal and is effectively part-payment of the adjudicated amount. The Tribunal may direct appropriation of the pre-deposit towards amounts adjudicated (interest/compensation) and is not barred from ordering release to the allottee if the appeal fails or the adjudicated amount is confirmed. However, where amounts deposited exceed the interest due, excess must be refunded upon appropriate application. The Court rejected the promoter's argument that the pre-deposit is purely a procedural condition and cannot be appropriated; precedent shows such deposits discharge liability and are subject to refund only when the appeal succeeds. Ratio vs. Obiter: Ratio - pre-deposit under Section 43(5) is a part-payment/discharge of the adjudicated liability and may be appropriated by Tribunal toward amounts adjudged; excess amounts are refundable if shown to exceed entitlement. Obiter - specific directions on administrative handling and Registry practice are ancillary. Conclusion: The Tribunal was justified in directing appropriation/release of amounts deposited under Section 43(5) in aid of the allottee where adjudicated entitlement exists; amounts found in excess of interest payable must be refunded upon application. Final Disposition (as applied by the Court): The appeals by the promoter were dismissed as the Tribunal rightly awarded statutory interest on admitted dates as a mechanical computation and rightly directed disposition of pre-deposit consistent with statutory scheme and precedent; the allottee's appeal seeking compensation was dismissed for lack of arguments before Tribunal that would raise a substantial question of law.