The Bombay High Court has intervened in a critical dispute under the Real Estate (Regulation and Development) Act, 2016 (RERA), staying the disbursement of pre-deposit amounts to allottees before the expiry of the statutory appeal period. The judgment underscores the balance between securing allottees' claims and preserving the promoter's right to challenge adverse orders, offering clarity on the procedural safeguards under Section 43(5) of RERA.
Background & Facts
The Dispute
The petitioner, Digitally CCI Projects Pvt. Ltd., a real estate developer, challenged an order dated 27th April 2026 passed by the Maharashtra Real Estate Appellate Tribunal in a suo moto proceeding. The Tribunal had directed the disbursement of amounts deposited by the promoter under Section 43(5) of the RERA Act, 2016, along with accrued interest, to multiple allottees following the dismissal of a batch of appeals (including Appeal No. AT006-53079/2021). The promoter contended that this disbursement, ordered without an application from the allottees and before the expiry of the statutory appeal period, prejudiced its rights under Section 58 of RERA.
Key Facts
- The promoter had deposited amounts in compliance with Section 43(5) of RERA, which mandates pre-deposit for filing appeals before the Appellate Tribunal.
- On 27th April 2026, the Tribunal dismissed a batch of appeals filed by the promoter, imposing a cost of Rs. 5,000 on the promoter for each allottee.
- The same day, the Tribunal passed a suo moto order directing the Registry to disburse the pre-deposited amounts, along with accrued interest, to the allottees.
- The promoter filed an application seeking a stay on the disbursement, arguing that the judgment had not been formally communicated and that the disbursement would render its right to appeal infructuous.
- The Tribunal rejected the promoter’s application, relying on the Supreme Court’s observations in Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. & Ors., which emphasized that the object of Section 43(5) is to prevent allottees from running "from pillar to post" to recover their amounts.
- The Tribunal directed the allottees to furnish undertakings that they would refund the amounts if the order was reversed in a second appeal.
Procedural History
- 27th April 2026: Tribunal dismisses batch of appeals (AT006-53079/2021 and others) and passes suo moto order directing disbursement of pre-deposit amounts to allottees.
- 27th April 2026: Tribunal rejects promoter’s application for stay on disbursement.
- 5th May 2026: Bombay High Court stays the operation of the Tribunal’s order dated 27th April 2026 in Writ Petition (L) No. 15903 of 2026.
- 8th May 2026: Present writ petition (Writ Petition (L) No. 16053 of 2026) filed by the promoter.
- 23rd June 2026: Matter listed for further hearing.
The Parties' Positions
For the Petitioner (Promoter)
- Argued that the Tribunal’s order directing disbursement of pre-deposit amounts was passed without jurisdiction, as there was no application from the allottees.
- Contended that the disbursement, ordered before the expiry of the statutory appeal period, rendered its right to file a second appeal under Section 58 of RERA infructuous.
- Relied on the principle that an order adverse to a party cannot be passed in the absence of a formal application or hearing.
For the Respondents (Allottees)
- Respondent Nos. 34 and 35: Submitted that the Tribunal’s order was binding between the parties and that the allottees, who had suffered delays, could not be prejudiced by the promoter’s attempt to delay disbursement. Cited the judgment in Rare Townships Pvt. Ltd. v. Mitul Gada to argue that the allottees’ rights flowed from two concurrent judgments.
- Respondent No. 25: Relied on Regulation 25 of the Maharashtra Real Estate Appellate Tribunal Regulations, 2019, which empowers the Tribunal to pass orders in suo moto proceedings.
- Argued that the object of Section 43(5) of RERA is to secure the allottees’ claims, as held by the Supreme Court in Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. & Ors.
Relief Sought
The petitioner sought:
- Quashing of the Tribunal’s order dated 27th April 2026 directing disbursement of pre-deposit amounts to allottees.
- Stay on the operation of the impugned order until the expiry of the statutory appeal period.
- Preservation of its statutory right to file a second appeal under Section 58 of RERA.
The Legal Issue
The central question before the Court was whether the Maharashtra Real Estate Appellate Tribunal could, in a suo moto proceeding, direct the disbursement of pre-deposit amounts under Section 43(5) of RERA to allottees before the expiry of the statutory appeal period, thereby prejudicing the promoter’s right to challenge the order under Section 58 of RERA.
Arguments Presented
For the Petitioner
- The Tribunal’s order was passed without jurisdiction, as there was no application from the allottees seeking disbursement.
- The disbursement of pre-deposit amounts before the expiry of the appeal period rendered the promoter’s statutory right to appeal infructuous.
- The order was adverse to the promoter and could not be passed in the absence of a formal hearing or application.
For the Respondents
- The Tribunal’s order was binding between the parties, and the allottees’ rights could not be prejudiced by procedural delays.
- Regulation 25 of the Maharashtra Real Estate Appellate Tribunal Regulations, 2019 empowered the Tribunal to pass orders in suo moto proceedings.
- The object of Section 43(5) of RERA is to secure the allottees’ claims, as held by the Supreme Court in Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. & Ors.
- The promoter’s right to appeal was distinct from the allottees’ entitlement to the pre-deposit amounts.
The Court's Analysis
The Bombay High Court examined the procedural and substantive aspects of the Tribunal’s order, focusing on the balance between the allottees’ entitlement to the pre-deposit amounts and the promoter’s statutory right to appeal. The Court observed:
"This is quite well settled law that in a petition filed by an individual or an entity there cannot be an order adverse to him except dismissing the petition or application. Mr. Soli Cooper, the learned senior counsel appears for the promoter-petitioner and submits that by directing disbursal of the amount with accrued interest to the allottees the appellate authority has rendered the statutory right of the petitioner to file a second appeal infructuous."
The Court noted that the Tribunal’s suo moto order directing disbursement of the pre-deposit amounts, along with accrued interest, was passed without an application from the allottees and before the expiry of the statutory appeal period. This, the Court held, prejudiced the promoter’s right to file a second appeal under Section 58 of RERA, as the disbursement would render the appeal infructuous.
The Court distinguished the Tribunal’s reliance on the Supreme Court’s observations in Newtech Promoters and Developers Pvt. Ltd. v. State of U.P. & Ors., which emphasized the object of Section 43(5) to secure allottees’ claims. While the Court acknowledged the importance of protecting allottees’ interests, it held that this could not override the promoter’s statutory right to appeal, which required procedural safeguards.
The Verdict
The Bombay High Court stayed the operation of the Maharashtra Real Estate Appellate Tribunal’s order dated 27th April 2026, which directed the disbursement of pre-deposit amounts along with accrued interest to the allottees. The Court listed the matter for further hearing on 23rd June 2026, preserving the promoter’s right to challenge the Tribunal’s order in a second appeal.
What This Means For Similar Cases
Suo Moto Orders Cannot Prejudice Statutory Rights
- Courts and tribunals must exercise caution when passing suo moto orders that affect the substantive rights of parties, particularly when such orders render statutory remedies infructuous.
- The promoter’s right to appeal under Section 58 of RERA is a statutory safeguard that cannot be bypassed by procedural shortcuts, even in the interest of securing allottees’ claims.
Pre-Deposit Disbursement Requires Procedural Safeguards
- While Section 43(5) of RERA aims to protect allottees, its implementation must not override the promoter’s right to challenge adverse orders.
- Tribunals must ensure that disbursement orders are passed only after the expiry of the statutory appeal period or with adequate safeguards, such as undertakings from allottees to refund amounts if the order is reversed.
Balance Between Allottees' Rights and Promoters' Remedies
- The judgment reaffirms that the object of Section 43(5) - to prevent allottees from suffering delays - must be balanced with the promoter’s right to due process.
- Practitioners should argue for procedural compliance, including formal applications and hearings, before orders affecting substantive rights are passed.
