21 November 2022


Supreme Court

Newtech Promoters And Developers Pvt. Ltd. Vs. State Of UP and Ors. Etc.




Principal sum along with interest is to be recovered as arrears of land revenue from builder

The present batch of appeals are filed at the instance of promoter/real estate developer assailing the common issues and certain provisions of The Real Estate(Regulation and Development) Act, 2016, The Uttar Pradesh Real Estate(Regulation and Development) Rules, 2016 and the functioning of the Uttar Pradesh Real Estate Regulatory Authority (“the Authority”).

The impugned orders came to be passed by the single member of the authority on the complaint instituted at the instance of the home buyers/allottees after hearing the parties with the direction to refund the principal amount along with interest(MCLR + 1%) as prescribed by the State Government under the Act. The promoter/real estate developers approached the High Court by filing a writ petition under Articles 226 and 227 of the Constitution and have also challenged the condition of pre-¬deposit as envisaged under proviso to Section 43(5) of the Act for filing of a statutory appeal. Being aggrieved by the orders passed by the High Court dismissing their writ petitions, the present batch of appeals have been preferred.

As per the scheme of the Act, the power of authority to direct the refund of the principal amount is explicit in Section 18 and the interest that is payable is on the principal amount in other words, there is no interest in the absence of a principal amount being determined by the competent authority. Further, the statute is read to mean that, the principal sum with interest has become a composite amount quantified upon to be recovered as arrears of land revenue under Section 40(1) of the Act.

It is settled principle of law that, if the plain interpretation does not fulfil the mandate and object of the Act, this Court has to interpret the law in consonance with the spirit and purpose of the statute. There is indeed a visible inconsistency in the powers of the authority regarding refund of the amount received by the promoter and the provision of law in Section 18 and the text of the provision by which such refund can be referred under Section 40(1). While harmonising the construction of the scheme of the Act with the right of recovery as mandated in Section 40(1) of the Act, keeping in mind the intention of the legislature to provide for a speedy recovery of the amount invested by the allottee along with the interest incurred thereon is self¬-explanatory. However, if Section 40(1) is strictly construed and it is understood to mean that only penalty and interest on the principal amount are recoverable as arrears of land revenue, it would defeat the basic purpose of the Act.

In view of scheme of the Act what is to be returned to the allottee is his own life savings with interest on computed/quantified by the authority becomes recoverable and such arrear becomes enforceable in law. The amount which has been determined and refundable to the allottees/home buyers either by the authority or the adjudicating officer in terms of the order is recoverable within the ambit of Section 40(1) of the Act. There is no error in the judgment impugned in the instant appeals. Appeals are disposed off.

Tags : Arrears Recoverable amount Land Revenue

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