Haryana RERA Late Fee Cannot Be Refunded In IBC Proceedings Without Challenge Before REAT: NCLT, Kolkata

The National Company Law Tribunal's Kolkata bench has recently observed that once the competent Real Estate Regulatory Authority levies and realizes late fee in exercise of its statutory powers, such levy assumes the character of a statutory charge payable to the State authority and cannot be ordered to be refunded in insolvency proceedings unless it is challenged before the appropriate appellate forum under the RERA law.

“Once the competent RERA Authority has levied and realized late fee in exercise of its statutory powers, such levy partakes the character of a statutory charge payable to the State Authority. In absence of any challenge before the appropriate appellate forum under HRERA, this Tribunal cannot direct refund of such amount,” the tribunal observed.

A bench of Judicial Member Labh Singh and Technical Member Rekha Kantilal Shah dismissed an application filed by Ashiana Landcraft Realty Pvt Ltd, which is undergoing resolution under the Insolvency and Bankruptcy Code.

The corporate insolvency resolution process against the company commenced on January 11, 2022. A resolution plan submitted by One IV County Pvt. Ltd. was approved by the committee of creditors with 78.56% voting share and was later approved by the tribunal on August 11, 2023.

After approval of the plan, the company applied on February 9, 2024 for extension of registration of its real estate project “The Center Court” in Gurugram before the Haryana Real Estate Regulatory Authority (HRERA). During the process, HARERA demanded various charges including late fee for delay in seeking an extension of the project registration.

To obtain renewal of the registration and continue the project for the benefit of more than 300 homebuyers, the company deposited Rs 1,01,23,558 under protest on April 5, 2024, and later sought a refund of the amount before the NCLT.

The applicant argued that the demand related to the period prior to approval of the resolution plan and therefore stood extinguished under the “clean slate” principle recognised under insolvency law.

Rejecting the plea, the tribunal held that the late fee was levied by HRERA in exercise of statutory powers and, once realised, it assumed the character of a statutory charge payable to the regulator. The tribunal further held that the adjudicating authority under the Insolvency and Bankruptcy Code does not sit in appeal over orders passed by the RERA authority and cannot direct refund of statutory fees imposed under an independent regulatory enactment.

Since the levy was never challenged before the appropriate appellate forum under the Haryana RERA law, the tribunal held that the refund could not be ordered in proceedings under the IBC and dismissed the application.