Forfeiture Of ₹25 Lakh For Two-Day Delay In Submitting Fire Scheme Approval Is Disproportionate: Haryana REAT

Terming the forfeiture of Rs. 25 lakh for a two-day delay in submitting fire scheme approval “grossly disproportionate,” the Haryana Real Estate Appellate Tribunal has set aside the order passed by the Haryana Real Estate Regulatory Authority against developer M/s TARC Limited.

A coram comprising Chairman Justice Rajan Gupta and Members Dr. Virender Parshad and Dinesh Singh Chauhan observed, “Forfeiture of 25 lakhs for such a minor infraction, especially when other compliances were impeccable and no homebuyer prejudice is shown, is grossly disproportionate. Penalties under RERA must be just and equitable, not punitive for technicalities. Thus, equity demands setting aside the forfeiture."

The developer had been granted conditional registration for its project, with a requirement to submit fire scheme approval by December 4, 2024. Pending the clearance, it deposited a security amount of Rs 25 lakh.

The tribunal noted that the developer had applied for the fire scheme approval on August 18, 2024, well ahead of the deadline. The approval was, however issued only on December 6, 2024, by the Director General, Fire Services, Haryana, that lead to a two-day delay submitting the same with the authority.

The delay, as per records, occurred on account of the absence of a concerned officer. The officer was on leave between October 25 and November 9, 2024 due to the passing of his young son.

Despite these circumstances, the Haryana Real Estate Regulatory Authority, by its order dated January 31, 2025, forfeited the security deposit for failure to meet the timeline stipulated under the conditional registration.

Allowing the appeal, the tribunal first held that the Authority's order was unsustainable for want of reasons.

It described the impugned order as “cryptic and non-speaking,” noting that it failed to deal with the developer's specific explanation for the delay in submitting fire scheme approval, thereby violating principles of natural justice.

On merits, the tribunal held that the forfeiture could not be sustained.

“RERA, enacted to regulate the real estate sector transparently, does not envisage mechanical penalties that ignore context,” it observed.

The tribunal further noted that while Section 4 mandates fire safety compliances, conditional registration through a security deposit is a pragmatic mechanism to accommodate genuine processing delays by statutory authorities.

It emphasised that the developer's application dated August 18, 2024 “evinces diligence” and that the two-day delay in submitting fire scheme approval arose purely from factors beyond its control.

Holding that penalties were punitive, the tribunal concluded that equity demanded setting aside the forfeiture.

Accordingly, the Appellate Tribunal allowed the appeal, set aside the January 31, 2025 order, and directed the Authority to refund the Rs 25 lakh security deposit within 90 days, without interest.

For Appellant: Advocate Neeraj Goel

For HRERA: Advocate Dhruv Lamba