UP REAT Sets Aside RERA Refund Order, Says Reply Opportunity Must Be Formally Closed Before Decision On Merits

The Uttar Pradesh Real Estate Appellate Tribunal (REAT) at Lucknow has recently held that while the right of a party to file a reply may be closed if they fail to do so despite sufficient opportunities, such a right must be expressly and formally closed by the authority before proceeding to decide the case on merits.

A coram of Judicial Member Sanjai Khare and Technical Member Devindar Singh Chaudhry set aside a refund order of the U.P. Real Estate Regulatory Authority (RERA) and observed that:

“The basic principle of Natural Justice is that a lis should be decided on merits after ensuring that sufficient opportunities have been given to parties for filing their pleadings and documents. If opposite party is not filing reply/documents intentionally and deliberately even after sufficient opportunities, opposite parties right to file reply can be closed and thereafter arguments should be heard and final order should be passed."

Flagging a procedural lapse, it further observed that the authority ought to have first closed the opportunity before proceeding further

"Learned Regulatory Authority has not closed the opportunity of promoter to file objection, if any objection, documentary evidence was not filed by the promoter even after giving opportunity on two previous dates. Learned Regulatory Authority ought to have ascertained on 14.03.2022 during hearing whether any objection with documentary evidence has been filed by the opposite party/promoter or not. If Regulatory Authority was of the opinion that opposite party has not filed any objection till date even after giving sufficient opportunities, then Regulatory Authority ought to have first close the opportunity of filing objections by the opposite party and thereafter ought to have proceeded to hear the arguments".

The dispute concerns a commercial unit in the “Park Town Commercial Complex Phase-2” project in Ghaziabad, allotted to Sanjay Kumar under an agreement dated December 4, 2015 for ₹12.62 lakh plus charges.

Possession was due by June 4, 2019. The developer claimed it obtained the completion certificate on June 29, 2019 and issued an offer of possession on July 1, 2019.

Sanjay Kumar filed a complaint before the Regulatory Authority alleging delay in the project and initially sought possession with interest, but later sought a refund of the deposited amount with interest under Section 18(1) of the Real Estate (Regulation and Development) Act, 2016.

Proceeding on the premise that the developer had failed to file any reply, U.P. RERA, by an order dated July 22, 2022 directed the developer to refund the deposited amount with interest at MCLR +1% within 45 days.

Park Town Complex Pvt. Ltd., the developer, challenged the order before the Appellate Tribunal.

It contended that it had uploaded its reply along with documents on August 10, 2021, but due to a technical glitch the filing was not visible on the portal, leading the authority to treat the case as undefended. It further maintained that the project stood completed and possession had been duly offered.

Sanjay Kumar opposed the appeal, contending that the developer had not provided the completion certificate and that the project remained incomplete, relying on progress reports uploaded on the RERA website. He also argued that sufficient opportunities had been granted to the promoter.

On examining the record, the Tribunal found that screenshots showed that a “Reply with all annexures” had indeed been uploaded on August 10, 2021. It also noted that during the hearing on March 14, 2022, the developer's counsel referred to the completion certificate, yet the authority recorded that no documents had been filed.

The tribunal held that the authority is duty-bound to ascertain the status of pleadings during the hearing and that even where a party defaults, its right to file a reply must first be formally closed.

Proceeding without such closure, particularly where the absence of documents may have resulted from a technical glitch, amounts to a gross violation of the principles of natural justice, the Tribunal said.

Finding material irregularity in the procedure adopted by the authority, the Tribunal concluded that the promoter had been denied a fair opportunity to present its case.

Accordingly, the tribunal allowed the appeal, set aside the RERA order dated July 22, 2022, and restored the complaint for fresh adjudication.

The promoter has been directed to file objections within three weeks, after which the allottee may file a rejoinder, and the regulatory authority has been instructed to decide the complaint afresh, preferably within two months.

For Appellant (Park Town Complex Pvt. Ltd.): Advocate Kshemendra Shukla.

For Respondent (Sanjay Kumar): Advocate Suchita Singh.