Court affirms statutory interest computation under BMPLR plus 2%, dismisses interim relief for substitution with MCLR.
The Kerala High Court has delivered a significant judgment affirming the mandatory pre-deposit condition under Section 43(5) of the Real Estate (Regulation and Development) Act, 2016. The court held that promoters/builders must adhere to the statutory requirement of depositing the total interest and compensation amount before their appeals can be entertained by the Real Estate Appellate Tribunal. This decision came in response to writ appeals filed by Prasanth B and others challenging the interim order of a Single Judge that allowed the pre-deposit to be computed based on the Marginal Cost of Funds based Lending Rate (MCLR) instead of the State Bank of India's Benchmark Prime Lending Rate (BMPLR) plus 2%, as mandated by Rule 18 of the Kerala Real Estate Rules.
The bench, consisting of Justices Raja Vijayaraghavan V and K.V. Jayakumar, emphasized that the legislative intent behind retaining BMPLR plus 2% was a conscious policy decision aimed at protecting the interests of home buyers. The court observed that substituting BMPLR with MCLR through judicial intervention would undermine the statutory framework and dilute the safeguards intended by the legislation.
The judgment further referenced the Supreme Court's decision in the case of Newtech Promoters and Developers Pvt. Ltd., which upheld the constitutionality of the pre-deposit requirement, affirming that it was neither onerous nor violative of constitutional provisions. The High Court reiterated that the judiciary cannot rewrite statutory provisions unless they are ex facie unconstitutional, and any relief that necessitates such rewriting is impermissible under the doctrine of separation of powers.
The court also addressed concerns about the potential financial impact on builders, stating that the statutory framework aims to ensure deterrent benchmarks to protect home buyers and that judicial intervention should not undermine these protections. The judgment vacated the interim order of the Single Judge and directed the appellants to comply with the pre-deposit requirement as per the statutory mandate.
Bottom line:-
Real Estate (Regulation and Development) Act, 2016 - Mandatory pre-deposit condition under Section 43(5) for filing appeals by promoters/builders is binding and cannot be diluted through judicial intervention; Rule 18 prescribing BMPLR plus 2% for interest computation is a legislative policy choice and cannot be substituted with MCLR by judicial directive.
Statutory provision(s): Real Estate (Regulation and Development) Act, 2016 - Section 43(5), Rule 18 of Kerala Real Estate Rules, Constitution of India - Articles 14 and 19(1)(g).
Prasanth B v. Hoysala Projects Private Limited, (Kerala)(DB) : Law Finder Doc id # 2917899
