Promoters must approach RERA, not civil courts, for dues from allottees: HC

The Punjab and Haryana High Court has held that Civil Courts do not have jurisdiction to entertain recovery suits filed by promoters or colonisers against flat allottees for unpaid dues following specialised redressal mechanism provided under the Real Estate (Regulation and Development) Act, 2016

The assertion came as Justice Anil Kshetarpal allowed 14 revision petitions filed against orders passed by trial courts on plea by a colonizer. “Once a specialized tribunal has been created under the 2016 Act which provides for remedy under the Act, the Civil Court should not entertain the suit”, the court ruled.

Justice Kshetarpal asserted that Civil Courts possessed “plenary jurisdiction” to try civil matters only “unless such jurisdiction is expressly or impliedly barred by a statute”. Section 79 of the 2016 Act expressly bars the jurisdiction of Civil Courts in matters where the authority, the adjudicating officer, or the appellate tribunal is empowered to adjudicate.

Justice Kshetarpal noted that the only issue in the pleas before the Bench was whether jurisdiction of the Civil Court was excluded under Section 79 of the 2016 Act in a suit filed by a promoter for recovery of unpaid dues. The dispute arose from a residential project at Faridabad, where the petitioners—allottees—were proceeded against by the promoter for non-payment after possession had already been delivered.

Referring to the relevant statutory scheme, Justice Kshetarpal pointed out that Section 19(6) of the Act made it obligatory for the allottee to make necessary payments “in the manner and within the time as specified in the agreement for sale”, and Section 31 of the Act provided a forum for filing complaints by or against an allottee, promoter or agent for any contravention of the Act.

Justice Kshetarpal added the promoter had adequate recourse under the Act itself to recover amounts from allottees since Section 31 provided for such remedy. “In other words, if the provisions of the Act enable the authority or the adjudicating officer or the appellate tribunal to adjudicate upon the dispute, then the jurisdiction of the Civil Court is excluded.”

Justice Kshetarpal also held that the Trial Court “erred in overlooking the express bar under Section 79, particularly when under Section 31 the colonizer/promoter has the remedy of filing complaint before the Tribunal constituted under the 2016 Act.”

The Bench added specialized tribunal for such matters had the benefit of experts and domain knowledge of the subject “which would be in a better position to assess the recoverable amount against the allottee.” Allowing the pleas, the Bench rejected the plaints filed by the promoters before civil courts under Order VII Rule 11 CPC with liberty to avail the appropriate remedy under the 2016 Act.

Punjab