Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 10.08.2026
Punjab & Haryana High Court Upholds Mandatory Pre-Deposit Under Section 43(5) of RERA for Promoter
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his email id amitnaren@outlook.com . Β
The Punjab and Haryana High Court recently delivered a significant judgment in the case of Vrinda Krishna Realtech Private Limited v. State of Punjab and Others, addressing the enforceability of the pre-deposit requirement for appeals under the Real Estate (Regulation and Development) Act, 2016 (RERA). This article provides a detailed analysis of the case, its background, legal arguments, and the implications for real estate promoters and stakeholders.
Background of the Case
Vrinda Krishna Realtech Pvt. Ltd., a real estate promoter, was developing a residential colony in Pathankot, Punjab. The company faced a penalty of Rs. 50 lakhs imposed by the Punjab RERA for violation of Section 3 of the RERA Act, primarily for not obtaining the required project registration. The penalty was imposed ex parte after the promoter failed to respond to multiple notices and did not appear before the authority.
Subsequently, the promoter sought to challenge the penalty but was confronted with the statutory requirement under Section 43(5) of the RERA Act: a mandatory pre-deposit of 30% of the penalty amount as a condition for filing an appeal. Arguing that the project had not taken off, no third-party rights were created, and the penalty was imposed without proper service, the promoter approached the High Court seeking a waiver or reduction of the pre-deposit requirement.
Legal Arguments Presented
Petitioner’s Contentions
- No Project Execution or Third-Party Rights: The promoter argued that since the project was never executed and no third-party rights were created, the penalty was arbitrary and caused undue hardship.
- Ex Parte Proceedings: The penalty was imposed without proper service or opportunity to be heard.
- Request for Waiver/Reduction: The promoter cited previous cases where courts had relaxed pre-deposit requirements in exceptional circumstances, arguing that the High Court had the power to grant relief in cases of genuine hardship.
Respondents’ Position
The State and RERA authorities maintained that the pre-deposit requirement was statutory and had been upheld by the Supreme Court. They argued that the promoter had been duly served with notices but chose not to participate in the proceedings.
Court’s Analysis and Findings
- Validity of Pre-Deposit Requirement: The Court emphasized that the Supreme Court, in M/s Newtech Promoters and Developers Pvt. Ltd. v. State of U.P., had upheld the validity of Section 43(5) of the RERA Act, confirming that the pre-deposit obligation for promoters is neither onerous nor unconstitutional.
- Scope for Waiver: Referring to M/s Technimont Pvt. Ltd. v. State of Punjab, the Court acknowledged that while the High Court can interfere in cases of genuine hardship, such discretion is to be exercised sparingly and only in exceptional circumstances.
- Petitioner’s Conduct: The Court found that the promoter had been served with multiple notices, including personal delivery and newspaper publication, but failed to respond or appear. The penalty was imposed only after due process.
- No Exceptional Hardship: The Court held that the facts did not demonstrate any exceptional hardship warranting waiver or reduction of the pre-deposit. The promoter’s arguments could be raised in the appeal, provided the statutory pre-deposit was made.
Key Takeaways from the Judgment
- Strict Enforcement of Pre-Deposit: The High Court reaffirmed that the pre-deposit requirement under Section 43(5) of RERA is mandatory for promoters seeking to file an appeal against penalties or orders.
- Limited Scope for Waiver: Courts may consider waiving or reducing the pre-deposit only in rare cases of genuine hardship, which must be clearly demonstrated by the petitioner.
- Importance of Compliance: Promoters must respond to notices and participate in proceedings to avoid ex parte penalties and subsequent procedural hurdles.
Implications for Real Estate Promoters
- Mandatory Pre-Deposit: Promoters must be prepared to deposit 30% of the penalty or compensation amount when appealing RERA orders.
- Timely Participation: Ignoring notices or failing to appear can lead to adverse orders and limit the scope for judicial relief.
- Strategic Legal Planning: Before initiating appeals or writ petitions, promoters should assess the statutory requirements and ensure compliance to avoid dismissal on technical grounds.
Conclusion
The Vrinda Krishna Realtech judgment underscores the judiciary’s commitment to upholding the statutory framework of RERA and ensuring that promoters comply with procedural requirements. The decision serves as a cautionary tale for real estate developers, highlighting the importance of timely engagement with regulatory authorities and adherence to legal processes.
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Source: Punjab & Haryana High Court
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