- 1 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF NOVEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ WRIT PETITION NO. 30968 OF 2024 (GM-RES) BETWEEN: ANAND RATHI GLOBAL FINANCE LTD., A NON BANKING FINANCE COMPANY, HAVING IT REGISTERED OFFICE AT 4TH FLOOR, SILVER METROPOLIS, JAI COACH COMPOUND, OPPOSITE BIMBISAR NAGAR GOREGOAN (EAST) MUMBAI, MAHARASHTRA, INDIA 400063 REP, BY ITS AUTHORISED SIGNATORY, MR. ASHUTOSH GUPTA COMPANIES ACT 1956 …PETITIONER (BY SRI. THAKUR RISHABHA RAJ, ADVOCATE) AND: 1. REAL ESTATE APPELLATE TRIBUNAL REPRESENTED BY ITS HON'BLE SECRETARY, 1/14, 2ND FLOOR, SILVER JUBILEE BLOCK, UNITY BUILDING BACKSIDE, CSI COMPOUND, 3RD CROSS, MISSION ROAD, BENGALURU-500027 2. COMMUNE BUYERS WELFARE ASSOCIATION COMMUNE 1 APARTMENTS, 1ST FLOOR CLUB HOUSE, MARASUR, CHANDAPURA ANEKAL ROAD, ANEKAL TALUK, BENGALURU 562106 COMPANIES ACT 1956 3. COMMUNE ONE OWNERS COOPERATIVE SOCIETY LTD. CLUB HOUSE 1 FLOOR, COMMUNE 1 APARTMENTS BUILDING, CHANDAPURA ANEKAL BUILDING, SURVEY NO. 477/4, 478/A2, 479/A AND 480/3 Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 MARASUR VILLAGE, KASABA HOBLI, ANEKAL TALUK, BENGALURU SOUTH - 562106 COMPANIES ACT 1956 4. COMMUNE PROPERTIES INDIA PVT LTD. A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT NO. 823, GROUND FLOOR, 21ST MAIN ROAD, 8TH BLOCK, KORAMANGALA, REPRESENTED BY IT'S DIRECTOR, BANGALORE 560095 COMPANIES ACT 1956 5. PRATAP SATYANARAYANA KUNDA FOUNDER DIRECTOR AND PROMOTER OF COMMUNE PROPERTIES INDIA PVT. LTD. RESIDING AT 8-2-703/4/P ROAD NO.12, BANJANA HILLS, HYDERABAD, TELANGANA 500034 6. RATISH KUMAR MOORTHY DIRECTOR, COMMUNE PROPERTIES INDIA PVT. LTD., RESIDING AT 820, 80 FEET ROAD, 20TH MAIN, 8TH BLOCK, KORAMANGALA, BANGALORE- 560095 7. REAL ESTATE REGULATORY AUTHORITY REPRESENTED BY ITS HON'BLE CHAIRMAN, KARNATAKA REAL ESTATE REGULATORY AUTHORITY, NO.1/14, 2ND FLOOR, SILVER JUBILEE BLOCK, UNITY BUILDING BACKSIDE, CSI COMPOUND, 3RD CROSS, MISSION ROAD, BENGALURU 560027 …RESPONDENTS (BY SRI.P.K.PRADEEP KUMAR, ADVOCATE FOR R2 & 3; VENKATESH.R.BHAGATH, ADVOCATE FOR R4; R1-REAL ESTATE APPELLATE TRIBUNAL SD; R5-PRATAP SATHYANARAYANA KUNDA SD; R6-RATISH KUMAR MOORTHY SD; R7-REAL ESTATE REGULATORY AUTHORITY SD) THIS W.P. IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH / MODIFY THE OFFICE - 3 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 OBJECTIONS AND ORDER DTD. 27.09.2024 AT ANNX-C PASSED BY THE KARNATAKA REAL ESTATE APPELLATE TRIBUNAL IN F.R. NO. 66/2024, DIRECTING THE PETITIONER TO PRE-DEPOSIT RS.4.39 CRORES AS A PRECONDITION FOR HEARING THE APPEAL AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ ORAL ORDER 1. The Petitioner is before this Court seeking for the following reliefs: “a. Issue a Writ or Certiorari or any other appropriate writ, order or direction to quash / modify the office objections and order dtd. 27.09.2024 at Annx-C passed by the Karnataka Real Estate Appellate Tribunal in F.R. No. 66/2024, directing the petitioner to pre-deposit Rs.4.39 crores as a precondition for hearing the appeal. b. Issue a Writ or Certiorari or any other appropriate writ, order or direction, directing the Karnataka Real Estate Appellate Tribunal to hear the Petitioners appeal (F.R. No. 66/2024) on merits without the requirement of pre-deposit under Section 43(5) of the RERA Act. c. Pass an interim order staying the proceedings of the Appeal (F.R. No. 66/2024) pending before Karnataka Real Estate Appellate Tribunal, pending the final disposal of this writ petition. d. Grant any such relief(s) and orders as this Hon'ble Court deems fit under the facts and circumstances of the case in the interest of justice and equity.” 2. The short grievance of the Petitioner is that the Petitioner being a creditor of the promoter/developer when challenging an order dated 17.05.2024 passed - 4 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 by the Karnataka Real Estate Regulatory Authority (hereinafter referred to as the ‘RERA’ for short) in CMP.No.210223/0007613, the petitioner has been called upon to comply with Proviso to Sub-Section 5 of Section 43 of the Real Estate (Regulation and Development Act), 2016, (hereinafter referred to as ‘the Act’ for short). 3. The submission of Sri.Thakur Rishabha Raj, learned counsel for the Petitioner, is that the said provision would not apply to the Petitioner, who is not a promoter. It is only when a promoter files the appeal before the Appellate Tribunal that at least 30% of the penalty or such higher percentage has to be determined by the Appellate Tribunal has to be deposited. 4. Vide order dated 17.05.2024, the Appellate Tribunal had directed the Petitioner to make payment of certain amounts of money which cannot be said to be - 5 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 one which is due by the Petitioner as penalty or otherwise determined by the RERA. 5. Sri. P.K.Pradeep Kumar, learned counsel for Respondents No.2 and 3, would submit that the Petitioner being a financier of Respondent No.4 steps into shoes of the borrower and as such would be amenable to the jurisdiction of RERA. In this regard, he relies upon the decision of the Hon'ble Rajasthan High Court in the case of Union Bank of India Vs. Rajasthan Real Estate Regulatory Authority and Ors.1, more particularly, para 35 thereof, which is reproduced hereunder for easy reference: “35. Clauses (a), (b) and (c) of sub-section (4) of Section 13 vest power in the secured creditor to take all steps as the borrower himself could take in relation to the secured asset. Clause (d) goes a step further and enables the bank to recover its dues directly from a debtor or the borrower who has acquired any of the secured assets. For all purposes thus the secured creditor steps in the shoes of the borrower in relation to the secured asset. This is thus a case of assignment of rights of the borrower in the secured creditor by operation of law. In other words the moment the bank takes recourse to any of the measures under sub- 1 2022(1) RLW 343 (RAJ) - 6 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 section (4) of Section 13, it triggers statutory assignment of right of the borrower in the secured creditor. Till this stage arises the bank or financial institutions in whose favour secured interest may have been created may not be in isolation in absence of the borrower be amenable to the jurisdiction of RERA. However the moment the bank or the financial institution takes recourse to any of the measures available in sub-section (4) of Section 13 of the SARFAESI Act, RERA authority would have jurisdiction to entertain the complaint filed by an aggrieved person.” 6. Section 43 of the Act provides for the establishment of a Real Estate Appellate Tribunal, and in terms of Sub-Section 5 of Section 43 of the Act, any person aggrieved by any direction or decision or order made by the Authority or by an adjudicating officer under the Act may prefer an appeal before the Appellate Tribunal having jurisdiction over the matter. 7. However, the right to file such an appeal is predicated and subject to the proviso to Sub-Section 5 of Section 43 of the Act, which mandates that where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained without the promoter first having deposited with the Appellate - 7 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 Tribunal at least 30% of the penalty or such higher percentage as may be determined by the Appellate Tribunal or the total amount to be paid to the allottee including interest and compensation imposed on him, if any or with both, as the case may be. 8. 8. The term promoter has been defined under Clause (zk) of Section 2 of the Act, which reads as under: “(zk) “promoter” means,— (i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or 8 (iii) any development authority or any other public body in respect of allottees of— (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or (b) plots owned by such authority or body or placed at their disposal by the Government, for the purpose of selling all or some of the apartments or plots; or - 8 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 (iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or (v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or (vi) such other person who constructs any building or apartment for sale to the general public. Explanation.—For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different person, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified under this Act or the rules and regulations made thereunder.” 9. A perusal of Clause (zk) of Section 2 of the Act would only indicate that it is a person, who constructs or causes to be constructed, who delivers any land, a development Authority, a Cooperative Society or any person, who acts as a builder, coloniser, contractor or be a promoter, Clause (zk) does not include within its meaning a financier or a bank, who has lent money to the promoter. - 9 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 10. Of course, the Hon'ble Rajasthan High Court in Union Bank of India's case has held that the lender would step into the shoes of the borrower when the lender exercises powers under Sub-Section (4) of Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as ‘the SARFAESI Act’ for short), that is for the purposes of exercising jurisdiction under RERA in respect of any orders to be passed against the lender since the RERA prevails over the SARFAESI. 11. That apart, the Hon'ble Rajasthan High Court has not held that a lender would become a promoter by lending money and or exercising power under Sub- Section 4 of Section 13 of the SARFAESI Act. Hence, I am unable to accept the submission of Sri.P.K.Pradeep Kumar, learned counsel for Respondents No.2 and 3, stated that the Petitioner, being a lender, would step into the shoes of the - 10 - HC-KAR NC: 2025:KHC:46598 WP No. 30968 of 2024 borrower and thereby become a promoter under Clause (zk) of Section 2 of the Act, requiring compliance with the proviso to Sub-Section (5) of Section 43 of the Act. 12. In that view of the matter, I pass the following: ORDER 1) Writ petition is allowed. 2) A certiorari is issued, the order dated 27.09.2024 at Annexure-C passed by the Karnataka Real Estate Appellate Tribunal in FR.No.66/2024 is, quashed. 3) The Karnataka Real Estate Appellate Tribunal is directed to consider the appeal of the Petitioner without insisting on a deposit, since the Petitioner is not a promoter under Clause (zk) of Section 2 of the Real Estate (Regulation and Development Act), 2016. SD/- (SURAJ GOVINDARAJ) JUDGE KTY/List No.: 1 Sl No.: 65