Welfare Societies Are Promoters Under RERA – Profit Motive Not Required – Delhi High Court

“Non-Compliance with Mandatory Pre-Deposit Under Section 43(5) Justifies Dismissal of Appeal”, Delhi High Court delivered a significant ruling, holding that a registered welfare society acquiring land for residential flats falls within the definition of “promoter” under the Real Estate (Regulation and Development) Act, 2016 (RERA Act), even if it is a non-profit body and has not yet constructed apartments. The Division Bench of Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar dismissed the appeal in limine for non-compliance with the statutory pre-deposit requirement under Section 43(5) of the Act.

The case arose from a RERA Authority order directing the Sansadiya Adhikari Welfare Society (SAWS) to refund member contributions with 10.75% interest. The Society, formed to provide cost-effective housing to Lok Sabha Secretariat officials, had collected funds, purchased 85 bighas of land in Delhi’s Khera Kalan, but failed to construct housing. When members sought refunds, the Society challenged the RERA order before the Appellate Tribunal, which dismissed the appeal for want of the mandatory pre-deposit of the decretal amount.

In the High Court, the appellant argued that it was not a “promoter” under Section 2(zk) of the Act, claiming to be merely a welfare society without having carved out plots or constructed buildings. It further relied on an interim stay in a connected appeal to seek relief.

The Bench was unimpressed. “The definition of the expression ‘promoter’ is expansive and wide… it includes welfare societies, co-operative housing societies, and other juristic persons acquiring land for development of residential flats for members,” the Court held. Citing Section 2(zg), it noted that “the word ‘person’… includes body corporates, companies and other legal entities… an association of persons… is included,” making it clear that a registered society is a “body corporate” under Section 6 of the Societies Registration Act, 1860 and capable of falling within RERA’s regulatory scope.

Rejecting the profit-motive argument, the Court observed, “Profit making is not the exclusive criteria for a person to fall within the definition of ‘promoter’… the object of the Act is to regulate construction and protect homebuyers, even where development is for members only.” The judges found that the Society’s memorandum of association expressly aimed at acquiring land for developing and constructing flats, bringing it within the statutory fold. Even absence of actual construction did not help its case: “Even if the Society has not constructed… still it will fall within the definition of ‘promoter’ because the objective of acquisition of land… was/is to construct/provide apartments for its members.”

The reliance on an interim stay in another matter was brushed aside with a reminder that “interim orders do not hold precedential value” and cannot override a binding statutory requirement. The Court also noted that the constitutional validity of Section 43(5), which mandates the pre-deposit before appeal, has already been upheld by the Supreme Court in M/s Newtech Promoters and Developers Pvt. Ltd. v. State of UP.

Concluding that “non-compliance with the mandatory pre-deposit requirement justified the dismissal of the appeal,” the Bench dismissed the matter outright. With this ruling, the High Court has reinforced RERA’s wide regulatory net and its strict procedural bar on appeals without financial compliance.

Date of Decision: 30 July 2025