Karnataka RERA has no jurisdiction over project granted ‘partial OC’ before enactment of RERA: Karnataka HC

The Karnataka High Court (HC) has quashed an order passed by the Karnataka Real Estate Regulatory Authority (KRERA) that asked the developer, Provident Housing, to refund the entire booking amount to the homebuyer after the sale agreement was mutually cancelled following a dispute over the title of the land.

In the judgement, the HC allowed the writ petition filed by the developer and quashed the order for the refund that KRERA had issued in September 2020: “The judgment/order dated 30.09.2020 passed by the Karnataka Real Estate Regulatory Authority, Bangalore, stands quashed.”

The project had obtained two partial occupancy certificates from the Bengaluru Development Authority (BDA) in 2015 and 2017.

The HC judgment said that KRERA had no jurisdiction over projects granted partial occupation certificate (OC) before the enactment of the RERA Act.

The court found that by the time the Act came into force, the construction was no longer an ongoing project.

The order defined an ongoing project as, “An ongoing project would mean where the development of a project is going on, for which a completion certificate has not been issued.”

“The issuance of occupancy certificates, albeit partial, before the Act came into force is not in dispute. Therefore, the project loses its character, as an ongoing project in terms of Rule 4 of the (KRERA) Rules,” the order added.

“Therefore, the determination by the Authority was without jurisdiction and if it is an act without jurisdiction, it is non est in the eye of the law, and if it is non est in the eye of the law, it is rendered unsustainable and requires to be obliterated,” the order said. A non est order is one that can be ignored.

Advocate H Kumar, who argued in favour of the homebuyer, said, “The court has not taken into consideration the fact that partial OC is sufficient to exempt from registration (meaning that this is an ongoing project). Prima facie, the court has not dealt with the matter in depth.”

The case

In September 2014, homebuyer Shyama Shetty booked an apartment at Provident Sunworth. However, in March 2017, Shetty decided to cancel the agreement on the ground that the land had not been legally acquired by the developer.

Shetty said that the state government wanted to take possession of the land his apartment stood on in Venkatapura village in Kengeri Hobli, and the developer moved the HC for a stay on the matter.

In June 2016, the HC ordered interim relief and directed the state government and the developer “to maintain status-quo,” the court order accessed by Moneycontrol showed.

“Despite several requests, the developer did not provide me with letters from the competent authority concerning the acquisition of land. Nor did they reply to my queries,” Shetty added.

Subsequently, on Shetty’s request, the developer cancelled the agreement and refunded Rs 17.5 lakh out of around Rs 24 lakhs Shetty had paid. The developer kept about Rs 6.8 lakh as cancellation charges and taxes, including GST.

At this point, the homebuyer moved the KRERA seeking relief and a refund of the money the developer had deducted.

KRERA findings

KRERA noted that the developer had received the partial OC in March 2017, before the enactment of RERA in the state.

However, KRERA noted per a Haryana RERA order in 2018 it was confirmed that the domain of the authority extended to projects that had not been registered. “Accordingly, the projects that have not been registered but are registrable, in case of violation of Section 3, come within the domain of the authority and the authority is well within its power to initiate legal proceedings,” the Haryana RERA order said.

The order further added that if a complaint in such a case was not entertained by the authority against an unscrupulous promoter/developer, it would “frustrate” the purpose of the Act to provide relief to homebuyers.

KRERA noted that the developer had transacted with the homebuyer even after the RERA Act was enacted in the state. “Hence the cause of action to file this complaint was alive even after the coming into force of this Act. The question of maintainability as contented by the developer has no basis,” the order stated.

KRERA concluded that the developer had returned a major portion of the amount but withheld a part of it while failing to give reasons for the same. Additionally, the order asked the developer to return the due amount within 60 days.

Karnataka HC findings

Karnataka HC cited the Supreme Court (SC) judgment in Newtech Promoters and Developers vs the State of Uttar Pradesh (UP) to clarify the “ongoing” status of a project. The SC order said that in cases where only the issuance of a completion certificate was pending, the legislature intended that even those projects have to be registered under the RERA Act.

The Newtech judgment further added that Section 3(2)(b) of RERA Act specifically excludes projects where a completion certificate has been received before the commencement of the Act and which need not be registered under the Act.

The Karnataka HC added that, “With regard to the explanation of ‘ongoing project’ under the rules which exempts the application of the Act, since a partial occupancy certificate was issued prior to coming into force of the Act, the complaint was not maintainable before the Authority.”

Thus, the court concluded that, “The order passed by the Authority is without jurisdiction and a nullity in law.”

Diverse judgements on similar cases

Right to Information (RTI) activist and Bangalore City Flat Owners’ Welfare Association President Anil Kalgi cited an observation in the order that read, “If the Authority had no jurisdiction to pass the order, the developer’s petition (against paying the refund) becomes maintainable.” Kalgi added: “The interpretation of this can be diverse. The HC order did not expand on the validity of the partial OC. If the project was complete, why was a partial OC obtained? The homebuyer can appeal again,” he added.

In Karnataka, several courts and KRERA orders have challenged the validity of partial OCs, as according to BBMP (Bruhat Bengaluru Mahanagara Palike) Byelaws, 2003, partial OCs can only be granted for certain floors in a project. This has also been laid down in a 2013 HC order in the case of IBC Knowledge Park on Bannerghatta Main Road, Bengaluru.

Pointing to a March 11, 2022, Karnataka HC ruling in Total Environment Building vs. Verghese Stephen, advocate Chaitanya SG said that there was no concept of a partial OC under RERA. Additionally, “The HC has ruled that no person shall occupy a building until a complete OC has been granted,” he explained.

Advocate Vittal BR, added: “Diverse judgements on similar issues will tend to confuse homebuyers, and more importantly, the future legal discourse. The SC clearly states that similar cases must be treated alike.”

Chaitanya said that under RERA Act Chapter II (3), whether a construction was an “ongoing project” or not was decided by a completion certificate. “The central Act does not refer to an OC for defining an ongoing project. The central RERA Act lays down model rules on the basis of which states notify their own rules. In which case, can states dilute or override central rules?” he added.

It is unclear whether in the case of Provident Sunworth the partial OC was obtained for certain floors or the entire project.

Source: https://www.moneycontrol.com/news/business/karnataka-rera-has-no-jurisdiction-over-project-granted-partial-oc-before-enactment-of-rera-karnataka-hc-9824211.html

Following multiple appeals by the Karnataka Home Buyers Forum, the Karnataka Housing Department has finally taken up the case of a potential digital complaints redressal system as part of K-RERA.

After pleas, RERA may address plaints digitally

Following multiple appeals by the Karnataka Home Buyers Forum, the Karnataka Housing Department has finally taken up the case of a potential digital complaints redressal system as part of K-RERA. The home buyers had been struggling for years to get relief after being allegedly stiffed by promoters and builders.

They had appealed to various government authorities, including the Karnataka Real Estate Regulatory Authority (K-RERA), on complaints and cases they had filed as well as suggestions on how to improve the current system to prevent years of waiting for complainants to get relief.

One of the suggestions was the implementation of a digital complaints redressal system, similar to the one recently imposed by Haryana RERA. If the request is implemented, Karnataka will become the second state to have such a system.

The home buyers believe that this will lead to more transparency and accountability, and will also help home buyers who do not reside in the state or Bengaluru. In this regard, the buyers had appealed to the Ministry of Housing and Urban Affairs.

In a document shared with TNIE, the Housing department secretary has forwarded the request to the Karnataka Housing Department’s Secretary, who in turn asked K-RERA’s Secretary to look into the request. K-RERA Secretary Ibrahim Maigur could not be reached for comment regarding the potential implementation of the system.

Source: https://www.newindianexpress.com/cities/bengaluru/2022/mar/26/after-pleas-rera-mayaddress-plaints-digitally-2434304.html

Thousands of homebuyers have been left in the lurch as they wait for compensation from defaulting builders for several months and revenue officials dither on recovery.

Demand for dedicated Karnataka-Rera secretary grows as compensation cases pile up

Thousands of homebuyers have been left in the lurch as they wait for compensation from defaulting builders for several months and revenue officials dither on recovery.

Karnataka Real Estate Regulatory Authority (K-Rera) listed 120 apartment projects whose promoters have failed to deliver flats within the agreed date. It asked deputy commissioners of respective districts to recover a cumulative amount of Rs 238 crore from builders and pay consumers. However, only around Rs 6.8 crore has been recovered since April and only 14 out of 5,800 consumers were fortunate enough to receive compensation.

The sorry state of affairs is being attributed to the absence of a dedicated secretary to K-Rera among other reasons.

The government had posted K Nagendra Prasad as K-Rera secretary in April after transferring KS Latha Kumari. But this is a concurrent charge given to Nagendra Prasad, who is director of the horticulture department. According to officials, enforcement of Rera rules is taking a hit because of this. “K-Rera needs a full-time secretary considering the workload and the nature of service that entitles protection of consumer interest. We have written to the government to post a dedicated secretary and response is awaited,” said K-Rera chairman HC Kishore Chandra.

“We have made some internal arrangements to ensure routine works are not hampered. While regulation issues demand dedicated attention, we are managing it with some extra working hours,” said Nagendra Prasad.

Monitoring apartment projects to see whether developers are complying with the rules and ensuring defaulters pay compensation to homebuyers demands regular field work and perpetual interaction with revenue officials. The stakeholders, including civil society organisations, argue that Rera rules cannot be effectively implemented without the presence of a full-time secretary at the real estate watchdog.

According to Rera rules, a developer who fails to deliver a flat within the deadline declared in the agreement of sale has to pay compensation — the amount decided by K-Rera adjudicating officer, and 8.5% interest on the amount paid by the customer for the delayed period. The recovery from developers is done by the revenue department and it can even attach the property in question following orders of the adjudicating officer.

In Bengaluru Urban district alone, about 600 recovery cases are pending. “A long process is involved in recovering compensation money from defaulting developers and it takes more time if it is a case for attachment. We are at it,” said Bengaluru Urban DC J Manjunath.

Source: https://timesofindia.indiatimes.com/city/bengaluru/demand-for-dedicated-k-rera-secretary-grows-as-compensation-cases-pile-up/articleshow/88232086.cms

The Karnataka government has told the Supreme Court that it has already adopted the model model-builder and agent-buyer agreements prescribed by the Central government to all states.

Realty agreements prescribed by Centre under RERA adopted, Karnataka tells Supreme Court

The Karnataka government has told the Supreme Court that it has already adopted the model model-builder and agent-buyer agreements prescribed by the Central government to all states. It said the Karnataka Real Estate (Regulation and Development) (Agreement for Sale) Rules, 2020 were notified on June 12, 2020.

Responding to the top court’s notice, the state government claimed the contention that none of the states had framed model agent-buyer agreement was incorrect and contrary to facts.

It asked the top court to dismiss a PIL filed by Ashwini Kumar Upadhyay in this regard for not being maintainable, either in law or facts.

The petitioner had sought a direction for framing the “model-builder agreement” and agent-buyer agreement in the real estate sector to infuse transparency and fairness, restraining builders and agents from indulging in unfair and restrictive trade practices.

The government said it issued circulars on October 30, 2021, and November 12, 2021, issuing directions to all deputy commissioners to comply with the orders passed by the Karnataka Real Estate Regulatory Authority within the prescribed period.

Earlier, the Centre said a robust regulatory mechanism and draft ‘agreement for sale’ already existed under provisions of the Real Estate (Regulation and Development) Act, to balance the rights and interest of homebuyers and promoters in an accountable and transparent manner.

The Centre further said it had shared the draft ‘agreement for sale’ in 2016, after the enactment of the RERA, with all states and Union Territories. “Currently, all States and UTs have notified rules under RERA except Nagaland with which the answering respondent is in discussion,” it said.

The Centre said it has discharged the duty by formulation of the act and delegating the rulemaking upon the states for better implementation of the provisions of RERA.

Source: https://www.deccanherald.com/state/top-karnataka-stories/realty-agreements-prescribed-by-centre-under-rera-adopted-karnataka-tells-supreme-court-1057946.html

RERA warns of action as 373 apartment projects unfinished

Karnataka-RERA warns of action as 373 apartment projects unfinished after deadline ends

Although the deadline was extended, real estate developers have completed a mere 51 of the 424 apartment projects, leaving thousands of homebuyers in the lurch, and prompting a stern reaction from Karnataka Real Estate Regulatory Authority (K-RERA).

However, while K-RERA plans to act against defaulting developers, realtors say hurdles caused by the pandemic was the reason for projects lying incomplete and want deadlines pushed back by another six months.

K-RERA had extended the deadline for apartment projects that were supposed to be completed in April or later to September 30 as a relief measure to bolster the sector which was badly affected by the pandemic.

While data shows only a few projects have been completed within the extended deadline, KRERA officials said they will wait till the end of the month to assess the situation before cracking down on defaulting developers.

“Developers must face legal consequences if they are found to have failed to deliver flats to customers within the extended deadline. We will issue notices to them,” said HC Kishore Chandra, chairman, K-RERA.

Rules state if a builder fails to deliver a flat within the date mentioned in the sale agreement, then he must pay 9% interest on the value of the flat for the delayed period besides compensation fixed by K-RERA.

This is the third deadline extension developers were given after Covid-19 hit in March 2020. Based on the Centre’s directive, K-RERA first extended the deadline by six months from March 15, 2020 and subsequently extended it by another three months.

In all, 525 of 4,378 approved projects were unfinished within the stipulated time, while deadlines for 241 projects were extended for general reasons unrelated to Covid. While 284 applications seeking extension are still under process, the completion date has expired for 976 projects.

“This is a sorry state of affairs,” said MS Shankar, general secretary of Forum for People’s Collective Efforts. “Customers are in distress with no support forthcoming from the government. K-RERA should be proactive in enforcing rules and ensure justice for homebuyers.”

He said homebuyers must now wait longer for possession but must continue repaying home loans, while the government’s generosity is limited to developers. But developers argue that the extended deadline did not really benefit the sector since it was not uniformly applied to all projects.

“The K-RERA circular said any project that was due to be completed by April 1, 2020 gets extension up to September 30, 2020. This means the extension differs from project to project. For example, a project that was due for completion on September 29, 2020 would get an extension of only one day,” said Bhaskar Nagendrappa, president, CREDAIBengaluru, while demanding a uniform six-month extension.

But homebuyers say the extension was unwarranted as, unlike the first wave, there were no curbs on construction activity during the second Covid wave. But developers counter that saying business was severely hit because of the ferocity of infections and the higher fatality rate.

Source: https://timesofindia.indiatimes.com/city/bengaluru/karnataka-rera-warns-of-action-as-373-apartment-projects-unfinished-after-deadline-ends/articleshow/87221479.cms

The RERA Karnataka has made public a list of 32 projects across the state which have violated guidelines laid by it when releasing advertisements.

RERA cracks the whip on real estate promoters over advertisements

The Real Estate Regulatory Authority-Karnataka (RERA-K) has made public a list of 32 projects across the state which have violated guidelines laid by it when releasing advertisements. All projects in the state need to mandatorily register under RERA and this number should figure in every advertisement by the promoter under Section 11 of the Act.

The 32 projects that have been listed on the RERA portal for violations are — Devagiri Emaralds, Golden Springs, Century Greens, Century Greens Phase-2, Sangam Grand, JR Habitat, Elmwood Phase-2, Aastha Properties Phase-3, Chaitanya Samarth, Century Ethos, and Centreo. RERA Secretary K S Lathakumari said, “Promoters have the responsibility of notifying the RERA registration number.

Those who have not done so, should realise this and also educate home buyers in this regard.” Under Section 11 (2) of the Act, “The advertisement or prospectus issued or published by the promoter shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto.”

M S Shankar, General Secretary, Forum for People’s Collective Efforts, told The New Indian Express, “We welcome the maiden initiatives of K-Rera which has started to analyse the advertisements of projects and issuing notices to those violating the advertisement norms per RERA Act. This kind of action will go a long way in helping home buyers from misleading advertisements.”

Source: https://www.newindianexpress.com/states/karnataka/2021/mar/01/rera-cracks-the-whip-on-real-estate-promoters-over-adverts-2270296.html

RERA Karnataka will impose a fine of Rs 10,000 per month on builders for not filing quarterly updates on the project status.

RERA to levy delay fee on builders across Karnataka

The Real Estate Regulatory Authority-Karnataka (RERA-K) will impose a fine of
wwRs 10,000 per month on builders across the State for not filing quarterly updates on the status of their projects, which is mandatory under the RERA Act. As per statistics available on its portal, the updates have not been uploaded for 811 projects.

RERA-K Chairperson K S Lathakumari told The New Indian Express, “The quarterly updates need to be compulsorily updated by the builders as they give the buyers an idea of the physical progress of the houses. The financial details pertaining to the amount collected as well as the amount spent so far too need to be updated.” She said that this pertains only to the period up to December 2019. “We have given a waiver for the year 2020 for all the projects due to Covid-19. However, the updates have not been filed even for the previous year by the builders,” she said.

A ‘Delay Fee’ of Rs 10,000 per month would be imposed on each project, she said. “A common reason given for not filing quarterly updates was that the job was handed over by them to a consultant or a third party or even an employee who had quit. Some of them do not even know their login ID to update their projects. Hence, we have asked them to apply for it again online and update the reports.”

As per statistics available, 512 projects have not applied for extension on the RERA portal. Of these, 413 projects have not filed quarterly updates even for a single financial quarter. Out of another 515 projects that are ongoing ones, 398 have not filed quarterly updates. Action would be initiated under RERA Act under these provisions: Sections7 (3) revocation, Section 34 (1) and Section 63.

A total of 126 projects are set to get exemption from the penalty. “Of these, a total of 39 projects that had applied for a deadline extension to complete their projects would be allowed to do so and file quarterly updates within a month without delay fee,” the chairperson said. “Another 87 projects have applied for an extension and their applications are pending. Even they would get a month’s time to file their updates without the delay fee,” she added.

Source: https://www.newindianexpress.com/cities/bengaluru/2021/jan/19/rera-to-levy-delay-fee-on-builders-across-karnataka-2252000.html

RERA Karnataka has warned promoters to immediately put up quarterly updates on its website, failing which they would be penalized.

RERA warns builders to put up quarterly updates on website

The Real Estate Regulatory Authority – Karnataka (RERA-K) has cautioned 1,437 promoters to immediately put up quarterly updates on its website, failing which they would be penalized.

An official release on Monday said that despite repeated notices being issued to the promoters in this connection, they had failed to do so, and urged the defaulters to do it before December 31.

RERA-K Chairperson K S Latha Kumari told TNIE, “All the companies which have registered with us need to update their financial status and physical progress of work done on their respective projects every three months. It has not been done by 1,437 promoters, who have registered with us on various dates over the past three years. A good number of them have not put up even one quarterly update, despite repeatedly stressing on the need for it and issuing notices.”

The need to put up updates is mandatory under various provisions of the RERA Act, the chairperson said. “Only if the firms release the updates would RERA be in a position to assess their progress, as well as check if the amounts paid by flat purchasers are being utilised for the intended purpose,” she added. Promoters are expected to create a separate account for it and deposit 70 per cent of the amount collected into it.

RERA was also keen on redressing the problem of promoters, Kumari said. A webinar will be held by the Authority with CREDAI, other builder organisations and promoters on December 9 to understand and sort out the problems faced by builders, she added.

Source: https://www.newindianexpress.com/cities/bengaluru/2020/dec/01/rera-warns-builders-to-put-up-quarterly-updates-on-website-2230218.html

Rera Karnataka tries to deliver speedy justice by taking details online

Under flak, RERA-K hopes to deliver speedy justice

Even as the Real Estate Regulatory Authority (RERA-K) tries to keep up with the times and take details of its cases online, the delay in getting justice is putting off homebuyers, who are desperate after investing huge amounts of money into properties.

The inability to bring erring realtors to book is an oft-repeated complaint against the authority by buyers. Presenting statistics on the backlog up to November 6, Forum for RERA Collective Efforts General Secretary M S Shankar said, “Out of the 4,450 complains that have been filed with the authority, 2,310 have been heard and judgment delivered.

Around 90 per cent of the cases filed pertain to compensation to be paid by developers for delay in construction of projects.” RERA officials said they were trying to provide speedy justice. An order issued by RERA-K on November 3 says the Deputy Commissioner would be involved in recovering the penalty to be paid by builders, along with interest for delays in completion, or for not adhering to promises made to the buyer.

“The regulatory authority will send a notice to both the builder and homebuyers 60 days after its award seeking a compliance report. If it exceeds the time period, RERA-K will take suo moto action and issue a Revenue Recovery Certificate to the revenue authorities,” it said. RERA-K Secretary K S Latha Kumari told TNIE, “If you assess the cases, we have nearly 2,500 pending with the RERA court. More than 60 per cent have been resolved, which is a good figure.” This was an association set up just three years ago, she pointed out, adding,

“We are going all out to make everything online. Details of every complaint will be made online in future.”To speed up resolution of cases, four additional benches are being set up in addition to the existing three-member authority through a recent notification, the secretary said. “Cases to be earmarked to each bench too would be displayed online to avoid any complaint of bias,” she added.

However, Shankar questioned the rationality behind the move. “There is no provision under the RERA Act to constitute such benches at all. Validity of the benches itself is under question. This decision itself is illegal as they are functioning beyond their powers,” he said.

Source: https://www.newindianexpress.com/states/karnataka/2020/nov/18/under-flak-rera-k-hopes-to-deliver-speedy-justice-2224753.html

RERA-K to ensure online allocation of cases

Amidst allegations from sections of homebuyers of weak implementation of the RERA Act, the Real Estate Regulatory Authority, Karnataka (RERA-K) is preparing to put in place an online system of allocation of cases, which, it says, will result in impartial allotment of cases.

RERA-K Secretary K.S. Latha Kumari told The Hindu, “Some people raise questions about the Chairman allotting cases manually. Now we are developing a software where case allocation will be done online and on rotational basis to benches without any human intervention. This will be allotted as and when cases come to the available benches. This will mean impartial allotment. It has already been developed, but it has to be clubbed with our existing complaint model. It should be put in place in another two to three weeks.”

The authority put out a notification in November about the constitution of four benches, in addition to the existing three-member authority. “Considering the number of pendency of complaints, a decision has been taken to create additional benches under Section 81 to delegate powers of the authority under the RERA Act on the chairman and members separately by creating the benches,” the notification signed by Ms. Latha Kumari said.

There are over 2,000 pending cases with the authority, she said, and disposal of cases under the old arrangement was time-consuming. Creation of additional benches will ensure speedy disposal of cases, she added.

Meanwhile, the Forum for People’s Collective Efforts, an NGO formerly known as the ‘Fight for RERA’ movement, has written to the Chief Secretary of the Karnataka government requesting a meeting to discuss the functioning of RERA-K. In the letter, they have alleged that RERA Act implementation has not been tracked or reviewed since 2017, when it was first implemented.

“The functioning of RERA-K has reached new lows and differences have cropped up among members of the authority, impacting the very purpose of the Act,” they have alleged, adding that there is “no protection for homebuyers.”

However, the RERA-K Secretary has denied all allegations. Ms. Latha Kumari said the authority is functioning as per rules and regulations. “Administratively, RERA-K is one of the best in the country,” she added.

Source: https://www.thehindu.com/news/cities/bangalore/rera-k-to-ensure-online-allocation-of-cases/article33060534.ece