Promoters Ordered to Refund Allottees for Unjustified Charges Beyond Agreement, Court Affirms Tribunal's Jurisdiction Despite Unregistered Project
In a significant ruling, the Karnataka High Court dismissed an appeal by promoters Navaratan Jhunjhunwala and another, upholding the Karnataka Real Estate Appellate Tribunal's decision mandating the refund of excess amounts collected from property allottees. This decision reinforces the responsibilities of real estate promoters under the Real Estate (Regulation and Development) Act, 2016 (RERA), even when projects are unregistered.
The appeal, RERA Appeal No.76 of 2025, was presided over by Justices Jayant Banerji and Tara Vitasta Ganju. The appellants contested the Tribunal's order dated 07.08.2025, which confirmed a prior order by the Karnataka Real Estate Regulatory Authority. The crux of the dispute involved additional charges imposed by promoters for services not specified in the original sales agreement, including payments to BESCOM and BWSSB, which amounted to Rs.1,75,000.
The Karnataka Real Estate Regulatory Authority had ruled in favor of the allottees, stating that only Rs.75,000 had been legitimately spent by the promoters, thereby entitling the allottees to a refund of Rs.1,00,000 plus interest. The promoters' appeal argued that the Authority lacked jurisdiction as the project was not registered under RERA. However, this was dismissed by the Tribunal, leading to the present appeal before the High Court.
The High Court's judgment emphasized that the promoters failed to register the project under RERA, as mandated by Section 3 of the Act. Furthermore, the court noted that the promoters did not apply for a completion or occupancy certificate before the Act's commencement, thereby nullifying any potential exemptions under Section 3(2)(b) of RERA.
The ruling underscores the legal obligation of promoters to adhere to RERA guidelines, including the registration of ongoing projects and refraining from levying charges outside the agreed terms. The court's decision is a reminder of the judiciary's role in upholding consumer rights in real estate transactions, ensuring transparency and accountability within the industry.
Bottom line:-
Real Estate Regulation - Promoters cannot charge additional amounts from allottees beyond the agreement to sell, and refund of excess amounts collected along with interest is justified, even if the project is unregistered under the RERA Act.
Statutory provision(s): Real Estate (Regulation and Development) Act, 2016 Sections 3, 18(3); Karnataka Real Estate (Regulation and Development) Rules, 2017 Rule 4
