Karnataka Tribunal Overturns KRERA, Grants Relief in Villa Dispute

The Karnataka Real Estate Regulatory Authority Tribunal (KREAT) recently overturned a Karnataka RERA (KRERA) order in a landmark order involving a 75-year-old homebuyer who had to wait for 12 years for possession of a luxury villa.  The Tribunal ordered Sterling Urban Developers Pvt. Ltd. to give possession of the property in one month from the order and also pay 9% annual interest for the delay period.  This significant ruling points to some important issues in the real estate sector, particularly concerning the developer's delay and when homeowners can exercise their rights under the Real Estate (Regulation and Development) Act, 2016 (RERA Act).

Case Background

The case involved Devki Nandan and Sterling Developers back in September 2012, when D. Nandan entered into an agreement to purchase a villa for Rs 3.2 crore with Sterling Developers. The date of possession was fixed for December 2013. In January 2014, the sale deed was registered in favor of D. Nandan, but possession was withheld. After years marked by unanswered emails and unfulfilled promises, Nandan approached KRERA for relief.

In May 2023, the complaint was dismissed by KRERA, holding that the developer obtained a partial OC in January 2017 prior to the effect of RERA Act. The buyer challenged the order before the Tribunal because the developer was lying about project completion and that partial OC could never mean full completion of the project.

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KREAT’s Observations and Verdict

The Tribunal meticulously reviewed the case and pointed out several inconsistencies in the developer’s claims:

1. Partial Occupancy Certificate: The developer argued that the project was completed, but KREAT highlighted that the partial OC issued in 2017 did not validate full project completion. This aligned with a Karnataka High Court precedent, which deemed partial OCs insufficient for project closure under RERA.
   
2. Delay in Possession: Despite the buyer’s consistent follow-ups between 2014 and 2019, the developer failed to provide possession or address the issues highlighted by KRERA's engineering team, such as dampness in the villa.
   
3. Ongoing Project Status: KREAT noted that the developer registered the project with KRERA, acknowledging its ongoing nature, which made the provisions of the RERA Act applicable to the case.
   

The Tribunal ruled that KRERA’s dismissal of the complaint lacked legal basis and ordered the developer to:

• Handover Possession: Deliver physical possession of Villa No. C-96 to the buyer within one month.
• Pay Delay Interest: Compensate the buyer with a 9% annual interest for the delay period, up to April 2017.

Implications of the Judgment

This decision underscores the protection offered to homebuyers under the RERA Act, particularly for ongoing or delayed projects. It also sets a precedent for holding developers accountable for incomplete projects and false claims regarding project completion.

For Homebuyers

The judgment is a reminder for homebuyers to persist in their legal battles and leverage the provisions of the RERA Act to ensure timely delivery and compensation.

For Developers

The ruling serves as a warning for developers to adhere strictly to project timelines, provide transparent updates, and avoid misrepresentation of project status.

KRERA and Real Estate Accountability

Legislation was created to provide oversight to real estate matters, thereby creating the very body known as KRERA. It serves to mediate disputes that arise between developers and buyers. However, this particular case highlights some inconsistencies in its decision-making, and hence its decisions should be rendered with more consistency and in line with the objectives of the Act.

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Conclusion

A huge win for the property buyers has issue by the Karnataka Tribunal in favor of the senior citizen and reversing the order of KRERA. It really strongly laid emphasis on the need to give buyers their rights and responsibility in real estate. The words of the order will probably, in fact, set a precedent for the developers to understand the implications of delays and unfinished projects under the law.

Homebuyers like Devki Nandan are encouraged by this ruling to have confidence in the judiciary and the need for bodies such as KRERA to protect and promote consumer interests in respect of real estate transactions.

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