M/S. Provident Housing Limited vs. Karnataka Real Estate Regulatory Authority

1
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU

ND
DATED THIS THE 02 DAY OF JANUARY, 2023

BEFORE

THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

WRIT PETITION No.18448 OF 2021 (GM – RES)

BETWEEN:

M/S. PROVIDENT HOUSING LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE COMPANIES ACT, 1956
HAVING ITS REGISTERED OFFICE
AT NO.8, ULSOOR ROAD,
YELLAPPA CHETTY LAYOUT
BENGALURU – 560 042
REPRESENTED BY ITS
AUTHORIZED SIGNATORY
MS. SONALI SYLVIA.
... PETITIONER
(BY SRI JOSEPH ANTHONY, ADVOCATE)

AND:

1. KARNATAKA REAL ESTATE REGULATORY AUTHORITY
ND
2 FLOOR, SILVER JUBILEE BLOCK
UNITY BUILDING, CSI COMPOUND,
BENGALURU – 560 027
REPRESENTED BY ITS SECRETARY.

2. MR. SHYAMA SHETTY
S/O LATE A.N.SHETTY
AGED ABOUT 62 YEARS,
PADMALEKHA KODI SASTAN ROAD,
GUDNMI VILLAGE, UDUPI TALUK
UDUPI – 576 226.



2
... RESPONDENTS

(BY SRI RAJASHEKHAR K., ADVOCATE FOR R1;
SRI HARISH KUMAR M.S., ADVOCATE FOR R2)


THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
IMPUGNED JUDGMENT AND ORDER ANNEXURE-A DATED
SEPTEMBER 30, 2020 PASSED BY THE KARNATAKA REAL ESTATE
REGULATORY AUTHORITY, BANGALORE IN CMP/UR/190214/
0002137.

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 07.11.2022, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-

ORDER

The petitioner-M/s Provident Housing Limited is before this
st
Court calling in question order dated 30-09-2020 passed by the 1
respondent/Karnataka Real Estate Regulatory Authority (‘Authority’
for short).


2. Brief facts that lead the petitioner to this Court in the
subject petition, as borne out from the pleadings, are as follows:-
The petitioner is a Company incorporated under the
Companies Act, 1956 and is engaged in the business of real estate
development. The petitioner advertises a project i.e., apartment



3
complex in the name and style of “Provident Sunworth” in Sy.Nos.1
nd
to 26 of Venkatapura Village, Kengeri Hobli, Bangalore. The 2
respondent registers his interest by an application pursuant to the
advertisement requesting the petitioner to allot an apartment in the
project. On consideration of the application, the petitioner is
nd
allotted a flat bearing No.SUN-II-5G-506 on the fifth floor to the 2
respondent by way of execution of an agreement to sell.

nd st
3. The 2 respondent who is the applicant before the 1
respondent entered into a sale agreement with the petitioner for
purchase of flat on 10-09-2014 and a construction agreement on
the same day comes into effect. This was on the basis of a
commencement certificate that was issued by the Bangalore
Development Authority (‘BDA’ for short) in respect of the purchase
in favour of the petitioner. It is averred that clause 1 of the
construction agreement obliged the petitioner to hand over
nd
possession of the flat allotted to the 2 respondent on or before
31-07-2016 with the extended period of 6 months from the date of
commencement certificate which would be up to January 2017
subject to the condition that there was no delay or default in



4
nd
payment of installments to the project by the 2 respondent and in
any event which would be force majeure.

4. The petitioner submits an application to the BDA on
21-10-2015 for grant of partial occupancy certificate in respect of
the project which was scrutinized and the same was granted by the
BDA on 18-11-2015. The petitioner later makes another application
on 28-03-2017 to the BDA for a second partial occupancy
certificate. It is the averment in the petition that when things stood
thus, negotiations and discussions were held between the petitioner
nd
and the 2 respondent and later the petitioner gave its willingness
to execute the sale deed and hand over possession of flat No.506
pursuant to the said partial occupancy certificate. On 14-05-2017,
nd
it appears, the 2 respondent seeks to cancel the agreement that
was entered into between him and the petitioner, on the ground
that there was information to him that the land had not been legally
acquired by the petitioner for construction of the Apartment
complex. It was alleged in the communication that the petitioner
had not produced any letter from the competent authority with
respect to acquisition of land and the petitioner had not replied to



5
nd
all those queries which were intermittently raised by the 2
nd
respondent. The petitioner acceded to the request of the 2
respondent and cancelled the agreement and the allotment made in
nd
favour of the 2 respondent and also refunded a sum of
Rs.17,85,212/- on 04-12-2017 after deduction of cancellation
charges and applicable taxes.

nd
5. Long after receipt of the said amount, the 2 respondent
st
knocks at the doors of the 1 respondent/Authority by registering a
complaint seeking refund of an amount of Rs.6,84,494/- along with
interest. On receipt of the notice, the petitioner appears to have
filed its objections with regard to maintainability of the complaint
st
before the 1 respondent and its entertainment by the Authority.
Notwithstanding the objections with regard to maintainability, the
Authority passes the impugned order, on the complaint so made by
nd
the 2 respondent, on 30-09-2020 directing refund of
nd
Rs.6,84,494/- to the 2 respondent within 60 days from
30-09-2020, failing which, it would carry interest at 2% per month.
It is this order that drives the petitioner to this Court in the subject
petition.



6
6. Heard Sri Joseph Anthony, learned counsel appearing for
the petitioner, Sri K. Rajashekhar, learned counsel appearing for
respondent No.1 and Sri M.S. Harish Kumar, learned counsel
appearing for respondent No.2.

7. The learned counsel appearing for the petitioner would
submit that the project had commenced and partial occupancy
certificate was issued in favour of the petitioner on 18-11-2015 and
on 27-04-2017. The Real Estate (Regulation and Development Act,
2016 (‘the Act’ for short) comes into force on 01-05-2016 and the
Rules thereunder were notified on 10-07-2017. The submission is
that by the time the Act came into force, the project of the
petitioner had lost its stage of being an ongoing project. It is his
submission that the Act mandates that the project should be an
ongoing one, for any aggrieved person to knock at the doors of the
Authority. Since the Act itself was not in existence at the time when
the occupancy certificate was issued and agreements were drawn
nd
with the 2 respondent, the complaint was not even maintainable.
In a complaint that was not even maintainable, the Authority could
not have passed the order directing refund of certain amount.



7
nd
8. On the other hand, the learned counsel for the 2
respondent/complainant would contend that the project was still an
ongoing project as complete occupancy certificate was not issued in
favour of the petitioner and, therefore, it is not open to the
petitioner to contend that the complaint was not maintainable. The
petitioner has admittedly not refunded the entire amount. If the
complaint was maintainable before the Authority, the writ petition is
not maintainable, as the petitioner has to prefer an appeal before
the Appellate Tribunal constituted under the Act and not knock at
the doors of this Court, in this petition under Article 226 of the
Constitution of India. He would further contend that for a large
builder like the petitioner, the amount that is directed to be
refunded is so paltry and the petition should, on that ground at
least, be dismissed.

9. In reply, the learned counsel for the petitioner would
contend that it is not the quantum of amount that is what is
necessary to be noticed, but it is the very registration of the
complaint before the Authority. If it was an act without jurisdiction,
the relief that is granted becomes immaterial, as the complaint



8
itself would not become maintainable. He would reiterate his
submission that if the complaint was not maintainable under the
Act, any order that is passed is without jurisdiction and if it is
without jurisdiction, it would be maintainable as a writ petition
before this Court.


10. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record. In furtherance whereof, the issues that fall for
my consideration are:
nd
“(i) Whether the complaint of the 2 respondent
before the Authority was maintainable?

(ii) Whether the order passed by the Authority is
tenable in law?”
Issue No.1:

nd
(i) Whether the complaint of the 2 respondent
before the Authority was maintainable?




9
11. The Real Estate (Regulation and Development) Act, 2016
(Act 16 of 2016) came into effect from 01-05-2016 vide Notification
dated 26-04-2016 published in the official gazette. The Act was to
establish a Real Estate Regulatory Authority for regulation and
promotion of the real estate sector and to ensure sale of plot,
apartment or building, as the case may be, in an efficient and
transparent manner and for establishment of adjudicating
mechanism for speedy dispute redressal and also to establish a
Tribunal to hear appeals from the decisions of the Authority and for
other matters incidental and connected thereto. Certain sections of
the Act which are germane are 2(g), 2(q), 2(zn), 2(zk), 3, 18, 31,
43 and 84 and they read as follows:
“2(g) “appropriate Government” means in respect of matters
relating to,—
(i) the Union Territory without Legislature, the Central
Government;
(ii) the Union Territory of Puducherry, the Union Territory
Government;
(iii) the Union Territory of Delhi, the Central Ministry of
Urban Development;
(iv) the State, the State Government;



10

2(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
(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
(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.



11
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 persons, 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;

12
(a) where the area of land proposed to be developed does not
exceed five hundred square meters or the number of
apartments proposed to be developed does not exceed eight
inclusive of all phases:
Provided that, if the appropriate Government considers it
necessary, it may, reduce the threshold below five hundred
square meters or eight apartments, as the case may be,
inclusive of all phases, for exemption from registration under
this Act;
(b) where the promoter has received completion certificate for a
real estate project prior to commencement of this Act;
(c) for the purpose of renovation or repair or re-development
which does not involve marketing, advertising selling or new
allotment of any apartment, plot or building, as the case may
be, under the real estate project.
Explanation.—For the purpose of this section, where the real
estate project is to be developed in phases, every such phase shall
be considered a stand alone real estate project, and the promoter
shall obtain registration under this Act for each phase separately.

18. Return of amount and compensation.—(1) If the
promoter fails to complete or is unable to give possession of
an apartment, plot or building,—
(a) in accordance with the terms of the agreement for sale
or, as the case may be, duly completed by the date
specified therein; or
(b) due to discontinuance of his business as a developer
on account of suspension or revocation of the
registration under this Act or for any other reason,
he shall be liable on demand to the allottees, in case the
allottee wishes to withdraw from the project, without
prejudice to any other remedy available, to return the
amount received by him in respect of that apartment, plot,
building, as the case may be, with interest at such rate as
may be prescribed in this behalf including compensation in
the manner as provided under this Act:
Provided that where an allottee does not intend to
withdraw from the project, he shall be paid, by the



13
promoter, interest for every month of delay, till the handing
over of the possession, at such rate as may be prescribed.
(2) The promoter shall compensate the allottees in case of
any loss caused to him due to defective title of the land, on which
the project is being developed or has been developed, in the
manner as provided under this Act, and the claim for compensation
under this sub-section shall not be barred by limitation provided
under any law for the time being in force.
(3) If the promoter fails to discharge any other obligations
imposed on him under this Act or the rules or regulations made
thereunder or in accordance with the terms and conditions of the
agreement for sale, he shall be liable to pay such compensation to
the allottees, in the manner as provided under this Act.
31. Filing of complaints with the Authority or the
adjudicating officer.—(1) Any aggrieved person may file a
complaint with the Authority or the adjudicating officer, as
the case may be, for any violation or contravention of the
provisions of this Act or the rules and regulations made
thereunder against any promoter allottee or real estate
agent, as the case may be.
Explanation.—For the purpose of this sub-section
“person” shall include the association of allottees or any
voluntary consumer association registered under any law for
the time being in force.
(2) The form, manner and fees for filing complaint
6
under sub-section (1) shall be such as may be [prescribed].

43. Establishment of Real Estate Appellate Tribunal.—
(1) The appropriate Government shall, within a period of
one year from the date of coming into force of this Act, by
notification, establish an Appellate Tribunal to be known as
the ……………………. (name of the State/Union Territory)
Real Estate Appellate Tribunal.
(2) The appropriate Government may, if it deems necessary,
establish one or more benches of the Appellate Tribunal, for various
jurisdictions, in the State or Union Territory, as the case may be.
(3) Every Bench of the Appellate Tribunal shall consist of at
least one Judicial Member and one Administrative or Technical
Member.



14
(4) The appropriate Government of two or more States or
Union Territories may, if it deems fit, establish one single Appellate
Tribunal:
Provided that, until the establishment of an Appellate
Tribunal under this section, the appropriate Government shall
designate, by order, any Appellate Tribunal functioning under any
law for the time being in force, to be the Appellate Tribunal to hear
appeals under the Act:
Provided further that after the Appellate Tribunal under this
section is established, all matters pending with the Appellate
Tribunal designated to hear appeals, shall stand transferred to the
Appellate Tribunal so established and shall be heard from the stage
such appeal is transferred.
(5) Any person aggrieved by any direction or decision
or order made by the Authority or by an adjudicating officer
under this Act may prefer an appeal before the Appellate
Tribunal having jurisdiction over the matter:
Provided 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
Tribunal at least thirty per cent 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, before the said appeal is
heard.
Explanation.—For the purpose of this sub-section
“person” shall include the association of allottees or any
voluntary consumer association registered under any law for
the time being in force.
84. Power of appropriate Government to make rules.—
(1) The appropriate Government shall, within a period of six
months of the commencement of this Act, by notification,
make rules for carrying out the provisions of this Act.
(2) In particular, and without prejudice to the
generality of the foregoing power, such rules may provide
for all or any of the following matters, namely—



15
(a) the form, time and manner of making application and
fees payable therewith under sub-section (1) of
Section 4;
(ab) information and documents for application to the
Authority for registration under clause (m) of sub-
section (2) of Section 4;
(ac) the form of application and the fees for extension of
registration under Section 6;]
(b) the form and manner of making application and fee
and documents to be accompanied with such
application as under sub-section (2) of Section 9;
(c) the period, manner and conditions under which the
registration is to be granted under sub-section (3) of
Section 9;
(d) the validity of the period of registration and the
manner and fee for renewal under sub-section (6) of
Section 9;
(e) the maintenance and preservation of books of account,
records and documents under clause (b) of Section 10;
(f) the discharge of other functions by the real estate agent
under clause (e) of Section 10;
(g) the rate of interest payable under Section 12;
(h) the form and particulars of agreement for sale under sub-
section (2) of Section 13;
(i) the rate of interest payable under clause (b) of sub-section
(1) of Section 18;
(j) the rate of interest payable under sub-section (4) of Section
19;
(k) the rate of interest payable under sub-section (7) of Section
19;
(l) the manner of selection of Chairperson and Members of
Authority under Section 22;
(m) the salaries and allowances payable to, and the other terms
and conditions of service of, the Chairperson and other
Members of the Authority under sub-section (1) of Section
24;



16
(n) the administrative powers of the Chairpersons under Section
25;
(o) the salaries and allowances payable to, and the other terms
and conditions of service of, the officers and other employees
of the Authority under sub-section (2) of Section 28;
(oa) the form, manner and fees for filing of a complaint under
sub-section (2) of Section 31;]
(p) the details to be published on the website as under clause
(b) and under clause (d) of Section 34;
(q) the additional functions which may be performed by the
Authority under clause (iv) of sub-section (2) of Section 35;
(r) the manner of recovery of interest, penalty and
compensation under sub-section (1) of Section 40;
(s) the manner of implementation of the order, direction or
decisions of the adjudicating officer, the Authority or the
Appellate Tribunal under sub-section (2) of Section 40;
(t) recommendations received from the Central Advisory Council
under sub-section (2) of Section 42;
(u) the form and manner and fee for filing of appeal under sub-
section (2) of Section 44;
(v) the manner of selection of Members of the Tribunal under
sub-section (3) of Section 46;
(w) the salaries and allowances payable to, and the other terms
and conditions of service of, the Chairperson and other
Members of the Appellate Tribunal under sub-section (1) of
Section 48;
(x) the procedure for inquiry of the charges against the
Chairperson or Judicial Member of the Tribunal under sub-
section (4) of Section 49;
(y) the salaries and allowances payable to, and the other terms
and conditions of service of, the officers and employees of
the Appellate Tribunal under sub-section (3) of Section 51;
(z) any other powers of the Tribunal under clause (g) of sub-
section (4) of Section 53;
(za) the powers of the Chairperson of the Appellate Tribunal
under Section 54;



17
(zb) the terms and conditions and the payment of such sum for
compounding of the offences under Section 70;
(zc) the manner of inquiry under sub-section (1) of Section 71;
(zd) the form to be specified in which the Authority shall prepare
a budget, maintain proper accounts and other relevant
records and prepare an annual statement of accounts under
sub-section (1) of Section 77;
(ze) the form in which and time at which the Authority shall
prepare an annual report under sub-section (1) of Section
78;
(zf) any other matter which is to be, or may be, prescribed, or in
respect of which provision is to be made, by rules.”
(Emphasis supplied)

Section 2(q) defines what is completion certificate; Section
2(zk) defines who is a promoter; Section 2(zn) defines what is real
estate project. Section 3 makes prior registration of a real estate
project with the Real Estate Regulatory Authority and mandates
several obligations while making such registration under sub-
section (1) and (2) of Section 3. Section 18 deals with return of
amount and compensation. It would spring into action, if the
promoter fails to complete or unable to give possession of an
apartment, floor or building in accordance with the terms of the
agreement for sale; due discontinuance of business as a developer
or several other circumstances projected in Section 18. Section 31
empowers aggrieved person to file a complaint before the Authority



18
or the Adjudicating Officer for any violation or contravention of the
provisions of the Act or the Rules and Regulations made there
under against any promoter. The powers of the Authority are
defined under Section 38. Section 43 deals with constitution of Real
Estate Appellate Tribunal. Any order passed by the Authority in
terms of the Act and the Rules is appealable under sub-section (5)
of Section 43. Section 84 empowers appropriate Government to
make Rules. The appropriate Government is also defined to be
respective State Government.

12. In exercise of its powers under Section 84, the
Government of Karnataka notifies the Rules. Rules 3 and 4 of the
Rules read as follows:
“3. Information and documents to be furnished by the
promoter for registration of project .— (1) The promoter shall
furnish the following additional information and documents, along
with those specified in sub-section (2) of Section 4 of the Act for
registration of the real estate project with the regulatory authority
namely:—

(a) self attested copy of the PAN card of the promoter;
(b) annual report including audited profit and loss account,
balance sheet, cash flow statement, directors report and the
auditors report of the promoter for the immediately
preceding three financial years; and where annual report is
not available, the audited profit and loss account, balance
sheet, cash flow statement and the auditor report of the



19

20
through online payment mode, as the case may be, for a sum
calculated at the rate of,—

(a) in case of group housing project,-five rupees per square
meter for projects where the area of land proposed to be
developed does not exceed one thousand square meters; or
rupees ten per square meter for projects where the area of
land proposed to be developed exceeds one thousand square
meters, but shall not be more than five lakhs rupees;

(b) in case of mixed development (residential and commercial)
project,-ten rupees per square meter for projects where the
area of land proposed to be developed does not exceed one
thousand square meters; or fifteen rupees per square meter
for projects where the area of land proposed to be developed
exceeds one thousand square meters, but shall not be more
than seven lakhs rupees;

(c) in case of commercial projects,-twenty rupees per square
meter for projects where the area of land proposed to be
developed does not exceed one thousand square meters; or
twenty five rupees per square meter for projects where the
area of land proposed to be developed exceeds one thousand
square meters, but shall not be more than ten lakhs rupees;
and

(d) in case of plotted development projects,-five rupees per
square meter, but shall not be more than two lakhs rupees.

(4) The declaration to be submitted under clause (l) of sub-
section (2) of Section 4, shall be in Form-B, which shall include a
declaration stating that the promoter shall not discriminate against
any allottee at the time of allotment of any apartment, plot or a
building, as the case may be.

(5) In case the promoter applies for withdrawal of application
for registration of the project before the expiry of the period of
thirty days specified under sub-section (1) of Section 5, registration
fee to the extent of ten percent paid under sub-rule (3), or rupees
fifty thousand whichever is more, shall be retained as processing
fee by the regulatory authority and the remaining amount shall be
refunded to the promoter within thirty days from the date of such
withdrawal.



21

4. Additional disclosure by promoters of ongoing
projects.— (1) Upon the notification for commencement of
sub-section (1) of Section 3, promoters of all ongoing
projects which have not received completion certificate
shall, within the time specified in the said sub-section, make
an application to the Regulatory Authority in the form and
manner as specified in Rule 3.

Explanation: For the purpose of this rule “Ongoing
project” means a project where development is going
on and for which completion certificate has not been
issued but excludes such projects which fulfill any of
the following criteria on the date of notification of
these rules, namely:—

(i) in respect of layouts where the streets and civic
amenities sites and other services have been
handed over to the Local Authority and Planning
Authority for maintenance;

(ii) in respect of apartments where common areas
and facilities have been handed over to the
registered Association consisting of majority of
allottees;

(iii) where all development works have been
completed as per the Act and certified by the
competent agency and sale/lease deeds of sixty
percent of the apartments/houses/plots have
been registered and executed;

(iv) where all development works have been
completed as per the Act and certified by the
competent agency and application has been filed
with the competent authority for issue of
completion certificate/occupation certificate;
and

(v) where Partial occupancy certificate is obtained
to the extent of the portion for which the partial
Occupancy Certificate is obtained.




22
(2) The promoter shall in addition to disclosures
provided in Rule 3 disclose the following information,
namely:—

(a) the original sanctioned plan, layout plan and
specifications and the subsequent modifications
carried out, if any, including the existing sanctioned
plan, layout plan and specifications;

Explanation:—For the purpose of clause (ii) of sub-
section (2) of Section 14 of the Act, the Prior written
consent of at least two third of the allottees would not
be required if,—

(i) implementation of the proposed plan has already
been disclosed to the allottees under the
agreement prior to registration, or

(ii) modification is required to be made in
compliance of any order or direction issued by
competent authority or statutory authority,
under the agreement for sale, the promoter is
not required to obtain the consent of allottee in
case of any alteration or addition to the
apartment required by Government authorities
or due to change in any law.

(b) the total amount of money collected from the allottees
and the total amount of money used for development
of the project including the total amount of balance
money lying with the promoter; and

(c) status of the project (extent of development carried
out till date and the extent of development pending)
including the original time period disclosed to the
allottee for completion of the project at the time of
sale including the delay and the time period within
which he undertakes to complete the pending project,
which shall be commensurate with the extent of
development already completed, and this information
shall be certified by an engineer, an architect and a
chartered accountant in practice.




23
(3) The promoter shall disclose the size of the
apartment based on carpet area even if earlier sold on any
other basis such as super area, super built up area, built up
area etc. which shall not affect the validity of the agreement
entered into between the promoter and the allottee to that
extent.

(4) In case of plotted development, the promoter shall
disclose the area of the plot being sold to the allottees as per the
layout plan.

(5) For projects that are ongoing and have not received
completion certificate on the date of commencement of the Act, the
promoter shall, within a period of three months of the application
for registration of the project with the Authority, deposit in the
separate bank account, seventy per cent, of the amounts already
realized from the allottees, which have not been utilized for
construction of the project or the land cost for the project as
required under sub-clause (D) of clause (l) of sub-section (2) of
Section 4, which shall be used for the purposes specified therein:

Provided that if the receivable of the ongoing project is less
than the estimated cost of balance construction, then the promoter
shall deposit 100 per cent of the amounts to be realised in the
separate account.”
(Emphasis supplied)

Rule 3 mandates information and documents to be furnished by the
promoter for registration of a project under the Act. Rule 4
mandates additional disclosure by promoters of ongoing projects.
The said Rule mandates that upon the notification for
commencement under sub-section (1) of Section 3 of the Act,
promoters of all ongoing projects which have not received
completion certificate shall, within the time specified in the said



24
sub-section, make an application to the Regulatory Authority. The
Rule places an explanation as to what is an ‘ongoing project’ . An
ongoing project would mean where a development of a project is
going on, for which completion certificate has not been issued, but
excludes those projects which fulfill the criteria enumerated therein
which are layouts where the streets and civic amenities and other
services have been handed over to the Local Authority. Among
other things clause (v) of Rule 4 therein exempts rigour of the Act
and the Rules where partial occupancy certificate is obtained to the
extent of the portion for which occupancy certificate is issued.
Therefore, the Rule itself recognizes the situation of issuance of
partial occupancy certificate on the exemption with the applicability
of the Act and the Rules or the conditions stipulated therein. It is in
the aforesaid statutory frame work the issue in the lis is to be
considered. A little walk in history is needed for the said purpose.


13. Certain events are a matter of record. On 10-09-2014 an
nd
agreement between the petitioner and the 2 respondent which
was an agreement of sale and construction agreement are signed.
Prior to the said construction agreement, the BDA which was the



25
Competent Authority had issued a commencement certificate for
commencement of the project. The project was completed to
certain extent and a partial completion certificate was issued by the
BDA on 18-11-2015 accepting the application of the petitioner
dated 21-10-2015. The partial occupancy certificate is appended to
the petition. Another partial occupancy certificate is issued on
nd
27-04-2017. The 2 respondent with whom agreement of sale was
signed between the parties seeks to wriggle out of the project or
the agreement, communicates to the petitioner that he is intending
to cancel the agreement on some information that he received that
the project is not on a legally acquired land.

14. The petitioner did not make a hue and cry over it; did
refund an amount of Rs.17,85,212/- on 04-12-2017. This amount
having been realized is also not in dispute. Therefore the contract
nd
between the parties had concluded on 04-12-2017 without the 2
respondent making any grievance with regard to the refund. But on
nd
14-02-2019, the 2 respondent registers a complaint before the
Authority, invoking Section 31 of the Act claiming that he is
aggrieved that the entire refund is not received from the hands of



26
the petitioner and an amount of Rs.6,84,494/- was still due. The
petitioner filed its detailed objections before the Authority
contending that the complaint itself was not maintainable as the
project was not an ongoing project. Declining to accept the same,
the Authority passes the order dated 30-09-2020 directing refund
of the amount claimed along with interest under Section 18 of the
Act. The order reads as follows:
“I failed to understand the stand taken by the developer who
has said nothing about the plea taken by the complainant. In the
present case only the issue regarding non-repayment of part of the
amount which was withheld by the developer stating that he has
withheld the same towards cancellation charges. In this regard I
would say that the developer has transacted with the complainant
even after coming into force of this Act. It means the cause of
action to file this complaint was alive even after the coming into
force of this Act. Hence, the question of maintainability as
contended by the developer has no basis. Further he said nothing
so far as allegations are made towards deduction of amount. In
what way he is deducted the part of the amount is not explained.
In the absence of specific defense, the contention of the
complainant has to be honoured. When he has cancelled the
booking then the developer ought to have returned the amount in
full or he ought to have given reasons for deduction. But the
developer has denied the case of the complainant on the ground of
receipt of OC. It is not correct on his part why he has withheld the
amount when his project was not on the free litigated land. He has
returned major portion of the amount but withheld some portion
without any reason. He failed to give reasons for the same. In his
absence now I have to go to the same. The developer has received
the amount in the year 2014 and he has utilized the same for his
project. After cancellation of booking he has returned the money
without any interest. The present amount was withheld as
cancellation charges and towards tax. In this regard I would say
that the developer will again collect the amount towards the tax



27
from the new buyer. Hence, he has to return the same to the
present complainant. The developer has already benefitted with the
money and earned benefit out of the money when it was with him.
The major portion of the money which has been returned to the
complainant was without interest and hence the same is also to be
returned. With this observation I allow this complaint in part.

13. Before passing the final order I would like to say
that as per Section 71(2) of RERA the complaint shall be
disposed off by the Authority within 60 days from the date
of receipt of the complaint. This complaint was filed on
14.02.2019. Since this complaint was filed against the
unregistered project, the file was with the Secretary who
has taken necessary steps against the developer with regard
to the registration of his project. Later the complaint has
been transferred to this authority on 18.12.2019 for disposal
in accordance with law. Afterwards this authority has issued
notice to the parties. The developer has appeared and filed
the objections. In the meanwhile on account of natural
calamity COVID-19 the Government has declared lock down
completely from 24.03.2020 till 17-05-2010 and as such this
judgment could not be passed and as such it is with some
delay. With this observation, I proceed to pass the
following:
ORDER

a. The complaint filed by the complainant bearing
No.CMP/UR/190214/0002137 is hereby allowed
in part.

b. The developer shall return Rs.6,84,494/- to the
complainant within 60 days from to-day. If not,
it will carry interest @ 2% above the MCLR of
st
SBI commencing from 61 day till the
realization.

c. Intimate the parties regarding the order.”
(Emphasis added)
As observed hereinabove, against the said order in the normal
circumstance an appeal would be maintainable. The issue here is



28
whether the complaint before the Authority was itself maintainable
or otherwise. If the complaint before the Authority was
maintainable, the impugned order becomes appealable under sub-
section (5) of Section 43. If the Authority had no jurisdiction to
pass the order, the writ petition in the form that is presented
becomes maintainable. In view of the preceding analysis, more
particularly, with regard to the explanation of ‘ongoing project’
under the Rules which exempts application of the Act and the Rules
since the project had commenced and partial occupancy certificate
was issued prior to coming into force of the Act, the complaint itself
was not maintainable before the Authority. Notwithstanding such
exemption, the Adjudicating Authority appears to have been
nd
swayed by the grievance vented out by the 2 respondent in
entertaining the complaint.

15. The issuance of occupancy certificate prior to the Act
coming into force, albeit partially, is not in dispute. Therefore, the
project loses its character, as an ongoing project in terms of Rule 4
of the Rules, as the explanation in the Rule exempts such an
ongoing project. Therefore, the determination by the Authority was



29
without jurisdiction and if it is an act without jurisdiction, it is non
est in the eye of law, and if it is non est in the eye of law, it is
rendered unsustainable and requires to be obliterated. It is
germane to notice at this juncture the judgment of the Apex Court
in the case of NEWTECH PROMOTERS AND DEVELOPERS PVT.
1
LTD. v. STATE OF U.P. wherein the Apex Court considers the
retroactivity and retrospectivity of the Act in the following
paragraphs:

1

2021 SCC OnLine SC 1044



30

The Apex Court at paragraph-40 considers what is an ongoing
project and issuance of completion certificate interpreting the Act
and the Rules made by the State of Uttar Pradesh. At paragraph-51
the Apex Court holds that the statute is not retrospective merely
because it affects existing rights or its retrospection because of a
part of the requisites for its action would destroy or impair the
vested rights. At paragraph 54 the Apex Court holds that its action
is retroactive in character and can safely be observed that the
projects which are already completed or to which completion
certificate has been granted are not under the fold of the Act and at
the same time the Apex Court holds that it will apply after getting
the ongoing projects and future projects registered under the Act.



31
In the case at hand, it is Rule 4 which exempts the projects like the
petitioners.

16. In the light of the judgment of the Apex Court and
undisputed facts as narrated hereinabove, the order passed by the
Authority is without jurisdiction and a nullity in law. The first issue
being held in favour of the petitioner with regard to maintainability
of the complaint itself before the Authority, no other issue need be
considered with regard to tenability of the order passed by the
Authority.


17. For the aforesaid reasons, I pass the following:

O R D E R

(i) The Writ Petition is allowed.

(ii) The judgment/order dated 30.09.2020 passed by the
st
1 respondent/Karnataka Real Estate Regulatory
Authority, Bangalore in No.CMP/UR/190214/0002137
stands quashed.




32

(iii) The amount in deposit before this Court shall be
refunded to the petitioner forthwith.



Sd/-
UDGE
J


bkp