33 villa occupancy certificates remain cancelled after court finds the project incomplete and material completion facts suppressed

The petitioner developed a 61-villa project within Samethanahalli Gram Panchayat limits and a notified planning area.

The Gram Panchayat issued Occupancy Certificates for 33 villas between September 2016 and May 2017.

Following an inspection in December 2022 that identified incomplete works, the Panchayat withdrew those certificates on 10 January 2023.

The petitioner challenged the withdrawal; on 11 December 2023, the High Court quashed it and restored the certificates subject to completion of works and payment of taxes.

Two purchasers of other villas then sought impleadment and recall, alleging that the project was incomplete and that material facts had been withheld from the Court.

During the proceedings, the Court examined the applicable statutory framework and obtained inspection reports and State submissions on the process for issuing Occupancy Certificates.

The purchasers relied, in particular, on the petitioner’s 12 May 2017 letter to BESCOM stating that completion of the remaining 41 villas was delayed.

1. Whether the purchasers were proper parties to the writ petition.

2. Whether the order dated 11 December 2023 should be recalled for suppression of material facts.

3. What statutory regime applied to Occupancy Certificates for buildings in Gram Panchayat limits within a Local Planning Area, and which authority was competent to issue them.

4. Whether the Occupancy Certificates were issued after adequate inspection and verification, and whether the project was complete and fit for occupation at the relevant time.

5. Whether the subsequent cancellation of the certificates was lawful and consistent with natural justice.

6. Whether the Court should determine whether the project was an “ongoing project” under RERA.

Section 64 of the Karnataka Gram Swaraj and Panchayat Raj Act, 1993 empowers a Gram Panchayat to regulate building construction; that power includes the incidental authority to verify compliance before permitting occupation.

Section 64(5A) requires compliance with the Karnataka Town and Country Planning Act, 1961, while Section 316(2) provides that Model Bye-laws require adoption by the relevant Panchayat.

Under the planning framework, the Planning Authority issues development permission and a commencement certificate under Sections 4-A and 15 of the KTCP Act, while the State’s stated statutory position was that the KTCP Act does not empower it to issue Occupancy Certificates.

The 2015 Model Bye-laws, including Rules 12 and 13 on completion and occupancy, did not bind this Panchayat because it had not adopted them.

The Court applied the doctrine of implied powers in Sakiri Vasu v. State of Uttar Pradesh, (2008) 2 SCC 409, and the principles that fraud or suppression of material facts may justify recall of a judicial order in Meghmala v. G. Narasimha Reddy, (2010) 8 SCC 383, and Badami v. Bhali, (2012) 11 SCC 574.

The 5 August 2024 Circular prescribed joint verification and technical opinion for future applications but could not retrospectively impose new requirements on certificates issued in 2016–2017.

The question of RERA’s application, including whether the project was ongoing, was left to the RERA Authority under the Act’s statutory scheme, including Section 89.

The purchasers were proper, though not necessary, parties because the petitioner relied on the earlier order in pending RERA proceedings and the Court’s consideration of the project’s certificates could affect the purchasers’ asserted interests.

The petitioner’s own BESCOM letter stating that 41 villas remained to be completed was material to the earlier order restoring the Occupancy Certificates; its non-disclosure, considered alongside later construction-linked financing and the Villa No. 38 sale and possession timeline, justified recall for suppression.

Although the Gram Panchayat had authority under Section 64 to issue Occupancy Certificates notwithstanding its non-adoption of the Model Bye-laws, the contemporaneous inspection report did not show meaningful verification of construction against the sanctioned plan or of fitness for occupation.

The Court therefore found the certificates inadequately verified and the project not complete and fit for occupation when they were issued.

The petitioner had been given notice and an opportunity to participate in a further inspection but did not avail itself of that opportunity; the Court accordingly upheld the Panchayat’s withdrawal of the certificates.

The Court did not determine RERA applicability, leaving that question and the parties’ related rights and liabilities to the Authority.

I.A. No. 2/2024 was allowed, and the order dated 11 December 2023 was recalled for suppression of material facts.

The writ petition was dismissed; consequently, the Panchayat’s order dated 10 January 2023 withdrawing the Occupancy Certificates for the 33 villas was revived and upheld.

The Court directed that fresh applications for occupancy be considered under the applicable procedure, including site inspection and technical verification; required completion of pending works and payment of specified outstanding taxes; and left the status of other subsisting Occupancy Certificates, including those for Villa Nos. 8 and 53, unaffected.

Whether the project was an “ongoing project” under RERA was expressly left for independent determination by the RERA Authority.