Kempegowda Layout Allottees Get 3 Months To Pay; 15% Interest Starts Only From 2024 Acquisition Ruling

The petitioners were allottees of sites in Nadaprabhu Kempegowda Layout and had paid initial deposits and, in some cases, part of the allotment price.

They withheld the balance, contending that the BDA had not completed the layout’s infrastructure and amenities.

The BDA demanded payment with interest under Rule 13 of the Bengaluru Development Authority (Allotment of Sites) Rules, 1984.

The petitioners sought extensions of time, waiver of interest and, in some petitions, reduction of the allotment price or invalidation of Rules 9, 12 and 13.

The acquisition for the layout had been quashed by a Single Judge in 2014, but that decision was reversed by a Division Bench on 22 February 2024, upholding the acquisition.

Section 31 of the Bengaluru Development Authority Act, 1976, prevents the BDA from selling or otherwise disposing of sites until the improvements specified in Section 30 have been substantially provided for.

Rule 13 of the Bengaluru Development Authority (Allotment of Sites) Rules, 1984, provides for interest where payment is delayed beyond the prescribed or extended period; the Court noted a rate of 18% per annum under the Rule.

The Division Bench decision in W.A. No. 1783/2014 and connected appeals, dated 22 February 2024, upheld the acquisition for the layout, enabling the BDA to proceed with development after that date.

Because the acquisition had been quashed until the Division Bench reversed that decision on 22 February 2024, the BDA could not proceed with the acquisition and development during that period.

In light of Section 31, the Court held that the allottees could not be held responsible for delaying payment while the legal status of their allotments remained uncertain.

Once the acquisition was upheld, however, the petitioners became liable to pay the balance price within a reasonable time.

As they had not done so, the Court directed interest from 22 February 2024, but reduced the applicable rate from the Rule 13 rate of 18% to 15% per annum.

The petitioners were directed to pay the balance allotment price with interest at 15% per annum from 22 February 2024 until payment, within three months of receiving the order.

Upon payment, the BDA must execute the conveyance deeds for the allotted sites.

If the petitioners fail to pay within that period, their allotments stand cancelled, and the BDA may take steps to re-allot the sites within the following three months.