Karnataka High Court Upholds RERA Authority’s Power: Promoters Ordered to Refund Excess Charges to Homebuyers

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 29.08.2026

Karnataka High Court Upholds RERA Authority’s Power: Promoters Ordered to Refund Excess Charges to Homebuyers

This article provides a detailed overview and analysis of a recent judgment by the High Court of Karnataka concerning a dispute under the Real Estate (Regulation and Development) Act, 2016 (RERA). The case highlights key issues around project registration, refund claims, and the jurisdiction of regulatory authorities in Karnataka’s real estate sector.

Background of the Case

The dispute arose between the appellants—Mr. Navaratan Jhunjhunwala and M/s Durga Projects and Infrastructure Pvt Ltd.—and the respondents, including the Karnataka Real Estate Appellate Tribunal, the Karnataka Real Estate Regulatory Authority, and two individual allottees (Sowmya Nayak Ullal and Ullal Prakash Nayak). The appellants challenged an order from the Karnataka Real Estate Appellate Tribunal, which had upheld a previous order by the Karnataka Real Estate Regulatory Authority (RERA Authority) directing the promoters to refund excess amounts collected from the allottees.

Key Facts

1. Excess Collection Allegation: The promoters collected an additional deposit of Rs. 1,75,000 from the allottees for payments to BESCOM, BWSSB, Khata, and transfer of electric meter.
2. Occupancy Certificate and Sale Deed:
   • Sale deed executed: 23 March 2016
   • Occupancy certificate obtained: 5 February 2020
3. Refund Claim: The allottees claimed that only Rs. 75,000 was actually spent for the stated purposes, and sought a refund of the remaining Rs. 1,00,000 plus interest.
4. Agreement Terms: The agreement to sell did not mention any additional charges for the stated purposes, strengthening the allottees’ claim.

Legal Issues Examined

1. Jurisdiction of RERA and Appellate Tribunal

The promoters argued that since the project was not registered under RERA, the Authority lacked jurisdiction. They cited Explanation (iv) to Rule 4 of the Karnataka RERA Rules, 2017, claiming their project was not ongoing and thus exempt from registration.

Court’s Finding:

• The project was not registered, and no evidence was provided that a completion or occupancy certificate application was made before RERA’s commencement.
• Section 3 of the RERA Act mandates registration of ongoing projects unless a completion certificate was obtained before the Act commenced. The promoters failed to demonstrate such exemption.
• The court held that the RERA Authority and Appellate Tribunal had jurisdiction in this matter.

2. Entitlement to Refund

The core issue was whether the promoters could charge amounts not specified in the agreement to sell.

Court’s Finding:

• The agreement did not authorize the collection of additional amounts for BESCOM, BWSSB, or meter transfer.
• The allottees were entitled to a refund of Rs. 1,76,811 (including interest), as calculated up to 30 November 2023.

Judgment and Implications

• The High Court dismissed the appeal, upholding the orders of the RERA Authority and the Appellate Tribunal.
• The promoters were directed to refund the excess amount collected, with interest, to the allottees.
• The judgment reinforces the importance of project registration under RERA and strict adherence to the terms of the agreement to sell.

Key Takeaways for Stakeholders

1. Promoters/Builders:
   • Must register ongoing projects under RERA unless a valid exemption applies.
   • Cannot collect charges from allottees beyond what is specified in the agreement.
2. Homebuyers/Allottees:
   • Can seek redressal and refunds for unauthorized charges through RERA mechanisms.
   • Should ensure all payment terms are clearly documented in the agreement.
3. Legal Practitioners:
   • The case sets a precedent for interpreting RERA’s jurisdiction and the enforceability of agreement terms.

Conclusion

This judgment by the Karnataka High Court underscores the robust protections offered to homebuyers under RERA and the necessity for promoters to comply with statutory requirements. It serves as a cautionary tale for real estate developers and a reassurance for allottees seeking transparency and fairness in real estate transactions.

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Source: Karnataka High Court

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