Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration
Date: 06.11.2026
Karnataka High Court Sets Terms for Villa Project Completion and Compensation
This Short Article has been prepared & written by Advocate Narendra Singh. The views expressed are based on his interpretation of the law. He can be reached at his mob no- +91 8800860662 and email id amitnaren@outlook.com .
The Karnataka High Court has disposed of a commercial appeal after the property owners and developer reached a court-recorded settlement governing construction, payments, approvals and project safeguards for an 11-villa development.
Background of the dispute
In Indrani V. Chhabria and another v. Tandra Constructions Pvt. Ltd., the appellants challenged an order dated 8 July 2026 of the Dedicated Commercial Court in Bengaluru Rural. During the appeal, the parties submitted a joint compromise petition and confirmed before the High Court that they had agreed to its terms voluntarily, without force, coercion or undue influence.
A Division Bench comprising Justice D. K. Singh and Justice H. Shanti Bhushan accepted the settlement and passed a consent decree on 16 October 2026. The appeal was therefore disposed of in accordance with the compromise terms.
Construction commitments for 11 villas
Under the settlement, Tandra Constructions must construct 11 villas allotted to the appellants under the partiesβ sharing arrangement, at its own cost.
The agreed built-up areas are:
- West-facing villas: 1,800 sq. ft. each
- East-facing villas: 1,850 sq. ft. each
The developerβs scope includes excavation, civil works, electrical wiring, plumbing, doors and windows, kitchen slabs, switches and switch plates, flooring, painting, sanitary fittings and hardware fittings.
Interior and furnishing work is expressly excluded. Items such as wardrobes, woodwork, modular kitchens, false ceilings and temporary partitions must be arranged and paid for separately by the appellants or prospective purchasers.
For Villas 1 and 2, the developer must obtain BIAPPA approval for the maximum permissible construction area. If construction exceeds 1,800 sq. ft. in either villa, the additional area will be paid for by the appellants at a mutually agreed written market rate.
Timelines and delay protection
The settlement sets a clear construction deadline: all 11 villas must be completed within 30 months of the compromise.
The developer receives an additional three-month grace period. However, if completion has not occurred by the end of the initial 30 months, it must pay each appellant liquidated damages of Rs. 25 lakh during the grace period. If all villas remain incomplete after 33 months, the appellants may also claim damages for the continuing delay.
The developer must submit the building licence plan application for the 11 plots by 5 November 2026 and obtain the licence at its own cost. Construction must begin within seven working days after the building licence plan is obtained.
Payments and compensation
The settlement provides significant financial compensation to the appellants.
The Rs. 1 crore refundable deposit paid by the developer in 2023 under the joint development arrangement is treated as compensation for construction delay and stands forfeited in favour of the appellants.
In addition, the developer must pay a further Rs. 1 crore, divided equally between the two appellants:
- Rs. 15 lakh each through cheques dated 16 October 2026;
- Rs. 10 lakh each on 1 December 2026; and
- Rs. 25 lakh each within five months of the compromise petition.
The developer must ensure that the issued cheques are honoured when presented.
Project infrastructure and safeguards
The developer must arrange electricity connections and borewell water supply for each plot. The project also includes common infrastructure such as a sump tank with a pressurised water system, septic tank and DG set, where applicable.
A clubhouse is to be constructed after completion of all villas belonging to both sides. If the clubhouse is not built, the related plot must be handed over to the future Plot Owners Association.
Original title documents are to be reviewed by the appellants and then kept in a Canara Bank locker in Kannamangala, Devanahalli, held in the name of the developerβs directorβs wife, Ms. Karthika. The documents are to be handed over later to the Plot Owners Association.
The parties also appointed Mr. Mahesh Raja Reddy to inspect, supervise and exercise quality control over construction until the entire project is completed.
Limits on sale of the developerβs plots
As security for performance, the developer cannot transfer three plots in its own shareβPlots 17, 24 and 25βduring the construction period.
It may sell or transfer Plot 17 only after completing six villas allotted to the appellants. Plots 24 and 25 may be sold or transferred only after all 11 appellant-share villas are completed as agreed. Handover of the villa keys and electricity connections will be treated as the appellantsβ no-objection to the permitted transfers at the relevant stage.
The settlement also states that any existing mortgages over the developerβs share do not prevent enforcement of the compromise. The developer remains solely responsible for loan repayment and must avoid defaults that could trigger mortgage enforcement or foreclosure.
Continuing agreements and cooperation obligations
The parties agreed to retain the construction agreement dated 7 February 2023, subject to revised timelines and the settlementβs applicable terms. Where there is a conflict, the compromise terms prevail.
The appellants confirmed that the general power of attorney dated 7 February 2023 remains valid, subsisting and irrevocable. They withdrew their earlier cancellation notice and public notice, allowing the developer to issue a corresponding public notice. No fresh power of attorney is required to implement the settlement.
The appellants must cooperate in obtaining approvals, utility connections and, where applicable, RERA registration. They cannot cancel or repudiate the joint development agreement, power of attorney or sharing agreement, and cannot demand additional construction area beyond the agreed terms. Any optional interior work by the developer must be separately agreed in writing and paid for by the appellants; it will not count toward the construction completion timeline.
Significance of the consent decree
The consent decree converts the negotiated settlement into an enforceable court order. It combines defined construction specifications, staged monetary compensation, time-bound obligations, supervision provisions and restrictions on disposal of key developer-owned plots to protect completion of the 11-villa project.
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Source: Karnataka High Court
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