There is no authority of Karnataka RERA over projects granted ‘Partial’ Occupancy certificate prior to enforcement of Act: Karnataka High Court

The Karnataka High court has put aside an order under Justice M Nagaprasanna in M/S. Provident Housing Limited v. Karnataka Real Estate Regulatory Authority & ANR.(Writ Petition No. 18448 of 2021) where the Karnataka Regulatory Authority directed M/S. Provident Housing Limited to refund the amount of an apartment purchaser who seeked refund by filing a complaint to the authority after willingly withdrawing from the contract of sale and accepting the refund amount.


The petitioner is a Company incorporated under the Companies Act, 1956 and is engaged in the business of real estate development. Shyama Shetty entered into an agreement with the company for purchase of flat on 10-09-2014 and a construction agreement on the same day comes into effect. The basis of this was a commencement certificate that was issued by the Bangalore Development Authority (‘BDA’ for short) in respect of the purchase in favour of the petitioner.

An application was submitted to BDA on 21.10.2015 for grant of partial occupancy certificate in respect of the project which was scrutinised 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 and the 2nd 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, it appears, the 2nd 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. The petitioner acceded to the request of the 2nd respondent and cancelled the agreement and the allotment made in favour of the 2nd respondent and also refunded a sum of Rs.17,85,212/- on 04-12-2017 after deduction of cancellation charges and applicable taxes. Long after receipt of the said amount, the 2nd respondent (Shyama Shetty) knocks at the doors of the 1st respondent/Authority(KRERA) by registering a complaint seeking refund of an amount of Rs.6,84,494/- along with interest. the Authority passes the impugned order, on the complaint so made by the 2nd respondent, on 30-09-2020 directing refund of Rs.6,84,494/- to the 2nd 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.


It was noted that 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. Section 84 empowers appropriate Government to make Rules. “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 framework the issue in the list is to be considered.”

The court further said “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 swayed by the grievance vented out by the 2nd respondent in entertaining the complaint.” Therefore, the authority lacked jurisdiction when it issued the order, making it legally invalid.

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