Civil Remedies Under Real Estate Act Do Not Bar Criminal Action Against Builders: Bihar RERA

The Bihar Real Estate Regulatory Authority (RERA) on 25 June held that remedies under the Real Estate (Regulation and Development) Act, 2016 do not prevent a homebuyer from pursuing criminal action where the facts disclose the ingredients of a cognizable offence.

Chairman Vivek Kumar Singh directed issuance of a Public Demand Recovery Certificate to recover Rs. 11.20 lakh along with applicable interest in execution proceedings initiated by Malvika Singh against Bhootesh Construction Pvt. Ltd. concerning its Prakriti Vihar project. He also ordered the Secretary, RERA, Bihar, to forward details of all execution and complaint cases against the builder to the Enforcement Directorate, Bihar. He observed:

“This Authority is conscious that proceedings under the RERA Act are regulatory, adjudicatory and compensatory in nature. At the same time, it is equally well settled that the existence of a civil, contractual or statutory remedy does not exclude recourse to criminal law where the facts disclose the ingredients of a cognizable offence.”

The dispute arose after Malvika Singh approached Bihar RERA against Bhootesh Construction. over the Prakriti Vihar project. On 17 September 2025, the Authority directed the company and its director to refund Rs. 11.20 lakh to Singh with interest at 2% above the State Bank of India's Marginal Cost of Funds Based Lending Rate (MCLR) applicable on the date the amount became due, within 60 days.

After the builder failed to comply with the order, Singh initiated execution proceedings before the Authority. When the matter was heard on 25 June 2026, neither party appeared. The Authority noted that the builder had neither filed a reply nor participated in the proceedings despite several opportunities.

The Authority observed that although RERA proceedings are regulatory, adjudicatory and compensatory, the availability of civil or statutory remedies does not prevent criminal proceedings where allegations disclose a cognizable offence. It clarified that a mere breach of contract or failure to honour a promise would not constitute cheating unless dishonest or fraudulent intention existed at the time of entering into the transaction.

It noted that fraudulent inducement, false representations regarding title, approvals or project status, collection of money despite knowledge of inability to perform obligations, diversion of project funds, multiple allotments of the same property and concealment of material facts could justify criminal action under applicable laws.

Further, considering the builder's continued absence, disregard of proceedings and failure to comply with the refund order, the Authority observed that the conduct could warrant examination by law enforcement authorities for offences including cheating, criminal breach of trust and dishonest misappropriation under the Bharatiya Nyaya Sanhita, 2023. It observed:

“In the peculiar facts of the present case, the continued non-appearance of the Respondent, persistent disregard of statutory proceedings, and failure to comply with the order of this Authority have deprived the complainant of effective realization of the relief granted. Such conduct may, depending upon the underlying facts and evidence available to the complainant, warrant examination by competent law-enforcement authorities from the standpoint of offences relating to cheating, criminal breach of trust, dishonest misappropriation, or other applicable provisions of the Bharatiya Nyaya Sanhita, 2023.”

Further, the Authority directed the Secretary, RERA, Bihar, to share details of all execution and complaint cases against Bhootesh Construction, including information about its directors and projects, with the Enforcement Directorate, Bihar. It ordered issuance of a Public Demand Recovery Certificate and directed the Collector, Patna, to recover the awarded amount.

Accordingly, the RERA disposed of the matter.