Karnataka High Court Upholds ₹1.77 Lakh Refund, Says Developer Failed To Establish RERA Exemption Claim

The Karnataka High Court has upheld an order directing a Bengaluru-based real estate developer and its promoter to refund about ₹1.77 lakh with interest to homebuyers.

It found that the project, which remained unregistered under the Real Estate (Regulation and Development) Act, 2016, could not claim exemption from registration without demonstrating compliance with the statutory requirements.

A division bench of Justice Jayant Banerji and Justice Tara Vitasta Ganju observed:

“It is the mandate of Section 3 of the RERA Act that the registration of ongoing projects has to be made by the promoters within the period specified under the RERA Act. This has, admittedly, not been done by the promoters in the instant matter. Moreover, the exemption from registration could have been claimed by the promoters, where it had received completion certificate for a real estate project prior to commencement of the RERA Act as is the mandate of Clause (b) of sub-Section (2) of Section 3 of the RERA Act. This too, has not been demonstrated.”

The appeal was filed by Navaratan Jhunjhunwala and Durga Projects and Infrastructure Pvt. Ltd. It challenged concurrent orders of the Karnataka Real Estate Regulatory Authority and the Karnataka Real Estate Appellate Tribunal directing a refund of excess amounts collected from Sowmya Nayak Ullal and Ullal Prakash Nayak.

The dispute arose from the purchase of a flat under a sale deed executed on March 23, 2016. Apart from the sale consideration, the developer collected ₹1.75 lakh towards BESCOM, BWSSB, khata and electricity meter transfer charges.

The homebuyers claimed that only ₹75,000 had actually been spent for those purposes. They sought a refund of the balance amount, alleging that it had been retained without any contractual basis.

The occupancy certificate for the project was issued only on February 5, 2020. The project was never registered under the RERA Act.

By an order dated April 10, 2024, the Karnataka Real Estate Regulatory Authority directed the developer to refund about ₹1.77 lakh with interest. It held that the agreement to sell did not authorise recovery of the additional charges.

The real estate appellate tribunal upheld that decision on August 7, 2025. It also directed release of the amount deposited before it along with the accrued interest.

Before the High Court, the promoter argued that the project was not an "ongoing project" under Explanation (iv) to Rule 4 of the Karnataka Real Estate (Regulation and Development) Rules, 2017. It contended that neither the Authority nor the appellate tribunal had jurisdiction to entertain the complaint.

The homebuyers, on the other hand, contended that the additional charges had been collected outside the terms of the agreement to sell. They argued that the amount was therefore liable to be refunded.

The court found that the promoters had placed no material before the Authority, the appellate tribunal, or the High Court to show that they had applied to the competent authority for a completion certificate or an occupancy certificate. It also noted that nothing had been produced to establish that a completion certificate had been obtained before the RERA Act came into force.

The court held that the promoters were therefore not entitled to claim exemption from registration. It found that the benefit available to projects that had received a completion certificate before the commencement of the Act could not be claimed in the absence of such material.

The court further held that the appellate tribunal had rightly exercised jurisdiction under Section 18(3) of the Act because the dispute concerned recovery of amounts collected outside the agreement to sell.

Finding that no question of law, much less a substantial question of law, arose for consideration, the court dismissed the appe

For Appellants (Navaratan Jhunjhunwala and Durga Projects and Infrastructure Pvt. Ltd.): Advocate S.K. Mithun.

For Respondent (Karnataka Real Estate Appellate Tribunal): Advocate K.V. Girish.

For Respondents (Sowmya Nayak Ullal and Ullal Prakash Nayak): Advocate Thanima Bekal.