Co-op Society Without Land Or Layout For Real Estate Project Not Promoter Under RERA: Karnataka REAT

The Karnataka Real Estate Appellate Tribunal (REAT) has held that a housing co-operative society that had not acquired any land for development and had no project in existence could not be treated as a “Promoter” under RERA.

A complaint seeking relief under the Act was therefore not maintainable before Karnataka RERA.

A Bench of Chairperson Justice J.M. Khazi and Judicial Member Santhosh Kumar Shetty N. made the observation while dismissing an appeal against the BSNL Employees Welfare House Building Co-operative Society Ltd.

The tribunal held, “Undisputedly, the Respondent No.1/Co-operative Society has not acquired any land for development and consequently it does not fall into the definition of Promoter and there is no project in existence let alone Complainant could be called as an Allottee.”

The appellant had worked with BSNL for more than 18 years. He became a member of the society, which was formed by BSNL employees to provide houses or residential plots to BSNL employees at cheaper rates.

The society represented that sites were available at Madhavanagara, according to the complaint. The appellant paid ₹7,66,800 in 2013 and 2014 towards purchasing a site in the BSNL Madhavanagara Project Phase-II, off Nelamangala Road.

The society did not deliver the site as promised. The appellant made several follow-ups seeking a refund, but neither the amount was refunded nor was the site registered.

The society opposed the complaint before Karnataka RERA, arguing that the project was not registered with the Authority and that RERA therefore had no jurisdiction to adjudicate the dispute. It also contended that the receipts issued to the appellant were not allotment letters. The amount was not collected towards any particular plot, and no agreement for sale had been executed between the parties.

The society further contended that it had not acquired land for development. It therefore argued that there was no real estate project and that it did not fall within the definition of a Promoter. It also contended that the appellant could not be treated as an Allottee under RERA.

Karnataka RERA dismissed the complaint. The appellant challenged the order before the appellate tribunal, arguing that the Authority had failed to properly consider the evidence and provisions of the Act. He also contended that since the project was incomplete, Section 18 entitled him to the relief sought.

The tribunal examined whether RERA applied to the dispute. Section 18 provides remedies to an Allottee when a Promoter fails to complete a project or give possession in accordance with the agreement for sale. If the Allottee wishes to withdraw from the project, the provision allows the amount paid to be returned with interest and compensation as provided under the Act.

The tribunal noted that Section 2(zn) defines a “Real Estate Project” to include development of land into plots or apartments. Section 2(zk) defines a “Promoter” to include a person who develops land into plots or apartments. An “Allottee” under Section 2(d) is a person to whom a plot, apartment or building has been allotted, sold or otherwise transferred by the Promoter.

The tribunal found that the society had not acquired any land for development and no project was in existence. It therefore did not fall within the definition of Promoter, while the appellant could not be called an Allottee.

The society had enrolled members and collected various sums towards purchase of sites, to be allotted when it developed such a project or layout. The tribunal agreed with Karnataka RERA that the Act had no application to the dispute. The complaint was therefore not maintainable before the Authority.

The tribunal also referred to the Supreme Court's ruling in Newtech and the Bombay High Court's judgment in Macrotech. It noted that where a project is not registered, the Authority must first examine whether it was required to be registered under Section 3 or was exempt from registration. If registration was not required, the Authority could not proceed with the complaint for want of jurisdiction.

Section 3 generally requires prior registration of a real estate project before a Promoter can advertise, market, book, sell or offer plots, apartments or buildings for sale. The provision also deals with ongoing projects, subject to statutory exemptions.

Here, however, the issue went beyond registration. No project had come into existence because the society had not acquired land for development. The provisions governing a Promoter's obligations and the remedies available to an Allottee therefore could not be invoked against the society.

The tribunal noted that the appellant was free to approach the Registrar of Co-operative Societies or the Consumer Forum for recovery of the amount. Counsel for the society had also made a fair offer to refund the amount with 6% interest. The appellant did not agree to the offer.

Finding no justifiable ground to interfere with the RERA order, the tribunal dismissed the appeal and confirmed the September 2, 2025 order. There was no order as to costs.