Karnataka RERA Orders Surya Homes, Bagpack Suites To Pay ₹12 Lakh Annual Rent Loss To Homebuyer

The Karnataka Real Estate Regulatory Authority (KRERA) has recently directed Surya Homes and its hospitality partner Bagpack Suites Bangalore Private Limited to pay Rs 12 lakh per annum towards loss of rent and Rs 2 lakh towards mental agony to homebuyer Subhash Dhekne for failing to hand over physical possession of a flat despite executing the sale deed.

The Authority held that mere execution of a sale deed does not complete a promoter's obligations in the absence of actual handover of possession, observing that compensation can only partially address the distress suffered by a homebuyer.

Adjudicating Officer Maheshwari S. Hiremath observed, “It is also to be noted that mental agony being intangible aspect no one other than the aggrieved can put it in words of mouth and no quantum of money could be said to be sufficient to heal the injury caused to the mind. At the most it could be akin to applying a cooling balm on the burns. Therefore, it is quite necessary for this forum to step into the shoes of the aggrieved as practicable as possible to determine the amount of compensation that could be proportionate to the mental agony and financial loss undergone by the complainant. That might have compelled him to spend many sleepless nights. The struggle they had made to mobilize funds for legal battle to recover the money they had invested with such great hope.”

The Authority further noted, “Mere execution of sale deed of flats in favor of allottees is not sufficient to complete the transaction. It is essential to handover the possession of property to the allottees for their use and enjoyment as their wish. Herein this case, email dated 19.06.2025 shows that even the complainants are unable to identify their own respective flats.”

The dispute arose from an agreement dated July 26, 2019, under which Dhekne agreed to purchase Flat No. 401 in the “Surya Elegance” project. The flat was purchased for Rs 88.50 lakh, with an additional Rs 20 lakh paid towards interiors

A sale deed was registered on December 6, 2019, after which the developer agreed to pay monthly rent of ₹1,06,200. Around ₹7.6–7.7 lakh was paid in the initial months, but the payments soon stopped. By December 16, 2022, the unpaid rent had mounted to ₹30.81 lakh.

Documents on record also show that the parties later entered into a revenue-sharing arrangement in April 2022.

Matters escalated in June 2025, when the complainant tried to take back the flat for personal use, including a planned housewarming. The respondents responded by moving a civil court and securing an injunction to prevent him from interfering with their use of the premises.

He then approached the Authority, seeking recovery of unpaid rent along with interest and compensation for mental agony.

According to him, despite executing the sale deed, he was never given possession of the flat or any real benefit from it. Meanwhile, the respondents continued to hold on to the property and had stopped paying the assured rent.

Surya Homes maintained that the project had been completed in 2018 and that its obligations ended with the execution of the sale deed. It also argued that disputes relating to rent fell outside the Authority's jurisdiction.

Bagpack Suites took a similar line, claiming it was a separate entity not governed by RERA and that the complainant had willingly entered into a long-term revenue-sharing arrangement.

The Authority, however, was not persuaded. It noted that the partners of Surya Homes were also directors of Bagpack Suites and that project brochures presented both entities together, shaping the expectations of buyers.

Despite the registered sale deed, possession was never handed over. The flat continued to remain with the respondents.

Taking note of this continued denial of possession since December 6, 2019, the Authority held the respondents responsible for both the financial loss and the mental distress caused to the complainant.

It ultimately directed them to pay Rs 12 lakh per year towards loss of rent from the date of the sale deed until possession is handed over, after adjusting amounts already paid. An additional Rs. 2 lakh was awarded towards mental agony.

The respondents have been directed to comply with the order within 60 days, failing which interest at the rate of MCLR plus 2% per annum will apply from the 61st day until realisation.

For Petitioner (Subhash Dekhne): Advocate Mohamed Sadiq.

For Respondent (Surya Homes & Ors.): Advocates S. Nagesh, N. Srinivasa.