Karnataka High Court Upholds Cancellation Of Occupancy Certificates For 33 Raffles Park Villas

The Karnataka High Court has recently upheld the cancellation of occupancy certificates issued for 33 villas in Raffles Residency Private Limited's Raffles Park project in Bengaluru, finding that the project was incomplete and unfit for occupation when the certificates were issued.

Justice Suraj Govindaraj recalled an earlier order that had restored the certificates, finding that the developer had suppressed material documentary evidence bearing on the project's completion.

The court observed that the documents were within the developer's own knowledge and custody and that the withheld material directly affected the factual basis on which relief had been granted.

Raffles Park is a 61-villa residential project in Bengaluru. The Samethanahalli Gram Panchayat issued occupancy certificates for 33 villas on five dates between September 2016 and May 2017.

An inspection on December 22, 2022, revealed construction deficiencies. The Gram Panchayat issued a show-cause notice on December 26, 2022, and cancelled the certificates on January 10, 2023.

Raffles Residency challenged the cancellation before the high court. On December 11, 2023, the court quashed the cancellation order and restored the certificates, subject to the developer making 15 villas fit for occupation within three months, completing the remaining 18 within a further three months, and clearing outstanding property taxes within 90 days.

Villa purchasers Koshy Kuruvilla and Anand Krishnamoorthi later sought to join the proceedings and have the earlier order recalled. They alleged that the developer was relying on the certificates before the Real Estate Regulatory Authority (RERA) to contend that the project was not an ongoing project and fell outside its jurisdiction.

The developer opposed their applications, arguing that the purchasers' Villas 8 and 53 were not among the 33 villas affected by the cancellation and that the pending work largely involved interior finishing and customisation.

The court allowed the two villa purchasers to join the case but clarified that Villas 8 and 53 were not covered by the cancellation. A letter sent by Raffles Residency to BESCOM in May 2017 stated that 41 villas were still incomplete. A ₹100 crore loan sanctioned in March 2018 and the subsequent sale of Villa No. 38 further supported the court's findings. It held that the architect's completion certificate did not reflect the project's actual condition and upheld the cancellation, ruling that no fresh notice was needed. The developer must complete pending work within six months and clear outstanding property taxes within 90 days.

The court directed the Gram Panchayat and the jurisdictional Planning Authority to examine planning deviations, including the location of the sewage treatment plant, encroachment on a rajakaluve (stormwater drain), incomplete internal roads and non-maintenance of the diesel generator. The developer must rectify the deviations or regularise them where legally permissible, within the time fixed by the authorities.

The Gram Panchayat and the Principal Secretary, Rural Development and Panchayat Raj Department, were directed to examine the role of then Panchayat Development Officer C. Muniraju and other officials in issuing the certificates without adequate verification. The Gram Panchayat must also examine the conduct of project architects Karan Grover and Associates and, if necessary, refer the matter to the Council of Architecture or another competent body.

Occupancy certificates already in force for villas outside the 33 affected units, including Villas 8 and 53, remain unaffected. The court left the question of whether the project qualifies as an ongoing project under RERA to the Authority. Individual claims for possession, refund, compensation, or specific performance remain open for adjudication before the appropriate forum.

For Petitioner (Raffles Residency Private Limited): Advocate Joshua Hudson Samuel.

For Respondents (State of Karnataka and Others): Advocates Boppanna Belliayappa, M.S. Devaraju, A.V. Gangadharappa, Yogesh D. Naik.