Market Value Rise, Hypothetical Future Profits Not Enough For RERA Compensation: Karnataka REAT

The Karnataka Real Estate Appellate Tribunal (KREAT) has dismissed an appeal by two Bengaluru homebuyers seeking enhanced compensation over delayed possession of flats in Vaishnavi Infrastructure Corridor Enterprises Pvt. Ltd.'s “Vaishnavi Mandara” project, upholding a Karnataka RERA order that awarded them ₹2 lakh for mental agony and ₹7,000 in litigation costs.

The tribunal bench of Chairperson Justice J.M. Khazi and Judicial Member Santhosh Kumar Shetty N said compensation claims under the Real Estate (Regulation and Development) Act must be supported by cogent evidence.

“Mere escalation in market value, generalised hardship or hypothetical future profits ordinarily may not, by themselves constitute a valid claim for compensation towards loss of opportunity under the Act.”

Ravi Shankar and Latha Shankar had booked Flats B-005 and B-006 in the Yeshwanthpur project under agreements executed in 2014 and paid the full sale consideration of ₹93.60 lakh before the stipulated possession date. The developer had promised possession by January 31, 2015, but failed to hand over the flats within the agreed timeline.

The buyers had earlier approached Karnataka RERA, which in January 2023 directed the developer to pay ₹70.75 lakh towards interest for delayed possession and execute the sale deeds. Execution proceedings initiated by the buyers in that matter remain pending.

The buyers later filed a second complaint seeking compensation under multiple heads, including delay compensation, incomplete works, legal expenses, loss of opportunity and mental agony. During the proceedings, they enhanced their claim to ₹68.74 lakh through revised memos.

Karnataka RERA partly allowed the complaint in June 2025, awarding ₹2 lakh towards mental agony and ₹7,000 in litigation costs while rejecting the remaining claims.

Before the appellate tribunal, the buyers argued that the construction agreements entitled them to ₹10,000 per month for delay, that Karnataka RERA had ignored their revised claims and supporting documents, and that they had suffered loss of rental opportunity due to delayed possession.

"However, such compensation cannot be granted on mere assumptions, conjectures or vague assertions. The Allottees are required to specifically plead and establish by cogent evidence that, due to delay in completion, failure to hand over possession or any other breach committed by the promoter, they were deprived of a definite financial, commercial, rental or proprietary opportunity resulting in a quantifiable loss.”, the tribunal observed.

The tribunal also rejected the buyers' ₹4,90,500 claim towards legal expenses, holding that no satisfactory documentary proof had been produced to establish that the expenditure was actually incurred or justified.

It said litigation costs cannot be awarded mechanically and upheld Karnataka RERA's award as “just, fair and reasonable,” concluding that the impugned order suffered from no manifest error, legal infirmity, or procedural irregularity warranting interference.

For Appellants (Ravi Shankar and Latha Shankar): Amathya Legal.

For Respondent (Karnataka Real Estate Regulatory Authority): Advocate Rajashekhar K.