Karnataka RERA Orders Penalty Proceedings Against Maxworth Realty Over Unregistered Project

The Karnataka Real Estate Regulatory Authority (KRERA) has ordered initiation of penalty proceedings against Maxworth Realty India Ltd for failing to register its project under the Real Estate (Regulation and Development) Act, 2016, while also directing the developer to hand over possession of a plot booked by a homebuyer more than a decade ago.

A Bench comprising Chairperson Rakesh Singh and Member Gurijala Ravindranadha Reddy held that the developer could not continue retaining the buyer's money without either completing the transaction or returning the amount.

"The respondent cannot be permitted to unjustly enrich itself by retaining the complainant's money indefinitely without either executing conveyance or refunding the amount," the Authority observed.

The dispute concerned Plot No. 579 in the "Max Orchids III" project. The homebuyer paid a booking amount of ₹1 lakh in 2013. Records before KRERA showed that ₹50,000 was paid through cheque, while another ₹50,000 earlier paid for a plot in the developer's "Max Meadows II" project was transferred towards the booking of the subject plot.

According to the complaint, despite receiving the money, the developer neither executed an Agreement of Sale nor a registered Sale Deed. Possession was also not handed over.

The homebuyer said repeated efforts to reach the company's representatives got nowhere. Legal notices sent in 2021, including one addressed to the developer's corporate office, also went unanswered.

With no progress on the allotment, the homebuyer moved KRERA seeking execution of a registered Sale Deed, possession of the plot free from encumbrances, and protection against any transfer or allotment of the property to third parties.

After examining the record, the Authority found that the complainant had produced documents including the booking form, cheque copy, receipt and journal voucher to establish payment of the booking amount.

More than twelve years after the booking was made, the buyer was still waiting for both possession and conveyance of the plot. KRERA noted that although the developer appeared during the initial stages of the proceedings, it later stopped participating, filed no objections and placed no material on record to contest the claim.

The Authority held that the developer had failed to fulfil its obligations under Sections 11 and 13 of the Act. It pointed out that a promoter cannot accept more than ten per cent of the cost of a plot without first entering into a written Agreement for Sale.

KRERA also found that the project had not been registered even though it fell within the scope of the Act.

Even after issuance of a show-cause notice, the developer neither registered the project nor offered any explanation.

Allowing the complaint, the Authority directed the developer to hand over possession of Plot No. 579 upon receipt of the balance sale consideration and lawful charges, and thereafter execute the Agreement of Sale and registered Sale Deed. It also restrained the company from creating third-party interests in the unsold plots of the project until registration is completed and directed initiation of penalty proceedings for violation of the registration requirement.