Karnataka High Court Quashes Circular on 'Delay Fee' by Real Estate Regulatory Authority
Imposition of Fee Deemed Arbitrary and Lacking Statutory Backing Under Real Estate Act
In a landmark judgment, the Karnataka High Court has struck down a circular issued by the Karnataka Real Estate Regulatory Authority (K-RERA) that imposed a "delay fee" for late submissions of quarterly updates and annual audit statements by real estate promoters. The court ruled that the circular lacked statutory authority under the Real Estate (Regulation and Development) Act, 2016, rendering it arbitrary and illegal.
The judgment, delivered by Justice M. Nagaprasanna, was in response to a series of writ petitions filed by various real estate promoters challenging the validity of the K-RERA circular dated September 3, 2020. The petitions argued that the circular imposed an undue financial burden on promoters without any legislative sanction, particularly in circumstances where construction activities were stalled due to the COVID-19 pandemic.
During the proceedings, petitioners contended that the Real Estate Act does not empower K-RERA to levy such fees, and that the circular was a violation of Articles 14 and 265 of the Constitution, which mandate that no tax or fee can be levied without the authority of law. The court examined relevant sections of the Act, including Sections 11, 34, 37, 61, and 63, and concluded that none of these provisions authorized the imposition of a "delay fee."
Justice Nagaprasanna highlighted that while the Act imposes certain obligations on promoters, it does not envisage or empower K-RERA to levy fees of the kind demanded. The judgment further asserted that the power to impose a fee must be backed by express legislative sanction and cannot be based on executive fiat.
The court's decision emphasized that the imposition of any pecuniary burden on citizens must be traceable to a statute, and that the authority to levy fees cannot be presumed or implied. The ruling also directed K-RERA to consider applications for withdrawal of registration without insisting on the payment of delay fees.
This judgment is expected to have significant implications for real estate developers across Karnataka, providing clarity on the limits of regulatory authority under the Real Estate Act and reinforcing the principle that any financial imposition must have a clear legal basis.
Bottom Line:
Circular issued by Karnataka Real Estate Regulatory Authority imposing "delay fee" for delayed submission of quarterly updates and annual audit statements is held arbitrary, illegal, and void, as it lacks statutory authority under the Real Estate (Regulation and Development) Act, 2016.
Statutory provision(s): Real Estate (Regulation and Development) Act, 2016 - Sections 11, 34, 37, 61, 63; Constitution of India - Article 265
Sharada Achar v. State of Karnataka, (Karnataka) : Law Finder Doc id # 2782149
