The Karnataka High Court has struck down a circular issued by K-RERA (Karnataka Real Estate Regulatory Authority) that sought to impose retroactive delay fees on developers and promoters for late submission of quarterly updates and annual audit statements. The court held that the circular lacked legislative backing and that such fees cannot be levied through executive directive alone.
The challenged circular, dated September 3, 2020, required promoters to pay a delay fee if they failed to submit required project updates. Petitioners argued the Real Estate (Regulation & Development) Act, 2016 mandates submissions but does not empower RERA to impose financial penalties retroactively. The court agreed, stating that imposing fees demands explicit sanction in law, which was missing in this case.
Justice M. Nagaprasanna emphasized that fees, being a compulsory exaction, must derive from statutory authority and not from administrative circulars. He cited Article 265 of the Constitution, which bars any levy without legislative sanction. The judgment noted that delegations for imposing such burdens must be unambiguous in the parent statute—something absent in the RERA Act.
The ruling applies to all promoters and developers to whom the circular was enforced. Authorities will no longer be able to demand retrospective delay charges under that directive. Developers who have already paid such fees may now seek refunds or challenge the charges based on this decision.
This judgment is seen as a major clarification in real estate regulation, delineating the boundary between regulatory duties and fiscal powers. It is expected to have wide implications for real estate compliance norms in Karnataka and possibly beyond.
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