Karnataka Real Estate Regulatory Authority Takes Action Against Bengaluru Developer
The Karnataka Real Estate Regulatory Authority (KRERA) has directed Bengaluru-based developer, Casa Grande Garden City Builders Pvt Ltd, to pay ₹2 lakh as compensation towards mental agony suffered by a complainant and an additional ₹2 lakh for raising premature payment demands.
The Case
- A homebuyer had booked a flat in the Casagrand Keatsway project and entered into a sale agreement dated January 8, 2024.
- The buyer paid ₹69.66 lakh out of the total sale consideration of ₹80.01 lakh.
- The complainant alleged that the builder was required to collect payments strictly based on stage-wise construction progress, supported by architect or engineer certificates.
- However, the developer allegedly issued multiple demand letters between April and August 2024, claiming completion of various stages and seeking payments accordingly.
- The buyer later inspected the site and realised that the structure shown in earlier progress reports did not correspond to his unit.
The KRERA Order
The KRERA order stated that the developer had not produced a single iota of evidence to show that payment demands were raised based on stage-wise construction progress supported by Architect/Engineer certificates.
The Authority found that the developer issued multiple demand letters between April and August 2024, despite the project being at an earlier construction stage.
The order directed the developer to pay compensation of ₹2,00,000/- (Two Lakhs only) towards mental agony to the complainant and an additional ₹2,00,000/-(Two Lakhs only) for raising premature payment demands.
The developer is required to comply with the order within 60 days from the date of the aforesaid order, failing which it will carry interest at MCLR+2% from the 61st day of this order on compensation till realisation.
Developer's Stance
- The developer denied the allegations, arguing that all payment demands were raised based on the overall progress of the project.
- The developer claimed that the complainant had made the payments voluntarily without raising any objections at the time.
- The developer argued that the payments made well in advance of the corresponding construction stages would be adjusted as upfront benefits.
KRERA's Observations
- Whenever a promoter raises a payment demand, the developer is required to communicate the actual stage-wise progress of the project to allottees, along with photographs of the construction site and supporting architect or engineer certificates.
- The developer had failed to produce any evidence showing that payment demands were raised in accordance with stage-wise construction progress supported by architect or engineer certificates.
- The developer had also failed to submit any material proving its claim that the complainant had received financial benefits or incentives for making early payments.