Dismissing a complaint filed by a developer, the Karnataka Real Estate Regulatory Authority (KRERA) has held that developers are bound to display discrepancies in land litigation on the “official website of the project” to alert potential investors.
Godrej Properties had filed a complaint with KRERA after a homebuyer refused to pay the balance amount until the developer furnished land litigation documents for the Godrej Aqua project that is still pending in the Devanahalli civil court.
“In exercise of powers conferred under Section 31 of RERA Act, 2016, the complaint is hereby dismissed as premature,” the KRERA order dated February 8 said.
The person had purchased a flat in the project and signed the sale agreement in July 2019.
However, after he came to know about the land litigation case pending in the civil court, the buyer stopped payment of the balance amount and requested the developer to furnish all documents about the civil suit.
After sending several notices and reminders, the developer filed the KRERA complaint in July 2021, requesting the authority to cancel the sale agreement.
However, during the proceedings, the buyer denied all the allegations against him and said the developer had failed to reveal the pendency of the land litigation at the time of entering into the sale agreement.
“The developer did not disclose the same on the official website. Therefore, the homebuyer did not make further payments to avoid risking the investments,” the KRERA order added.
According to the project website on the authority page, the developer has uploaded a civil suit from 2013: OS No. 506. However, the KRERA order mentions the civil suit from 2019: OS No.73 at Senior Civil Judge and Judicial Magistrate of First Class Court in Devanahalli. The last hearing for the 2019 civil suit was in March 2022, and the next hearing is posted for April 2023.
A list of questions has been sent to the developer, and Moneycontrol will update the story after receiving a response.
KRERA findings
The authority found that the civil litigations of the project area were pending since January 24, 2019, and the sale agreement was signed in July of the same year.
“Therefore, developers are bound to disclose the discrepancies on the official website so that the prospective investors can be alerted,” KRERA said.
KRERA concluded that, under such circumstances, homebuyers cannot be held liable here for not completing the payments. "Naturally, they will be afraid that they may lose their money due to such litigations," the order said.
KRERA noted that the homebuyer was ready to pay the balance amount by taking a loan from a cooperative bank, but failed to do so since the developer did not furnish the required documents as per the checklist provided by the bank.
“Even during the proceedings, the Authority had asked the developer to furnish the documents as per checklist, however, the developer has failed to comply,” the order added.
After going through the details of the case, KRERA concluded that Godrej Properties has not made valid grounds for cancellation of the sale agreement. “Additionally, non-disclosure in civil litigations and failure to furnish the documents has led to a delay in the sale formalities,” the order added.
The authority directed the developer to furnish the documents as per the checklist within two months of the order and dismissed the developer's complaint as premature.
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Developers are bound to disclose documents
Terming the order a landmark ruling, advocate Abhilash Naik added that it is the responsibility of the developer to be transparent about the land documents. “Homebuyers have every right to ask for a refund along with compensation for non-disclosure of the documents and can challenge the developer at RERA court,” he added.
Naik added that KRERA has not been strictly verifying and following the documents uploaded by the developer on the KRERA website. “If the homebuyers did not notice the discrepancies, in future they will be in trouble. However, in such cases, homebuyers can approach the courts for relief,” he added.
Right to information activist and Bangalore City Flat Owners’ Welfare Association president Anil Kalgi added that several land parcels in Bengaluru have a similar problem. “Most of them are disputed and are available for cheap, and become a profit model for developers. The RERA Act mandates that every developer disclose such discrepancies on the project website or the authority can penalise them,” he added.
According to the Godrej Properties website, the project Godrej Aqua spans 7.18 acres and has 540 units spread across nine towers. The handover date is mentioned as January 2023 onwards.
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