Karnataka HC order to state govt highlights discrepancies in issuing OC in Bengaluru

The High Court order came in the case of project Serene Urbana in Bengaluru, a senior living project consisting of 318 apartments developed by Ozone Group and maintained by Columbia Pacific Communities

A recent Karnataka High Court order asking the state government to issue circulars to local municipal authorities regarding issuing of occupancy certificates (OC) to real estate projects in the city, has exposed several several grey areas in the city's real estate sector, specifically on the authorities responsible for issuing OC in areas that do not fall under any development authority.

"Looking at the large increase in the number of cases which call in question reckless issuance of occupancy certificates, it has become necessary to direct the state government to issue a necessary circular in the form of guidelines to the authorities who handle grant of occupancy certificates," the order uploaded last week said.

The case

The high court order came in the case of project Serene Urbana in Bengaluru, a senior living project consisting of 318 apartments developed by Ozone Group and maintained by Columbia Pacific Communities.

Moneycontrol reported on July 15 last year that the project obtained a completion certificate from an architect in April 2017 and the occupancy certificate was issued by the local town planning authority (in this case local gram panchayat) in batches in April and August of that year.

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However, on a complaint by the homebuyers, Karnataka RERA found that the completion certificate was issued by an independent architect and not the competent authority (the gram panchayat in this case).

Thus, the authority declared Serene Urbana as an ongoing project under RERA jurisdiction and asked the developer Ozone Group to register the project under KRERA.

However, the developer moved the high court to quash the KRERA order.

A completion certificate under the Real Estate Regulatory Act (RERA) would mean that the real estate project has been developed according to the sanctioned layout, layout plan and specifications as approved by the competent authority.

However, the high court said none of those indications were found in the completion certificate placed before the panchayat. "All the information necessary to be filled in, remain blank. The owner’s name and his signature are blank."

There is not even a hint of water, sanitary facilities, or power in the completion certificate or the submission requesting the occupancy certificate, it said.

In fact, the gram panchayat issued the OC in 2017, two years before the project obtained its fire clearance and a year before obtaining the power supply.

The order opens space for larger debate

"Such fraud cannot be played only by the hands of the developer or by the hands of the competent officers, it can be played only when the hands of the competent officers are in the glove of the developers. It is an action hand in glove," the Karnataka High Court order noted.

The court said that the authorities will have to inspect the property to ensure that an occupancy certificate can be granted by the law. If they are unable to do so, it added that the officers in charge of issuing occupancy certificates will be held fully accountable.

Within the city limits, the municipal body or the planning authorities are empowered to issue OC in the state.

However, as Bengaluru expands, real estate pockets are slowly coming up in the city outskirts offering affordable real estate to homebuyers. Local real estate agents say such pockets are growing at 20-30 percent YoY.

The new land that is being unlocked is often not under the jurisdiction of the local municipal or planning authority but only under the gram panchayats.

"The grey area arises, that in such areas who are supposed to issue OC to high rise buildings?" Anil Kalgi, president of the Bangalore City Flat Owners' Welfare Association said. "In this case, gram panchayats are not empowered to issue OC for buildings more than two floors. However, in places like Anekal and Devanahalli, we see several projects being issued OC by them."

According to the Panchayat Raj Act, Kalgi added that the Karnataka Public Works Department is supposed to provide the necessary permissions and issue the OC for high rises.

"However, despite several circulars from the state this still remains conflicted and the government should issue guidance on the matter," Kalgi added.

Dhananjaya Padmanabhachar, director of Karnataka Home Buyers Forum, said within the city limits the major challenge is issuing occupancy certificates to projects that have violated the building bylaws or the floor-to-area ratio. "Such (a thing) happens due to a lack of diligent inspection from the authorities. While getting an OC should be a burden on the developer, it has become homebuyers' woes too," he added.

Among the several cases, Moneycontrol reported last year the local municipal body Bruhat Bengaluru Mahanagara Palike (BBMP) scrapped all 2000 partial occupancy certificates (OC) issued to the Sobha City project for alleged fabrication of documents. This comes years after its issuance in 2016, 2019, and 2020.