Karnataka RERA order on forming RWA causes a tizzy

A Karnataka Real Estate Regulatory Authority (KRERA) order directing a Bengaluru developer to form a residents’ welfare association (RWA) under the Karnataka Societies Registration Act (KSRA), 1960, has stumped buyers of flats in the project, who have alleged that it contravenes previous Karnataka High Court orders.

The court and the state housing department had earlier clarified that RWAs cannot be registered under KSRA.

"It would be appropriate to issue directions to the respondent to form an association under Karnataka Societies Registration Act (KSRA) 1960 and to obtain the occupancy certificate from competent Authority," the KRERA order dated November 4 said.

In this case, the order was passed for the Sai Poorna Luxuria project in Bengaluru developed by Srinivasa Developers. A bench presided by KRERA chairman Kishore Chandra was providing relief to a homebuyer for completion of the project and obtaining an occupancy certificate.

Legal experts say that though KSRA permits the registration of societies that fall under the category of non-governmental organisations (NGOs), charities, etc, it does not permit the collection of maintenance charges, something that RWAs perforce have to do.

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Sub Editor|Moneycontrol

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Homebuyers claim contradictory order

Dhananjaya Padmanabhachar, president of the Karnataka Home Buyers Forum, said that the KRERA chairman's findings contradict the Karnataka High Court order that clearly states RWAs cannot be registered under KSRA.
"Recently, the RERA chairman has also passed multiple orders to register the association of allottees under Karnataka Co-Operative Societies Act, 1959," he added.

According to another KRERA order passed on October 10, 2023, in the case regarding the Sharadindu Senior Commune Owners Association that Moneycontrol reported on, the authority said, "The RERA Act stipulates that the promoter enables the formation of an association or cooperative society. Previous Karnataka High Court orders have prevented RWAs from being registered under KSRA 1960. In stalled, abandoned, or delayed projects, the allottees are required to be the registered entity to avail legal rights."

HC, state government flag KSRA

Pointing out a legal contradiction, advocate Vittal BR, who has worked closely on the matter, said, "Among several orders passed by the Karnataka High Court, in one particular order for Lilium Gardenia apartment in November 2022, a bench presided by Justice M Nagaprasanna said that any transactions by RWAs registered under KSRA will be unauthorised."

According to Section 3 of the KSRA, societies that can register under the act include NGOs, educational and sports institutes, organisations responsible for maintaining libraries, etc; however, it does not mention registration for RWAs that would allow them to collect maintenance fees, he added.

Moreover, in December 2022, the Karnataka Registrar of Cooperative Societies clarified that RWAs cannot be registered under KSRA, according to a document accessed by Moneycontrol.

Officials at the Karnataka Housing Department told Moneycontrol that RWAs in Bengaluru should be registered under the Karnataka Cooperative Societies Act, 1959, one of the laws in the state for housing purposes.

Awareness required

Given that Bengaluru’s real estate sector took off as late as the mid-1990s with the IT boom, experts say most of the discrepancies in the policies governing the sector are only now coming to light gradually.

Anil Kalgi, president of the Bangalore City Flat Owners' Welfare Association, however, believes that both the homebuyers and authorities need further awareness of their rights.

"While homebuyers need to be aware of how an association is registered in the state, the state departments, including the Karnataka RERA, also need to pass the correct orders to prevent further confusion in future," he said.

Vittal added that the recent order passed by KRERA has not complied with the state high court orders. "However, KRERA being a quasi-judicial body, homebuyers can appeal against the order at the appellate tribunal for further relief," he added.

KRERA’s Chandra could not be reached for comments. A list of questions has been sent to the authority and the report will be updated after receiving a response.