BENGALURU: In a significant win for homebuyers, the Karnataka Real Estate Appellate Tribunal (KREAT) has mandated a local builder to pay interest on a refunded amount of ₹34.4 lakh to a family that waited nine years for possession of a flat, which was never delivered along with a registered sale deed.
Although the Karnataka Real Estate Regulatory Authority (RERA) ordered a refund in 2023, it did not include interest. However, the tribunal, on July 25, 2025, acknowledged the complainants’ entitlement to interest under RERA.
The issue began in September 2013 when K. Kiran Sarat and Subhagya S. Kumar, residents of Begur-Hulimavu Road, booked a flat in Suadela’s ‘Queens Gate’ project. Over the next four years, they paid ₹34.4 lakh towards a total sale consideration of ₹80.1 lakh, with the builder assuring possession within four years of booking. However, a registered sale agreement was never executed, nor was the flat delivered.
Despite multiple follow-ups, the builder failed to register the agreement or deliver possession. In March 2022, the BBMP issued a partial occupancy certificate for the project—nearly nine years after the initial payment. Frustrated by the extended delays, the family chose to exit the project.
On July 20, 2022, the duo filed a complaint with K-RERA, requesting a refund along with interest. RERA, in its December 2, 2023, ruling, ordered the builder to refund ₹34.4 lakh but denied the request for interest, reasoning that no registered agreement existed and the buyers had voluntarily decided to withdraw. The family subsequently appealed this decision before KREAT.
The buyers contended that the builder violated Section 13 of the RERA Act, which prohibits the acceptance of over 10% of the flat cost without a registered agreement. They presented a 2016 email from the builder that acknowledged construction delays, as the basement slab was only completed after 3.5 years.
They further argued that the standard construction agreement used with other buyers stipulated a 30-month delivery period with an additional six-month grace period, indicating that possession should have been given within three years of the initial payment.
The buyers also noted that they were only contacted by the builder in August 2018—five years after booking—to execute an agreement. Frustrated by the ongoing delays, they finalized their withdrawal in February 2019. In 2024, the builder refunded the entire amount in two demand drafts of ₹17.2 lakh each.
The builder’s legal representative claimed that the buyers had defaulted on pending installments and did not respond to repeated notices, including a final pre-cancellation warning issued in October 2018. They argued that by accepting the refund, the buyers forfeited their right to claim interest. The promoter also mentioned that the project remained registered with RERA until August 2022, suggesting no delay on their part.
After reviewing both sides, the tribunal concluded that the developer had breached mandatory legal requirements and failed to execute a sale agreement even after collecting a significant portion of the flat’s cost. They found the argument regarding the absence of a registered agreement—rendering the buyers ineligible for interest—unacceptable.
The tribunal pointed out that the builder took nearly ten years to achieve even partial occupancy, with official RERA registration occurring only in October 2017, four years after the first payment. It emphasized that the builder only approached the buyers about the agreement five years post-booking. Such delays constituted a severe deficiency in service.
The tribunal has now ordered the builder to pay interest at a rate of 9% per annum on the principal amount up to April 30, 2017.
