By Sanjana CS
BENGALURU: A significant ruling from the High Court on June 30 has brought much-needed relief to flat owners. The single bench’s decision supports a registered cooperative society of allottees who have faced challenges for over 11 years.
Justice Suraj Govindaraj presided over a case highlighting disputes among apartment owners, agreement holders, and builders concerning the completion and maintenance of an apartment complex. It was revealed that builders had manipulated an unauthorized association for illicit activities, contesting a Real Estate Regulatory Authority (RERA) order. The High Court dismantled this facade and reaffirmed the RERA order, thereby reinstating authority to the registered cooperative society of allottees.
We consulted legal expert Pradeep Kumar PK from Pradeep Kumar PK & Associates, who explained that the builders lacked a legitimate defense. They had neglected the project for 11 years and fostered a rogue group masquerading as representatives of the apartment owners. This group pursued legal action against the RERA order in support of the builders.
The High Court discerned the charade and recognized an illegal association created to manage the project and carry out unauthorized transactions. This association had already been disbanded by the Registrar of Societies.
“The Court acknowledged the reality of the situation, leading to scrutiny of the rebel group backed by the builder, who is reportedly attempting to silence whistleblowers,” he noted.
The case, initially brought to light in May 2025, saw RERA permit the cooperative society to take charge of project completion while the deputy registrar prohibited the welfare association from collecting maintenance fees. The builders, leveraging this welfare association, sought to invalidate the cooperative society’s registration through the High Court, but this plea was rejected. The Court reaffirmed support for the homebuyer’s cooperative society, mandating that the builder transfer the deed of common areas within 120 days.
Association of Allottees
The Court clarified that under RERA, builders are required to facilitate the formation of an Association of Allottees within three months after a majority of apartments are sold. However, associations formed under the Karnataka Apartment Ownership Act (KAOA) 1972 do not comply with this requirement, as they can only be established once the project is fully completed and all sale deeds are registered. The Court illuminated this frequent misconception.
Referencing the Supreme Court’s verdict in the Hibiscus Condominium case, the Court established that associations formed under KAOA are not recognized as voluntary consumer associations and thus cannot lodge complaints under RERA. In contrast, cooperative societies formed by homebuyers prior to project completion are acknowledged under RERA as legitimate Associations of Allottees.
These cooperative societies have full authority over property management, can file complaints with RERA, obtain legal ownership of common areas, and even take charge of stalled or abandoned projects.
Crucially, the Court noted that the prior Starnest case, which restricted the formation of cooperative societies to projects with commercial units, is not applicable to RERA projects. Justice Govindaraj explained that the Starnest judgment did not consider RERA, and as a central law, RERA supersedes conflicting state laws as per Article 254(1) of the Constitution.
Justice Suraj Govindaraj stated that his previous ruling in the Shantharam Prabhu case did not account for RERA, and thus it cannot serve as a precedent in cases related to RERA.
He asserted that in Karnataka, associations established under KAOA 1972 or KSRA 1960 do not qualify as valid Associations of Allottees under RERA. Cooperative societies formed under the Karnataka Cooperative Societies Act, 1959 (KSCA) must be established within three months of a majority of bookings, rather than post-sale deed. Such societies are fully empowered under RERA to manage common areas, obtain conveyance, and initiate proceedings under RERA, with builders required to comply within specified timelines.
This interpretation is also substantiated by a response to an RTI from the Karnataka Government’s legal cell, confirming that for RERA projects, associations should be created under KCSA 1959 until PIL 511/2021 is resolved.
Pradeep elaborated that RERA is a central statute designed to safeguard homebuyers and regulate the real estate sector more effectively than prior state laws.
“Previously, court decisions did not prioritize RERA sufficiently, resulting in confusion and exploitation by builders. State laws have proven inadequate in preventing unfair practices. This judgment has clarified that RERA holds precedence over state laws, thereby better protecting the rights of homebuyers, marking a significant victory for real estate customers,” he emphasized.
