Karnataka High Court Quashes RERA's Retroactive Delay Fee Circular
The Karnataka High Court has struck down a circular issued by the Real Estate Regulatory Authority (RERA) that sought to impose a retroactive delay fee for late submission of quarterly updates and annual audit statements.
Karnataka High CourtReraReal EstateDelay FeeLegislationReal EstateSep 23, 2025
The circular mandated that every builder, developer, promoter, or individual in the development business file quarterly updates and annual audit statements in accordance with Section 7 of the Real Estate (Regulation and Development) Act, 2016. The petitioners argued that while the Act imposes obligations on promoters, it neither envisages nor empowers the authority to levy delay fees as demanded. They also claimed that delays occurred due to the COVID-19 pandemic and the consequent non-takeoff of projects, which were beyond their control.
In contrast, the government advocate argued that the Act imposes mandatory obligations on promoters to provide quarterly updates on the K-RERA portal regarding project details. According to the advocate, promoters, developers, or individuals in the business of development who fail to submit quarterly updates on the K-RERA website are subject to fee collection. Justice M Nagaprasanna noted that no impost in the nature of tax or fee may be exacted from a citizen except by the authority of law.
Law, in this context, must mean not the executive fiat of the authority nor the circular of a department, but an enactment of the legislature clothed with the constitutional mandate and fortified by statutory sanction. Article 265 of the Constitution declares that no tax shall be levied or collected except by authority of law; it necessarily encompasses within its sweep every compulsory exaction, however named. Therefore, as a matter of logic, the power to levy a fee must be traceable to a statute, clearly expressed, never left to conjecture, inference, or executive convenience, Justice M Nagaprasanna noted as the court passed the order after allowing a batch of petitions filed.
Justice Nagaprasanna also observed that the authority to impose a pecuniary burden on any citizen must derive directly from legislation. If the legislature delegates such power, the delegation must be unambiguous and within the boundaries of the legislative policy. Tested against these principles, the impugned circular seeking to impose a delay fee on promoters and developers was found to lack statutory parentage.
Frequently Asked Questions
What is RERA?
RERA stands for Real Estate Regulatory Authority. It is a regulatory body established under the Real Estate (Regulation and Development) Act, 2016, to protect the interests of homebuyers and promote a more transparent and accountable real estate market.
Why did the Karnataka High Court quash the RERA circular?
The Karnataka High Court quashed the RERA circular because it lacked legislative sanction. The court ruled that no fee or tax can be imposed without the authority of law, and the circular did not have the necessary statutory backing.
What were the main arguments presented by the petitioners?
The petitioners argued that the Act imposes obligations on promoters but does not empower the authority to levy delay fees. They also claimed that delays were due to the COVID-19 pandemic and were beyond their control.
What did the government advocate argue in defense of the circular?
The government advocate argued that the Act imposes mandatory obligations on promoters to provide quarterly updates on the K-RERA portal. They claimed that promoters who fail to submit these updates are subject to fee collection.
What is the significance of Article 265 of the Constitution in this context?
Article 265 of the Constitution declares that no tax shall be levied or collected except by authority of law. This means that any fee or tax must be traceable to a statute and cannot be imposed by executive fiat or departmental circular.
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