Karnataka High Court Strikes Down RERA’s Retroactive Delay Fee
Bengaluru: The Karnataka High Court has struck down a circular issued by the Real Estate Regulatory Authority (RERA) on September 3, 2020, citing a lack of legislative sanction. The circular aimed to impose a 'delay fee' retrospectively for the delayed submission of quarterly updates and annual audit statements.
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 stated 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.
