Karnataka High Court Strikes Down RERA’s Retroactive Delay Fee
The Karnataka High Court has quashed 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. The court ruled that the authority lacked the legislative sanction to levy such fees.
Karnataka High CourtReraReal EstateDelay FeeLegislationReal Estate NewsSep 22, 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 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.
Frequently Asked Questions
What did the RERA circular issued in September 2020 aim to do?
The RERA circular aimed to impose a retroactive delay fee for the late submission of quarterly updates and annual audit statements by builders, developers, and promoters.
Why did the petitioners challenge the RERA circular?
The petitioners argued that the Act does not empower RERA to levy delay fees and that delays were due to the COVID-19 pandemic, which was beyond their control.
What was the government's stance on the RERA circular?
The government argued that the Act imposes mandatory obligations on promoters to provide quarterly updates and that failure to do so subjects them to fee collection.
What did Justice M Nagaprasanna rule regarding the imposition of fees?
Justice M Nagaprasanna ruled that no fee can be imposed without the authority of law, and the power to levy a fee must be clearly expressed in a statute.
What was the final decision of the Karnataka High Court?
The Karnataka High Court quashed the RERA circular, finding that it lacked the necessary statutory parentage to impose a delay fee.
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