Karnataka High Court Suspends RERA Applicability to BDA Pre-2016 Projects

The Karnataka High Court has issued a stay on the applicability of the Real Estate (Regulation and Development) Act, 2016 (RERA) to projects of the Bangalore Development Authority (BDA) that acquired land before 2016. This decision, made by Justice Suraj Govindaraj, aims to determine the application of RERA to statutory authorities that have acquired lands and proposed projects prior to the Act's commencement.

Justice Suraj Govindaraj stated, “The stay is granted to examine the applicability of the Real Estate (Regulation and Development) Act, 2016 to the projects of statutory authorities like the BDA, who are implementing projects on the basis of acquisition of the land, prior to such projects being initiated, prior to the commencement of the RERA.” The court reasoned that the stay could help decide whether RERA should be applied to certain allotments and the criteria for the same.

Advocate General Shashi Kiran Shetty, representing the BDA, argued that the BDA faces unknown aspects that are not in its complete control. He submitted that the BDA implements projects and forms layouts based on the land acquired and guided by the BDA Act. Applying RERA regulations to such projects would put the BDA and the general public, who are allottees, at a disadvantage.

The BDA is responsible for regulating Bengaluru's urban growth and functions as an independent statutory body. It argued that the RERA authority's attempt to regulate and supervise its activities is without jurisdiction and contrary to law. The dispute arose after allottees of BDA's major residential schemes, including Arkavathi Layout and Nadaprabhu Kempegowda Layout, approached the RERA authority alleging delays in the completion and development of layouts.

The petition states that the RERA authority entertained these complaints, imposed heavy costs on the BDA for failing to register projects under the Act, and questioned delays in project completion. Before the authority, the BDA contended that it is a statutory body governed by a self-contained legislative framework under the BDA Act and was not subject to RERA's jurisdiction. However, the RERA authority rejected this contention in a batch of cases concerning the Nadaprabhu Kempegowda Layout.

The BDA subsequently challenged the decision before the Karnataka Real Estate Appellate Tribunal. The Tribunal upheld RERA's jurisdiction, relying on Section 2(zk) of the RERA Act, which expressly includes statutory authorities within the definition of 'promoter'. In its challenge before the High Court, the BDA questioned the applicability of RERA to its functioning.

The plea raises the question of whether a statutory planning authority with multiple public responsibilities can be subjected to the supervisory and regulatory framework of RERA. It further contended that allotments made by the BDA are contractual in nature and governed by the BDA (Allotment of Sites) Rules, 1984. According to the BDA, every allottee accepts the terms and conditions prescribed under these rules at the time of allotment. Consequently, disputes between allottees and the BDA should be adjudicated exclusively under the BDA statutory framework and not under RERA.

The BDA has also argued that funds generated through its projects are not confined to the development of individual layouts but are utilized for wider urban planning, infrastructure development, and civic works across Bengaluru. It claims that RERA's requirement of maintaining project-specific funds would restrict its ability to undertake such public development activities. Planning authorities such as the BDA should not be treated as promoters under the RERA Act because their objectives and functions differ fundamentally from those of private real estate developers, the petition stated.

The BDA maintains that RERA was enacted to regulate a largely unregulated private real estate sector and was never intended to govern layouts and schemes developed by statutory authorities functioning under separate legislative regimes such as the BDA Act, 1976. Advocate Gauthamdev C Ullal appeared for the Karnataka Real Estate Regulatory Authority.