Karnataka RERA Empowers Homebuyers to Take Over Stalled Belagavi Project

In a significant move, the Karnataka RERA has allowed the Abhinandan Residency Welfare Association to take over and complete a stalled real estate project in Belagavi, providing much-needed relief to homebuyers. The project, which is 40% completed, has been stalled for over a year.

The Abhinandan Residency project, located in Belagavi, faced a significant setback when the developer, Raju Doddabommannavar, passed away in 2022. This left homebuyers paying EMIs without possession and with no clarity on the project's completion. The Authority has now directed the Abhinandan Residency Welfare Association to assume charge of the incomplete project and finish the remaining work under its supervision.

The Authority’s order states, “The Authority authorises the Complainant Association (Abhinandan Residency Welfare Association) to take over the incomplete project, Abhinandan Residency, for the purpose of completing the remaining development work under the supervision of this Authority and obtain all necessary statutory approvals and file periodic compliance accordingly.”

The case of Abhinandan Residency was being developed by North Karnataka Metro City Developers and Builders, led by its proprietor, Raju Doddabommannavar, who passed away on March 15, 2022. After his death, the developer’s office shut down, and no authorised representative or legal successor stepped in to manage or complete the project. As a result, construction was left at approximately 40% and remained stalled for more than a year.

The RERA registration of the project expired in 2022, and no extension or revocation procedure has been granted to landowners holding 35% undivided share in the built-up area. The interim order freezing the Escrow Account is already in operation, thereby safeguarding the financial assets of the project.

After reviewing submissions and evaluating the project's status, Karnataka RERA determined that the situation meets the conditions under Section 8 of the RERA Act, which allows the Authority to intervene when a promoter (developer) is non-functional and the project remains incomplete. “This case squarely fits the condition contemplated under Section 8, a situation of a non-functioning promoter and incomplete project warranting intervention by the Authority to safeguard the interest of allottees. Hence, transfer of project rights or unsold inventory to the Association can be ordered under Section 8 of the RERA Act without due process,” the order stated.

While reiterating that associations cannot claim takeover as a matter of right, KRERA stated that this case satisfies the criteria for an administrative transfer of responsibilities. It therefore authorised the Abhinandan Residency Welfare Association to take over and complete the remaining development under its supervision. The Association has been permitted to utilise the existing escrow account and raise funds by selling the unsold flats and shops previously owned by the erstwhile promoter.

“The Legal Heirs of the deceased proprietary promoter are directed to appear before the Authority and disclose all project-related documents, approvals and agreements within 30 days of receipt of this order,” the order said. The Association has been given 24 months to complete the project and must submit progress updates every three months to KRERA, as per the order.

This decision by Karnataka RERA is a significant step towards ensuring that homebuyers' interests are protected and that stalled projects are completed, bringing relief to many who have been waiting for their homes for years.