Karnataka RERA Rules: Landowners Also Deemed Promoters, Must Pay Compensation for Delay

On October 30, 2025, the Karnataka Real Estate Regulatory Authority (K-RERA) made a landmark ruling that landowners also fall under the definition of 'promoter' as defined in Section 2(zk) of the RERA Act, 2016. As a result, the K-RERA ordered the landowner to pay Rs 6.5 lakh as interest compensation to a homebuyer for the delay in possession, constituting a violation of the RERA Act.

This ruling arose from a case filed by two homebuyers who had purchased apartments in a housing project. On October 3, 2019, the builder, landowner, and others entered into a development agreement that led to the construction of this housing project. Even though the apartment was developed and promoted by the builder, it was allocated to the landowner. He then executed an Agreement for Sale cum Construction on April 12, 2022, in favor of the homebuyers for a total sale price of Rs 1.1 crore.

The homebuyers have already contributed Rs 22 lakh from their own funds and Rs 79 lakh through a home loan to the landowner, acknowledging that the flat belongs to the landowner, which has been acknowledged by him. The developer and landowner were expected to hand over the possession of the flat to the homebuyers by December 31, 2022, with a grace period of 6 months, up to June 30, 2023.

However, the homebuyers were upset because, even though they have paid over 90% of the sale price upfront and the developer and landowner obtained the Occupancy Certificate on March 24, 2023, they still haven’t received any notice about possession even after following up for six months. The landowner has been postponing the release of the developer's share of the apartments as per their agreement. Additionally, the landowner is demanding an extra Rs 4,000 per square foot.

Homebuyers stated that they are ready to immediately pay the pending installments for the apartment, but the developer and landowner are not fulfilling their obligations under various agreements, breaching the terms of those agreements, and violating the RERA Act, according to the homebuyers. Because of this, they felt they had no choice but to file a complaint with the RERA Authority.

The K-RERA ordered the builder and landlord to pay compensation and give possession of the apartment to the homebuyer. K-RERA said in its order dated September 6, 2024: “To pay a sum of Rs 6,58,759/- towards interest on delay period calculated at SBI MCLR + 2% from 30.06.2023 to 06.02.2024 to the complainants within 60 days from the date of this order; The interest due from 07.02.2024 shall be calculated likewise and paid to the complainant till the date of possession.”

The builder filed an appeal in Karnataka RERA against this order. On October 31, 2025, the homebuyers won the case in Karnataka RERA.

Why Homebuyers Won the Case

Subrata Mukherjee, Partner, SNG and Partners, Advocates & Solicitors, explained the key points of the ruling. The K-RERA and K-REAT (hereinafter referred to as “Authorities”) have decided that the Allottees are entitled to interest for the delay in handover of the apartment for the following reasons:

1. Landowner is also a 'Promoter' under Section 2(zk) of the Real Estate (Regulation and Development) Act, 2016: - The Landowner contended that he doesn’t fall within the definition of ‘Promoter’ under the RERA Act. The Authorities held that the Landowner falls under the definition of ‘Promoter’ under the Act. Hence, the Allottees are justified in seeking interest for delay in handing over possession of the Apartment by the Landowner under Section 18 of the Act. - The definition of ‘Promoter’ under the Act includes “a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees.” - K-RERA has already stated, in terms of Circular dated 06.11.2019 bearing No. KRERA/Circular/3/2019, that if a landowner grants a developer the right to develop the land belonging to him/her, in exchange for a share in the developed area or a share in the proceeds from sale of the developed area, then the landowner shall be deemed to be a 'Promoter' under the Act.

2. Delay is solely attributable to the Landowner: - The Developer sought for the order of K-RERA dated 06.09.2024 to be set aside as far as the Developer is concerned, citing the fact that the Developer had completed their obligations in a timely manner and obtained OC, well within the agreed timeline. Further, the Developer contended that in terms of the JDA, the Landowner was responsible for ensuring that the title is clear and marketable. - The Landowner contended that the delay in handing over possession of the Apartment to the Allottees, and the execution of the sale deed was due to a temporary injunction in the partition suit bearing O.S. No.639/2024 restraining the Landowner from alienating or encumbering the property. - The Allottees also filed a memo concurring with the Developer and acknowledging that the delay was solely attributable to the Landowner. The Allottees also stated that they didn’t have any objection to the order of K-RERA dated 06.09.2024 to be set aside as far as the Developer is concerned.

Karnataka RERA Analysis of Facts

In the appeal against the earlier K-RERA order (2024), Karnataka RERA in its order dated October 30, 2025, considered the following points:

1. Whether the impugned Order dated 06.09.2024 passed by K-RERA in Complaint No.01641/2023 warrants interference in this appeal? - K-RERA said that their findings on point No.1 are in the affirmative. K-RERA gave the following reasons for its judgment: - In the first round of litigation, the landowner did not take any trouble to appear before the RERA Authority and was placed ex-parte. However, the developer appeared before the RERA Authority, filed his Statement of Objections, and it is a replica of the defense set out in the Memorandum of Appeal. - After hearing arguments of the counsels for homebuyers and developers, the RERA Authority allowed the complaint in part, directing the landowner to pay the delay period interest and execute the Sale Deed in respect of the apartment unit No.F-002 and to deliver possession with all amenities within 15 days. Further, the developer was directed to cooperate with the homebuyer and the landowner in the process of execution of Sale Deed and delivering the possession. - As per Section 44(1) of the RERA Act, 2016, any person aggrieved by any direction or order or decision of the Authority or the Adjudicating Officer has to prefer an Appeal before the RERA Tribunal. But for the reasons best known to him, the landlord filed a Writ Petition in W.P. No.14684/2024 in the High Court of Karnataka and it was allowed on July 5, 2024, and thereby the Order of the RERA Authority was set aside and the matter remitted back to the RERA for fresh consideration.

2. In the second round of litigation, the developer appeared before the RERA Authority and reiterated the stand taken by him in the first round of litigation. - However, the contention of the landowner was that he does not fall within the purview of the term ‘promoter’ as defined in Sec.2 (zk) of the RERA Act. Hence, the landlord alleged that the RERA Authority has no jurisdiction to entertain the complaint and the remedy, if any, lies before the Civil Court. - Added to that, the landlord has taken further contention that with respect to the larger property, a suit for partition is pending before the City Civil Court in O.S. No.639/2024 and thereby sought for dismissal of the complaint. - However, the RERA Authority in the second round of litigation came to the definite conclusion that the landowner also comes under the purview of ‘promoter’ and held that both developer and the landowner are liable to complete the project, hand over possession, and execute the Sale Deed in favor of the homebuyers. - The first and foremost defense of the developer is that, as per the agreement entered into between the parties, there was an obligation on the part of the developer to complete the project on or before June 30, 2023. However, the construction was completed much prior to the said date, and he obtained Occupancy Certificate on March 24, 2023 itself. - Since the Flat No.F-002 had fallen to the share of the landowner, there was no impediment to the landowner to execute the Sale Deed in favor of the homebuyers in terms of the agreement. Hence, the builder said that this latch on the part of the landowner cannot be extended to the developer. - In the meantime, the counsel for the homebuyers filed a memo in RERA. Karnataka RERA said that the memo filed by the homebuyers made it clear that the homebuyers are also accepting the fact that as per written agreement arrived between the developer and the landowner, the Flat No.F-002 fell into the share of the landowner. The other thing for consideration is that before the due date, the developer has completed the project and obtained the Occupancy Certificate. This being the factual position, it is apparently clear that the RERA Authority was not correct in extending the liability on the developer.