Why
KRERA failed to comply its own Section 17?
Since the Real
Estate (Regulation and Development) Act, 2016 (RERA) made conveyance to
allottees and their associations a statutory obligation (Section 17), Indian
courts — including the Supreme Court in Newtech — have clarified the
promoter’s duties and RERA’s powers. Yet in Karnataka the statutory promise of
timely conveyance and clean hand-over remains fraught: overlapping defective state
law of KAOA with Cooperative Societies Act, judicially contested routes to form
allottee associations, slow/contradictory decisions by local RERA benches, and
governance problems at the Authority itself have combined to frustrate
implementation. Below is the legal background (with key judgments),which show
how these tensions play out in Karnataka, explain the role of limitation law,
and conclude with practical steps to fix the system.
What Section 17 requires (short primer)
Section 17 of RERA
imposes three core duties on the promoter once the project is complete (or as
local law prescribes):
(a) execute a
registered conveyance deed in favour of the allottee (and convey the undivided
share in common areas to the association of allottees or competent authority),
(b) hand over
physical possession and title documents, and
(c) deliver
insurance/title documents and other records — all within the timeline fixed by
local laws, or within three months (conveyance) / thirty days (document
handover) if no local law is applicable.
Why this matters.
Conveyance is the statutory mechanism that moves ownership of common areas into
the hands of homebuyers (via an association or competent authority). Without
it, allottees remain legally exposed — unable to exercise clear control over
maintenance, common amenities, and insurance or to protect themselves from
third-party claims. Property remains at risk of illegal mortgaging by the
builders after selling the apartments.
The Supreme Court’s Newtech ruling — the
high-level takeaways
In M/s Newtech
Promoters & Developers Pvt. Ltd. v. State of U.P. & Ors. the
Supreme Court clarified several important points about RERA’s scope and
remedies. The decision (major points relevant here) includes:
- Recognition of RERA’s wide remedial
and regulatory powers to protect allottees;
- Emphasis on promoter obligations
including conveyance to society through execution of conveyance deeds as
core duties; and
- Guidance on RERA’s jurisdiction and
procedural aspects (e.g., how RERA Orders interact with other statutory
remedies).
- Guidance on opening the Escrow
Account to protect the investment of the home buyers
The Newtech
line of cases has been relied upon repeatedly by state RERAs and tribunals when
ordering promoters to refund, compensate, or execute conveyances — but it also
produced litigation about RERA’s limits (jurisdictional and procedural) that
has had uneven consequences on the ground.
Gujarat RERAs
Orders: Gujarat RERA has issued a departmental order in this regard,
stating that the conveyance can be completed only with the registered juristic
society. Under this situation it is only the Cooperative society registered
under the Gujarat Cooperative Society Act 1961 which can be formed to comply
with the section 17 requirement of the RERA 2016. When Gujarat RERA has
recognised the same why KRERA is delaying the conveyance? Question often asked
is that whether KRERA is playing for the builder lobby ignoring the home buyers
grievances ?
Why Karnataka’s implementation of Section 17 has faltered
— three structural problems
A. Overlapping defective state laws and inconsistent
judicial rulings about the type of association that can take conveyance
Karnataka has
multiple statutes that touch resident associations: the defective Karnataka
Apartment Ownership Act (KAOA) 1972, the Karnataka Cooperative Societies Act
(KCSA), rules for Residents’ Karnataka Ownership of Flats Act 1972 (KOFA).
Courts and registration authorities have reached different conclusions on
whether an “association of allottees” for purposes of Section 17 must be (or
can be) a cooperative society, an association registered under any law as per
KRER Rule 2(b) and (c) which rules out KAOA since such associations are not
registered under any law and not juristic entity. An unregistered
association cannot be a recipient of conveyance. This conflict has produced
concrete paralysis. Few Karnataka High Court rulings have set aside
registrations of certain cooperative societies while directing registration
under the Apartment Ownership Act even though it is not possible under law and
such judgements have failed to implement till date. And few other benches and
RERA orders have accepted cooperative societies (or RERA-backed societies) as
valid parties entitled to conveyance — creating a patchwork of outcomes that
leaving everyone in dilemma.
Conflicting RERA jurisprudence and inconsistent KRERA orders
Across India, RERA
authorities and tribunals have both relied on Newtech to enforce
promoter obligations and, in other cases, read Newtech to limit RERA’s
interventions (for instance on questions of jurisdiction where registration
status or local law momentum creates doubt). Karnataka RERA and its Appellate
Tribunal show examples where the local orders have had to be re-examined in
light of higher court pronouncements, and where the Authority itself has been
accused of failing to correctly apply the spirit of the Supreme Court’s
directions. The Karnataka Authority’s own orders and the Appellate Tribunal
files repeatedly cite Newtech while also recording confusion about local
law precedence. Legal uncertainty means promoters stall conveyance, disputing
either who is competent to receive it (which juristic form) or whether
RERA/Authority orders are binding — so the transfer of title and common areas
stalls.
Governance and
appointment failures at the Authority — weak oversight, perceived taint and
slow adjudication
RERA’s effectiveness
depends on a trusted Authority with independence, transparent appointments, and
quick adjudication. Several investigative and news reports from around India —
and critiques of Karnataka RERA practice — flag systemic weaknesses: slow dispositions
of cases (many KRERA orders take a year or more), administrative opacity in
appointments, and occasional public controversies about the integrity or
suitability of persons in senior positions (this is not unique to Karnataka but
affects public confidence in State RERAs). Independent reporting has linked
slow case disposal at KRERA, delays in uploading/issuing orders, and public
complaints about processes to the broader conveyance problem. Even where law
and higher court precedent point to speedy hand-over, delayed or poorly
reasoned RERA orders — coupled with resistance from promoters — mean practical
implementation of Section 17 does not happen in time, or becomes mired in fresh
litigation.
The “juristic body” question — why unregistered or ad-hoc
RWAs may be held incapable
A practical
bottleneck is the question: Is an unregistered association (or an
association registered as a cooperative rather than under KAOA) a competent
juristic body to receive the conveyance? Courts have wrestled with this. The
Supreme Court judgement in Sobha Hibiscus vs MD Sobha Developers has stated
that the association formed under KAOA 1972 are not voluntary registered
consumer associations which can not sue nor get sued which limits the scope of
its capacity to manage a property and to agitate against the liability of the
builders. In some Karnataka cases, High Courts have held that the association
contemplated by RERA must conform to statutory forms under state law (e.g.,
KAOA), leading to cancellation of cooperative registrations where
deputies/registrars registered a co-op that the court considered inconsistent
with KAOA requirements; in other matters, courts have treated co-op societies
formed by allottees as valid recipients and directed conveyance. The
inconsistent approach creates litigation and practical deadlocks.
The law is there; implementation is the task
RERA’s Section 17
and the Supreme Court’s jurisprudence (notably Newtech) create a clear
legal framework obligating promoters to execute conveyance and hand over common
areas. The failure in Karnataka is not a single legal lacuna but a confluence
of overlapping defective state statutes, inconsistent judicial rulings about
the precise juristic form required to receive conveyance, and
administrative/governance problems within the Authority and registration
machinery. Until the state follows the tried tested model of State of Maharashtra
where the Cooperative Societies are the only format encouraged by the High
Courts and the Supreme Court, the conveyance crisis will persist — leaving
homebuyers legally exposed to illegal mortgaging and prize commitments
unfulfilled.
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