The Karnataka High Court has issued a stay on the application of the Real Estate (Regulation and Development) Act, 2016 (RERA) concerning the Bangalore Development Authority (BDA) projects developed on lands acquired before the enactment of the RERA Act. This decision came in the case of Bangalore Development Authority v. Union of India & Ors, overseen by Justice Suraj Govindaraj.
The Court sought to ascertain whether RERA could be enforced on statutory authorities like the BDA, which had acquired land and commenced projects prior to RERA’s implementation. Justice Govindaraj mentioned, “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.”
This temporary suspension will help determine the specific allotments to which RERA should apply, considering it impacts numerous public allotments. Justice Govindaraj further stated, “At this stage, it would also have to be determined as to, for what kind of allotments, the RERA would be applicable and to what kind of allotments, it would not be applicable since the matter would touch upon the allotments made to several hundreds of general public.”
Representing the BDA, Advocate General Shashi Kiran Shetty argued that applying RERA provisions to BDA projects would unfairly disadvantage the organization and the public. According to Shetty, the BDA operates under the BDA Act, forming layouts and executing projects based on acquired land. He emphasized that RERA’s imposition would disrupt BDA’s governance and public services.
The controversy emerged when allottees from BDA’s significant residential layouts, such as Arkavathi Layout and Nadaprabhu Kempegowda Layout, approached the RERA authority due to delays in project completions. The RERA authority entertained these complaints, imposing penalties on the BDA for non-registration under the Act and scrutinizing project delays. However, the BDA argued that it is governed by its legislative framework, not RERA, a stance initially dismissed by the RERA authority.
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The BDA’s appeal to the Karnataka Real Estate Appellate Tribunal, which endorsed RERA’s jurisdiction, led to the current legal challenge. The Tribunal referenced Section 2(zk) of the RERA Act that includes statutory bodies within the promoter definition. The BDA’s case before the High Court questions whether RERA can govern a statutory planning authority with broad public responsibilities.
The BDA maintains that its allotments, governed by the BDA (Allotment of Sites) Rules, 1984, are contractual and should be resolved within its statutory framework, not under RERA. Additionally, the BDA argues that funds from its projects support broader urban development, not solely individual layouts, and RERA’s project-specific fund requirements would hinder public work.
The BDA contends that planning authorities should not be categorized as promoters under RERA, as their functions and objectives starkly differ from private developers. The BDA insists that RERA was crafted to regulate the private real estate sector, not statutory authorities like itself, which operate under distinct legislative frameworks, such as the BDA Act, 1976.
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Gauthamdev C Ullal represented the Karnataka Real Estate Regulatory Authority in the proceedings.
