The voluntary demolition of an 18-storey residential tower in Bengaluru by real estate developer SNN Raj Corp, despite the project having received an Occupancy Certificate (OC) and being almost ready for handover before it developed a tilt, is an ‘unprecedented case’, Karnataka Real Estate Regulatory Authority Chairman Rakesh Singh told HT Real Estate.
However, Singh said the developer is unlikely to require a fresh project registration. Instead, the project can be granted a one-year extension under Section 6 of the Real Estate (Regulation and Development) Act, with the possibility of a further extension if required.
“This may provide the developer with the legal cover to complete the project and ensure there are no issues for its financial institutions,” Singh said.
‘First such case in the country’
Calling it an ‘unprecedented case,’ Singh said neither Karnataka RERA nor, to the best of his knowledge, any other RERA in the country has dealt with a situation where an OC-approved residential tower is being voluntarily demolished and rebuilt because of structural concerns.
“To the best of my understanding, this is the first such experience for us and perhaps for the country. I checked with a few other RERAs as well, and they too said this is the first case of its kind,” he said.
Singh said the legal process itself is relatively straightforward. Since the project’s registration has expired, the developer can seek a one-year extension under Section 6 of the RERA Act, with the possibility of a further extension if required.
“Legally, I don’t find a challenge. The provisions under Sections 6 of the RERA Act are sufficient to deal with such a situation,” he said.
Homebuyers’ interests come first
While the legal framework is clear, Singh said the regulator’s foremost concern is safeguarding the interests of homebuyers.
“The allottees’ interests begin from day one. Many would have planned to shift into their homes, vacate rented accommodation or made other financial commitments. The developer should adequately compensate those genuinely affected by the delay by paying the rent they would have otherwise avoided. For instance, if the prevailing rent is ₹25,000 a month, they should consider paying ₹30,000 if needed, rather than inviting friction or disputes at this stage,” he said.
Singh said SNN Raj Corp’s representatives had met him two to three times to discuss the legal course of action and had been receptive to the regulator’s suggestions.
“…I believe the matter can be resolved smoothly. It is a matter we will be able to sail through,” he said.
‘Every allottee’s circumstances are different’
Singh said he advised the developer to adopt a transparent and consultative approach with homebuyers instead of imposing a one-sided solution.
“I suggested that all buyers be called for a meeting and that the developer openly discuss the situation with them. Rather than us prescribing a solution, the stakeholders themselves should be actively involved in arriving at one,” he said.
He noted that the impact of the delay would differ from one buyer to another.
“Some people may be financially comfortable and mentally prepared to wait for two years. Others may be under tremendous financial pressure, unable to wait because they have EMIs, rent or other commitments. All allottees’ circumstances are different, and that has to be taken into account,” he said.
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Commenting on the demolition, Singh said the matter does not fall under the defect liability provisions because the entire structure will be demolished and rebuilt.
“This has nothing to do with defect liability. The entire building is being demolished, and a fresh construction will take place,” he said.
Singh also made a broader observation on India’s rapidly evolving high-rise construction sector.
“Building technology in India has advanced significantly, and we are now constructing 30-, 40-, 60- and even 100-storey buildings. I have my own reservations, though I don’t have a theory to support them. In my limited experience, I have rarely seen a building that, within two or three years of completion, does not experience some issue, whether it is cracks, seepage or fading. This case, however, is exceptional because the developer has chosen to demolish and rebuild the structure voluntarily,” he said.
What does Section 6 of the RERA Act say?
Section 6 of the Real Estate (Regulation and Development) Act, 2016, empowers the Real Estate Regulatory Authority (RERA) to extend the registration of a real estate project. A promoter can apply for an extension in cases of force majeure by submitting the prescribed application and fee.
The provision also allows RERA, in reasonable circumstances where the delay is not attributable to the promoter, to extend a project’s registration based on the facts of each case. Such extension, however, cannot exceed an aggregate period of one year. Before rejecting an application for extension, the Authority is required to give the promoter an opportunity to be heard.
Bengaluru tilted tower demolition case
SNN Raj Corp last week announced that it would voluntarily demolish and reconstruct one of the towers at its SNN Raj Etternia project in HSR Layout at no cost to homebuyers after identifying structural issues linked to an error in soil testing.
The developer said it has approached the Bruhat Bengaluru Mahanagara Palike (BBMP) seeking permission to demolish the tower and has also informed Karnataka RERA about the external consultant’s error and its decision to rebuild the structure.
Anuj Sanjay Jain, Director (Operations), SNN Raj Corp, said the company had decided to rebuild the entire tower after discovering the error.
“We have decided to rebuild the entire structure. Demolition will take at least six months and reconstruction another 18 months,” Jain said, adding that the exercise would cost the company around ₹20 crore.
The company said all affected homebuyers have been informed about the decision. While they were initially disappointed, they later accepted the proposal.
In a statement, SNN Raj Corp said, “Despite the structures having received the Occupancy Certificate and almost ready for handover, the developer chose to prioritise long-term structural integrity and customer safety over financial considerations.”
The project comprises 972 apartments, of which possession of 822 units has already been handed over.
