The Karnataka Real Estate Regulatory Authority has directed a Bengaluru-based developer and its partner to pay ₹12 lakh annually to a homebuyer towards ‘loss of rent’ after failing to hand over possession of a flat despite executing the sale deed. It also ordered ₹2 lakh as compensation for ‘mental agony.’
‘This court cannot ignore the prevailing rental/commercial realities in a metropolitan city such as Bengaluru. Apart from the financial loss, the complainant has also suffered inconvenience, uncertainty and hardship due to the failure of the respondents to give the rent of the said flat to the complainant,” KRERA said in its order.
In this case, the developer, Surya Homes, and its partner, Bagpack Suites Bangalore Pvt Ltd, told KRERA that disputes relating to rent were outside the authority’s jurisdiction.
“The respondents are hereby directed to pay compensation of ₹12 lakh per annum to the complainant towards loss of rent calculated from 06.12.2019 till handover of physical possession by deducting the amount, if any, already paid towards rent,” the order said.
“Further, the respondents are directed to pay compensation of ₹2 lakh towards mental agony to the complainant,” it said.
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In this case, the homebuyer entered into an agreement in July 2019 to purchase an apartment in the Surya Elegance project, including a covered parking space. He initially paid ₹17.7 lakh and later completed the purchase in December 2019 by paying the remaining ₹93.2 lakh. In addition, he spent around ₹20 lakh on interiors, taking his total investment in the property to about ₹1.30 crore, the order noted.
“The developer agreed to pay a rental of ₹1.06 lakh per month from the date of registration. So far, he has paid an amount of ₹7.69 lakh. Rent amount due as on 16.12.2022 is ₹30.81 lakh,” the order noted.
The homebuyer told KRERA that the developer is liable to pay interest for the delay and also compensate for not handing over possession on time.
However, the developer told the authority that the company had completed the construction in 2018 and also obtained the occupancy certificate in November 2018.
“The developer contended that the obligation of the respondents towards the said flat is completed once the sale deed was registered on 06.12.2019 and handover possession of the same in favour of the complainants on the same day,” the developer submitted before KRERA.
“They are not at all obliged to pay any rentals to the complainants as they have not entered into any rental agreements/arrangements with the complainants. This court has no jurisdiction to adjudicate the claims for rents by the complainants,” the developer submitted.
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KRERA order
The authority noted that the homebuyer approached the court seeking compensation for ‘loss of rent’ and ‘mental agony’.
“The grievances are that he had purchased an apartment in the project of the respondents under a sale deed dated 06.12.2019, and on the same day, the respondents have taken possession of the same, agreeing to pay rent of Rs. 1.06 lakh per month from the date of registration. Thereafter, the developer had paid an amount of ₹7.69 lakh to date. Hence, the rent amount due is ₹30.18 lakh,” it said.
The authority noted that even though the developer had executed the sale deed and received the full payment, they continued to retain the flat under the pretext of paying rent, thereby depriving the complainant of using the property or earning rental income from it for a significant period.
The authority observed that possession had been withheld and held the respondents accountable for the resulting financial losses and the hardship caused to the complainant.
A list of questions has been sent to the developer. The story will be updated once a response is received.