Karnataka High Court strikes down K-RERA circular imposing retrospective delay fee

HC rules that Real Estate Regulatory Authority cannot levy fees without clear legislative backing, citing Article 265 of the Constitution.

The Karnataka High Court has quashed a September 3, 2020, circular issued by the Real Estate Regulatory Authority (RERA) that sought to impose retrospective "delay fees" on promoters and developers for late submission of quarterly updates and annual audit statements.

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The circular required builders, developers, and promoters to file quarterly updates and annual audit statements under Section 7 of the Real Estate (Regulation and Development) Act, 2016. Petitioners argued that while the Act mandates compliance, it does not empower RERA to levy delay fees. They also highlighted that COVID-19-related project delays were beyond their control.

Government advocates contended that the Act obligates promoters to update project details on the K-RERA portal, and non-compliance could justify fee collection.

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Justice M Nagaprasanna, however, emphasized that “no impost in the nature of tax or fee may be exacted from a citizen except by the authority of law.” The court observed that executive orders or departmental circulars do not constitute law; only enactments by the legislature backed by statutory sanction can authorize financial exactions.

The judgment underscored that any fee imposed on citizens must have clear legislative authorization. Testing the circular against these principles, the court found that the RERA circular lacked statutory parentage and quashed it, granting relief to developers and promoters who had challenged the retrospective fee.

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