Rajasthan RERA Awards ₹1 Lakh Compensation After Promoter Retains Booking Amount Following Cancellation of Allotment

 

Rajasthan RERA Awards ₹1 Lakh Compensation After Promoter Retains Booking Amount Following Cancellation of Allotment

Case: Seema Devi & Ors. v. Ravi Surya Affordable Homes Pvt. Ltd.
Complaint No.: RAJ-RERA-C-O-2024-7211
Forum: Rajasthan Real Estate Regulatory Authority (Rajasthan RERA)

The matter concerned cancellation of allotment and retention of the booking amount by the promoter, Ravi Surya Affordable Homes Pvt. Ltd. The Rajasthan RERA considered whether the homebuyers were entitled to compensation where the promoter had retained the booking amount for a prolonged period following cancellation.

Background

Seema Devi and the other complainants had booked units in a project of Ravi Surya Affordable Homes. The dispute arose after the allotment was cancelled and the promoter retained the amount deposited by the complainants.

The Rajasthan RERA considered the nature and extent of the financial loss suffered by the complainants, particularly because the amount retained by the promoter consisted only of the booking amount, rather than a substantial part of the sale consideration. 

Finding of Rajasthan RERA

The Authority held that retention of the booking amount for such a period caused tangible financial loss to the complainants and resulted in an element of undue enrichment to the promoter.

The Authority observed that, had the promoter borrowed an equivalent amount from the market, it would ordinarily have incurred an interest liability. Therefore, although the case could not be treated in the same manner as a normal refund case involving substantial payments towards the sale consideration, the complainants were nevertheless entitled to reasonable compensation for the financial loss suffered.

Compensation awarded

The Authority awarded a total of ₹1 lakh to the complainants, comprising:

• ₹80,000 towards financial loss; and

• ₹20,000 towards physical and mental agony and litigation expenses.

Ravi Surya Affordable Homes was directed to pay the amount within 45 days. In case of default, the amount would carry interest at 6% per annum from 16 September 2026 until payment. 

Important RERA proposition

Even where the promoter has retained only the booking amount, prolonged retention following cancellation of allotment may justify compensation for the financial loss caused to the allottee; the quantum of compensation may, however, be assessed differently from cases involving refund of substantial sale consideration.

Significance

The case is useful for the proposition that compensation under RERA is not necessarily confined to cases where a substantial portion of the apartment's consideration has been paid. Where the promoter retains a booking amount for an extended period, the Authority may consider the resulting financial loss and other consequences while determining appropriate compensation. 

Landowner Liable for Project Registration Despite Development Agreement: Rajasthan RERA

Case Title: Suo Motu v. K.D. Developers
Case No.: F.15 (326) RJ/RERA/C/2024 (RAJ-RERA-Suo Motu-2026-77)

The Rajasthan Real Estate Regulatory Authority (Rajasthan RERA) has held that a landowner cannot evade statutory obligations under the Real Estate (Regulation and Development) Act, 2016 (RERA Act) merely because a development agreement assigns construction and other development responsibilities to a developer.

In proceedings concerning the unregistered multi-storey residential project “99 Avenue” in Jaipur, the Authority imposed a penalty of ₹1 lakh each on Siddharth Landmark LLP, the developer, and Brajesh Saxena, one of the landowners, for contravention of the registration requirement under Section 3 of the RERA Act. The Authority further directed them to apply for registration of the project within 45 days.

Development Agreement Does Not Extinguish Landowner's Statutory Obligations

Chairperson Veenu Gupta observed:

“The contractual allocation of particular development responsibilities to the developer cannot, by itself, absolve the landowner from the statutory obligations arising under the Act in respect of the project.”

The project, situated at B-99-A, Surya Marg, Tilak Nagar, Jaipur, comprised 12 residential units. The proceedings arose from a complaint alleging that K.D. Developers was developing the project and had commenced bookings without obtaining the mandatory registration under the RERA Act. It was also alleged that requisite permissions from the Jaipur Development Authority and other competent authorities had not been obtained.

Rajasthan RERA issued a show-cause notice dated September 12, 2024, under Sections 3 and 59 of the Act concerning the failure to register the project. An interim direction under Section 36 was also issued restraining further booking, sale or purchase in relation to the project.

Pursuant to directions issued on March 12, 2025, a site inspection was conducted. The inspection report dated May 5, 2025 recorded the existence of a basement, ground floor and six additional floors. The project comprised 12 residential units spread over approximately 970 square metres. The structural framework had been completed, while interior and exterior works were still in progress.

Landowner's Defence Rejected

The inspection report recorded the involvement of Siddharth Landmark LLP and identified Brajesh Saxena as a landowner.

Saxena admitted that he had executed a Development Agreement dated February 8, 2023. However, he contended that his role was confined to that of a landowner and that he had not participated in the management, promotion, marketing or day-to-day affairs of the project.

The Authority rejected this defence.

The Development Agreement described Saxena as the First Party/Landowner and Siddharth Landmark LLP, through its partners Nischal Bhandari and Pradeep Moolrajani, as the Second Party/Developer. Although the agreement entrusted the developer with construction and the sale of the flats, it also provided for the constructed flats to be divided between the developer and the landowner.

Significantly, Saxena retained a 58.33% share in the flats to be constructed. On this basis, the Authority found that he continued to possess a substantive proprietary interest in the project.

The Authority held that the contractual arrangement between the parties could not override or dilute statutory obligations imposed by the RERA Act. The fact that construction, development and sale-related responsibilities had been assigned to the developer did not, by itself, absolve the landowner from compliance with the statutory registration requirement.

Violation Was Not a Mere Technical Lapse

Rajasthan RERA further held that the contravention could not be characterised as a “mere technical or inadvertent lapse”.

The project was actively under development and comprised 12 residential units, notwithstanding the statutory requirement that the project be registered before commencement of activities falling within Section 3 of the Act.

The Authority accordingly concluded that continued development of the project without registration constituted a “wilful contravention” of Section 3.

Proceedings Against Another Landowner Dropped

The Authority, however, distinguished the position of Kunal Daga, another person identified as a landowner.

Proceedings against Daga were dropped as the material on record did not establish his participation in the development arrangement, construction or sale of the project. The Authority held that his “mere identification as a landowner” was insufficient to impose liability in the absence of material demonstrating his participation in, or nexus with, the development.

Liability of Siddharth Landmark LLP

The order also noted that the proceedings were initially instituted against K.D. Developers. However, the subsequent site inspection report and the Development Agreement identified Siddharth Landmark LLP as the developer actually undertaking the development of the project.

Since no material was placed on record establishing any continuing role of K.D. Developers in the development or sale of the project, the Authority determined liability on the basis of the material subsequently brought on record.

Penalty and Direction for Registration

Rajasthan RERA ultimately held that Siddharth Landmark LLP, being the developer responsible for construction and development, and Brajesh Saxena, being the landowner having a substantive share in the constructed project, could not avoid the statutory requirement of registration under Section 3 of the RERA Act.

Accordingly, exercising its powers under Section 59, the Authority imposed a penalty of ₹1 lakh each upon Siddharth Landmark LLP and Brajesh Saxena.

They were further directed to apply for registration of the project “99 Avenue” within 45 days and comply with the requisite statutory formalities.

Key Takeaway

The order underscores that private contractual arrangements between a landowner and developer cannot, by themselves, determine or extinguish statutory liability under RERA. While the actual role and nexus of each party must be examined on the basis of the material on record, a landowner having a substantive proprietary or economic interest in a development project may remain subject to statutory obligations despite delegating construction, development and sale responsibilities to a developer.

 

Supreme Court Upholds RERA Jurisdiction Over Banks in Union Bank Case

New Delhi: The Supreme Court has upheld the Rajasthan High Court’s ruling that banks and other secured creditors can come within the jurisdiction of the Real Estate Regulatory Authority (RERA) when they take enforcement action against real estate projects under the SARFAESI Act.

The case arose from a dispute involving Union Bank of India and the Rajasthan Real Estate Regulatory Authority, following proceedings concerning the stalled Sunrise real estate project. The Rajasthan High Court had clubbed the bank’s petition with 69 other connected writ petitions involving similar legal questions.

The High Court delivered its judgment in D.B. Civil Writ Petition No. 13688/2021 & 69 other connected Writ Petitions on December 14, 2021, and Union Bank subsequently approached the Supreme Court through SLP (Civil) Nos. 1861–1871.

Dispute over bank recovery and homebuyer rights

The dispute involved a conflict between two important regulatory frameworks — the Real Estate (Regulation and Development) Act, 2016 (RERA) and the SARFAESI Act, 2002, which enables secured creditors to enforce security interests and recover outstanding dues.

According to the case record, the developer had obtained financing by creating security over the real estate project. The project subsequently remained incomplete and the developer defaulted on its loan obligations. The bank then initiated recovery proceedings under SARFAESI, including action against properties in the project.

Homebuyers approached the RERA authority to protect their interests, leading to a dispute over whether RERA could exercise jurisdiction against the bank as a secured creditor.

Rajasthan High Court's key conclusions

The Rajasthan High Court held that RERA would prevail over SARFAESI in the event of a conflict between the two statutes, relying, among other things, on the Supreme Court's earlier ruling in Bikram Chatterji v. Union of India.

The High Court also held that RERA would generally not apply to a borrower-bank transaction where the security interest had been created by mortgage before RERA came into force, unless the creation of the mortgage or the transaction was found to be fraudulent or collusive.

At the same time, the court held that the RERA authority could entertain a complaint against a bank acting as a secured creditor when the bank invoked Section 13(4) of SARFAESI, subject to the circumstances identified by the court.

Supreme Court dismisses Union Bank's challenge

On February 14, 2022, a Supreme Court bench comprising Justice M.R. Shah and Justice B.V. Nagarathna heard Union Bank's SLPs.

The Supreme Court recorded that it was “in complete agreement” with the view taken by the Rajasthan High Court and dismissed the petitions. However, it added a specific clarification to the High Court's conclusion concerning RERA jurisdiction over secured creditors.

The Supreme Court clarified that the High Court's finding concerning Section 13(4) of SARFAESI would apply where proceedings before RERA are initiated by homebuyers to protect their rights.

Significance for stalled real estate projects

The ruling establishes an important legal intersection between homebuyer protection, RERA and bank recovery proceedings.

In practical terms, a bank exercising its statutory recovery powers over a real estate project cannot simply be treated as outside the reach of RERA when homebuyers approach the authority to protect their rights, subject to the limitations identified by the courts.

The judgment also preserves an important distinction for pre-RERA mortgages. The High Court's conclusion, affirmed by the Supreme Court, states that RERA does not ordinarily apply to the borrower-bank transaction where the security interest was created before the introduction of RERA, unless the mortgage or transaction is found to be fraudulent or collusive.

Relevance to stalled-project resolution

The judgment is particularly relevant to stalled real estate projects where three interests can collide: homebuyers seeking completion or protection of their units, developers facing financial defaults, and banks seeking recovery of secured loans.

The decision does not mean that every dispute between a borrower and a bank automatically falls within RERA. Rather, the Supreme Court's order confirms the High Court's framework concerning secured creditors and specifically ties the relevant RERA jurisdiction to proceedings initiated by homebuyers for protection of their rights.

The ruling has subsequently been cited in later real-estate and insolvency proceedings concerning the relationship between RERA protections for homebuyers and the enforcement rights of secured creditors.

Rajasthan RERA - Complaint under Section 12 will not be dealt by the Authority and has to be compulsorily put before the Adjudicating Officer.

 In the Matter of Amit Kumar Lamba V/s Shekhar home Developers Complaint no.RAJ-RERA-C-2018-2193  decided on 23.04.2019 before Rajasthan Real Estate Regulatory Authority

The Bench of Sh. Nihal chand Chairman and and Rakesh jain member held that

Complaint for Relief under Section 12, Section 14(3), Section 18(2) and Section 18(3) are to be filed with and disposed of by the adjudicating officer alone, in the manner prescribed in the Rule 36 of the Rules. 

Complaints for Relief under Section 14(1) , Section 14(2) , Section 19(16) to 19(11) are to be filed with and disposed of by the Authority alone, in the manner prescribed in the Rule 35 of the Rules.

As regards to complaint under Section 18(1), the Complaint is to be filed with and disposed by authority if the complaint pertains to refund, interest , penalty or of other other directions.

The Complaint under Section 18(1) is to be disposed by the Adjudicating officer if the complaint pertains to the compensation only.

The copy of Detailed order can be found at https://rera.rajasthan.gov.in/Content/pdf/2018-2193%20001-converted.pdf

If the developer is not building the project as promised in the brochure, the Authority directed the promoter to complete the project as promised in brochure and rectify the mistake and also for compensation they can approach the Adjudicating Authority

 In the Matter of Pawan Beniwal and Kavita Vs Parsvnath Developers Ltd Complaint no.Raj-RERA-C-2017-2007 decided on 20.06.2019  before Rajasthan Real Estate Regulatory Authority

• The Rajasthan Real Estate Authority presided by Shri Nihal Chand Goel and Shri Rakesh Jain held that the Allottee/complainant contended that the developer is not developing these flats as per their brochure in that they have converted the lawn of the flat into a common facility area by making five sewerage manholes in the backyard. 

• The issue has not been resolved despite complaints made to the non-complainant. Even as per para 1(a) of the Agreement, it is clear that a lawn was supposed to be part of these flats at ground floor, but no lawn has been developed. 

• The competent Authority issued the following directions:

• (i) The non-complainant shall cover the manholes and develop the back yard/ rear set back into a proper lawn; 

• (ii) The complainants shall take possession of the their respective floors; and then point out the difficulties and deficiencies in workmanship, quality or provision of services to the promoter to rectify such difficulties and deficiencies, at no cost to the complainants, Within 30 days thereof; 

• (iii) If, before or after giving possession, the non-complainant does not comply with the directions given hereinbefore, the complainants will be at liberty to approach the Adjudicating Officer for relief under section 14(3) of the Act. Besides this, the complainants will also be at liberty to approach the Adjudicating Officer for relief of compensation under section 12 and section 18(1) of the Act.

x

Authority is competent only to deal with violations or contraventions of the Act.,Authority is not the appropriate forum for settlement of disputes between the land owner and the promoter or between partners in business

 In the Matter of Raghunath Prasad Jain Vs Arihant Dream Infra Projects Ltd. Complaint no.RAJ-RERA-C-2017-2105 decided on 12.06.2019 before Rajasthan Real Estate Regulatory Authority.

• The Rajasthan Real Estate Authority presided by Shri Nihal Chand Goel and Shri Rakesh Jain held that the promoter has no obligation towards the land owner or his partners in business. 

• All the obligations of the promoter enumerated under the Act are either towards the allottees or towards the Authority, but there is no obligation the promoter has towards the land owner or his partners in business. And, the Authority is competent only to deal with violations or contraventions of the Act. 

• Thus, the Authority is not the appropriate forum for settlement of disputes between the land owner and the promoter or between partners in business;and this complaint of the land owner against the promoter is not maintainable under the Act.

• In this case, the agreement for sale executed between the allottees and the non-complainant, it was promised to deliver the possession of the project by October, 2016. Promoters challenged the maintainability of the complainant as it has been wrongly invoked under RERA as the complainant is not an allottee, but the land owner and business partner, who has been duly shown as a co-promoter in the application for registration filed before the Authority, under his consent. 

• The Act provides for remedial action for the allottees or customers being buyers of the developed property; and the disputes inter-se between the developer and the owner of land are not under the ambit and jurisdiction of RERA.

x

RERA has superseding powers on Directorate of Enforcement as far as protection of homebuyer rights are concerned

 Before Ld. RERA Rajasthan:

Hydepark landowners association V. Adarsh Buldestate Ltd. (ABL)and others Complaint No. RAJ-RERA-C-201 9-31 69

The Authority has ruled that RERA has superseding powers on Directorate of Enforcement as far as protection of homebuyer rights are concerned;

it has Also ruled that valuation of “proceeds of crime” connected to a project cannot be more than actual amount invested towards the construction. Such a valuation can be arrived at through a government approved valuer by already legally settled principles of calculation methodology.

The Complete order can be seen at 

https://rera.rajasthan.gov.in/Content/pdf/29352019-3169%20merged_compressed.pdf

RERA Act, being a special law for protection of interest of consumers in real estate sector, prevails over Companies Act

In the Matter of Kuldeep Kaur v. MVL Ltd., Complaint No. RAJ-RERA-C-2018-2127, decided on 09-05-2019 at The Rajasthan Real Estate Regulatory Authority: A Coram of Nihal Chand Goel (Chairman) and Rakesh Jain (Member), rejected an application for staying the proceedings filed under Section 279 of the Companies Act, 2013.

In the present order, the Authority was dealing with ten cases taken together, all against the company MVL Ltd. having a common case. An application was filed under Section 279 of the Companies Act, 2013 on the behalf of the non-complainant company requesting that the proceedings be stayed as the High Court of Delhi had admitted a winding-up petition against the non-complainant company and had appointed a provisional liquidator.

The learned counsel, Harshal Tholia, filed a reply to the said application and brought the Authority’s attention to Section 279 of the Act which contained two clearly separate provisions, one for the fresh institution or commencement of a new suit or other legal proceeding, and the other for proceeding with an already pending suit or other legal proceeding.

The Authority observed that no pending suit or other legal proceedings can be proceeded with when a winding order is passed and hence the appointment of a provisional liquidator was of no consequence when it came to staying or not staying a pending suit or other legal proceedings. 

Only the winding up order was relevant for staying a pending suit or other legal proceedings. As the winding-up order had not been made by the court till that time, the stage for staying the proceedings had not arrived yet.

It was further noted that the proceedings were pending under the Real Estate (Regulation and Development) Act, 2016 which was a special Act of the Parliament made much after the Companies Act, 2013. 

Referring to the Section 89 of the RERA Act, the Authority held that it prevailed over the Companies Act, 2013 and hence Section 279 of the Companies Act, 2013 did not come in the way of the Authority’s proceedings.

In view of the above, the application for staying the proceedings was rejected.

RERA is applicable to state run entities too

 In September 2020, the Rajasthan RERA in a landmark decision held that the RERA Act is mandatory in nature. 

In Vinod Agarwal Vs. Jaipur Development Authority (JDA) RAJ -RERA-C-2020 -3622, the complainant said that he had participated in an auction organized by JDA and was allotted a plot in the project. He had also deposited 15% of the amount with JDA. However, JDA further issued a demand note of 35% of the amount and 15% interest in case of delay, without executing the agreement for sale. 

As per RERA Act, the developer is not allowed to accept more than 10% of the cost without executing or getting an agreement of sale registered. 

The argument put forth by the respondent was that it is a statutory development authority, it is guided by Rajasthan Improvement Trust (Disposal of Urban Land) Rules, 1974. Further, it was added that the auction conditions did not stipulate any specific requirement for executing an agreement of sale. Also, the auction of the plot took place on an as-is-where-is basis. 

However, RERA ruled that the project was registered under it and thus, all rules and regulations under the Act would be applicable to the project as well and directed JDA to execute the sale agreement before demanding an additional amount. Section 13 of the Act mandates the execution of the sale agreement. 

The Complete order can be found at https://rera.rajasthan.gov.in/Content/pdf/Vinod%20Agarwal.pdf