Karnataka High Court Quashes RERA Circular on Delay Fees

The Karnataka High Court, through Justice M. Nagaprasanna, invalidated a circular dated 3 September 2020 issued by Karnataka Real Estate Regulatory Authority (KRERA) which imposed a "delay fee" on promoters for late submission of quarterly updates and annual audit reports. The circular didn’t consider differences like project size, stage of development, or specific conditions (e.g. force majeure), rendering it arbitrary and illegal. The petitions argued that while the Real Estate (Regulation and Development) Act, 2016 mandates submission of periodic updates and audits, it does not empower KRERA to impose penalty fees simply for delay through a circular. The Court held that such financial exactions require legislative backing; a regulatory body cannot levy fees via executive or subordinate circulars absent explicit statutory authority. The circular was quashed, and promoters are entitled to consequential benefits resulting from the quashing. The decision leaves open the possibility that any delay fee may be imposed in future—but only if done through proper legislation or under law.