The court established that the imposition of delay fees by circular without statutory authority contradicts the principles of law, rendering such fees arbitrary and illegal.

ORDER :

M. NAGAPRASANNA, J.

1. Conglomeration of writ petitions, though arising from distinct projects and differing promoters, converge upon a common grievance - the validity of a Circular dated 03-09-2020 issued by the Real Estate Regulatory Authority, Karnataka (hereinafter referred to as ‘the Authority’ for short). This Circular, in essence, mandates the levy of “delay fee” for belated submission of quarterly updates and annual audit statements, without distinction to the scale of the project, the stage of development, or the peculiar circumstances surrounding it.

For the sake of convenience, the factual backdrop of writ petition Nos.4770 of 2024, 3379 of 2024 and 18662 of 2023 would be noticed, for it mirrors in substance the circumstances present in the other connected cases.

2. Sans details, facts germane are as follows: -

IN WRIT PETITION NO.4770 OF 2024

2.1 The petitioner is a partnership firm engaged in the business of development, construction and sale of residential buildings. The petitioner is planning to construct apartments under the Pradhan Mantri Awas Yojana in the name and style of ‘Shubh Gruh’ in Sy.No.147, Plot No.102+103+139+140, Paninagar Layout, Indi Road Pass, near Royal Enfield Showroom, Bijapur-Vijayapura District. In compliance with the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as ‘the Act’ for short) and Karnataka Real Estate (Regulation and Development) Rules, 2017 (hereinafter referred to as ‘the Rules’ for short) the petitioner applied for RERA registration on 07-04-2018. The application comes to be approved on 01-06-2018 with the petitioner being termed as a promoter and was allotted a RERA registration number. The petitioner then applied for plan sanction for construction of apartment aforementioned and announced the project canvassing for pre-bookings from the general public. The petitioner then tried to source pre-bookings in order to obtain commencement certificate for the project and when the things were then picking up, the nation was engulfed with COVID-19 due to which, the construction activity came to a grinding halt. It is the averment in the petition that the petitioner could not fetch even a single pre-booking for the project.

2.2. A Circular comes to be issued by the Authority on 03-09-2020. The Circular imposes ‘delay fee’ retrospectively for delayed submission of quarterly update and annual audit statement. The Circular encompasses every builder, developer or promoter to file quarterly update and annual audit statement in terms of Section 7 of the Act. The petitioner did not receive any pre-bookings for the apartment to be constructed and it has neither taken advances against the flat nor commenced any construction on the site. Commencement certificate is not obtained. It is the averment in the petition that, notwithstanding the aforesaid circumstance, late fee is imposed upon the petitioner.

2.3. The petitioner represents on 26-06-2023 seeking withdrawal of RERA registration due to non-receipt of pre-bookings and non-commencement of construction activity. The petitioner also applies for cancellation of plan, as nothing commenced from the date of sanction of the plan. The petitioner is said to have pursued the requisition for withdrawal with the 2^nd respondent only to be known, that in terms of the afore-mentioned Circular, only if delay fee Rs. 7,90,000 as on 06-01-2024 is paid, further steps would be taken towards the request of the petitioner. It is in this way, delay fee is imposed upon the petitioner. This is called in question in the subject petition.

IN WRIT PETITION NO.3379 of 2024

3. The petitioner in the subject petition is an individual who has developed a project “Amogh Anagha Nivasayati” and is involved in the development and promotion of real estate projects in the State more particularly in Bangalore Urban and Rural areas. The Act, as observed hereinabove, comes into effect on 25-03-2016 and the Rules on 10-07-2017. The Circular imposing dela