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KRERA pulls up Bengaluru developer for raising premature payment demands without construction proof
Bengaluru real estate: KRERA faulted the developer for raising premature payment demands without proof of construction progress; directed it to pay compensation
Karnataka Real Estate Regulatory Authority has pulled up Bengaluru-based developer Casa Grande Garden City Builders Pvt Ltd for raising construction-linked payment demands without supporting them with architect or engineer certificates, ruling that homebuyers cannot be asked to make advance payments based on unverified claims of construction progress. The authority also directed the developer to pay ₹2 lakh as compensation towards mental agony suffered by the complainant and an additional ₹2 lakh for raising premature payment demands.
“The respondent has not produced a single iota of evidence before this court to show that he had raised demands as per stage-wise progress supported by Architect/Engineer certificates,” the order stated.
The Authority found that the developer issued multiple demand letters between April and August 2024, despite the project being at an earlier construction stage, leading a buyer to pay ₹69.66 lakh, including around ₹12 lakh collected before the actual stage of completion.
“The respondent is hereby directed to pay compensation of Rs. 2,00,000/- (Two Lakhs only) towards mental agony to the complainant. Further, the respondent is directed to pay compensation of ₹2,00,000/-(Two Lakhs only) to the complainant towards early demand of payments,” the order said.
“The respondent is directed to comply with the order within 60 days from the date of the aforesaid order, failing which it will carry interest at MCLR+2% 61st day of this order on compensation till realisation,” the order said.
The case
According to the complaint filed before the KRERA, the homebuyer had booked a flat in the Casagrand Keatsway project and entered into a sale agreement dated January 8, 2024. The complainant said he paid ₹69.66 lakh out of the total sale consideration of ₹80.01 lakh.
The buyer alleged that the builder was required to collect payments strictly based on stage-wise construction progress, supported by architect or engineer certificates. However, the developer allegedly issued multiple demand letters between April and August 2024, claiming completion of various stages, including the basement, ground floor, first floor, and third floor, and seeking payments accordingly.
According to the complaint, the buyer later inspected the site after construction had reached the second floor level and realised that the structure shown in earlier progress reports did not correspond to his unit. He further alleged that a project progress report issued in November 2024 showed that units, including his own, were still at the basement stage, contradicting the developer's earlier claims.
“The November 2024 progress report clearly evidenced that units No. 10, 11, 12, 13, 14 and 15 were still in the basement stage at that time, proving that earlier reports and corresponding demands were inaccurate. This amounts to false demand misrepresentation, cheating, unfair trade practice and violation of statutory obligations under RERA,” the KRERA order noted.
The complainant accused the builder of raising false demands, misrepresentation, unfair trade practices and violating obligations under the Real Estate (Regulation and Development) Act (RERA).
“This amounts to false demand misrepresentation, cheating, unfair trade practice and violation of statutory obligations under RERA,” the complainant told KRERA.
The developer’s stance
The authority noted that the developer denied the allegations, arguing that all payment demands were raised based on the overall progress of the project and that the complainant had made the payments voluntarily without raising any objections at the time.
“Further, the payments which were made well in advance of the corresponding construction stages would be adjusted as upfront benefits. Thus, the respondent had extended financial benefit to the complainant for early payments and provided a detailed upfront calculation with actual stage on site progress,” the order noted.
The Authority said in its order that the developer had failed to produce any evidence showing that payment demands were raised in accordance with stage-wise construction progress supported by architect or engineer certificates, as required under RERA norms.
KRERA observed that whenever a promoter raises a payment demand, the developer is required to communicate the actual stage-wise progress of the project to allottees, along with photographs of the construction site and supporting architect or engineer certificates.
“Herein in this case the demand for payment raised by the respondent is not supported with Architect/Engineer certificates. This being the fact, it is difficult to know the exact stage wise progress of the project,” the authority noted.
The authority further said that the builder had also failed to submit any material proving its claim that the complainant had received financial benefits or incentives for making early payments.
“Further, the respondent has not produced any document in support of his defence that he has given financial benefit to the complainant for early payments,” the order said.
In view of these findings, KRERA held that the complainant was entitled to compensation for the early payment demands raised by the developer.
A list of questions has been sent to the developer. The story will be updated if a response is received.
