Summary: The Karnataka High Court, in a judgment dated 19 September 2025, struck down Karnataka RERA’s circular dated 03.09.2020 that imposed delay filing fees for non-submission or late submission of quarterly updates by promoters. The Court held that neither the Real Estate (Regulation and Development) Act, 2016 nor the Rules and Regulations framed thereunder authorized the Authority to levy such fees through an administrative circular. It emphasized that financial liabilities, including fees and taxes, must have explicit statutory backing and cannot arise from executive instructions. The Court further found the circular arbitrary because it imposed uniform delay fees irrespective of project size or circumstances, thereby offending constitutional principles of equality. While quashing the circular and extending consequential benefits to affected promoters, the Court clarified that future levies may still be introduced if supported by proper legislative authorization and due process requirements.
RERA – Legal Relief and Compliance Strategies Following Karnataka HC’s Strike on RERA Delay Fees on delay / non-filing of Quarterly Updates
The Real Estate (Regulation and Development) Act, 2016 (RERA) was enacted to bring transparency, accountability, and discipline in the real estate sector, ensuring protection of homebuyers and supporting proper implementation standard practices of real estate projects in India. One of the key compliance requirements under the Act is the Quarterly updates (QU), mandated under Section 11(1) read with the relevant Karnataka RERA Rule 15 and Regulations, which requires every registered promoter (Builder and Developers) to update the status of the progress of construction of the project on the RERA web portal. The QU functions as a reporting mechanism for continuous disclosure of construction status, approvals, financial utilization, and project milestones, enabling allottees, investors and the Authority to monitor progress. This reporting ensures that promoters follow approved plans and timelines, adhere to utilisation of funds, and maintains transparency as required under RERA. Non-compliance with QU provisions may attract penalty under Sections 60 and 61 of the Act, showing its importance as a compliance and monitoring tool under the regulatory framework.
The Karnataka Real Estate Regulatory Authority (K-RERA) issued a circular dated 03.09.2020, vide No.RERA/Finance-Section/83/2020-21, proposing the levy of delay filing fees on promoters who fail to submit their Quarterly Updates within the prescribed timelines. This circular was intended to ensure timely disclosure and compliance with Section 11 of the Real Estate (Regulation and Development) Act, 2016, which mandates that promoters provide regular updates on the progress of their registered Real estate projects.
Following the issuance of this circular, several promoters across Karnataka were subjected to delay filing fees for non-filing or late submission of quarterly updates. However, few promoters challenged the said circular before the Hon’ble Karnataka High Court, contending that the mandatory levy of delay filing fees is not supported by the provisions of the RERA Act or its corresponding Rules. They argued that while the Act empowers the Authority to seek information and impose penalties after due process, it does not authorize automatic or mandatory imposition of such delay fees through a circular.
This challenge before the High Court has raised an important question regarding the extent of K- RERA’s powers to frame compliance mechanisms through administrative circulars, and whether such circulars can impose financial liabilities on promoters beyond what is explicitly provided under the Act or the Rules of Regulations framed thereunder.
The judgment delivered by the Hon’ble Mr. Justice M. Nagaprasanna of the High Court of Karnataka at Bengaluru, dated 19th September 2025, holds significant importance in interpreting the powers and functions of the Real Estate Regulatory Authority (RERA) concerning imposition of delay filing fees for non-submission of Quarterly updates by the promoters.
In this article, an attempt is made to present a detailed understanding of the contentions raised by the petitioners, the arguments advanced before the Court, and the various judicial precedents that were relied upon and discussed in the judgment. The order authored by Justice M.Nagaprasanna not only examines the validity of the Karnataka RERA Circular dated 03.09.2020, but also delves into the broader question of whether such administrative directions can create financial obligations that are not expressly provided under the Real Estate (Regulation and Development) Act, 2016 or the Rules or Regulations framed thereunder.
Through this discussion, the article aims to highlight the legal reasoning adopted by the Hon’ble Court, the principles of statutory interpretation applied, and the impact of the judgment on ongoing and future compliance obligations of promoters under RERA.
1. The following are the contentions raised by the petitioners, the arguments advanced before the Honourable High Court –
a. The circular sought to impose the same delay fee on all promoters whether the project comprised 10 apartments or 1000 apartments without considering the project’s scale, the actual delay, or specific circumstances, leading to an arbitrary and unfair burden on small and large developers alike.
b. The RERA Act already provides a well-defined penalty mechanism under Section 61, a promoter is liable for a penalty up to 5% of the estimated cost of the real estate project for certain contraventions. Crucially, the Act does not mention or authorize any separate delay fee for late filing of quarterly updates.
c. No power to levy a fee by circular. Section 37 of the Act only empowers the Authority to issue directions necessary for discharging its functions, it does not grant the authority to impose any financial exactions. Imposing a pecuniary burden such as a delay fee is beyond what is permitted by this section, and is not supported elsewhere in the Act.
d. The impugned circular imposed delay fees retrospectively from the third quarter of 2018-19, although the circular itself was issued on 03.09.2020. This retroactive application is patently unjust and not supported by legislative sanction.
e. The central legal question before the Court was whether the delay fee circular could be justified under the parent RERA statute or whether it constituted an act of ultra vires (beyond legal authority) action by the Authority.
f. The Act, Rules, Regulations never contemplates the imposition of a delay fee for non-compliance. The only sanctions authorized are penalty or interest, both of which require due process and are capped and conditioned by statutory provisions.
g. Basic constitutional principle reaffirmed, It is settled law that the imposition of a tax, fee, or any compulsory payment cannot be made by executive authority or departmental circular; such a levy must be clearly and expressly authorized by statute. The RERA circular represented an exaction without lineage under the statute and was therefore struck down.
2. Grounds Considered for Conclusion –
a. Absence of Legislative Authority – no provision in the Act or rules expressly or impliedly allows RERA to impose a delay fee by circular.
b. Ultra Vires Exercise of Power – RERA exceeded its statutory authority, executive directions cannot create pecuniary liability absent legislative basis.
c. Violation of Constitutional Principles – The levy treated different promoters identically, regardless of project circumstances, in violation of Article 14 (equality before law). No rational basis or proportionality existed in the imposition, making it arbitrary.
d. Judicial Precedent- Cited Supreme Court judgements clarify that any kind of fiscal exaction (fee, tax, cess) must be rooted in statute. Executive intent or convenience cannot substitute for statutory mandate.
e. Principle of Quid Pro Quo for Fees – The distinction between tax and fee requires a corresponding, measurable benefit for the payer absent in this levy.
The court thoroughly discussed legislative competence, fiscal jurisprudence, and constitutional requirements in striking down the circular, respecting the doctrine that no exaction is valid unless traceable to clear legislative authority
3. Tax and Fee Differentiation – Fee should be corresponded to the services rendered
a. In this judgment, the Karnataka High Court undertook a comprehensive analysis of the distinction between a tax and a fee, relying on a rich body of case law decided by the Supreme Court and other courts. The Court noted that while both taxes and fees involve compulsory exactions, the essential difference lies in their nature and purpose: a tax is levied as a contribution to the general public revenue without any direct quid pro quo, whereas a fee is charged for a special service rendered to individuals and must bear a reasonable correlation to the benefit received by the payer.
b. The Court referenced landmark cases such as Jindal Stainless Ltd. v. State of Haryana and Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar to establish that a fee must be backed by statutory authority and can only be justified where there is a demonstrable quid pro quo or equivalence principle, meaning the fee should correspond to the services rendered. The judgment cites many decisions, notably Corporation of Calcutta v. Liberty Cinema and Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla, which clarify that the power to levy either a tax or a fee must be specifically conferred by statute and cannot be derived by implication, executive action, or circulars
c. By referring to this established precedent, the High Court made it clear that the imposition of a delay fee by way of circular, without explicit legislative authorization or demonstrable special service, was not only legally unsustainable but failed both constitutional and fiscal jurisprudence tests.
4. Few important Case Laws referred in the judgement –
a. Jindal Stainless Ltd. v. State of Haryana [2017 12 SCC 1]
b. Commissioner, Hindu Religious Endowments v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt [AIR 1954 SC 282]
c. Jagannath Ramanuj Das v. State of Orissa [AIR 1954 SC 400]
d. Hingir-Rampur Coal Co. Ltd. v. State of Orissa [AIR 1961 SC 459]
e. Corporation of Calcutta v. Liberty Cinema [AIR 1965 SC 1107]
f. Kewal Krishan Puri v. State of Punjab [1980 1 SCC 416]
g. Krishi Upaj Mandi Samiti v. Orient Paper and Industries Ltd. [1995 1 SCC 655]
h. State of Gujarat v. Akhil Gujarat Pravasi V.S. Mahamandal [2004 5 SCC 155]
i. State of W.B. v. Kesoram Industries Ltd. [2004 10 SCC 201]
j. Calcutta Municipal Corporation v. Shrey Mercantile Pvt Ltd [2005 4 SCC 245]
k. Kerala Samsthana Chethu Thozhilali Union v. State of Kerala [2006 4 SCC 327]
l. State of Kerala v. Maharashtra Distilleries Ltd. [2005 11 SCC 1]
m. Indian Mica Micanite Industries v. State of Bihar [1971 2 SCC 236]
n. Khoday Distilleries Ltd. v. State of Karnataka [1996 10 SCC 304]
o. Clariant International Ltd. v. SEBI [2004 8 SCC 524]
p. Union of India v. Cipla Ltd. [2003 7 SCC 1]
q. Mohan Meakin Ltd. v. State of H.P. [2009 3 SCC 157]
r. A. P. Paper Mills Ltd. v. Govt. of A.P. [2000 8 SCC 167]
s. Ashok Lanka v. Rishi Dixit [2005 5 SCC 598]
t. Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla [1992 3 SCC 285]
u. Asian Leather Limited v. Kolkata Municipal Corporation [2007 SCC OnLine Cal 268]
v. Indus Towers Limited v. State of Gujarat [2010 SCC OnLine Guj 3777]
w. Mumbai Agricultural Produce Market Committee v. Hindustan Lever Ltd. [2008 5 SCC 575]
x. Liberty Cinema 1965 2 SCR 477 [AIR 1965 SC 1107]
y. Chandru v. Member-Secretary, Chennai Metropolitan Development Authority [2009 4 SCC 72]
z. Krishna Das v. Town Area Committee, Chirgaon [1990 3 SCC 645]
aa. Gaurav Kumar v. Union of India [2025 1 SCC 641]
bb. Commissioner of Income Tax, Udaipur v. McDowell and Co. Limited [2009 10 SCC 755]
cc. Om Kumar v. Union of India [2001 2 SCC 386]
dd. Khargram Panchayat Samiti case [1987 3 SCC 82]
5. Judgement / Order –
| Sl No | Order | Details |
| 1 | Writ Petitions Allowed | The Court unreservedly allowed all the writ petitions filed by various promoters, developers, and partnership firms challenging the validity of the RERA circular dated 03-09-2020. This collective allowance signifies judicial acknowledgment of the widespread and fundamental flaws in the circular and relief for every petitioner affected by its imposition |
| 2 | Quashing of the Circular issued by Karnataka RERA Dated 03.09.2020, vide No. RERA/Finance-Section/83/2020-21, proposing the levy of delay filing fees | The impugned circular, which purported to levy a uniform delay fee for late submission of quarterly updates and annual audit statements without reference to project scale, timing, or special circumstances, is quashed in its entirety. |
| 3 | Consequential Benefits to Petitioners | All petitioners are expressly declared entitled to the full range of consequential benefits flowing from the judgment.
a. This may include the reversal of previously imposed delay fees, b. relief from pending demands, and the c. revision or reconsideration of applications and registrations adversely affected by the now quashed circular. d. Etc |
| 4 | Legislature Retains Power for Future Levy | Importantly, the order does not bar the government from legislating or RERA from imposing levy or penalty in the future provided such measures are carried out in a manner known to law, i.e., strictly in accordance with statutory due process and explicit legislative authorization. The judgment is thus prospective and does not preclude future compliance mechanisms, but insists that any pecuniary levy must pass the test of legality, certainty, and express statutory sanction. |
6. Way forward for promoters or industry leaders / associations –
| Sl No | Action | Details |
| 1 | Consult a consultants or Professionals | Seek advice from the consultants or professional experienced in RERA matters. This will help ensure proper execution of court relief and facilitate communication with authorities |
| 2 | Approach the RERA Authority for Rectification | Submit a letter to Karnataka RERA, enclosing a copy of the High Court judgment and an application seeking removal/withdrawal of delay fee that is still reflecting against the project in the RERA online portal. |
| 3 | Request Portal Access for Past Compliance | Formally request K RERA to enable access or allow submission of any pending or past quarterly updates on the portal, without any hindrance or requirement to pay delay fees for regularizing records. |
| 4 | Recover Amounts Already Paid (If Applicable) | If a delay fee was already paid under protest, make a formal claim for refund or adjustment against future compliance fees, referencing the court’s explicit grant of consequential benefits.
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| 5 | Look for consequential benefits of your project if any | If a promoter is eligible for consequential benefits, this includes seeking clearance for any pending approvals such as project registrations, extension requests, or change applications that may have been withheld due to non-payment of these fees either in ongoing or previous projects. Approach the authority for the relief.
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In summary, the High Court quashed the circular, emphasizing that any financial liability or administrative fee imposed on citizens or businesses must be sanctioned by the legislature and cannot arise from administrative orders, circulars, or executive discretion however it serves as an important reminder to promoters about the critical importance of timely compliance with statutory requirements. These disputes related to delayed filings could have been avoided had promoters been diligent in submitting quarterly updates within prescribed timelines.
It is therefore strongly advisable for promoters to engage competent professionals who can provide continuous guidance and handholding to ensure that all RERA compliances are met promptly and accurately. Regular consultation with such professionals not only helps in avoiding costly penalties, which can run up to 5% of the project’s estimated cost. Proactive adherence to compliance requirements ultimately safeguards promoters from legal complications and financial burdens, ensuring smoother project execution and reputational integrity.
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This article is prepared considering the judgement, you can reach vinay@vnv.ca for further clarifications
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