Karnataka REAT Upholds Refund to Homebuyers, Holds Promoter Liable for Clear Title Despite Land Disputes

March 26, 2026 : The Karnataka Real Estate Appellate Tribunal (REAT), Bengaluru, has upheld a refund order passed by the Karnataka Real Estate Regulatory Authority (RERA), reiterating that a promoter cannot evade liability for failing to deliver a flat with a clear and marketable title by shifting blame onto the landowner or citing pending title disputes.

A Bench comprising Judicial Member Santhosh Kumar Shetty N and Administrative Member Mahendra Jain dismissed an appeal filed by Sobha Limited against the RERA order dated August 17, 2023, which had directed refund of ₹2.24 crore along with interest to the homebuyers.

The dispute arose from the booking of a residential apartment in the project “Sobha Valley View – Heritage.” The allottees had entered into agreements for sale and construction on November 15, 2014, for a total consideration of approximately ₹1.31 crore, nearly the entire amount of which was paid. As per the agreement, possession was to be delivered by July 31, 2018, extendable to February 1, 2019.

However, the project encountered legal hurdles due to disputes concerning the title of the land, including attachment proceedings under the Benami law and pending civil litigation. These complications prevented execution and registration of the sale deed, even though the occupancy certificate was eventually issued in October 2019.

The Tribunal noted that despite lapse of substantial time from the promised possession date, the promoter failed to convey the property free from encumbrances. It held that under Section 18 of the Real Estate (Regulation and Development) Act, 2016, the right of an allottee to seek refund is triggered when the promoter fails to deliver possession in accordance with the agreement, including transfer of clear title.

Rejecting the promoter’s argument that construction had been completed and possession offered, the Tribunal clarified that mere physical completion is insufficient if the promoter is unable to execute a valid sale deed. It emphasized that the statutory obligation to ensure clear and marketable title rests squarely on the promoter.

On the issue of liability, the Tribunal categorically held that internal arrangements between the promoter and landowner cannot dilute the rights of homebuyers. It observed that the promoter remains liable under RERA even where title defects arise from disputes involving the landowner, and may seek recovery separately under contractual arrangements.

The Bench further rejected the plea of force majeure, holding that delays arising from title disputes, regulatory approvals, or litigation do not fall within the statutory definition, which is limited to events such as natural calamities.

Significantly, the Tribunal found that material facts regarding encumbrances and litigation were not disclosed to the allottees at the time of entering into the agreement, amounting to suppression of vital information.

On the question of interest, the Tribunal upheld the RERA’s direction that interest is payable from the dates of payments made by the allottees where they opt to withdraw from the project, and not merely from the date of delay in possession.

The Tribunal also reaffirmed that the responsibility to obtain occupancy certificates and comply with regulatory requirements lies with the promoter and cannot be used as a defence to avoid liability.

Finding no merit in the appeal, the Tribunal upheld the refund order, holding that failure to deliver possession with clear title within the stipulated time entitles allottees to exit the project and claim refund under Section 18 of the Act.

Case Details:
Case Title: Sobha Limited v. Karnataka Real Estate Regulatory Authority & Ors.
Case No.: Appeal No. (K-REAT)-52 of 2025
Coram: Santhosh Kumar Shetty N (Judicial Member), Mahendra Jain (Administrative Member)