K-RERA Cracks Down on Mantri Developers for Non-Compliance, Imposes Penalty up to 5% of Project Cost

The Karnataka Real Estate Regulatory Authority (K-RERA) has taken strict action against Mantri Developers Private Limited for failing to comply with its earlier refund order in favour of homebuyers in the “Mantri Webcity 2B” project. In a detailed order dated 24 March 2026, the Authority imposed a penalty that may extend up to 5% of the estimated project cost and directed the company’s Managing Director and concerned Directors to appear and explain continued non-compliance.

The proceedings arose from a complaint filed by Gourav Gupta and another allottee under Section 63 of the Real Estate (Regulation and Development) Act, 2016, seeking enforcement action against the developer for failing to honour a prior order dated 03 April 2024. That earlier order had directed the company to refund ₹96.44 lakh along with applicable interest, but the Authority found that the directions remained unimplemented even after the lapse of the compliance period.

The case traces back to the booking of an apartment (Unit No. K-704) under a Pre-EMI scheme, where the complainants paid ₹14.35 lakh and the remaining amount was financed through a housing loan. A tripartite agreement placed the burden of servicing the Pre-EMI and loan liability on the developer in case of withdrawal. When the project was delayed beyond the promised possession date of 31 March 2017, the allottees withdrew in August 2016. Despite accepting the withdrawal, the developer neither refunded the amounts nor closed the loan, forcing the buyers to continue repayment obligations.

On examining the matter, the Authority held that once the existence of a binding order and expiry of the compliance period are established, the burden shifts to the promoter to prove compliance. In this case, no material was placed on record to demonstrate adherence to the earlier order, leading the Authority to conclude that there was “clear and continued non-compliance.”

Rejecting the developer’s argument that penalty proceedings were barred due to the availability of execution under Section 40, the Authority clarified that both provisions operate independently. While Section 40 ensures recovery of dues, Section 63 acts as a coercive and deterrent mechanism to enforce compliance. Therefore, penalty proceedings can be initiated even when execution proceedings are pending.

Significantly, K-RERA also addressed the liability of company officials. Referring to Section 69 of the Act, it observed that a company functions through its directors and officers, and the corporate structure cannot be used as a shield against statutory obligations. The Authority noted a pattern of persistent non-compliance by the developer and held that individuals responsible for the conduct of the company’s affairs may be proceeded against unless they demonstrate lack of knowledge or due diligence.

In its final directions, the Authority held the developer liable for non-compliance and imposed a penalty under Section 63, payable within 60 days. It further directed the Managing Director and responsible Directors to appear within 30 days and show cause why proceedings should not be initiated against them personally under Section 63 read with Section 69 of the Act.

The ruling reinforces the regulatory framework under RERA by emphasising that failure to comply with binding orders will attract not only recovery action but also penal consequences, including potential personal liability of those in charge of the company.

Case Title: Gourav Gupta & Anr. v. Mantri Developers Private Limited
Case No.: Complaint No. 01047/2024
Coram: Rakesh Singh (Chairman) and Gurijala Ravindranadha Reddy (Member), K-RERA