In a significant ruling protecting homebuyers’ rights, the Karnataka Real Estate Regulatory Authority (KRERA) has pulled up Bengaluru-based developer Casa Grande Garden City Builders Pvt Ltd for raising construction-linked payment demands without valid architect or engineer certifications. The authority held that builders cannot seek advance payments based on unverified claims of construction progress and directed the developer to pay ₹4 lakh compensation to the complainant for mental agony and 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, according to a report by The Hindustan Times.

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.

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).