Risk Radar

Legal experts in Bengaluru have raised strong objections to the Bruhat Bengaluru Mahanagara Palike’s (BBMP) recent move to issue over 31,000 showcause notices demanding property tax on parking spaces allotted to individual flat owners. Senior lawyers argue that most sale deeds grant only **exclusive usage rights** over parking areas, not ownership, and as per RERA guidelines, such spaces are part of the **common area** that must be transferred to the association of allottees. They contend that usage rights alone do not create a taxable property interest. Critics also pointed out that the revised parking tax notification issued on March 30, 2025, has **no provision for retrospective application**, making backdated tax demands unconstitutional under Article 265 of the Constitution.

Adding to the controversy, experts revealed that **software errors in e-khata generation** have sometimes recorded inflated or incorrect parking space measurements, leading to arbitrary and inflated assessments. Civic activists, citing a Supreme Court judgment that prohibits builders from selling parking areas separately, emphasized that these spaces are already accounted for in the super built-up area for which owners are paying property tax. They urged BBMP to withdraw unlawful notices, correct systemic flaws, and avoid imposing retrospective financial burdens that have caused confusion and anxiety among genuine homeowners.

In a landmark ruling, the West Bengal Real Estate Appellate Tribunal (WBREAT) ordered a developer to repurchase a flat nearly two decades after its sale, citing the absence of a completion certificate. The buyer, Sibsankar Koley, had lived in the Nagerbazar flat since 2006 but was unable to complete mutation due to the developer’s failure to obtain the certificate. The tribunal overturned a previous West Bengal RERA decision that had dismissed Koley’s complaint, directing the promoter to refund the flat’s cost along with stamp duty and registration fees. Koley must vacate the property and return possession within 45 days, though no interest will be charged as he had occupied the flat since 2006.

The dispute stemmed from a 2004 development agreement between landowner Renu Bala Paul and promoter Satchidananda Mitra of Sona Enterprise, leading to a G+4 building project. Koley booked his 940 sq ft flat in 2005, but a long-standing legal dispute between the landowner and developer emerged in 2013. Despite earlier consumer forum orders to execute a Deed of Conveyance, Koley later discovered the promoter did not actually own the flat. After failed attempts through consumer courts and WBRERA, WBREAT finally ruled in his favour, ordering a buyback to resolve the ownership defect.

The Karnataka government is set to introduce major amendments to the Karnataka Rent Act, 1999, significantly increasing financial penalties to curb unauthorised subletting and regulate the rental market. Under the proposed changes, tenants who sublet without landlord consent will face fines of ₹50,000, up from the current ₹5,000, while landlords who knowingly permit such subletting will see their penalty rise from ₹3,000 to ₹30,000. The amendments replace the existing provision for jail terms with steeper monetary fines to deter violations. The reforms also aim to address the growing number of disputes between landlords and tenants, particularly in urban areas like Bengaluru where the rental market is expanding rapidly.

Additionally, the bill targets unregistered property brokers, raising daily penalties from ₹2,000 to ₹25,000, with repeat offenders facing an extra ₹20,000 per day. All brokers will be required to register with designated authorities such as an Assistant Commissioner in large cities. Other key measures include launching an online portal for rental agreement registration to boost transparency, adjusting rental caps to match market conditions, ensuring adequate notice before evictions, and introducing tax breaks for affordable rentals. A fast-track dispute resolution system will also be implemented to reduce delays in rental conflict cases, offering quicker resolutions outside of lengthy civil court processes.

In a significant development following the arrest of Ramprastha Promoters & Developers’ directors by the Enforcement Directorate (ED), the Haryana Real Estate Regulatory Authority (HRera) has issued a stern show-cause notice to the company. HRera has warned that the directors could face civil imprisonment under Section 40(1) of the RERA Act for failing to comply with multiple refund orders dating back to 2020. These orders were issued to compensate homebuyers — over 2,000 of whom were allegedly defrauded out of ₹1,100 crore across several projects in Gurgaon, including Edge, Skyz, Rise, and Ramprastha City. Although buyers were promised possession within 3–4 years of booking (between 2008–2011), most have received nothing even after 14 years.

The notice follows a wider money laundering investigation by the ED, which revealed ₹140 crore was illegally diverted by the developers to group companies under false pretexts. The ED has seized ₹18 lakh in unaccounted cash, six luxury vehicles, 34 bank accounts, and attached assets worth ₹681.54 crore. HRera has also issued a production warrant for the directors, who are currently in ED custody, to ensure their appearance before the Authority. This coordinated legal pressure by ED and HRera reflects a growing crackdown on errant developers who fail to honor commitments to retail homebuyers and misuse public funds under the guise of real estate development.

The Telangana Real Estate Regulatory Authority (TGRERA) has imposed significant penalties on two real estate developers for regulatory violations. In one case, Haris Pranava Builders from Madhapur was fined ₹7.6 lakh based on a complaint filed by the Pranava Elite Association, a society formed by residents of the Pranava Elite Residential Building. The builder was accused of deviating from the sanctioned construction plan, failing to provide essential amenities, and using substandard materials that led to issues like wall cracks, water seepage, and pest infestations. TGRERA ordered the builder to fix the defects within 30 days without passing the cost onto residents and barred the promotion of the project under any unregistered names.

In a separate case, Kapstone Properties India Pvt Ltd was fined ₹21 lakh for irregularities related to its plotted development project in Kamsampalle village. Buyers alleged that despite making payments of ₹10 lakh and ₹12.8 lakh, the builder failed to register the plots. The project was marketed as "Little Woods" but was registered with TGRERA under a different name, "Whistling Meadows," indicating deliberate misrepresentation. The authority directed the builder to refund the amounts with 11% interest within 30 days and declared the company's founder, Kakarla Srinivas, a defaulter. His photo and associated firm names will be displayed on the official RERA defaulters list, and a broader investigation into related entities has been initiated.

In the case of Mahnoor Fatima Imran & Others vs M/s. Viveshwara Infrastructure Pvt. Ltd & Ors, the Supreme Court of India held that mere registration of a property does not confer ownership rights if the original title is defective or unregistered. The Court emphasized that registration, though important for legal visibility, is not conclusive proof of ownership. Legal ownership must be based on a valid title and lawful possession. In this case, the Court rejected claims based on a registered deed that originated from an unregistered and legally flawed transaction, reiterating that defects in the chain of title cannot be cured by subsequent registrations.

This landmark ruling underlines the need for buyers to verify the entire chain of ownership and not rely solely on the seller’s documents. Ownership must be established through legally sound and supportive documents such as a proper title deed, mutation records, and tax receipts. The Court observed that this decision aims to curb fraudulent and defective transactions that plague the Indian real estate market. It sends a strong message to all stakeholders—buyers, brokers, and developers—to perform rigorous due diligence. The judgment reinforces that assumptions or paperwork alone do not equate to legal ownership; rather, it is the legal history, validity of transfer, and lawful possession that determine true ownership rights.

The twitter handle @InvestHyderabad posted a story on how due diligence of property saved him from loses!

Due Diligence Saved Me

I was about to buy 1 acre land recently near ORR. Negotiated price, checked pahani, EC, old sale deeds — regular stuff. While digging docs from 1951, found the land was originally given via 38E (protected tenant) certificate. Owner left village & never returned. Turns out, someone impersonated him and sold the land in 2000. Changed hands 4 times since. Luckily, I managed to collect original owner's fingerprints, got them verified through forensic expert — they didn’t match with first sale deed! Dropped the deal. Final buyer (4th in chain) now stuck — invested crores.

Lesson: Real estate = Due diligence or disaster.

In a troubling case of real estate fraud in Ahmedabad, a 33-year-old trader from Khokhra alleged he was duped of ₹27 lakh in a property transaction. According to the FIR filed, the complainant approached an accused individual to help him purchase a house. He was introduced to two men claiming ownership of a property in the Gujarat Housing Board area. After paying ₹2 lakh by cheque and ₹25 lakh in cash, a preliminary agreement was signed, supported by documents showing ownership in the accused’s father’s name via a 2010 registered deed. On this basis, the complainant secured a bank loan, and the final sale deed was executed jointly in his and his wife’s name in August 2018.

The fraud came to light when the complainant later visited the bank to collect a demand draft, and the manager pointed out discrepancies in the property's boundary description. Further scrutiny revealed that the documents handed over were related to a nearby illegal structure, not the actual property promised. Realizing the deceit, the trader filed a police complaint, and the Khokhra police have now registered a case involving charges of cheating, breach of trust, forgery, and criminal conspiracy. This case highlights the ongoing risks in real estate transactions due to forged documentation and deceptive practices.

In a strongly worded judgment, the Punjab and Haryana High Court highlighted the growing menace of real estate fraud targeting non-resident Indians (NRIs), particularly those who cannot frequently visit India or manage their property in person. Justice Harpreet Singh Brar, while dismissing anticipatory bail for accused persons, remarked that such absentee owners are often defrauded through forged documents and the misuse of powers of attorney, leading to the sale of their valuable properties at significantly undervalued prices. The Court noted that these frauds are not isolated incidents but part of a broader, systemic abuse that exploits the vulnerabilities of absentee ownership and undermines the legal safeguards in place.

The case under review involved a prime land parcel near Ladhowal-Verka bypass in Ludhiana, which was sold for just ₹30 lakh despite a market value of around ₹6 crore. The actual owner, an NRI living in the US, was impersonated by a fraudster who executed the sale deed at the tehsil office, allegedly with the involvement of government officials including a tehsildar. The court emphasized that such crimes are not just personal betrayals but also damage public trust in the real estate system and threaten the economic stability of the region. Given their far-reaching impact, the court refused to treat these offences lightly and denied bail to the accused, noting their alleged role in a larger gang specializing in fraudulent property sales of NRI-owned assets.

In a serious case of real estate fraud, Jaipur police arrested two individuals—Pramod Kumar Tated and Shravan alias Suresh Ranwa—for forging SEBI documents to sell land that had been seized by central agencies from PACL (Pearls Agrotech Corporation Ltd). The land, meant to be liquidated under the supervision of a Supreme Court-appointed committee for investor repayment, was falsely claimed as available for private sale using fabricated paperwork and forged SEBI seals. The accused accessed publicly available SEBI property listings and used the data to create fake sale deeds, with supporting documents allegedly tampered with by an associate. Fake seals were procured from Delhi, and land records were manipulated to complete the fraudulent transactions.

The scam surfaced when the duo sold a plot in Bagru to one Amit Kumar for ₹98.47 lakh. They deceitfully accepted a ₹14.77 lakh demand draft issued in SEBI's name, which they diverted and encashed through a cooperative bank in Sirsa, Haryana, using an account linked to an accomplice named Sandeep. This illegal diversion of funds not only defrauded the buyer but also bypassed the legal recovery process for thousands of PACL investors. Investigating officers suspect that some bank officials may have been complicit in enabling the forged transaction. The case highlights a disturbing misuse of regulatory assets and underscores the need for tighter security and verification around court-monitored property liquidations.