When Circulars Collide with Statute

 

Policy & Regulation Intelligence

Edition 09

When Circulars Collide with Statute

23 Petitions, One Day, One Principle: Karnataka's Regulatory Reckoning

By Arindam Bose
BeEstates | Decoding law, markets, and power in Indian real estate

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On 19 September 2025, the Karnataka High Court delivered something rare in Indian jurisprudence: not a landmark judgment in the traditional sense, but a consolidation event.

Justice M. Nagaprasanna disposed of 23 writ petitions in a single batch judgment. Not scattered across weeks. Not adjourned for procedural reasons. Not fragmented by forum or issue.

All 23. One day. One principle.

The petitioners were diverse:

M/S Caliber Properties
M/S Sairam Dwellings Private Limited
M/S Classic Ventures LLP
M/S Hiren Wahen Buildtech
M/S Profound Developers
M/S Sree and Sree Builders and Promoters
Country Club Hospitality and Holidays Ltd.
M/S Prasiddhi Classic Realty
Government Employees House Building Co-operative Society
M/S Yashmu Projects
Universal Developers
M/S Pais Developers
Sri Nidhi Infrastructures
M/S Axis Concepts Capstone Private Limited
Raj Builder and Developers
M/S Opera Structures
M/S Horizon Constructions (twice)
M/S Ozone Urbana Infra Developers Pvt. Ltd.
Mr. Maning Teli
JCSV Builders and Developers
M/S JRC Projects
M/S V.G. Parekh and Company

The respondent was uniform: the State of Karnataka and its Real Estate Regulatory Authority.

The grievance was identical: a circular dated 03 September 2020 imposing delay fees for late submission of quarterly updates and annual audit statements on the RERA portal.

And the answer was final: RERA's Registry cannot impose penalties through circulars. Only the Authority or Appellate Tribunal can adjudicate disputes.

This was not judicial activism. This was judicial containment.

I. The Circular That Triggered Mass Litigation

The controversy began quietly, as regulatory overreach often does.

On 03 September 2020, the Karnataka Real Estate Regulatory Authority issued Circular No. RERA/Finance-Section/83/2020-21.

Its stated purpose was administrative: ensure compliance with quarterly project updates and annual audited financial statements under RERA.

Its method was punitive: levy delay fees on developers, societies, and individuals who failed to file on time.

The circular did not cite statutory authority for the delay fee. It did not follow rule-making procedure. It did not offer hearing or appeal.

It simply declared: file late, pay penalty.

For nearly five years, developers complied—or challenged it piecemeal. But by 2025, the contradictions had compounded:

• RERA mandates transparency. True.
• RERA demands quarterly reporting. Also true.
• But does RERA authorize financial penalties by circular? No statutory provision said yes.

That gap—between compliance obligation and penalty authority—is where the litigation exploded.

II. The Principle: Registry Is Not Tribunal

Justice Nagaprasanna did not rewrite RERA. He read it.

The Court's reasoning was architectural, not interpretive:

RERA creates three distinct functions:

1. The Registry — maintains records, facilitates transparency
2. The Authority — adjudicates disputes, imposes penalties
3. The Appellate Tribunal — hears appeals from the Authority

The 2020 circular collapsed this structure. It allowed the Registry to impose financial liability—a power reserved exclusively for the Authority.

The Court refused to accept this conflation.

Across all 23 petitions, the finding was uniform:

• The Registry's role is administrative, not adjudicatory
• Compliance obligations survive, but penalties require statutory basis
• Circulars cannot expand powers the Act does not grant

This was not a judgment against transparency. It was a judgment against procedural improvisation.

RERA survived. The circular did not.

III. The Stakeholders: Corporates, Societies, Individuals

What made 19 September 2025 remarkable was not just the number of cases—it was the breadth of petitioners.

This was not a developers-only grievance. It cut across the real estate ecosystem.

The Developers: The Majority Bloc

The bulk of the 23 petitions came from private developers and LLPs:

Caliber Properties, Sairam Dwellings, Classic Ventures, Hiren Wahen Buildtech, Profound Developers, Sree and Sree Builders, Country Club Hospitality, Prasiddhi Classic Realty, Yashmu Projects, Universal Developers, Pais Developers, Sri Nidhi Infrastructures, Axis Concepts Capstone, Raj Builder and Developers, Opera Structures, Horizon Constructions (both filings), Ozone Urbana Infra, JCSV Builders, JRC Projects, and V.G. Parekh & Company.

Their argument was consistent:

We accept the obligation to file quarterly updates and annual audits. We do not accept penalties imposed by circular without statutory authority.

The Court agreed. Compliance obligations remained enforceable. But the delay fee—imposed without legal basis—was struck down.

Beyond Developers: A Co-operative Society in the Crossfire

One petition stood apart: Government Employees House Building Co-operative Society Ltd. vs State of Karnataka (Writ Petition No. 20829 of 2023).

This was not a corporate developer. It was a housing society representing government employees in Mysuru, led by Director R. Joseph, functioning under co-operative statutes.

Why This Case Was Different

Unlike corporate developers, this was a co-operative society representing government employees—people pooling resources collectively for housing.

The Society challenged the RERA circular of 03 September 2020, which imposed delay fees for late submission of quarterly updates and annual audit statements.

Their argument was simple yet constitutionally powerful: as a co-operative functioning under its own statutes, they should not be penalized by administrative circulars that extended RERA's powers beyond the Act.

The Court's Stand

Justice M. Nagaprasanna reaffirmed the principle applied across all 23 petitions:

• The RERA Registry cannot adjudicate disputes or impose penalties.
• Only the RERA Authority or Appellate Tribunal has jurisdiction to decide such matters.
• Administrative circulars cannot expand statutory powers.

Outcome

The writ petition was disposed of along with the others.

The Society's demand notice for delay fees was invalidated.

Compliance obligations (quarterly updates, audits) remain, but disputes must now be pursued before the proper RERA forums.

The Society retains the option to escalate to the Supreme Court if it wishes.

Broader Implications

This case demonstrates that the impact of RERA's 2020 circular was not confined to commercial developers. It reached into the domain of collective housing institutions, affecting even government employees' co-operative societies.

• For developers, the ruling was about protecting business compliance.
• For co-operative societies, it was about safeguarding collective housing rights from administrative overreach.

This ruling carries social significance beyond legal technicality. By striking down the Registry's overreach, the Court protected both private developers and collective housing societies, ensuring that RERA's powers remain within statutory limits.

When government employees pooling resources for housing can be penalized by administrative fiat, the circular has exceeded its constitutional boundaries. Justice Nagaprasanna recognized this and drew the line.

From Corporates to Individuals: The Case of Mr. Maning Teli

The most striking petition in the batch came from Mr. Maning Teli vs State of Karnataka (Writ Petition No. 29044 of 2023).

Not a company. Not a society. Not an LLP.

An individual. Aged 45. Resident of Mahantesh Nagar, Jamkhandi, in Bagalkot district.

The Profile of an Individual Petitioner

Mr. Teli was not a large developer with legal departments and compliance teams. He was a single stakeholder in Karnataka's real estate ecosystem—likely a small-scale promoter or individual builder—facing the full weight of RERA's administrative machinery.

On his desk: a demand notice for delay fees.

The basis: late submission of quarterly updates and annual audit statements on the RERA portal.

The authority cited: Circular No. RERA/Finance-Section/83/2020-21, dated 03 September 2020.

His Challenge: Direct and Unambiguous

Mr. Teli's petition was not wrapped in corporate language or filtered through institutional representation. His arguments were straightforward:

The circular was ultra vires. It exceeded RERA's statutory powers. The Act nowhere authorized the Registry to impose financial penalties through administrative directive.

The demand notice was illegal and arbitrary. He had not been adjudicated by the Authority. He had not been given a hearing. He had not been found in violation through any quasi-judicial process. Yet a penalty was levied.

The Registry had overstepped. Its statutory role was administrative—maintaining records, facilitating transparency. It was not empowered to decide disputes or impose financial liability.

His relief sought was precise:

1. Quash the circular in toto.
2. Set aside the demand notice levying delay fees.
3. Direct RERA to permit him to file quarterly updates on the portal without penalty.

He did not dispute the compliance obligation. He disputed the method of enforcement.

The Court's Response: Equal Protection Under Law

Justice M. Nagaprasanna did not dilute the principle because the petitioner was an individual rather than a corporation.

The finding was identical to the other 22 cases:

The RERA Registry has no adjudicatory powers.

Only the RERA Authority or Appellate Tribunal can decide disputes or impose penalties.

Administrative circulars cannot extend statutory powers.

The circular imposing delay fees was invalid in law—whether applied to Caliber Properties or to Mr. Maning Teli.

The Outcome: Personal Accountability Protected

The writ petition was disposed of on 19 September 2025, along with the batch.

For Mr. Teli, this meant:

The demand notice against him was invalidated. He could not be penalized by circular.

His compliance obligations remained. Quarterly updates and annual audits were still mandatory under RERA. The Court did not absolve him of transparency requirements.

Any substantive disputes must now go before the proper RERA Authority/Tribunal. If RERA believes he violated filing requirements, it must adjudicate that claim through the statutory process—not through administrative fiat.

He retains the right to appeal to the Supreme Court if he wishes to challenge the High Court's interpretation further.

Why This Case Matters Beyond Its Facts

Mr. Maning Teli's petition reveals something the bulk developer cases do not: the circular's reach extended all the way down to individual stakeholders.

This was not just corporate developers with resources to litigate being penalized. This was individuals—sole proprietors, small builders, personal promoters—facing the same arbitrary enforcement.

For Mr. Teli, the delay fee demand was not a line item in a compliance budget. It was a personal financial burden, imposed without hearing, without adjudication, without statutory authority.

The High Court's ruling gave him the same protection it gave Universal Developers, Pais Developers, and Country Club Hospitality.

The principle did not scale with the size of the petitioner.

Whether you are a listed company or a 45-year-old individual in Jamkhandi, penalties must arise from statute, not from administrative improvisation.

The Broader Implication: Individual Accountability vs. Arbitrary Enforcement

Mr. Teli's case completes the stakeholder spectrum in this batch judgment:

• For developers, the ruling was about protecting business compliance from regulatory excess.
• For co-operative societies, it was about safeguarding collective housing rights from administrative overreach.
• For individuals like Mr. Teli, it was about defending personal accountability against arbitrary demands.

This is what makes the Karnataka batch judgment constitutionally significant.

It did not just discipline a regulator. It protected every category of stakeholder—corporate, institutional, and individual—from the same form of overreach.

RERA's power to enforce compliance survived. But its power to penalize by circular did not.

And Mr. Maning Teli, from Mahantesh Nagar, Jamkhandi, Bagalkot, stood in the Karnataka High Court on equal footing with 22 other petitioners—and won the same protection under the same principle.

That is not just legal victory. That is constitutional equality in action.

IV. The Larger Architecture: What Batch Disposal Reveals

Indian courts are often criticized for delay. But 19 September 2025 showed something else: efficiency through consolidation.

Justice Nagaprasanna did not fragment the issue across 23 separate hearings. He unified them, clarified the law once, and disposed of them together.

This was not just case management. It was systemic correction.

The batch disposal sent three signals:

To developers: Compliance obligations remain non-negotiable. Quarterly updates and audits are mandatory. But penalties require statutory authority.

To regulators: RERA's power is real, but it is not unlimited. Administrative circulars cannot do what the Act does not permit.

To the judiciary: When a legal question recurs across dozens of petitions, consolidation is not just efficient—it is necessary for consistency.

This is what mature regulation looks like. Not harsher. Not softer. But precisely bounded.

V. The Constitutional Boundary: Regulation Is Not Governance by Memo

The deeper significance of this batch judgment lies in what it refused to allow.

RERA is a powerful statute. It shifted the balance of real estate law decisively toward buyers. It created accountability where none existed. It gave regulators teeth.

But power, even remedial power, must stay within constitutional limits.

The Court's message was constitutional, not anti-regulatory:

• Regulation requires statute. Circulars can clarify, not create.
• Penalties require procedure. No liability without legal basis.
• Adjudication requires authority. The Registry is not a tribunal.

This is the same principle the Delhi High Court applied in M/s Realpro Realty Solution Pvt. Ltd. v. GNCTD—a case we examined in Edition 07. There, RERA tried to restrain trademark use. The Court pulled it back: consumer protection does not mean universal jurisdiction.

Here, RERA tried to impose delay fees by circular. The Court pulled it back again: transparency mandates do not authorize financial penalties.

The pattern is clear: Indian courts are now auditing regulatory excess, not just developer default.

VI. Why This Day Matters More Than the Judgments Themselves

In When Orders Meet Power (Edition 07), we examined what happens when lawful orders are not executed, when regulators exceed jurisdiction, and when compliance is challenged.

The Karnataka batch judgment completes that analysis.

It shows what happens when 23 petitioners, representing corporates, societies, and individuals, all challenge the same regulatory overreach—and win on the same day.

This was not fragmentation. This was convergence.

And convergence reveals something courts rarely say aloud: when administrative action lacks statutory foundation, volume does not create legitimacy.

Twenty-three petitions did not make the circular valid. They made its invalidity undeniable.

The Era of Circular Compliance Is Ending

Indian real estate regulation has matured past symbolic gestures.

RERA is no longer new. Its principles are settled. Buyer protection is non-negotiable. Developer accountability is enforceable.

But the next phase is subtler—and more important.

It is no longer about whether RERA has power. It is about how far that power extends, and who decides when it has gone too far.

Karnataka's batch judgment on 19 September 2025 answered both questions:

RERA's power extends as far as the statute permits—no further.

And courts decide when circulars become overreach.

Compliance obligations survive. Transparency mandates remain. Quarterly updates and audits are still compulsory.

But penalties must come from statute, not from memo.

That distinction—between administrative directive and legal liability—is what separates regulation from arbitrariness.

And on 19 September 2025, Justice M. Nagaprasanna made that distinction binding across 23 cases, three categories of petitioners, and one inescapable principle:

Circulars cannot do what statutes do not allow.

The era of regulation by improvisation is over.

What remains is something sturdier: accountability anchored in law, power exercised within limits, and credibility earned through restraint.

Arindam Bose
BeEstates

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Disclaimer
This article is based on publicly available court judgments, statutory provisions, and independent legal research. It is intended for educational and informational purposes only and does not constitute legal advice. Readers should consult qualified professionals for case-specific guidance.