K-REAT orders East North VVS Realty to refund Rs 42 lakh to homebuyer

The Karnataka Real Estate Appellate Tribunal (K-REAT) on 16 October 2026 held that East North VVS Realty, a Bengaluru partnership firm, must refund Rs 42 lakh to a homebuyer whose flat was not delivered. The tribunal dismissed the firm's bid to escape liability but cut the interest period set by the Karnataka Real Estate Regulatory Authority (K-RERA).

What Happened

According to the judgment, the homebuyer signed a registered sale agreement on 29 November 2019 for an apartment in the "Nash Ville" project for Rs 42 lakh, with possession due by 28 November 2020. The homebuyer said the full price had been paid but the flat was never handed over.

On 11 December 2023, K-RERA ordered a refund of Rs 64,46,190 with interest, calculating interest from 1 May 2017. The firm's partners did not appear before K-RERA.

The firm appealed, arguing it was never made a party to the complaint and that the money had been received by a partner company, East North Realty Private Limited. K-REAT rejected this. It held that the firm's managing partner, who took charge after a 2020 reconstitution, could not disown the firm's obligations under the sale agreement, and that the appeal was an attempt to avoid the firm's legitimate obligations.

However, the tribunal found an error on the face of the record: interest could not run from 2017, before the agreement was signed and before any payment was shown. It modified the order so that the firm must refund Rs 42 lakh with interest at SBI's marginal cost of funds based lending rate (MCLR) plus 2% a year, from 29 November 2019 to 24 March 2025, the date the firm deposited the amount with the tribunal. The tribunal's registry will release the amount to the homebuyer after the appeal period ends.

What It Means

For homebuyers, the ruling shows that a change in a builder firm's partners does not wipe out its obligations under a registered sale agreement, according to the tribunal. It also confirms that refund interest generally runs from the date of the agreement, not an earlier date.

The judgment of K-REAT may be appealed to the High Court. Homebuyers facing delayed possession in Karnataka can file a complaint with K-RERA.

Source: K-REAT judgment