'Making Retired People Run Around': Karnataka High Court Raps State Over Delay In CM Housing Scheme, Orders Refund

The Karnataka High Court has rapped the State authorities for failing to complete a housing project under the Chief Minister's 1 Lakh Bengaluru Housing Scheme, despite receiving payment from a beneficiary, observing that the authorities were “making retired people run around”.

Justice Suraj Govindaraj made the observation while allowing a petition filed by a woman seeking refund of the amount paid towards a flat under the scheme.

The Court directed the Rajiv Gandhi Rural Housing Corporation to refund the amount paid by the petitioner, along with 6% interest per annum calculated from the respective dates of payment until repayment. It orally remarked,

“…Retired people, you are making them run around”.

The court said this in response to a submission by the State authority's counsel that the authority had replied to the petitioner's representation, and that it was willing to refund Rs 13,25,500/- without interest upon production of documents.

During the hearing, counsel appearing for the State authority submitted that around 75% of the project had been completed, but it could not be completed on time due to technical issues and a stay order.

The Court however remarked that if the authority were treated like a private builder under the Real Estate (Regulation and Development) Act, it would have to make the requisite payment for the delay.

“…if you are under RERA, then you will pay properly…. Would that [reasoning that the flats couldn't be finished on time due to stay order] apply to a private builder, Madam? Why should it then apply to you then even if there is a stay," it orally said. 

The court thereafter in its order dictated:

“…Undisputably, respondent has not completed the project for which the money has been paid. The fact remains that respondent has not completed the project despite the petitioner paying the monies in 2022. It is also unlikely that said project will be taken up and completed within a reasonable time period….”.

The court, hence, ordered that the state authority should return the advance amount with 6% interest per annum, calculated from the respective dates when the amounts were paid, till its repayment. The petitioner would have to place on record details of payments made with appropriate proof, and the respondents shall consider such documents and refund the money within 30 days, the court added.

“…In that background, the petitioner is not interested in continuing with the allotment made by respondent and seeks to withdraw the amounts and buy apartment elsewhere. There cannot be no fault found by prudence exhibited by petitioner in doing so. The mistake is with respondent in not completing the project…”, the court noted further in the order.

The petitioner, a 55-year-old resident of Mysuru, had applied for allotment of a flat under the State Government's housing scheme, which was notified in the Prajavani newspaper on September 19, 2010, inviting applications through a lottery-based allotment system for construction of 1 lakh housing units in Bengaluru.

She was allotted Flat No.3C, Ground Floor, at Ramanagara District, pursuant to which an allotment letter was issued on January 8, 2012. The petitioner made payments totalling Rs.15,10,000/-.

The Court noted in its order that initially the petitioner was asked to make a payment of Rs.5,25,000. Subsequently, she was informed that the revised flat value was Rs.15,10,000. By another communication dated August 19, 2022, the petitioner was informed that the final flat value was Rs.13,25,000.

The petitioner had already made an initial payment of Rs.2,88,500 and the balance payment of Rs.12,21,500 on March 11, 2022 - much prior to the communication dated August 19, 2022, where the value of the flat therein was reduced, the court noted.

The petitioner submitted through counsel P.A. Kulkarni that she had visited the apartment and found it unsuitable for her requirements. Despite the amounts being received by the respondents, they did not complete construction on time, it was submitted. Though she initially sought refund of the monies with 18% interest, she later accepted the court's proposition that it could only award interest of 6 per cent.

Accordingly, the writ petition was allowed.

Case Title: Smt. Lakshmamma vs. State of Karnataka & Anr.

Case No: WP No. 33179/2024

CITATION: 2026 LiveLaw (Kar) 291