Proving the Exception: What the Karnataka High Court's 2026 Ruling Says About the Burden of Establishing RERA's Registration Exemption

Introduction : Section 3 of the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”) is in many ways a mere procedural precondition to registration that a promoter has to fulfill, or fail to fulfill, with little consequence beyond the regulation. However, a division bench of the Karnataka High Court in Navaratan Jhunjhunwala & Anr. v. Karnataka Real Estate Appellate Tribunal & Ors. on 16 July 2026 took a much wider view of it, one that touches upon the very heart of the promoter’s obligations to allottees. The dispute in Navaratan Jhunjhunwala was about an amount of only about ₹1.77 lakh, which was for the recovery of “BESCOM & BWSSB connection charges”, “khata transfer charges”, and “electric meter transfer charges” by the developer, Durga Projects and Infrastructure Pvt. Ltd., and its promoter, Navaratan Jhunjhunwala, from the purchasers, Sowmya Nayak Ullal and Ullal Prakash Nayak.

The Court was faced with the question of law as to who should bear the burden of proving that a project completed years after RERA came into force was not an “ongoing project” and therefore did not require registration. The question was whether this burden was on the allottees who continued paying maintenance dues, or on the promoter who failed to register the project despite repeated notices. The present blog analyzes the judgment alongside a few other High Court decisions on Section 3, and argues that the doctrinal position taken up by Karnataka is, while reasonable, only one side of a broader dispute that the Supreme Court has so far declined to intervene in.

The Facts of the Case

The facts of the case were largely unexceptionable. A flat was purchased by the respondents under a sale deed executed on 23 March 2016, well before RERA’s commencement on 1 May 2017. Apart from the consideration payable under the sale deed, the respondents were also required to pay additional installments to the appellant-promoter, Durga Projects and Infrastructure Pvt. Ltd., for connection to BESCOM & BWSSB, transfer of khata, and electric meter transfer. It was later discovered by the respondents that only around ₹75,000 had actually been spent on these items and that the balance of around ₹1.75 lakh had been unjustifiably withheld by the appellant-promoter. An occupancy certificate for the project was issued on 5 February 2020, nearly three years after RERA’s commencement, and the project was never registered with K-RERA. Consequently, K-RERA passed an order on 10 April 2024 directing a refund of about ₹1.77 lakh with interest to the respondents, and the Karnataka Real Estate Appellate Tribunal affirmed the same on 7 August 2025. The present appeal by the promoter was filed before the Karnataka High Court.

Contentions of the Promoter

The appellants before the Karnataka High Court were not contesting the correctness of the calculation of the refund amount due to the respondents. They restricted their submissions to the question of law as to whether the project in question actually fell under the definition of an “ongoing project” as per Explanation (iv) to Rule 4 of the Karnataka Real Estate (Regulation and Development) Rules, 2017, and whether therefore neither K-RERA nor the Appellate Tribunal had the jurisdiction to entertain the complaint in the first place. This contention is not without precedent in RERA jurisprudence. Given that Sections 12, 14, 18, and 19 of the RERA Act, which impose several affirmative obligations on promoters towards allottees, use the term “promoter” and not “promoter of a project registered under this Act”, a successful argument that the project in question was not a project “that requires registration” under Section 3 of the RERA Act can potentially remove the dispute from the regulatory jurisdiction altogether and make it a matter for the civil courts.

The Court’s Reasoning

The Karnataka High Court rightly rejected this jurisdictional plea in law, not on the ground that the project in fact fell within the definition of an “ongoing project” as per Explanation (iv) to Rule 4, but on the ground that the appellants had failed to prove the same. A division bench of Justice Jayant Banerji and Justice Tara Vitasta Ganju observed that the appellants had not placed any material before the Authority, the Appellate Tribunal, or the Karnataka High Court to demonstrate that an application for a completion certificate had been filed before RERA’s commencement, or that a completion certificate had actually been issued before the RERA Act came into force. Section 3(2)(b) of the RERA Act, which provides an exemption from registration for promoters who have received a completion certificate before the commencement of the Act, therefore, did not apply to the case at hand, as no such certificate had been shown to exist. Consequently, the Appellate Tribunal had correctly applied its jurisdiction under Section 18(3) of the RERA Act, as the dispute pertained to amounts collected by the promoter which fell outside the four corners of the agreement to sell, and the appeal was dismissed by the Karnataka High Court.

A Similar Evidentiary Approach in Kerala

At first glance, Navaratan Jhunjhunwala is not an especially surprising decision, as an evidentiary burden to prove a negative generally does not lie with the party seeking to benefit by it. The Kerala High Court appears to have taken a similar view in P.V. Nidhish v. Sivaprakash. In that case as well, the contention was that a completion or occupancy certificate issued before RERA’s commencement was conclusive proof that a project did not “require registration”, but the evidentiary onus to demonstrate the issuance of such a certificate was with the promoter. In its order dismissing the appeal, the Kerala High Court held that though a certificate issued before RERA’s commencement was conclusive proof of exemption from registration, the promoter had to demonstrate the fact and date of such a certificate, and in its absence, the Authority was entitled to rely on reports from commissioners of survey and valuation to determine whether the project was genuinely complete. Consequently, both the Kerala and Karnataka High Courts have taken a uniform view on Section 3(2)(b) of the RERA Act, and hold that the promoter must bear the onus of proving an exemption from registration under Section 3(2).

What Happens After the Exemption Fails

The more interesting question, perhaps, concerns the implications of a promoter’s failure to satisfy the evidentiary onus under Section 3(2). In Navaratan Jhunjhunwala , the Karnataka High Court held that a promoter who had failed to demonstrate an exemption from registration would continue to be subject to the RERA Act’s remedies framework even if the project happened to have been completed before the commencement of the Act. This reasoning is consistent with the Bombay High Court’s observations in Mohammed Zain Khan v. Maharashtra Real Estate Regulatory Authority, which held that the very fact that registration was mandatory for “all projects” meant that promoters could not “defy this very mandate” and avoid the jurisdiction of the Regulatory Authority merely on the ground that their project had commenced before the Act came into force. By contrast, the Madras High Court in Devinarayan Housing and Property Developments (P) Ltd. v. Manu Karan took a slightly different view, holding that for projects which fell under the separate small-project exemption for plots and dwelling units under Section 3(2)(a) on account of their built-up area or number of units, Sections 12, 14, 18, and 19 of the RERA Act, which deal with promoter’s obligations, were inapplicable. In other words, allottees of a project which legitimately fell under the small-project exemption would have to approach the civil courts for any disputes pertaining to the promoter’s conduct and could not invoke the remedies provided under the RERA Act. The Supreme Court has declined to interfere with this view insofar as the Madras High Court’s interpretation of the small-project exemption under Section 3(2)(a) was concerned.

5.6 Failed Exemption Versus Genuine Exemption

A comparison of the decisions of the Karnataka and the Madras High Courts demonstrates the potential for confusion that may arise from the interactions between the small-project exemption under Section 3(2)(a) and the completion-certificate exemption under Section 3(2)(b). On a reading of Devinarayan , it would seem that the Madras view is only applicable to projects that genuinely fell under the small-project exemption. In such cases, the promoter’s obligations under Sections 11, 12, 14, 18, and 19 of the RERA Act simply did not arise, as the project was not subject to registration in the first place. By contrast, in Navaratan Jhunjhunwala , the promoter in the Karnataka case was unable to demonstrate that the project fell under either of the exemptions, and therefore remained bound by the RERA Act’s obligations regime even though the project had been completed before the Act came into force. Consequently, the two cases are not directly at odds with each other, as the promoter in Devinarayan who successfully demonstrated a small-project exemption would not have been bound by the RERA Act in the first place, whereas the promoter in Navaratan Jhunjhunwala who failed to demonstrate any exemption would remain bound by the RERA Act’s provisions even if the project had been completed before RERA’s commencement. The distinction, therefore, is between a promoter who satisfies the requirements for a genuine exemption from registration and a promoter who fails to satisfy the requirements for any exemption, exemption from registration remains a complete defence to any action under the RERA Act for the former, whereas it does not for the latter. The potential for confusion is obvious, as promoters and allottees in different jurisdictions may have conflicting notions of what constitutes a valid exemption from registration under the RERA Act.

Why This Is Important

In practice, the difference between the two approaches is of little significance to the allottees. An allottee of a project which failed to register with the Regulatory Authority rarely has any idea as to whether an application for a completion certificate had been filed or even issued, let alone the precise date on which it had been issued. Such information is generally available only with the promoter. Consequently, the evidentiary onus to prove a negative, as placed upon promoters by Navaratan Jhunjhunwala and Mohammed Zain Khan, is unlikely to affect allottees’ remedies under the RERA Act significantly. If the opposite were the case, and the onus were placed upon allottees to demonstrate that a promoter had failed to satisfy the requirements for any exemption from registration, it would potentially deprive allottees who purchased flats in delinquent or unregistered projects of any RERA remedy whatsoever. Navaratan Jhunjhunwala , by continuing to place the onus upon promoters, avoids this undesirable result. This approach is also consistent with the Supreme Court’s observations in Newtech Promoters & Developers (P) Ltd. v. State of U.P. on the RERA Act’s role as a protective, allottee-friendly law, which held that the Act’s provisions should be interpreted in a manner that advanced the interests of allottees and did not curtail the remedies available to them. The Bombay High Court’s decision in Neelkamal Realtors Suburban (P) Ltd. v. Union of India, which held that the RERA Act applied to projects which had commenced before its commencement and therefore subjected such projects to the obligations of the RERA Act without any exemptions, takes a similar view. In effect, all three decisions, by the Karnataka, Bombay, and Delhi High Courts, hold that the RERA Act applies retroactively to projects which had commenced before its commencement, rather than prospectively from the date of its commencement onwards. Consequently, even projects which were completed long before the RERA Act came into force are subject to its obligations unless the promoters can demonstrate that they fall under one of the limited exemptions from registration under Section 3(2).

Conclusion

Navaratan Jhunjhunwala & Anr. v. Karnataka Real Estate Appellate Tribunal & Ors. is, on the whole, a fairly unremarkable decision from the Karnataka High Court. It deals with a dispute concerning a relatively small sum of money, and the decision itself is largely limited to observing that, if a promoter wishes to contend that its project did not “require registration” under the RERA Act, it would have to substantiate this contention with evidence. However, by returning to the topic of exemptions from registration under the RERA Act and the evidentiary onus to prove them, Navaratan Jhunjhunwala has reopened a discussion that has long been lingering in the RERA jurisprudence. That is, whether the RERA Act’s obligations truly apply to promoters even if their project had been completed before the RERA Act came into force. While the Karnataka and Bombay approaches are broadly consistent with the RERA Act’s stated aim of protecting allottees, the Madras approach has created potential for confusion by suggesting that promoters of small-value projects could avoid the obligations of the RERA Act altogether. At this point, eight years after its commencement, the RERA Act stands in dire need of the sort of clarification from the Supreme Court that Navaratan Jhunjhunwala has so far failed to provide.

Author: Namratha M in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney