Nash Ville Refund: K-REAT Says a Reconstituted Firm Cannot Shed a Bengaluru Buyer's Claim

In November 2019, a buyer now aged 82 signed a registered agreement to buy a flat in a project called Nash Ville for Rs 42,00,000. Possession was due by November 28, 2020. The buyer says the full price was paid. The flat never came. When the regulator ordered a refund, the firm behind the project argued that it had been reconstituted, that new partners now ran it, and that it was never properly made a party. On October 16, 2026, the Karnataka Real Estate Appellate Tribunal rejected that defence.

The Tribunal's judgment in Appeal No. (K-REAT) 60/2026, East North VVS Realty v. B.K. Nagaraj and others, holds that a change in a firm's partners does not wipe out the firm's obligations under a sale agreement it signed. It also corrected an error in the original order in a way every buyer claiming interest should understand: interest ran from the date of the sale agreement, not from an earlier date.

The short answer. K-REAT held the partnership firm liable to refund Rs 42,00,000 to the buyer with interest at SBI MCLR plus 2 percent a year from November 29, 2019, the date of the registered sale agreement, until March 24, 2025, when the firm deposited the amount with the Tribunal. It dismissed the firm's attempt to escape liability after reconstitution, but modified K-RERA's ex parte order, which had directed a refund of Rs 64,46,190 with interest calculated from May 1, 2017. The trade-off: the buyer's refund was protected, but on a lower base and a shorter interest period than the original order.

What happened in the Nash Ville case?

According to the judgment, the firm, represented by two of its partners, a private limited company and an individual partner, executed a registered agreement of sale on November 29, 2019 for an apartment in the project for Rs 42,00,000, with possession due on or before November 28, 2020. The buyer says the entire price was paid but possession was not delivered, and filed two complaints before K-RERA.

One sought compensation for loss of rental income; it was taken up by the Adjudicating Officer and settled before the Lok Adalat, with the buyer receiving Rs 3,00,000 towards rental loss. The other sought a refund with interest. The respondents in that complaint did not appear, and on December 11, 2023 K-RERA allowed it ex parte, directing a refund of Rs 64,46,190 with interest calculated from May 1, 2017 to November 11, 2023, and further interest until payment. The firm says it learnt of recovery proceedings through a notice dated December 21, 2024 from the Anekal Taluk Tahsildar and then appealed.

What did the firm argue?

That it was the real promoter but was never made a party, and that it never received the money. The firm's Managing Partner contended that the complaint was filed against a private limited company and an individual, not against the firm itself, and that notices went to an old address. The firm said its bank statement showed the sale consideration was received by the private limited company, not the firm, and that the parties named in the complaint were not even partners when the order was passed. It alleged collusion and suppression of facts.

The buyer replied that the agreement was registered, that a change in the firm's constitution after the agreement could not defeat the buyer's rights, and that the reconstitution was never intimated. Another respondent, a former partner, told the Tribunal that new partners had been inducted under a deed of reconstitution dated September 3, 2020, taking 97 percent of the partnership share and the entire project.

Why did the Tribunal refuse to let the firm off?

Because the incoming partners took on the firm's business, including this agreement. The Tribunal set out the firm's history, starting before its formation, when two of its founding partners had jointly bought a landed property under a registered sale deed dated November 14, 2013 and obtained its conversion for non agricultural use. The firm itself was formed under a partnership deed of July 11, 2016, registered on June 17, 2017, reconstituted in 2017, and again on September 3, 2020 when two new partners joined, while the private limited company remained a partner throughout. It quoted the 2020 deed, which said the changes did not involve dissolution of the firm, that the incoming partners would share profits and losses, and that the earlier partnership terms bound them.

Having been inducted as Managing Partner, the Tribunal said, the appellant's representative cannot disown the firm's responsibilities and liabilities, including those under the registered agreement of November 29, 2019. Since the private limited company, a partner of the firm, was a party to the complaint, and the Managing Partner was also one of its directors, the Tribunal inferred that the complaint was within the Managing Partner's knowledge. It described the appeal as an attempt to avoid the firm's legitimate obligations and defeat the buyer's lawful rights.

The buyer's counsel had pressed a further point. The firm's name and the name of the private limited company that was one of its partners were almost identical, the company's directors were associated with the firm, and the two carried on business side by side. Counsel produced a deed of reconstitution dated October 19, 2020 and a memorandum of understanding dated September 2, 2020 between the company and the firm, which, the buyer argued, specifically referred to the project and recorded an undertaking by the incoming Managing Partner to clear its existing liabilities with interest. The Tribunal observed that the way one person represented both the company and the firm gave rise to a strong inference that business was carried on under both names in circumstances that warrant scrutiny. For buyers, the point is practical rather than legal: when two entities with near identical names appear on your paperwork, find out which one is the registered promoter before you pay.

Why did the Tribunal cut the interest period?

Because interest cannot run before money was paid. The Tribunal noted that the sale agreement was executed on November 29, 2019, so the payment schedule would reasonably have started after that. It said the buyer is entitled to interest, if otherwise eligible, only from the date of the sale agreement, since there was no occasion to pay before it, and it was not the buyer's case that any payment was made in 2017.

Neither side had raised this issue. The Tribunal said that as the first appellate forum it was duty bound to correct an error apparent on the face of the record, because interest for a period when no payment was shown would give the buyer an unjustified benefit at the promoter's expense. Our explainer on how RERA refund interest is calculated from each payment covers the same principle.

What does the deposit before the Tribunal mean for the buyer?

The money is already secured. The judgment records that the firm deposited the amount before the Tribunal on March 24, 2025, in compliance with the requirement under Section 43(5) of the RERA Act, the provision on deposits by a promoter who appeals. Interest was stopped at that date. The Tribunal directed its Registry to release the buyer's amount, with interest accrued on the fixed deposit, by banker's cheque or demand draft after the appeal period expires, and to refund any balance to the firm. Our guide to the Section 43(5) pre-deposit rule explains why this protects buyers.

What should Bengaluru buyers learn from this?

Know exactly who your promoter is, and file against all of them. Here, a firm and a company with nearly identical names were both involved, the complaint named the company and a partner, and years later the firm said it was never a party. The buyer's registered agreement and the firm's own reconstitution deed ultimately decided the case.

1. Check the promoter name on the K-RERA registration and match it to your agreement.
2. Note whether the seller is a firm, a company or both, and get every entity's details.
3. Pay only to the account named in the registered agreement and keep every receipt.
4. Name the firm and all relevant partners or companies when you file a complaint.
5. Give the regulator every known address so notices reach the respondents.
6. Claim interest from the dates you actually paid, with proof of each payment.
7. If the promoter appeals, check whether the Section 43(5) deposit has been made.

Frequently asked questions

Can a reconstituted firm avoid a refund owed by the old firm?

Not according to K-REAT's October 16, 2026 judgment in the Nash Ville case. It held that the incoming Managing Partner of a reconstituted firm cannot disown the firm's liabilities under a registered sale agreement signed before the reconstitution, and dismissed the firm's attempt to escape its refund obligation.

From when does interest on a RERA refund run?

In this case, K-REAT held that interest runs only from the date of the sale agreement, November 29, 2019, because there was no occasion to pay before it. It corrected K-RERA's order, which had calculated interest from May 1, 2017, and stopped interest at the March 24, 2025 deposit date.

How much will the buyer receive?

K-REAT directed refund of the Rs 42,00,000 sale consideration with interest at SBI MCLR plus 2 percent a year from November 29, 2019 to March 24, 2025, released from the amount deposited before the Tribunal, together with interest accrued on that fixed deposit, after the appeal period expires.

What happened to the buyer's rent claim?

It was handled separately. The judgment records that the buyer's complaint for loss of rental income was taken up by the Adjudicating Officer and settled before the Lok Adalat, under which the buyer received Rs 3,00,000 towards rental loss. The appeal concerned only the refund order.

Last updated 2026-10-29. PropNewz Team.