Paid a Housing Co-op for a Site? What the BSNL Society Ruling Means for Bengaluru Members

In 2013 and 2014, a BSNL employee of more than 18 years paid Rs 7,66,800 to the employees' house building co-operative society for a site in its Madhavanagara Project Phase-II, off Nelamangala Road. No site, registration or refund followed. When the member took the society to Karnataka's real estate regulator, the complaint was dismissed. In September, the Karnataka Real Estate Appellate Tribunal agreed: with no land acquired, there was no project for RERA to regulate.

The short answer. In its order in Appeal No. (K-REAT) 3/2026, the Tribunal held that the BSNL Employee Welfare House Building Co-operative Society "has not acquired any land for development and consequently it does not fall into the definition of Promoter", that there was no project in existence and the member could not be called an allottee, and that the complaint was not maintainable before K-RERA. It left the member free to approach the Registrar of Co-operative Societies or the Consumer Forum. The trade-off: co-operative site schemes can be cheaper, but until land is acquired and a layout registered, RERA's refund and interest remedies may not reach your money.

What did the Tribunal decide in the BSNL co-operative case?

It dismissed the member's appeal and confirmed K-RERA's dismissal of the complaint. As reported by LiveLaw, the bench of Chairperson Justice J.M. Khazi and Judicial Member Santhosh Kumar Shetty N. held that the society did not fall within the definition of promoter and that the appellant could not be called an allottee.

The order records that the society had enrolled members and collected sums from them towards the purchase of sites, to be allotted as and when it developed a project or layout. It said the Authority had rightly held that the Act had no application and that the complaint was not maintainable before it.

The society argued before the regulator that the project was unregistered, that its receipts were not allotment letters, that no plot was specified and that no agreement for sale existed. During the appeal, its counsel offered to refund the amount with 6 percent interest, which the member did not accept, the order records.

Why did RERA not apply here?

Because RERA's remedies run between a promoter and an allottee in a real estate project, and the Tribunal found none existed. The Real Estate (Regulation and Development) Act, 2016 defines a promoter in Section 2(zk) to include a person who develops land into a project for the purpose of selling plots, and separately includes a primary co-operative housing society which constructs apartments or buildings for its members.

The Tribunal's reasoning, as set out in the order, was that the society had not acquired any land, so it was not developing land into a project and was not a promoter. Without a project, the member was not an allottee to whom a plot had been allotted, sold or transferred. Section 18, which provides refund with interest where a promoter fails to give possession, therefore did not come into play, LiveLaw reports.

The definition of allottee explains why receipts alone were not enough. Section 2(d) says an allottee, in relation to a real estate project, means the person to whom a plot, apartment or building has been allotted, sold or otherwise transferred by the promoter, and includes a person who later acquires that allotment. Both halves of that definition assume a project and a promoter. Where neither exists, a payment receipt for a future site does not by itself make the payer an allottee under the Act.

The order adds a forward-looking line: unless and until a layout is formed and registered with the Authority, the complainant is not entitled to relief under the Act, although a remedy may lie elsewhere.

Where can a co-operative society member go instead?

To the Registrar of Co-operative Societies or the Consumer Forum, according to the Tribunal. The order says the complainant is at liberty to approach either for recovery of the amount due, and elsewhere describes the remedy as lying before the Registrar of Co-operative Societies or under the Consumer Protection Act.

Which forum suits you depends on your claim and your documents. A member's dispute with the society about its affairs may fit the co-operative route; a claim framed as a deficiency in service may fit the consumer route. A lawyer can advise which is quicker for your facts. Our explainer on choosing between RERA and the consumer forum covers how the forums differ.

Keep in mind that this member paid more than a decade ago. Whatever forum you choose, gather your receipts, membership papers, society circulars about the project and every written reply from the society before you file.

What should you check before paying a house building society for a site?

Check whether there is land, a layout and a registration, in that order. The BSNL case turned on the absence of all three. Our guide to RERA registration for projects on the city's outskirts explains when registration applies.

1. Ask the society for the title documents of the land it says the layout will be on, and have a lawyer check them.
2. Ask whether a layout plan has been approved and by which planning authority.
3. Search the Karnataka RERA portal to see whether the layout is registered as a project.
4. Get a written allotment specifying the site number, size and price, not just a payment receipt.
5. Ask for an agreement for sale and check when it will be executed and registered.
6. Keep society circulars, meeting minutes and annual reports that mention the project.
7. If years pass without land or a layout, write to the society asking for a refund and a timeline, and keep the reply.

Employer-linked societies can feel safer than private developers, because members know each other and the society carries a familiar name. That familiarity is not a substitute for documents. Treat a society scheme with the same discipline you would apply to any plot purchase: land first, approvals second, registration third, and only then larger payments. If the society cannot show land, ask how long it expects to take to acquire it and what happens to your money if it never does.

Does this mean co-operative society projects are never covered by RERA?

No. The order turned on its facts: no land acquired and no project in existence. The Act's definition of promoter in Section 2(zk) expressly includes a primary co-operative housing society which constructs apartments or buildings for its members, and Section 3(1) requires a real estate project in a planning area to be registered before plots or apartments are advertised, booked or sold.

The Tribunal itself noted, as reported by LiveLaw, that for unregistered projects the authority must first check whether registration was required under Section 3 or whether an exemption applies. In this case the question never got that far, because there was nothing to register.

So the practical distinction for a member is between a society that has land and a layout under way, and one that is still collecting money for a future scheme. The first may bring you within RERA once registered. The second leaves you relying on co-operative and consumer law.

How should members weigh a refund offer?

Carefully, and in writing. In this case, the society's counsel offered a refund with 6 percent interest during the appeal, and the member did not accept, the order records. The Tribunal dismissed the appeal and pointed the member to other forums.

Every member's calculation is different. Compare the offer with what you could realistically recover in another forum, how long that might take, and what it costs. If you accept a settlement, record its terms in writing, including the amount, the interest rate, the payment date and what happens if payment is late.

Think about the time value as well as the headline rate. A refund offered today at a modest interest rate has to be compared with a larger claim that may take years to decide in another forum, plus the legal costs of pursuing it. Neither choice is automatically right, and different members of the same society may reasonably decide differently.

Above all, avoid paying more into a scheme that has no land or layout while a dispute is pending. The paper trail you build now is what any forum will rely on later.

Frequently asked questions

Why was the BSNL member's RERA complaint dismissed?

The Tribunal held that the BSNL Employee Welfare House Building Co-operative Society had not acquired any land for development, so it did not fall within the definition of promoter, there was no project in existence, and the member could not be called an allottee. The complaint was therefore not maintainable before K-RERA.

Where can a co-operative society member seek a refund?

According to the Tribunal's order, the member is at liberty to approach the Registrar of Co-operative Societies or the Consumer Forum for recovery of the amount due. The order also describes the remedy as lying before the Registrar or under the Consumer Protection Act.

Are co-operative housing societies covered by RERA?

They can be. Section 2(zk) of the RERA Act defines promoter to include a primary co-operative housing society which constructs apartments or buildings for its members. In the BSNL case, the Tribunal found the society had acquired no land and had no project, so RERA did not apply on those facts.

How much did the BSNL member pay and when?

The Tribunal's order records that the member paid Rs 7,66,800 during 2013 and 2014 for a site in the BSNL Madhavanagara Project Phase-II, off Nelamangala Road. The society's counsel offered a refund with 6 percent interest during the appeal, which the member did not accept.

Last updated 2026-10-22. PropNewz Team.