When a Builder Ignores a RERA Order: Recovery and Penalties for Bengaluru Buyers
Section 40 of the RERA Act lets unpaid interest, penalty or compensation be recovered as arrears of land revenue and other orders be enforced as prescribed, while sections 63 and 64 penalise promoters who ignore orders.
The order was a victory. After many hearings, a Bengaluru buyer holds a RERA order directing the builder to refund the amount paid with interest within a set period. The deadline passes. The builder's office stops answering calls, and the refund does not arrive. The buyer now has a piece of paper that says the money is owed, and a question that follows: how is a RERA order actually enforced?
The Real Estate (Regulation and Development) Act, 2016 answers in two ways. Section 40 provides for unpaid interest, penalty or compensation to be recovered as arrears of land revenue, and for other orders to be enforced in a prescribed manner. Sections 63 and 64 add penalties, and in some cases imprisonment, for promoters who fail to comply with orders. This guide reads those provisions as published in the Gazette of India and explains what a Bengaluru buyer can do when an order is ignored.
The short answer. Section 40(1) of the RERA Act says that if a promoter, allottee or real estate agent fails to pay any interest, penalty or compensation imposed by the adjudicating officer, the Regulatory Authority or the Appellate Authority, it shall be recoverable in the prescribed manner as an arrears of land revenue. Section 63 makes a promoter who fails to comply with the Authority's orders liable to a penalty for every day of default, which may cumulatively extend up to five per cent of the estimated cost of the project. The trade-off: these tools give an order real force, but recovery runs through official machinery that takes time, so a buyer should start the process promptly and keep pressing it.
What does section 40 say about recovering money?
The Gazette of India copy of the RERA Act sets out section 40(1). If a promoter or an allottee or a real estate agent fails to pay any interest or penalty or compensation imposed on him by the adjudicating officer or the Regulatory Authority or the Appellate Authority under the Act or the rules and regulations, it shall be recoverable from such promoter or allottee or real estate agent, in such manner as may be prescribed, as an arrears of land revenue.
The phrase "arrears of land revenue" matters. It points to the revenue recovery process that the state uses for land revenue dues. The detailed procedure is "as may be prescribed", which means it is set out in the state's rules. A Bengaluru buyer should therefore read the Karnataka rules, or take advice, on how to ask the Authority to start recovery.
Section 40(1) applies on its terms to interest, penalty or compensation. That covers money orders such as interest for delay or compensation adjudged by an adjudicating officer.
What about orders that are not about money?
Not every order is a payment order. An order may direct a promoter to complete certain works, hand over documents or execute a conveyance deed. Section 40(2) deals with these. It says that if any adjudicating officer or the Regulatory Authority or the Appellate Tribunal issues any order or directs any person to do any act, or refrain from doing any act, which it is empowered to do under the Act or the rules or regulations, then in case of failure by any person to comply with such order or direction, the same shall be enforced in such manner as may be prescribed.
Again, the detail sits in the state rules. The practical step for a buyer is the same: write to the Authority, attach the order and evidence that it has not been complied with, and ask for enforcement.
Where an order directs the promoter to execute a conveyance deed or hand over documents, attach copies of your earlier written requests and the promoter's replies, if any. That shows the Authority both the non-compliance and how long it has continued, which is also relevant to the daily penalty discussed below.
What penalties apply to a promoter who ignores an order?
Penalties add pressure beyond recovery. Section 63 says that if any promoter fails to comply with, or contravenes, any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to five per cent of the estimated cost of the real estate project, as determined by the Authority.
Section 64 deals with orders of the Appellate Tribunal. It says a promoter who fails to comply with, or contravenes, any of the orders, decisions or directions of the Appellate Tribunal shall be punishable with imprisonment for a term which may extend up to three years, or with fine for every day during which such default continues, which may cumulatively extend up to ten per cent of the estimated cost of the project, or with both.
The table below sets out the enforcement provisions side by side.
| Provision | Applies to | What it provides |
|---|---|---|
| Section 40(1) | Unpaid interest, penalty or compensation | Recoverable as arrears of land revenue, as prescribed |
| Section 40(2) | Other orders and directions | Enforced in the manner prescribed |
| Section 63 | Promoter not complying with Authority orders | Daily penalty, cumulatively up to five percent of project cost |
| Section 64 | Promoter not complying with Tribunal orders | Imprisonment up to three years, or daily fine up to ten percent, or both |
| Section 69 | Offences by companies | Persons in charge may be proceeded against, subject to a due diligence defence |
Can company directors be held responsible?
Where a promoter is a company, section 69 matters. Section 69(1) says that where an offence under the Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, or was responsible to the company for the conduct of its business, as well as the company, shall be deemed to be guilty of the offence and liable to be proceeded against and punished accordingly.
The proviso gives a defence: such a person is not liable to punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent it. Section 69(2) adds that where the offence was committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer, that person shall also be deemed guilty. The explanation says "company" includes a firm or other association of individuals, and "director" in relation to a firm means a partner.
Section 69 speaks of offences, so it is most relevant where non-compliance amounts to an offence, such as under section 64. Whether it applies in a given case is a question for legal advice.
Do the same rules apply to buyers?
Yes, and it is worth knowing. Section 40(1) applies to a promoter, an allottee or a real estate agent who fails to pay interest, penalty or compensation. Section 67 says that if any allottee fails to comply with, or contravenes, any of the orders, decisions or directions of the Authority, he shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to five per cent of the plot, apartment or building cost, as determined by the Authority.
Section 68 covers an allottee who fails to comply with orders or directions of the Appellate Tribunal, with imprisonment which may extend up to one year, or fine for every day of default which may cumulatively extend up to ten per cent of the plot, apartment or building cost, or both. So a buyer who is directed to pay something, such as interest on a late instalment, should comply too. Our guide on appealing a RERA order to the Appellate Tribunal covers what to do if you disagree with an order instead.
What should a Bengaluru buyer do if an order is not complied with?
Enforcement is a process that a buyer may need to keep moving. Start by confirming the order is final for your purposes, for example that no stay has been granted on appeal. Then act. Use this checklist:
- Keep a certified copy of the order and note the compliance deadline.
- Write to the promoter after the deadline, asking for compliance within a short period.
- Check whether the promoter has appealed and whether any stay was granted.
- Apply to the Authority for recovery under section 40(1) or enforcement under section 40(2).
- Ask the Authority to consider a penalty under section 63 for continuing default.
- Coordinate with other buyers holding similar orders against the same promoter.
- Keep a dated record of every letter, hearing and payment received.
Our earlier explainer on choosing between the RERA adjudicating officer, consumer forum and civil court covers how orders are obtained in the first place.
What do Bengaluru buyers ask about enforcing RERA orders?
What happens if a builder does not pay a RERA order?
Section 40(1) of the RERA Act says unpaid interest, penalty or compensation imposed by the adjudicating officer, the Regulatory Authority or the Appellate Authority shall be recoverable in the prescribed manner as an arrears of land revenue. The procedure is set out in state rules, so apply to the Authority for recovery.
Is there a penalty for a builder who ignores RERA orders?
Yes. Section 63 makes a promoter who fails to comply with the Authority's orders or directions liable to a penalty for every day of default, which may cumulatively extend up to five per cent of the estimated project cost. Section 64 sets imprisonment or fines for ignoring Appellate Tribunal orders.
Can a buyer be penalised for not following a RERA order?
Yes. Section 67 says an allottee who fails to comply with orders, decisions or directions of the Authority may face a penalty which may cumulatively extend up to five per cent of the plot, apartment or building cost. Section 68 covers failure to comply with Appellate Tribunal orders, with stricter consequences.
How are non money RERA orders enforced?
Section 40(2) says that if the adjudicating officer, the Regulatory Authority or the Appellate Tribunal directs a person to do or refrain from doing an act, and the person fails to comply, the order shall be enforced in such manner as may be prescribed under the state's rules.
Last updated 2026-10-18. PropNewz Team.
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