Can a Builder's Directors Be Held Liable? RERA Section 69 Explained for Bengaluru Buyers
A Bengaluru buyer's guide to RERA Section 69: when people in charge of a builder company or firm are deemed guilty of its offences, the due diligence defence, which breaches are offences, how they reach a court, and what to check about the promoter.
A Bengaluru buyer has won a RERA order against a builder, and the builder is a private limited company. The order has not been followed, and the company's reply letters carry a director's signature but speak only of "the company". The buyer starts to wonder whether the people running the business can simply hide behind the corporate name. The RERA Act addresses this in Section 69. It is a short provision about offences committed by companies, and it explains when the people in charge can also be treated as guilty and when they can escape that liability.
The short answer. Section 69(1) of the RERA Act says that where an offence under the Act has been committed by a company, every person who, at the time, was in charge of or responsible to the company for the conduct of its business, as well as the company, is deemed guilty and liable to be proceeded against and punished, unless that person proves the offence was committed without their knowledge or that they exercised all due diligence to prevent it. Section 69(2) adds that a director, manager, secretary or other officer is also deemed guilty where the offence is proved to have been committed with their consent or connivance, or is attributable to their neglect. The trade-off: this gives the Act real reach into a builder's management, but it applies to offences, which only a court tries on the authority's written complaint, so it is not a route a buyer drives directly.
What does Section 69 say?
It deals with offences by companies in two parts. Section 69(1) of the Real Estate (Regulation and Development) Act, 2016 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, the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly".
Section 69(2) says that, notwithstanding sub-section (1), where an offence under the Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
The first part looks at who was in charge when the offence happened; the second at what an officer did or failed to do.
Who counts as a company and a director here?
More than just companies. The explanation to Section 69 says that for the purpose of the section, "company" means any body corporate and includes a firm or other association of individuals, and "director", in relation to a firm, means a partner in the firm.
That matters for buyers because builders are organised in many forms. Section 4(2)(a) of the Act requires the registration application to give brief details of the enterprise, including its name, registered address, type of enterprise, such as proprietorship, society, partnership, company or competent authority, the particulars of registration, and the names and photographs of the promoter. Where the promoter is a partnership firm, the section's explanation means its partners stand where directors would stand in a company.
The Act's definition of promoter is also wide. Section 2(zk) covers, among others, a person who constructs or causes to be constructed a building of apartments for sale, a person who develops land into a project for sale of plots, and any other person who acts as a builder, coloniser, contractor or developer, or claims to hold a power of attorney from the landowner. Its explanation says that where the person who constructs and the person who sells are different persons, both are deemed promoters and are jointly liable for the functions and responsibilities under the Act. Our guide to when both landowner and developer are promoters covers that situation.
Is there a defence for the people in charge?
Yes, under the proviso to Section 69(1). It says that nothing in that sub-section shall render any such person liable to any punishment under the Act "if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence".
Two features of the wording stand out. The burden is on the person seeking the defence: the proviso says "if he proves". And there are two separate grounds: lack of knowledge, or all due diligence to prevent the offence. Whether either is made out in a given case is for the court to decide on the evidence.
The proviso is attached to sub-section (1). Sub-section (2) operates "notwithstanding anything contained in sub-section (1)" and turns on proof of consent, connivance or neglect by the officer. How the two parts interact in a particular prosecution is a legal question, so take advice if it becomes relevant to you.
Which RERA breaches are offences?
The ones that carry imprisonment. Most of the Act's consequences for promoters are penalties determined by the authority. Section 60 sets a penalty of up to five per cent of the estimated project cost for false information or contravention of Section 4, Section 61 sets up to five per cent for contravening other provisions, and Section 63 sets a daily penalty for failing to comply with the authority's orders, which may cumulatively extend up to five per cent of the estimated project cost.
A few provisions go further. Section 59(2) says that if a promoter does not comply with orders, decisions or directions issued under Section 59(1), or continues to violate Section 3, it shall be punishable with imprisonment for a term which may extend up to three years, or with fine which may extend up to a further ten per cent of the estimated project cost, or with both. Section 64 says that a promoter who fails to comply with or contravenes 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 of default, which may cumulatively extend up to ten per cent of the estimated project cost, or with both.
The Ministry of Housing and Urban Affairs' FAQs on RERA, dated July 2025, summarise the same scheme: under Section 59 a promoter that fails to register is liable to a penalty of up to ten per cent of the estimated project cost, and one that consistently defaults on the authority's registration directions faces an additional fine of ten per cent or imprisonment up to three years, or both. Our explainer on RERA penalties and the estimated project cost sets out the full list.
How does a RERA offence reach a court?
Through the authority, not the buyer. Section 80(1) says no court shall take cognizance of any offence punishable under the Act or the rules or regulations "save on a complaint in writing made by the Authority or by any officer of the Authority duly authorised by it for this purpose". Section 80(2) says no court inferior to that of a Metropolitan Magistrate or a Judicial Magistrate of the first class shall try any offence punishable under the Act.
The Act also allows compounding. Section 70 says that, notwithstanding the Code of Criminal Procedure, 1973, if any person is punished with imprisonment under the Act, the punishment may, either before or after the institution of the prosecution, be compounded by the court on such terms and conditions and on payment of such sums as may be prescribed, and that the sum shall not exceed the maximum fine for the offence.
So the buyer's role is to get the facts in front of the authority. Section 31(1) says any aggrieved person may file a complaint with the authority or the adjudicating officer for any violation or contravention of the Act, the rules or the regulations against any promoter, allottee or real estate agent.
How do the parts of Section 69 compare?
This table sets out the pieces of the section and what each one does.
| Part | Who it covers | What it says |
|---|---|---|
| Section 69(1) | The company and every person in charge of or responsible for its business | Deemed guilty and liable to be proceeded against and punished |
| Proviso to Section 69(1) | A person in charge | Not liable to punishment if they prove no knowledge or all due diligence |
| Section 69(2) | Any director, manager, secretary or other officer | Also deemed guilty if consent, connivance or neglect is proved |
| Explanation (a) | Bodies corporate, firms and associations of individuals | All count as a company for the section |
| Explanation (b) | Partners in a firm | Treated as directors for the section |
What should a buyer check about the people behind a builder?
Know who you are dealing with before you pay.
- Note the promoter's legal name and type of enterprise from the registration record.
- Check whether it is a company, a partnership firm or another association.
- Note the names and photographs of the promoter given in the filing.
- Check whether a separate landowner or seller is also named as promoter.
- Match the entity on the agreement for sale with the registered promoter.
- Keep every letter showing who signed for the builder and in what role.
- If an order is ignored, report the non-compliance to the authority in writing.
Start with the registration number. For a project such as the one on our page for DSR The Courtyard in Gunjur, the K-RERA record is where the promoter's details sit.
Frequently asked questions
Can a builder's directors be held liable under RERA?
Yes, for offences. Section 69(2) of the RERA Act says that where an offence by a company is proved to have been committed with the consent or connivance of, or is attributable to neglect by, a director, manager, secretary or other officer, that person is also deemed guilty and liable to be proceeded against and punished.
Does Section 69 apply to a partnership firm?
Yes. The explanation to Section 69 of the RERA Act says that for the section, "company" means any body corporate and includes a firm or other association of individuals, and "director", in relation to a firm, means a partner in the firm. So partners stand where directors would in a company.
Can a person in charge of a builder avoid liability for a RERA offence?
The proviso to Section 69(1) of the RERA Act says such a person is not liable to punishment if they prove the offence was committed without their knowledge or that they exercised all due diligence to prevent it. The burden of proving either ground is on that person.
Can a buyer prosecute a builder directly for a RERA offence?
No. Section 80(1) of the RERA Act says no court shall take cognizance of an offence under the Act except on a written complaint by the authority or an officer it authorises. A buyer can file a complaint with the authority under Section 31 to bring the facts before it.
Last updated 2026-10-21. PropNewz Team.
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