Telangana RERA Imposes Rs. 14.91 Lakh Penalty On Builders, Orders Refund To 62 Homebuyers For Possession Delay

In a relief to 62 homebuyers, the Telangana Real Estate Regulatory Authority (Authority) bench, comprising Justice Dr. N. Satyanarayana (Chairperson), K. Srinivasa Rao (Member), and Laxmi Narayana Jannu (Member), penalized the builders for non-registration of the project under RERA. The Authority imposed a penalty of Rs. 14.91 lakhs and directed the builders to refund the homebuyers' amounts due to the delay in handing over possession.

Background Facts

Homebuyers (Complainants) entered into unregistered sale agreements with Respondent Nos. 1 and 2 (Builders) to purchase a flat in the "Aura (Velimala)" project in Sanga Reddy district, Telangana. As per the agreement, possession was promised by December 2023. However, by June 2024 only about 20% of the construction was completed.

Despite repeated follow-ups, the respondents failed to give clear updates on the delay. The homebuyers stated they were under financial stress as they were paying both rent and EMIs. They also alleged that the respondents may be diverting funds collected from new buyers to other projects while unsold flats in the same project were still being marketed.

Homebuyers contended that parts of the project had not even started and the respondents did not honor their commitment to pay rent starting January 2024 in case of delay. They also expressed concern that the land had not been registered in their names and might be sold to someone else. Delays in approvals and failure to register the project under RERA further raised doubts about the project's legality.

Therefore, being aggrieved, the homebuyers filed a complaint before the Authority seeking directions to the respondents to complete the project within a specific timeline or refund the amount with interest in case of failure and rectify any construction defects.

Observation and Direction by Authority

The Authority referred to documents submitted by the homebuyers, which included two permissions granted by HMDA for a residential project spread over 7,300 sq. meters. It observed that this area crosses the 500 sq. meter threshold under Section 3(2) of the Act, which requires registration before any sale, marketing or booking begins.

Based on this, the Authority held that Respondent Nos. 1 and 2 violated Section 3(1) of RERA by carrying out the project without mandatory registration. It further noted that the builder did not apply for registration as required under Section 4(1) of the RERA.

Authority found no evidence of such an application being made. However, sale agreements were executed, showing clear and wilful non-compliance. It held that both respondents violated Sections 3 and 4 of the RERA and are liable for penalty.

Therefore, the Authority directed that Respondent Nos. 1 and 2 are jointly and severally liable to pay a penalty of Rs.14,91,958/- for violating Sections 3 and 4 of the RERA.

Authority observed that despite several years since the agreements were signed, the respondents have completed only about 20% of the project and have not handed over possession. The respondents ignored repeated reminders and failed to provide any clear plan for completion.

Authority held that the respondents collected large sums from homebuyers without getting the necessary permissions, which is against the law. Due to the severe delay and lack of progress, the homebuyers have the right to a refund with interest.

Therefore, Authority directed the respondents to refund the amounts with 11% P.a interest within 30 days and to immediately apply for project registration before continuing any marketing or sales activities.

Case – Sri M. Prem Kumar & others Versus M/s Bhuvanteza Infrastructures LLP & others Along with 8 others

Citation - COMPLAINT NO.105 OF 2024 A/W 8 others

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