Telangana RERA Penalises Builder For Unilaterally Cancelling Homebuyers Allotment, Also Holds Real Estate Agent Liable

Background Facts

The homebuyers purchased flats in the Tulasi Bhagyanagar Project located in Dundigal by paying sale consideration to the builder (Respondents No. 1). The amounts paid by the homebuyers ranged between Rs.15 lakhs and Rs.30 lakhs for their respective flats.

The builder executed agreements for sale in favour of the homebuyers and assured them that the agreements would be registered within 10 days. However, according to the homebuyers, the builder failed to fulfil this promise even after a delay of four years and further unilaterally cancelled the allotments.

Aggrieved by this, 14 homebuyers from the project filed complaints before the authority. In response the authority through an interim order directed the builder not to sell, transfer or create any third-party interest in the flats until the complaints filed by the homebuyers are disposed.

Observation and Final Direction by Authority

The Authority observed that the Builder cancelled the allotments made in favour of the homebuyer to evade liability. This act was held to be a violation of Section 11(5) of the RERA, 2016, which mandates that a builder can cancel an allotment only in accordance with the terms of the agreement for sale.

The Authority referred to the agreement's terms, noting that the only condition under which cancellation was permissible was the non-payment of the sale consideration by the homebuyer. Since this condition was not met, the Authority concluded that the cancellation violated Section 11(5) of the RERA, 2016.

The Authority also held that Respondent No. 2 acted as the Real Estate Agent for builder by executing agreements on the builder's behalf. While there was no formal agreement between the two Respondents for the sale, the Authority found evidence suggesting otherwise.

Furthermore, the Authority determined that the conduct of Respondent No. 2 amounted to unfair trade practices, as they falsely represented themselves as the true owner and promoter of the project. Consequently, the Authority recognised Respondent No. 2 as the Real Estate Agent of builder and held them liable for violating the provisions of the RERA, 2016.

The Authority directed the Respondents to register the flat in favor of the homebuyer and imposed a penalty of Rs.8,57,697 each on builder and Respondent Nos. 2 for the unilateral cancellation of the agreements of sale and for violating the provisions of the RERA, 2016.

Case – Sri D. Vinod & Sri M. Sathish Versus M/s Green Metro Infratech Projects Pvt. Ltd., & another Along with 13 others

Citation – COMPLAINT NO.32 OF 2024 Along with 13 others

Date – 24^th Jan

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