Telangana RERA Penalizes Builder For Non-Registration Of Project, Orders Completion Of Construction

Background Facts

The Homebuyer entered into an Agreement to purchase Flat No. 401 in Satya Surya Residency, with the agreement stating the completion date as 01.01.2019. However, construction disputes between Respondent No. 2 and their construction partner halted progress. Consequently, the Homebuyer was compelled to sign a new agreement with a higher price of Rs. 70,00,000, up from the initial Rs. 60,00,000.

Despite the Complainant's total payments amounting to Rs. 28,00,000, construction remained incomplete, thereby violating the Development Agreement, which mandated completion by September 2020. Furthermore, Respondent No. 2 demanded additional payments for registration and GST, which the Complainant reluctantly provided.

Moreover, the Respondent's actions raise concerns regarding compliance with RERA regulations. The Respondent sold flats mortgaged to GHMC without authorization and allegedly plans to construct a penthouse on the terrace without proper permissions, withholding 23 Sq. yards intended for this purpose from the buyers.

In light of these grievances, the Homebuyer filed a complaint before Telangana RERA seeking compensation in the form of rent, calculated at Rs. 30,000 per month plus Rs. 2000 as maintenance, totalling Rs. 17,60,000 for the period from 01.01.2019 to 31.07.2023, due to the prolonged delay in possession. Additionally, the Homebuyer demands the return of the Rs. 10,00,000 price increase.

Observations and Directions

After reviewing the photos submitted by the parties, the Authority observed that construction of the Project is pending in several aspects and requires considerable time to complete. The Authority held that the Respondent has contravened Section 11(4)(a), (b), (d), and (e) of the RERA, 2016 by failing to adhere to the agreed-upon timeline for delivering the flat to the Complainant, as specified in the Sale Agreement dated 26.06.2020, and by subsequently being unable to complete construction and procure the occupancy certificate.

The Authority referred to the relevant part of Section 11(4) of the Real Estate Regulation and Development Act 2016, which reads as follows:

11. Functions and duties of promoter

(4) The promoter shall—

(a) be responsible for all obligations, responsibilities and functions under the provisions of this Act or the rules and regulations made thereunder or to the allottees as per the agreement for sale, or to the association of allottees, as the case may be, till the conveyance of all the apartments, plots or buildings, as the case may be, to the allottees, or the common areas to the association of allottees or the competent authority, as the case may be:

Provided that the responsibility of the promoter, with respect to the structural defect or any other defect for such period as is referred to in sub-section (3) of section 14, shall continue even after the conveyance deed of all the apartments, plots or buildings, as the case may be, to the allottees are executed.

(b) be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority as per local laws or other laws for the time being in force and to make it available to the allottees individually or to the association of allottees, as the case may be;

(d) be responsible for providing and maintaining the essential services, on reasonable charges, till the taking over of the maintenance of the project by the association of the allottees;

(e) enable the formation of an association or society or co-operative society, as the case may be, of the allottees, or a federation of the same, under the laws applicable: Provided that in the absence of local laws, the association of allottees, by whatever name called, shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in the project.

Therefore, the Authority imposed a penalty of Rs. 4,66,976/- for violations of Section 11(4)(a), (b), (d), and (e). Additionally, the Authority directed the Respondent to remit the penalty of Rs.9,92,682 previously imposed for non-registration of the project under RERA. Lastly, the Authority held that the Respondents are jointly and severally obligated to complete construction within 90 days and deliver the flat to the Homebuyer as stipulated in the Agreement of Sale.

Case – Sri Madala Bharat Versus M/s Sree Sai Raghavendra Constructions & others

Citation - COMPLAINT NO.633 OF 2023