TSRERA Orders Refund To Homebuyer Who Paid Builder Without Verifying Project Registration, Refuses To Provide Interest

Authority refused to provide interest on the amount holding that it was the homebuyer duty to perform due diligence before making the payment to the builder.

Earlier on April 4, 2024, authority in its interim order directed the builder to submit the bank account statement. It also restrained the builder from marketing, advertising, selling or engaging in any acts that violate the provisions of RERA.

Background Facts

The homebuyer (Complainant) discovered the builder's (Respondent) project named The Continent located at Hafeezpet, Hyderabad through a Facebook ad and engaged with the builder's representatives who provided project details and pricing.

Initially attracted by a pre-launch offer the homebuyer visited the site and the builder office where the representatives assured them of possession by 2028 and convinced them to make an initial payment.

After paying a token amount the homebuyer learned that builder was marketing the flats without the necessary approvals. Further investigation revealed that Builder had no development agreement or title to the land and that the land was involved in pending litigation before the Supreme Court.

The homebuyer also found out that the encumbrance certificate provided by Builder was invalid and that builder had violated multiple provisions of the RERA 2016, by advertising and selling the project without registration.

Therefore, being aggrieved homebuyer filed a complaint against the builder for illegally marketing and selling flats in an unapproved project.

Observation and Direction by Authority

The Authority observed that by admitting to have received the token amount of Rs. 2 lakhs from the homebuyer the builder violated Section 3 of RERA, 2016 as they proceeded with the marketing and sale of flats in the project without securing the requisite approvals and permissions.

Authority rejected the homebuyer prayer to blacklist the builder from future projects holding that this punishment is too severe and disproportionate to the builder's offense.

Authority directed builder to strictly adhere to the due process of law as stipulated under the RERA, 2016 and comply with all ancillary regulations as prescribed by relevant authorities.

Authority further observed that the homebuyer was responsible for reviewing all relevant documents before making any payment to the builder. According to Section 19(1) had the duty to verify the project details and its registration under before making any payment to builder.

Since the homebuyer failed to perform this duty and paid Rs. 2,00,000 without proper verification therefore, homebuyer is only entitled to receive the refund of the amount paid without interest.

Lastly, homebuyer imposed a penalty of Rs.1,60,000/- on builder for non complainace of interim direction of authority.

Case Title – Sri Sharath Chandupatla Versus M/S. Buildox Private Limited

Citation – Complaint No.520 Of 2024

Date of order – 11 Nov, 2024

Click Here To Read/Download The Order