The Telangana Real Estate Regulatory Authority (TGRERA) recently ruled against a builder and a real estate agent for cancel a flat allotment of 14 homebuyers, despite receiving full payments from them. The case highlights the legal consequences of unilateral cancellations under the Real Estate (Regulation and Development) Act, 2016 (RERA) and reinforces the rights of homebuyers in real estate transactions.
Homebuyers’ Struggle for Possession and Registry
In 2020, 14 homebuyers in Hyderabad, Telangana signed an Agreement for Sale (AFS) with M/s Green Metro Infratech Projects Pvt. Ltd after paying a total amount of ₹3.37 crore for their respective flats. The builder promised to register the flats within 10 days, but four years later, neither registration nor possession was granted. Frustrated with the inaction, the buyers approached Telangana RERA in 2024 seeking relief.
Upon receiving the complaint, the builder took immediate action to refund the amounts in an attempt to nullify the dispute. However, TGRERA proceeded with the investigation and exposed multiple violations by the builder and the agent.
Key Findings from Telangana RERA’s Investigation
The TGRERA order dated January 24, 2025, issued under Section 31 of RERA, 2016, and Rule 34(1) of Telangana RERA Rules, 2017, highlighted the following violations:
- The project was registered with TGRERA from August 24, 2020, to November 8, 2025.
- Despite full payment by the buyers, the builder failed to register the flats or hand over possession.
- After the complaint was filed, the builder canceled all allotments and refunded the amounts, raising suspicion about the legitimacy of the refund.
- The real estate agent involved was not RERA-registered, violating Sections 9 and 10 of the Act.
- The agent misrepresented itself as the promoter, misleading homebuyers into believing it had the authority to execute sale agreements.
- The builder did not attend any of the hearings, while the agent appeared with legal representation, arguing that it was not liable for the transactions.
Legal Issues Considered by Telangana RERA
The case revolved around three major legal questions:
- Was the unilateral cancellation of the flat allotments a violation of Section 11(5) of RERA, 2016?
- Did the agent act as an unregistered real estate agent, violating Sections 9 and 10 of RERA?
- Were the homebuyers entitled to relief, and what legal remedy should be granted?
Builder Cannot Unilaterally Cancel a Flat Allotment
TGRERA ruled that unilateral cancellation of the flats by the builder, especially after receiving full payment, violated Section 11(5) of RERA, 2016. The law states that a promoter can only cancel an allotment if the Agreement for Sale permits it. In this case, the only cancellation clause in the agreement was non-payment by the buyer. Since all homebuyers had paid in full, the cancellation was deemed illegal.
TGRERA further emphasized that the builder only refunded the amounts after the complaint was filed, which raised concerns about its true intentions. The ruling cited the Supreme Court case of CITI Bank N.A. v. Standard Chartered Bank, (2004) 1 SCC 12, reinforcing that unilateral cancellations cannot override contractual agreements.
Even an Unregistered Real Estate Agent Can Be Held Liable Under RERA
TGRERA found that the agent, despite being unregistered, had actively facilitated the sale and executed agreements on behalf of the builder. This amounted to acting as a real estate agent under Section 2(zm) of RERA, 2016, making it liable for penalties.
The ruling also established that the agent’s misrepresentation of itself as the promoter of the project was a violation of Section 10(c)(i)(B) of RERA, 2016, as it misled buyers and engaged in unfair trade practices.
Final Judgment and Penalty Imposed by Telangana RERA
After examining all facts, TGRERA issued the following orders:
- The builder, M/s Green Metro Infratech Projects Pvt. Ltd, was fined ₹8,57,697 for violating Section 11(5) of RERA, 2016 (unilateral cancellation of sale agreements).
- The real estate agent was fined ₹8,57,697 for violating Sections 9 and 10 of RERA, 2016 (operating without registration and misrepresentation).
- Both the builder and agent were jointly and severally ordered to register the flats in the homebuyers’ names and hand over possession immediately as per Sections 17, 19(3), and 19(11) of RERA, 2016.
Impact of the Telangana RERA Judgment
This ruling sets an important precedent for homebuyers facing unilateral cancellations by builders. It confirms that:
- Builders cannot arbitrarily cancel allotments after full payment.
- Unregistered real estate agents can be held liable if they act in the capacity of a RERA agent.
- Refunding the amount does not absolve the builder of legal responsibility if the cancellation was wrongful.
- RERA authorities have the power to impose penalties and order registration of flats in favor of homebuyers.
Legal experts believe this judgment strengthens homebuyers’ rights and sends a strong warning to builders and agents against engaging in unfair practices.
Conclusion
The Telangana RERA’s decision reinforces the legal safeguards for homebuyers under the Real Estate (Regulation and Development) Act, 2016. The case serves as a crucial lesson for both builders and buyers—agreements for sale cannot be unilaterally canceled without legal justification, and even unregistered real estate agents can be penalized for engaging in unauthorized transactions.
