In a significant order, the Telangana Real Estate Regulatory Authority (TG RERA) has dismissed a homebuyer’s complaint seeking a refund of ₹25 lakh from Balaji Homes in connection with a flat in the Konathams IV Residency project in Kodad, Suryapet district.
However, while rejecting the refund claim, the Authority found that the builder had sold apartments before obtaining mandatory RERA registration and directed initiation of penalty proceedings under Section 59 of the Real Estate (Regulation and Development) Act, 2016 (RERA).
The order highlights two important legal principles:
- A complaint may fail if the proper allottee is not made a party to the proceedings.
- Builders cannot market or sell apartments before obtaining RERA registration.
Background of the Dispute
The complaint was filed by Bonala Nagarjuna against Balaji Homes regarding Flat No. 101 in the Konathams IV Residency Project.
The complainant stated that:
- He paid approximately ₹25 lakh towards the purchase of the flat between January 2021 and October 2023.
- The builder failed to:
- Hand over possession,
- Execute the sale deed, and
- Complete the project within a reasonable period.
Accordingly, he sought:
✔ Refund of ₹25 lakh
✔ Interest on the amount paid
✔ Compensation
✔ Litigation expenses
Builder’s Defence Before TG RERA
Balaji Homes denied the allegations and argued that:
- The project had already been completed.
- Several buyers had already taken possession of their flats.
- The total agreed sale consideration was ₹30.80 lakh, excluding:
- GST,
- Registration charges, and
- Amenities charges.
According to the builder:
- The complainant had paid only ₹25 lakh.
- The flat was ready for possession and registration upon payment of the balance amount.
Another Agreement Found in Wife’s Name
During examination of documents, TG RERA discovered an important fact.
The Authority found that:
- Another Agreement of Sale for the same flat had been executed on January 20, 2022.
- The agreement was in the name of the complainant’s wife, Bonala Vijaya.
Since the agreement holder was not made a party to the proceedings, TG RERA held that the complaint was not maintainable.
Why Did TG RERA Dismiss the Complaint?
The Authority observed that:
The agreement for sale was executed in the name of the complainant’s wife, and she was not impleaded as a party in the proceedings.
Therefore, the complaint suffered from a legal defect and could not proceed.
The dismissal was based on maintainability and not on the merits of the dispute.
Builder Still Faces Serious Action
Although the refund complaint was dismissed, TG RERA found serious violations by Balaji Homes.
The Authority noted:
- Sale agreements were executed in:
- February 2021, and
- January 2022.
However:
- The project obtained RERA registration only on December 14, 2022.
This meant that the builder had:
✔ Advertised and sold units before registration.
✔ Collected money from buyers prior to obtaining mandatory approval.
Pre-Launch Sales Violate RERA
Under Section 3 of the RERA Act, no promoter can:
- Advertise,
- Market,
- Book,
- Sell, or
- Offer units for sale
unless the project has been registered with the concerned RERA authority.
The purpose of this provision is to:
- Protect homebuyers,
- Prevent fraudulent pre-launch schemes,
- Ensure project disclosures, and
- Increase transparency in the real estate sector.
Penalty Proceedings Under Section 59
Since the project was sold before registration, TG RERA directed its Secretary to initiate proceedings under Section 59 of the RERA Act.
Section 59 provides for penalties where:
A promoter advertises, markets, books or sells units without registration.
The penalty can extend up to:
10% of the estimated cost of the project.
In certain cases, continued non-compliance may even attract:
- Additional penalties, and
- Imprisonment.
Important Lessons for Homebuyers
1. Verify RERA Registration Before Paying Money
Always check:
- Project registration number,
- Approval status,
- Completion timelines,
- Project details on the RERA portal.
2. Ensure Correct Parties File the Complaint
If the agreement is:
- Joint,
- In spouse’s name, or
- In another person’s name,
all necessary parties should be included in the complaint.
A technical defect can result in dismissal even if the buyer has a valid grievance.
3. Avoid Investing in Pre-Launch Projects
Projects sold before RERA registration carry significant risks:
✔ Delays
✔ Lack of approvals
✔ Refund disputes
✔ Regulatory violations
Significance of the Order
The TG RERA order sends a strong message that:
- Technical compliance matters for homebuyers, and
- Builders cannot escape liability for selling projects before registration.
Even though the refund claim was dismissed, the Authority ensured that regulatory violations by the builder would still face scrutiny and possible penalties.
The decision reinforces the core objectives of the RERA Act:
✔ Transparency
✔ Accountability
✔ Consumer protection
✔ Regulation of pre-launch sales
Key Takeaways
TG RERA’s Findings:
- Complaint for refund of ₹25 lakh dismissed.
- Agreement was in complainant’s wife’s name.
- Wife was not made a party to proceedings.
- Builder sold apartments before obtaining RERA registration.
- Penalty proceedings initiated under Section 59.
