Order Complaint No. 524 of 2024

BEFORE TELANGANA STATE REAL ESTATE REGULATORY AUTHORITY
[Under the Real Estate (Regulation and Development) Act, 2016]
5th Day of September 2024
Corum:

Dr. N. Satyanarayana, IAS (Retd.), Hon’ble Chairperson
Sri K. Srinivasa Rao, Hon’ble Member
Sri Laxmi Narayana Jannu, Hon’ble Member
COMPLAINT NO.647 OF 2022

Sri Katakam Santosh

…Complainant
Versus

1. M/s Sahiti Infratec Ventures India Pvt. Ltd.
represented through its Managing Director,
Sri Boodati Laxminarayana
2. M/s SVNR Infra
Represented through its Managing Partner, Sri
Chandur Rajender & Sri Kalvakuntla Naveen
Kumar
3. Inspector of Police/Station House Officer,
Central Crime Station
4. Jt. Commissioner of Police (Crimes & SIT),
Central Crime Station
…Respondents
COMPLAINT NO. 778 OF 2022
Akshay Jain & Anr.
…Complainant
Versus
1. M/s Sahiti Infratec Ventures India Pvt. Ltd.
represented through its Managing Director,
Sri Boodati Laxminarayana
2. M/s SVNR Infra
Represented through its Managing Partner, Sri
Chandur Rajender & Sri Kalvakuntla Naveen
Kumar

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3. Inspector of Police/Station House Officer,
Central Crime Station
4. Jt. Commissioner of Police (Crimes & SIT),
Central Crime Station
…Respondents
COMPLAINT NO. 254 OF 2023
Vishwanathan Keshetti & 47 Ors.
…Complainants
Versus
1. M/s Sahiti Infratec Ventures India Pvt. Ltd.
represented through its Managing Director,
Sri Boodati Laxminarayana
2. M/s SVNR Infra
Represented through its Managing Partner, Sri
Chandur Rajender & Sri Kalvakuntla Naveen
Kumar
3. Inspector of Police/Station House Officer,
Central Crime Station
4. Jt. Commissioner of Police (Crimes & SIT),
Central Crime Station
…Respondents
COMPLAINT NO. 226 OF 2023
Rama Bommakanti
…Complainant
Versus
1. M/s Sahiti Infratec Ventures India Pvt. Ltd.
represented through its Managing Director,
Sri Boodati Laxminarayana
2. M/s SVNR Infra
Represented through its Managing Partner, Sri
Chandur Rajender & Sri Kalvakuntla Naveen
Kumar
3. Inspector of Police/Station House Officer,
Central Crime Station

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4. Jt. Commissioner of Police (Crimes & SIT),
Central Crime Station
…Respondents
COMPLAINT NO. 524 OF 2024
Vishnu Vardhan Keerthi
…Complainant
Versus
1. M/s Sahiti Infratec Ventures India Pvt. Ltd.
represented through its Managing Director,
Sri Boodati Laxminarayana
2. M/s SVNR Infra
Represented through its Managing Partner, Sri
Chandur Rajender & Sri Kalvakuntla Naveen
Kumar
3. Inspector of Police/Station House Officer,
Central Crime Station
4. Jt. Commissioner of Police (Crimes & SIT),
Central Crime Station
…Respondents

This Authority is in receipt of complaints above-mentioned under Section 31
of the Real Estate (Regulation and Development) Act, 2016 (hereinafter referred to as
the “Act”) read with Rule 34(1) of the Telangana Real Estate (Regulation and
Development) Rules, 2017 (hereinafter referred to as the “Rules”) requesting
appropriate action against the Respondents. Whereas, after hearing the Complaints
together, this Authority directed the Complainants to form an Association and
therefore, the Complainants are jointly termed as the “Sahiti Sishta Abode Welfare
Association, Kompally” registered vide Registration No.789 of 2022 represented
through:
S.No. Position

Name

1.

Sri O. Krishnam Raju

President

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2.
3.
4.
5.
6.

2.

Vice President
General Secretary
Joint Secretary
Treasurer
Executive
Members

Sri B. Karunakar
Sri Ch. Raghupathi Reddy
Sri Vithoba Chouty
Sri B. Mahipal Reddy
Sri ASN Raju, Sri D. Krishna, Sri U.
Padmanabha Rao, Sri Surendra Kumar
Upadhyaya, Sri G. Kuchi Reddy, Sri M.
Surender, Sri N.A. Lakhani, Sri K. Uday Kiran,
Sri K. Vishwanadham, Sri V. Mahipal Reddy, Sri
Narayana Rao Deshmukh, Sri G. Anjaiah, Sri B.
Rajendra Prasad, Sri K. Ranga Chary

Accordingly, hearing was conducted by this Authority in the present matter

on 02.08.2023, 10.08.2023, 12.09.2023, 18.10.2023, 02.11.2023, 18.01.2024,
21.03.2024, 23.04.2024, 06.06.2024 and 01.08.2024 in the presence of the Office
Bearers of the Complainant Association along with its members, and Authorised
Representative

of

Respondent

No.2

i.e.,

the

landowners

and

Authorized

Representative on behalf of Respondent Nos.3 & 4 and none for the Respondent No.1,
and upon hearing the arguments, this Authority passes the following ORDER:

A. Brief facts of the case:
3.

Respondent No.1 is the Developer/Builder of the Project titled “Sahiti Sishta

Abode” situated in Survey Nos.41/1/AA and 41/4, Gundlapochampally Village,
Medhcal Mandal, Medchal-Malkajgiri District, Telangana (hereinafter referred to as
the “Project Land”). Respondent No.2 is the landowner in the Project Land.

Ownership of Land
4.

That the Respondent No. 2 are owners of the immovable property by virtue of

a registered Sale Deed No.14307/2018 admeasuring Ac.2.00 Gts, Sale Deed
No.13394/2018 admeasuring Ac.2.00 Gts, in total, Ac.4.00 Gts respectively,
registered with SRO, Medchal, Medchal-Malkajgiri situated at Survey Nos.41/1/AA
and 41/4, Gundlapochampally Village, Medhcal Mandal, Medchal-Malkajgiri
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District, Telangana and further, the schedule land was converted into nonagricultural land vide proceeding No.B2/586/2018 dt. 26.03.2019 in office of the
Competent Authority and RDO, Keesara Division, Medchal-Malkajgiri District.

Development Agreement
5.

The Complainants submit that the Respondent No.1 Builder entered into a

Development Agreement Cum Irrevocable General Power of Attorney (hereinafter
referred to as the “Development Agreement”) on 31.01.2020 vide Document
No.1265/2020 at SRO, Medchal with Respondent No.2. In the said Agreement, the
Respondent No.1 agreed to construct a multi-storeyed residential apartments
complex with 01 (one) Cellar for parking space + 01 (one) stilt floor for parking space,
and 5 (five)) typical upper floors as required & amenities over the Project Land. It was
also agreed that Respondent No.1 Developer/Builder shall construct and deliver with
its own funds 1,25,000 (One Lakh) Twenty-Five Thousand Only) SFT built-up area
inclusive of all common areas, balcony areas, parking area and other facilities,
circulation areas, etc., to the Respondent No.2 landowner and that the remaining
built-up area shall fall to the share of the Respondent No.1 Builder/Developer as
property of the Developer.

Timeline for completion of project as per Development Agreement
6.

It was also agreed between the parties that the Respondent No.1 shall

complete the development and construction on the Project Land in 24 (Twenty-Four)
months with a subsequent grace period of 06 (Six) months from the date of the final
approved plan including revised plans of the apartment complex by the competent
authorities.

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Competent Authority Permission
7.

The Complainants submitted that pursuant to this Agreement, the

Respondent No.1 Developer executed several unregistered Agreements of Sale, as
submitted by the Complainant Association from 2019 onwards. In the interim, the
Respondent No.1 Developer also applied for HMDA permission on 18.03.2020 vide
Application

No.

035526/MED/R1/U6/HMDA/18032020.

Thereafter,

HMDA

technical approval was accorded on 13.02.2021 for 1 Ground + 4 Proposed Building
(F): 1 Ground + 5 Proposed (Building G): 1 Ground + 5 Proposed (Building H): 2 Cellar
+ 1 Ground + 5 Upper Floors in Survey No. 41/1/AA and 41/4 of Gundlapochampally
Village, Medhcal Mandal, Medchal-Malkajgiri District, Telangana to an extent of
18,402.12 Sq. Mts. Therefore, a total of 136 flats were to be constructed wherein,
Block H – 35 units, Block G – 48 units and Block F – 53 flats. The said HMDA
approval is valid till 13.02.2027.

8.

The Complainants submitted that by virtue of the above-mentioned

Development Agreement dated 31.01.2020, the Respondent No.1 entered into 249
Agreements of Sale with the members of the Complainant Association, out of which
14 cancelled their allotment, 62 made partial payment up to 30 Lakhs and 174
allottees made partial/full payment more than 30 Lakhs collected by Respondent
No.1 Promoter.

Encumbrance Certificate
9.

The Complainant Association has provided Encumbrance Certificate of the

Project land which enumerated 72 entries out of which 43 sale deeds have been
executed for respective flat numbers in favour of Kedia Group by the Respondent
No.1 Developer and the Respondent No.2 landowner, whereas 28 sale deeds executed

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by the Respondent No.1 and Respondent No.2 in favour of Maa Bhavani Nirman Pvt.
Ltd. Group and one Sale Deed in favour of one individual flat owner.

TS RERA Registration
10.

Consequently, the Respondent No.1 Builder submitted application for

registration under Section 4, vide application No. REA02200025418 for development
of the Project, however the same was incomplete as several short falls were raised
and not fulfilled by the promoter, therefore, this Authority did not grant registration
to the said Project.

11.

The Complainant Association alleges that construction work has not

commenced, and work was not completed as per the HMDA plan. Despite the
Complainant Association's numerous attempts to communicate with Respondent
No.1 Builder, these efforts yielded no positive outcomes.

Criminal cases pending against Developer
12.

As the matter stood thus, the Complainants submitted that there were several

news reports that the Respondent No.1 Builder committed fraud, was arrested by
the Economic Office Wing team of Central Crime Station, Hyderabad, Telangana and
booked cases against B. Laxminarayana, Managing Director of the Respondent No.1
Builder under various sections of the Indian Penal Code, 1860 for fraud and
cheating. It was alleged that a total of Rs.1100 crores was siphoned by the
Respondent No.1 Builder, and the same was procured out of the sales made by him
in the present project as well as other projects titled Sahiti Sarvani Elite, Sahiti
Sishta Abode, Sahiti Karthikeya Panorama, Sahiti Sitara Commercial amongst
others. Cognizance of the said matters were taken by the Ld. Metropolitan Sessions
Judge, Nampally, Hyderabad and the matter is pending adjudication.

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13.

The Competent Authority under the Telangana Protection of Depositors

from Financial Establishments Act, 1999 has attached the subject land i.e.,
Survey Nos.41/1/AA and 41/4, Gundlapochampally Village, Medhcal Mandal,
Medchal-Malkajgiri District, Telangana State under Section 3 of the said Act on vide
G.O.Rt. No.1065 dated 26.05.2023. Cognizance of the said matters were taken by
the Ld. Metropolitan Sessions Judge, Nampally, Hyderabad and the matter is
pending adjudication.

Prayer
14.

Aggrieved, the Complainant Association prays for completion of construction

and to handover their respective flats in the Project at the earliest or refund of their
respective amounts paid by them along with interest.

Penalty imposed on the Respondent Builder:
15.

As the Respondent No. 1 Builder proceeded with the sale transactions without

obtaining registration from this Authority, a penalty of Rs. 1.30 crores was imposed
for

contravention

of

Sections

3

and

4

of

the

Act,

2016

vide

Order

No.742/2021/TGRERA dated 22.09.2023.

Reply on behalf of the landowners:
16.

The landowners filed an Application dated 18.10.2023 submitting that they

have a direct and substantial interest in the matter and seek to become a party to
the

ongoing

proceedings

relates

to

the

property

situated at Sy.No.41/1,

Gundlapochampally, Quthbullapur, Medchal, Medchal-Malkajgiri District. It was
submitted that the Development Agreement stipulated that the Respondent No.1 was
obligated to complete the development within 24 months with a grace period of 12

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more months. However, the Respondent No.1 completed only excavation work and
some work related to footings and abandoned the project in the year 2021. Since
then, no progress in the work.

17.

He added that since the Respondent No.1 failed to meet this obligation and

did not complete the project as agreed and there is no possibility of performance of
the contract, the development agreement was cancelled. Accordingly, he prayed that
M/s SVNR Infra, i.e., the owner of the schedule property is a necessary party to the
case and to implead him as party Respondent. Accordingly, same was heard and
allowed and he was made party to the present matter.

18.

The Landowner, M/s SVNR Infra was directed to file their reply to the main

complaint, however, despite several instructions and several directions, there was no
reply forthcoming from the Respondent No.2, consequently, its right to submit any
reply has been foreclosed.

Reply on behalf of the Respondent Nos.3 & 4
19.

The Respondent Nos.3 & 4 submitted a detailed report dated 19.08.2024

highlighting numerous complaints against Boodati Laxminarayana, Managing
Director of Sahiti Infratech Ventures India Private Limited. The complaints allege
that Mr. Laxminarayana, through social media, advertised pre-launch offers from
June 2019 onwards, collecting substantial sums from the complainant and other
customers without securing the necessary land acquisitions and permissions.
Despite repeated requests for refunds, the company continuously extended deadlines
and eventually ceased responding to customers, leading to the lodging of this
complaint.

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20.

During the early stages of the investigation, previous Investigating Officers

arrested A-1 Boodati Laxminarayana, A-2 Parvathi (his wife), and A-3 Sathwik,
following searches of their offices and residences, where material evidence was
seized. He, along with his marketing director, initiated pre-launch sales, collecting
approximately ₹103 Crores. Further investigations revealed that he expanded these
activities, launching 12 additional projects in Hyderabad and surrounding areas,
collecting about ₹1,290 Crores from 3,000 customers and defaulting on these
obligations, notably in the Sarvani Elite project.

21.

Respondent Nos. 3 & 4 further reported that they have identified and attached

the properties of the accused, including lands purportedly involved in these
fraudulent activities. A total of 60 cases have been registered against all Sahiti
projects. The Respondents conducted searches on several individuals’ homes and
offices, seizing incriminating material and ₹25 Lakhs in cash. Bank transactions are
being scrutinized with forensic auditors to trace the funds. The investigation has
reached an advanced stage, with a charge sheet expected to be filed imminently.

Issues for Consideration and Observations and Directions of the Authority:
22.

Keeping in mind the above facts and circumstances, the following issues arise

for consideration before this Authority:
(i)

Whether the Respondent No.1 Developer has failed to perform its
obligations under the Act and thereby violated the provisions of the Act,
2016?

(ii)

Whether the Complainants are entitled to the relief as prayed for? If yes,
to what extent?

(iii)

Whether action can be initiated under Section 59(2) against the
Respondent for non-compliance of Order No.742/2021/TGRERA dated

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22.09.2023 by way of which, this Authority imposed penalty of Rs.1.30
crores for violation of Sections 3 and 4 of the Act, 2016?
Issue (i)
23.

This Authority entrusted the task of conducting a comprehensive evaluation

of the Project to an investigating body being the Engineering Staff College of India
(“ESCI”), so as to facilitate collecting such relevant information as regards the Project
– Sahiti Sishta Abode for proper adjudication of the present dispute. The investigative
body submitted a Technical Report dated 18.12.2023. In the Technical Report, it is
submitted that the present stage of work assessed is at just the excavation stage with
little basement work in only ‘H’ Block and no work progress at all in ‘G’ Block, ‘F’
Block and Amenities Block of the project. It is clear from this finding that the
construction could not be concluded within the stipulated timeframe as committed
in the respective Agreements of Sale.

24.

As per the submission of the Complainants, the Respondent No.1 was arrested

by the competent authorities under Telangana Protection of Depositors from
Financial Establishments Act, 1999 and has not been able to conduct any business
on account of the attachment and the arrests. In such circumstances, it is not
expected, neither is it probable for the Respondent No.1 to complete the construction
of the Project “Sahiti Sishta Abode” and thereby comply with the provisions of the
Act, 2016 more specifically Section 11(4) which provides the duties of the promoter.
Observing the series of events taken place with the Respondent No.1 Builder in this
project as well as other projects which this Authority has taken cognizance of, it is
manifest that the Respondent No.1 Builder never intended to construct or handover
any flats to the allottees but merely siphoned monies for defrauding the innocent
allottees who invested their life savings in the said Project.

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25.

Section 11 (4) of the Act, 2016 obligates the Developer to 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, till the conveyance of all the apartments. It
also obligates the Developer to be responsible to obtain the completion certificate, to
obtain the lease certificate, 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, enable the formation of an association or society or cooperative society, execute a registered conveyance deed of the apartment in favour of
the allottee along with the undivided proportionate title in the common areas to the
association of allottees, etc, which the Respondent No.1 Developer has failed to do.
Looking at the progress of the construction and the stage at which the development
of the Project is proceeding, this Authority has no faith in the Respondent No.1
Builder.

26.

The Respondent No.1 Builder is not only in violation of Section 11(4) but other

provisions under the Rules such as Rule 14(1)(c) that obligate the promoter to file
quarterly reports of the construction along with photographs, list of number and
types of apartments offered for sale, etc. In lieu thereof, for not having complied the
functions and duties of the promoter under the Act, this Authority deems it fit to
rebuke any developmental rights of the Respondent No.1 Builder in respect of the
Project – Sahiti Sishta Abode. Point (i) is answered in affirmative.

Issue (ii)
27.

This Court is of the considered opinion that in recent times, there has been

an alarming increase in fraudulent activities carried out by builders, which

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necessitates urgent judicial intervention to protect the rights and financial stability
of allottees. It is the Authority's considered opinion that these individuals, having
invested their life savings with the legitimate expectation of securing a home, must
not be left vulnerable to such malfeasance. Respondent No.1 Builder has clearly
demonstrated a consistent pattern of fraudulent conduct, intentionally deceiving
numerous allottees and siphoning off vast sums of money, with no intention of
completing any of the promised projects.

28.

The evidence presented in this case and other matters in relation to the

Respondent No.1 Builder is unequivocal. Testimonies from affected allottees and
financial records clearly illustrate that the builder, with deliberate intent,
misappropriated funds, leaving projects incomplete and allottees in dire straits.

29.

This court finds such actions to be not only a grievous breach of trust but also

a direct violation of contractual and statutory obligations under the Act, 2016. The
affected allottees, having placed their trust and hard-earned savings into these
projects, have faced severe financial and emotional distress.

30.

It is, therefore, the duty of this Authority to ensure that the rights of these

allottees are upheld and that they are provided with the necessary redress in
accordance with law. Moreover, the Respondent No.1 Builder who engaged in such
fraudulent practices must be held accountable to prevent further instances of such
misconduct. The Authority, clothed with the responsibility of ensuring transparency
and accountability, recognizes that these fraudulent practices undermine public
confidence in the real estate sector, which is a critical component of economic
stability and growth, and therefore it is critical to restore faith in the general public.

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31.

It is also pertinent to note the ratio decidendi in Newtech Promoters vs. The

State of Uttar Pradesh & Ors. (Civil Appeal No(s). 6745-6749 of 2021), which
categorically upheld the very unequivocal right of the allottees to claim refund of the
amounts paid. Relevant extract is reproduced hereunder:
“77. This Court while interpreting Section 18 of the Act, in Imperia Structures
Ltd. v. Anil Patni [Imperia Structures Ltd. v. Anil Patni, (2020) 10 SCC 783 :
(2021) 1 SCC (Civ) 1] held that Section 18 confers an unqualified right upon an
allottee to get refund of the amount deposited with the promoter and interest at
the prescribed rate, if the promoter fails to complete or is unable to give
possession of an apartment as per the date specified in the homebuyer's
agreement in para 25 held as under : (SCC p. 810)
“25. In terms of Section 18 of the RERA Act, if a promoter fails to complete
or is unable to give possession of an apartment duly completed by the
date specified in the agreement, the promoter would be liable, on
demand, to return the amount received by him in respect of that
apartment if the allottee wishes to withdraw from the Project. Such right
of an allottee is specifically made “without prejudice to any other remedy
available to him”. The right so given to the allottee is unqualified and if
availed, the money deposited by the allottee has to be refunded with
interest at such rate as may be prescribed. The proviso to Section 18(1)
contemplates a situation where the allottee does not intend to withdraw
from the Project. In that case he is entitled to and must be paid interest
for every month of delay till the handing over of the possession. It is up
to the allottee to proceed either under Section 18(1) or under proviso to
Section 18(1). The case of Himanshu Giri came under the latter category.
The RERA Act thus definitely provides a remedy to an allottee who
wishes to withdraw from the Project or claim return on his investment.”

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85. From the scheme of the Act of which a detailed reference has been made
and taking note of power of adjudication delineated with the Regulatory
Authority and adjudicating officer, what finally culls out is that although the Act
indicates the distinct expressions like “refund”, “interest”, “penalty” and
“compensation”, a conjoint reading of Sections 18 and 19 clearly manifests that
when it comes to refund of the amount, and interest on the refund amount, or
directing payment of interest for delayed delivery of possession, or penalty and
interest thereon, it is the Regulatory Authority which has the power to examine
and determine the outcome of a complaint. At the same time, when it comes to
a question of seeking the relief of adjudging compensation and interest thereon
under Sections 12, 14, 18 and 19, the adjudicating officer exclusively has the
power to determine, keeping in view the collective reading of Section 71 read
with Section 72 of the Act. If the adjudication under Sections 12, 14, 18 and 19
other than compensation as envisaged, is extended to the adjudicating officer
as prayed that, in our view, may intend to expand the ambit and scope of the
powers and functions of the adjudicating officer under Section 71 and that
would be against the mandate of the 2016 Act.” (emphasis supplied)

32.

The Hon’ble High Court of Judicature at Bombay observed on similar lines in

Sanvo Resorts Pvt. Ltd. and Others vs. Shital Nilesh Deshmukh and Another, 2023
SCC OnLine Bom 1850 which is reproduced hereunder:
“21. In this context, the Supreme Court in the case of Newtech Promoters and
Developers Pvt. Ltd. (supra) in paragraphs 22 and 25 has expressly observed
that the allottee has an unqualified right to claim interest under Section 18(1) of
the RERA Act if the promoter fails to discharge his obligation in accordance with
the terms and conditions of the agreement. This unqualified right is not

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dependent on any contingencies or stipulations and therefore the legislature has
consciously provided this right of refund as an unconditional absolute right to
the allottee if the promoter fails to give possession within the stipulated time
regardless of unforeseen events or stay order of the Court which is in either way
not attributable to the allottee.” (emphasis supplied)

33.

This Authority has also taken note of the Order passed by the Hon’ble High

Court of Bombay in Wadhwa Group Housing Pvt. Ltd. vs. Vijay Choksi & Anr. (Second
Appeal No.21842/2023), in which, it is categorically held as under:

17.
….Thus, definition of the term “Promoter” under Section 2(zk) of RERA is
wide enough to include every person who is associated with construction
of the building such as builder, coloniser, contractor, developer, estate
developer or by any other name or even the one who claims to be acting
as the holder of a power of attorney from the owner of the land. One of
the principal objectives of RERA is to bring transparency in real estate
sector and to protect the interests of the consumers in the real estate
project. The term ‘Promoter’ has been so widely defined that it virtually
includes every person associated with construction of the building. Thus,
even a person who is merely an investor in the project alongwith the
Promoter and who is entitled to benefit in the real estate project is also
covered by definition of the term ‘Promoter’. In the present case, I need
not delve deeper into the enquiry as to whether Appellant is covered by
the expression ‘Promoter’ or not. While registering the project as ongoing
project under Section 3 of the RERA, Appellant’s name has been included
in the list of Promoters. Therefore, Appellant cannot run away from the

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fact that it is the promoter in respect of the project ‘The Nest’. Explanation
to Section 2(zk) makes all persons who construct or convert building into
apartments or develop a plot for sale, as well as a person who sells
apartments or plots to be promoters making them jointly liable as such
for the functions and responsibilities specified under the Act, or the Rules
and Regulations made thereunder. Thus, a person who does not
actually construct or causes to be constructed a building but
merely takes part in the joint venture and sells flats, becomes a
Promoter. Appellant admits that it is entitled to a share in the joint
venture in the constructed area, which it is entitled to sell. Thus, the
Appellant is entitled to sell flats in the project and accept consideration
for such sale. There is therefore no doubt to the position that, both
Appellant as well as the second Respondent are Promoters and are
jointly liable in respect of the responsibilities under the RERA and Rules
and Regulations made thereunder.

18. In my view therefore, mere falling of flat in the share of the second
Respondent under the Joint Development Agreement, would not excuse
the Appellant from the responsibilities and liabilities under the RERA,
Rules and Regulations made thereunder qua that flat. RERA does not
demarcate or restrict liabilities of different promoters in different areas.
The liability is joint for all purposes under the Act, Rules and Regulations.
…
23. Thus, under Section 18(1)(b), the liability to return the amount
received from the flat purchaser is on the Promoter. Since the Appellant
is covered by definition of the term ‘Promoter’, it is also jointly liable to
refund the amount along with the other promoter, being the second

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Respondent. Section 18 cannot be narrowly interpreted as sought to be
suggested by Mr. Engineer, to include only that promoter who actually
received the amount. The objective behind enactment of RERA must be
borne in mind. If such narrow interpretation of Section 18 is accepted, it
would give a license to developers to deliberately accept payments in the
accounts of one of the promoters and then escape the liability to refund
or to pay interest by taking a specious plea that the other promoters are
not liable in respect of those payments. Mr. Engineer has sought to draw
distinction between projects launched before and after coming into force
of RERA by submitting that now the monies must be received in the
registered account, which was not the case before registration under
RERA. To my mind, this distinction sought to be made cannot be a ruse
to escape the liabilities as promoter under RERA. The Act applies even to
ongoing projects and therefore the account in which monies are received
by promoters is irrelevant for the purpose of determining joint liability of
promoters under Section 18.

24. The Appellant’s contention about absence of privity of contract
between it and the Complainant is totally misplaced. Definition of the
term ‘promoter’ under Section 2(zk) of the RERA would indicate that even
persons/entities with whom a flat purchaser does not enter into contract
are also covered by definition of the term ‘promoter’. Therefore, it is not
necessary that there has to be an agreement between every Promoter
and the flat purchaser. As observed above, it is a matter of indoor
management between the Promoters and the flat purchaser who is not
supposed to know the intricacies of the arrangements made between
several promoters amongst themselves. When a claim is raised in respect

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of a real estate project by a flat purchaser, all promoters become jointly
liable qua that flat purchasers, irrespective of whether there is privity of
contract with each of the promoter or not. This is the scheme of RERA
and mere absence of privity of contract with a particular promoter does
not relieve such promoter in respect of the liabilities under RERA. 25. I
am therefore of the view that Appellant cannot escape the liability to
refund the amount received towards sale of flat to Respondent No. 1.”

34.

A careful perusal of the said judgment of the Hon’ble High Court of Bombay,

makes it abundantly clear that landowners i.e., M/s SVNR Infra, Respondent No.2
herein is also equally responsible towards its functions under the Act, 2016. In this
regard, it is also noted that the Encumbrance Certificate produced by the
Complainants clearly shows that the Respondent No.2 was also a party to the sale of
flats made by the Respondent No.1. Further, by virtue of the Development Agreement
dated 31.01.2020 bearing Document No.1265/2020, through which the Respondent
No.2 has been allotted 1,25,000 sft of built-up area and is entitled to sell the same
upon completion of the Project, therefore Respondent No.2 shall also be categorised
as a Promoter to the project. The landowners, squarely falling in the definition of a
Promoter

under

the

Act,

2016

cannot

escape

the

liability

towards

the

Complainants/allottees despite them not having received any sale consideration.

35.

During the hearing on 01.08.2024, the Complainants unequivocally

submitted that they are ready to accept a refund, as the prospect of handover of the
flats is far from being realized on account of several legal complications. Therefore,
this Authority is of the considered opinion that the Complainants herein are entitled
to full refund of their investments made in the project “Sahiti Sishta Abode” along
with maximum interest as per Rule 15 of the Rules, 2017.

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Issue (iii)
36.

Since

the

Respondent

has

failed

to

comply

with

the

Order

No.742/2021/TGRERA dated 22.09.2023 issued by this Authority by failing to pay
penalty, the Respondent is liable to be punished under Section 59(2).

37.

Earlier, penalty was imposed to a tune of Rs.1.3 crores on the Respondent

vide Order No.742/2021/TGRERA dated 22.09.2023 by this Authority vide its
powers under Section 59 (1) read with Section 38. However, the Respondent has
failed to comply with the same.

38.

Section 70 speaks about powers of the court to compound punishment

awarded under Section 59(2) on such terms and conditions and on payment of such
sums as prescribed either before or after the institution of the prosecution. Rule 33
of the Rules, 2017, makes a mention about the quantum of amount to be collected
by the court while compounding the punishment of imprisonment under Section
59(2). Further, Section 80 stipulates that no court, inferior to that of a Metropolitan
Magistrate or a Judicial Magistrate of the first class, shall, take cognizance of any
offence punishable under this Act save on a complaint in writing made by the
Authority or by any officer of the Authority duly authorised by it for this purpose and
thereby try the offence punishable under this Act.

39.

A combined reading of said provisions of Sections 59(2), 70 and 80 of the Act

read with Rule 33 of the Rules go to show that since the Respondent/Promoter did
not comply the orders of Authority by paying penalty already imposed, the
Respondent/Promoter has to be prosecuted. Therefore, it is held that the Respondent
is liable to be prosecuted as envisaged under Section 80 of the Act, 2016 and Addl.

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Registrar of this Authority is authorised to launch prosecution before the concerned
Metropolitan Magistrate. Issue No.(iii) is accordingly answered.

Directions of the Authority:
40.

Keeping in mind the above-made observations, this Authority passes the

following directions vide its powers under Section 37:
i.

Despite service of notices for hearing, there has been no representation on
behalf of the Respondent No.1 Promoter and therefore, he is set ex-parte.

ii.

The Respondent No.1 had applied for registration of the Project – Sahiti Sishta
Abode vide Appl. No.REA02200025418, and this Authority raised shortfalls in
the Project application on 06.05.2021, 21.08.2021, 28.08.2021, 11.09.2021,
26.09.2021, 21.10.2021 and 14.11.2021 as the application was not in
accordance with Section 4 of the Act, 2016 read with Rules thereunder. This
Authority also issued notice to the Respondent No.1 for hearing on 05.08.2024
and 20.08.2024, however, the Respondent failed to appear on both the dates
despite being in service of notice vide e-mail.

iii.

As enough opportunities have been granted to the Respondent No.1 but there
has been no representation on its behalf, and the promoter has defaulted in
complying its functions and duties as provided under the Act and the Rules,
and the promoter has violated all of the terms and conditions of the approval
given by the competent authority and further, the Respondent No.1, is
involved in unfair trade practice or irregularities by executing multiple
agreements for the same flat to the detriment of the allottees, this Authority
rejects the Application made vide Appl. No. REA02200025418.

iv.

Consequently, all developmental rights of the Respondent No.1 Developer are
hereby terminated henceforth, and the Respondent No.1 Promoter is
restrained not to advertise, market, book, sell or offer for sale, or invite persons

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to purchase in any manner, the apartment in the said Project or part of it as
otherwise, appropriate action under Section 63 will be initiated against the
Promoter.
v.

The Respondent No.1 Developer’s name shall be displayed in the list of
defaulters

and

the

photograph

of

the

Promoters

i.e.,

Sri

Boodati

Laxminarayana and Smt. Boodati Parvathi shall also be displayed on the TG
RERA website.
vi.

Further, as has been discussed in Para Nos.36 to 39, vide its powers under
Section 59(2) read with Section 80 of the Act, this Authority holds that the
Respondent is liable to be prosecuted as envisaged under Section 80 of the
Act, 2016 and Addl. Registrar of this Authority is authorised to launch
prosecution before the concerned Metropolitan Magistrate.

vii.

As has been stipulated in the judgment of the Hon’ble High Court of Bombay
(Wadhwa Group Housing Pvt. Ltd.), the Respondent Nos.1 & 2 are jointly and
severally liable and are hereby directed, under Section 18 of the Act, 2016, to
refund the payments made by the Complainants to the Promoter along with
interest at the rate of 10.85% p.a. as per Rule 15 of the Rules, 2017, wherein
interest is applicable from the date on which the respective Agreement of Sale
sought to give possession of the flat, within a period of 90 days failing which
appropriate action under Section 63 would be initiated against the
Respondent Nos.1 & 2; and

viii.

Such order of refund is being passed on three-fold reasons. First, the
Complainants have prayed before this Authority to direct the promoters to
refund the amounts as the landowners have also failed to initiate any progress
with to completion of the Project. Second, the said Project – Sahiti Sishta
Abode is unregistered and the present stage of work assessed in the entire
Project site is at just the excavation stage with little basement work in only ‘H’

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Block and no work progress at all in ‘G’ Block, ‘F’ Block and Amenities Block
of the project. Further because the Economic Offences Wing of the Central
Crime Station, Hyderabad, Telangana i.e., Respondent Nos.3 & 4 herein have
attached the subject land under Section 3 of the Telangana Protection of
Depositors from Financial Establishments Act, 1999 and cognizance of the
same has been taken by the Ld. Metropolitan Magistrate, Nampally and the
matter is pending adjudication.
ix.

Until

the

final

disposal

of

refunds

are

processed

to

the

Complainants/Allottees, the Respondent No.2 is directed not to enter into any
developmental agreement with any other developer/contractor or construct on
his own or give on lease to any third-party, and not to alienate/sell/transfer
or create any third-party rights on the subject land i.e., Survey Nos.41/1/AA
and 41/4, Gundlapochampally Village, Medhcal Mandal, Medchal-Malkajgiri
District, Telangana; and
x.

The “Sahiti Sishta Abode Welfare Association, Kompally” registered vide
Registration No.789 of 2022 is directed to collate all the claims for refund as
mentioned above, from the Complainants herein and also from those allottees
who have not filed any complaint before this Authority, and to assume
responsibility for ensuring the refund is processed from the Respondent Nos.1
& 2 along with the applicable interest as mentioned above; and

xi.

The Complainants, if so advised, may approach the Adjudicating Officer under
appropriate form (Form N) to claim compensation under Section 18 of the Act,
2016.

41.

The present complaints are hereby disposed of in accordance with the

aforementioned directions. No order as to costs.

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42.

If aggrieved by this Order, the parties may approach the Telangana Real Estate

Appellate Tribunal in accordance with Section 44 of the Act, 2016 within 60 days
from the date of this Order.

Sd/Sri K. Srinivasa Rao,
Hon'ble Member,
TS RERA

Sd/Sri Laxmi Narayana Jannu,
Hon'ble Member,
TS RERA

Sd/Dr. N. Satyanarayana, IAS (Retd.),
Hon'ble Chairperson,
TS RERA

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