Builder Cannot Impose Previous Allottees's Late Payment Charges On Subsequent Buyer: Telangana RERA

The Telangana Real Estate Regulatory Authority has recently directed Pacifica Construction Pvt. Ltd. to remove late payment charges linked to previous allottees before registering two flats. It held that buyers cannot be made liable for penalties that do not arise from their own defaults.

A coram of Chairperson Dr. N. Satyanarayana, IAS (Retd.), Members K. Srinivasa Rao and Laxmi Narayana Jannu, observed that “liability for late payment charges must necessarily flow either from a contractual obligation expressly undertaken by an allottee or from defaults attributable to that allottee's own conduct.”

The complaint was filed by Aparna Nuna and Nuna Venkata Suryanarayana in relation to two flats in the project “Aavas Hyderabad” at Bachupally. The flats were re-allotted to them on December 15, 2018. An Agreement for Sale was executed on January 18, 2019.

The homebuyers contended that cost sheets issued before registration included late payment charges that related to periods prior to their allotment. According to them, these charges were attributable to earlier allottees and were never disclosed at the time of re-allotment or incorporated in the Agreement for Sale.

The builder argued that the complainants had “stepped into the shoes” of the earlier allottees. It contended that they had assumed cumulative liabilities, including delayed payment charges. It also stated that the project was complete and registration would be executed upon clearance of dues. In its counter, the developer stated that the Occupancy Certificate application was under process. The Authority, however, recorded that the Occupancy Certificate has been received.

Before considering registration, the Authority examined the legality of the late payment charges. It found that the developer had not produced any documentary material to establish prior allotments or show that the complainants had assumed earlier liabilities.

It held that “the imposition of such charges would be arbitrary, contrary to the Agreement for Sale dated 18.01.2019, and violative of the principles of fairness and transparency embodied under the Real Estate (Regulation and Development) Act, 2016.”

Accordingly, the Authority directed the developer to rework the Statement of Accounts. All late payment charges attributable to previous allottees must be excluded. Any late charges can be computed only for defaults committed by the complainants after their allotment and strictly in terms of the Agreement for Sale.

On registration, the Authority held that once the Occupancy Certificate is obtained, the promoter's obligation under Section 17 of the Act to execute the conveyance deed stands crystallised. It directed the developer to issue a revised and itemised statement of legitimate dues. Upon payment of such dues, the sale deeds must be executed.

The Authority upheld the revised maintenance charge of Rs 3.6 per sq. ft., noting escalation in costs over time. However, it directed the developer to convene a General Meeting of the Association of Allottees within 30 days to determine future maintenance charges collectively.

It clarified that claims for compensation fall within the jurisdiction of the Adjudicating Officer under Section 71 of the Act. GST-related disputes must be raised before the competent GST authorities.

The complaints were disposed of with these directions.

For Complainants (Aparna Nuna & Mr. Nuna Venkata Suryanarayana): In person

For Respondent (Pacifica Construction Pvt. Ltd.): Advocates M. Naga Deepak, V. Ravi Kiran, Y. Abhiram