The Telangana Real Estate Appellate Tribunal (REAT), on 29 October, held that a real estate developer is not required to disclose pending litigation at the time of project registration unless the disputed property is shown to form part of the project land.
A Bench comprising Chairperson Justice A. Santhosh Reddy, Judicial Member P. Pradeep Kumar Reddy and Administrative Member Vemula Sreekar allowed Mihira Buildcon's appeal against findings recorded by Telangana RERA in a complaint filed by Vookanti Mahender Reddy and set aside the direction to initiate penalty proceedings against the developer. It observed:
“...we find that there was no obligation on the part of the appellant to disclose the pending litigation at the time of registration of the project.”
The dispute arose from Reddy's claim to enforce an alleged handwritten agreement of sale dated 12 August 2005, concerning 5,810.406 square yards in Waddepally village, Hanumakonda district. While his civil suit remained pending, Mihira Buildcon obtained registration for its CSR 99 residential project in March 2021.
Alleging that the developer had concealed the pending suit, Reddy approached Telangana RERA seeking action against Mihira Buildcon, disclosure of the litigation and suspension or cancellation of the project's registration.
On 22 April 2026, RERA dismissed the complaint on the ground that Reddy lacked standing. However, it separately recorded preliminary findings that Mihira Buildcon had failed to disclose the pending litigation and directed issuance of a show-cause notice proposing a penalty under Section 60 of the Real Estate (Regulation and Development) Act, 2016.
Mihira Buildcon challenged these findings and directions before the Tribunal. The appeal raised two issues: whether Reddy qualified as an “aggrieved person” entitled to file a complaint under the Act, and whether RERA could record adverse findings and initiate penalty proceedings after dismissing the complaint as not maintainable.
The company argued that RERA could not reject the complaint on maintainability grounds while simultaneously recording findings on its merits. It also maintained that the project site did not form part of the disputed property.
Reddy contended that non-disclosure warranted regulatory scrutiny irrespective of his standing and alleged that construction and sales continued without extended approvals.
On the question of standing under Section 31 of the Act, the Tribunal observed that “the phrase 'aggrieved person' used in Section 31 (1) of the Act would mean a person who is regulated or governed by the said Act and there is an injury of the right conferred under the said Act.”
It noted that Reddy was neither an allottee nor a promoter or real estate agent in relation to the project. His claim under the alleged agreement of sale remained pending before the civil court, and he had neither an allottee's rights nor registered title to the disputed property. It therefore upheld RERA's conclusion that he lacked standing to maintain the complaint.
On the disclosure requirement, the Bench clarified that “The statutory requirement does not depend upon the merits or strength of the claim raised in the litigation, but upon the existence of such litigation itself.”
However, it clarified that the disclosure obligation extended to litigation concerning the land on which the project was situated.
Moreover, the Tribunal found that RERA had overlooked documentary evidence supporting Mihira Buildcon's contention that the project land and the disputed property were different. This included an order passed by the development authority on 25 April 2020. It also noted that the Supreme Court had permitted construction by an order dated 29 January 2025, subject to the outcome of the pending civil suit.
Finding no preliminary evidence to contradict the developer's position that the project land was distinct from the disputed property, it held that the alleged non-disclosure had not been established.
Further, the Bench held that RERA's decision to record adverse findings and direct issuance of a show-cause notice after dismissing the complaint was “not permissible and not tenable in law.”
Accordingly, the REAT allowed Mihira Buildcon's appeal and set aside paragraphs 34–36 of RERA's order, without costs.
For Appellant: Advocate R.A. Sumith Raj.
For Respondent: Advocate P. Nagendra Reddy.