Telangana REAT Upholds ₹11 Lakh Penalty On Builder For Using Sale Agreement Different From RERA-Uploaded Draft

The Telangana Real Estate Appellate Tribunal (REAT) has upheld a nearly ₹11.00 lakh penalty against developer Mehta & Modi Realty Kowkur LLP for executing a sale agreement with homebuyers that was materially different from the standard agreement it had uploaded before the Telangana RERA at the time of project registration.

“The act of the appellant/promoter in changing the format and executing a completely different agreement of sale, even though some terms may be similar, is impermissible. Therefore, we are of the view that the conduct of the appellant not only contravenes Rule 38 of the Rules but also amounts to furnishing false information and deliberate suppression of material facts and as such the learned Regulatory Authority has rightly held that the appellant has violated Rule 38 of the Rules by not adhering to the format of the agreement for sale as stipulated in the annexure to the said Rule and imposed penalty on the appellant under Section 60 of the Act.”, the tribunal held.

A coram of Chairperson Justice A. Santhosh Reddy and Judicial Member P. Pradeep Kumar Reddy held that the Telangana RERA was justified in imposing the penalty for violating Rule 38 of the Telangana RERA Rules and for furnishing false information.

It also upheld directions restraining the developer from levying GST on interest charged for delayed payments, dissolving the existing 'Greenwood Welfare Association', and requiring completion of all pending works before handing over physical possession to the homebuyers.

The dispute arose from the “Greenwood Heights” project at Kowkur, where Deepa Suraj Premi and Suraj Premi booked Flat No. B-512 in October 2019 for ₹62.33 lakh and entered into a sale agreement in November 2019.

Although a registered sale deed was executed in April 2024, the buyers alleged that sanitary fittings, painting and other finishing works remained incomplete.

The buyers also objected to the developer's demand for maintenance charges for the period from March 2023 to March 2024, saying no occupancy certificate had been obtained and physical possession had not been handed over. They also challenged the levy of 18% interest on delayed instalments, GST on that interest, and the formation of the “Greenwood Welfare Association” in November 2021, when no flat had yet been occupied or registered.

In its June 23, 2025 order, the Telangana RERA imposed a penalty of ₹11.00 lakh (₹10,99,992) under Section 60 of the Real Estate (Regulation and Development) Act, 2016, holding that the developer had furnished false information and executed an agreement different from the one uploaded before the authority. It also issued a series of consequential directions.

Before the Appellate Tribunal, the developer argued that the differences in the executed agreement were only minor variations that caused no prejudice to the buyers.

It also maintained that, under the contractual terms, maintenance charges became payable from the date possession was intimated or the flat was completed.

The homebuyers argued that the agreement executed with them departed from the statutory format and could not be used to dilute protections available to allottees under the law.

Rejecting the appeal, the Tribunal held that the developer could not rely on terms in the non-compliant agreement to justify its maintenance charge demands when no occupancy certificate had been obtained.

“Clause 7.2 of Rule 38 of the Rules is a statutory provision, which states that the allottee shall be liable to pay the maintenance charges after taking over possession of the flat. The appellant cannot override this statutory mandate through a contractual Clause 11.4 in an invalidly executed agreement that differs from the uploaded draft agreement of sale.”

On pending works, the tribunal upheld the direction that the developer must complete final works before requiring buyers to execute possession-related documents.

It also affirmed the dissolution of the existing welfare association, noting that the association had been formed before the statutory conditions for constituting such a body had been met.

On GST, the Tribunal upheld the finding that tax could not be levied on interest charged for delayed payments.

“Therefore, no GST is applicable on the interest on delayed payments as the same is not part of the sale consideration.”

Holding the Telangana RERA Authority's order to be “legally sound”, the Tribunal dismissed the appeal on May 6, 2026.

For Appellant (Mehta & Modi Realty Kowkur LLP): Advocate D. Pavan Kumar.

For Respondents (Deepa Suraj Premi and Suraj Premi): Parties-in-person.