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In a landmark judgment, the Telangana Real Estate Appellate Tribunal (TREAT) set aside a penalty imposed on Sanali Housing Projects Pvt. Ltd., ruling that the Telangana RERA Authority had exceeded its jurisdiction. The case, involving the Sanali Pinnacle project in Shaikpet, Hyderabad, arose from a dispute with the family of Mohammed Mushtaq, who had entered a joint development agreement with the developer. The Tribunal held that landowners in such projects are co-promoters under the RERA Act and therefore cannot file complaints as aggrieved parties. It also clarified that name boards or project listings without sales information do not constitute advertising. The INR 4.27 lakh penalty was quashed, and a refund ordered.
In a landmark judgment with wide-ranging implications for real estate developers and landowners across Telangana and India, the Telangana Real Estate Appellate Tribunal (TREAT) overturned a penalty imposed on Sanali Housing Projects Pvt. Ltd. The Tribunal ruled that the Telangana RERA Authority had acted beyond its jurisdiction in entertaining a complaint filed by landowners, and it directed a refund of the penalty amount deposited by the developer. Advertisement
The three-member bench, comprising Justice A. Santhosh Reddy (Chairperson), Judicial Member P. Pradeep Kumar Reddy, and Administrative Member Chitra Ramachandran, delivered its order earlier this week in connection with two appeals arising from a dispute over the Sanali Pinnacle project at Shaikpet, Hyderabad.
The case stemmed from a Development Agreement-cum-Irrevocable General Power of Attorney signed between Sanali Housing Projects Pvt. Ltd. and the family of Mohammed Mushtaq. The landowners alleged that the developer had undertaken unauthorised excavation and advertised the project without registration under Sections 3 and 4 of the Real Estate (Regulation and Development) Act, 2016 (RERA Act). Acting on this, the Telangana RERA Authority had imposed a penalty of INR 4,27,013 on the developer and directed the company to register the project before further marketing or sales activity.
However, upon appeal, the Tribunal held that landowners who enter into joint development agreements are co-promoters under Section 2(zk) of the Act and cannot approach RERA as aggrieved persons under Section 31(1). It emphasised that disputes arising from contractual or commercial agreements between promoters should be adjudicated in civil courts. Legal experts have noted that this interpretation clarifies a long-standing ambiguity over whether landowners in joint projects could seek redressal under RERA against developers.
The Tribunal also addressed the issue of what constitutes advertisement under the RERA Act. It ruled that displaying a name board at a project site or listing a project as 'ongoing' on a website without details on pricing or offers does not amount to advertising. The Bench stated that such actions lack transactional information and cannot influence potential buyers, thus falling outside the scope of Sections 3 and 4.
After reviewing all submissions, the Tribunal concluded that the penalty was legally unsustainable as the complainants lacked standing, and the alleged act did not amount to advertising. It set aside the RERA Authority's order entirely and directed that the developer's penalty deposit be refunded after the appeal period lapses.
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