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• The Odisha Real Estate Appellate Tribunal (OREAT) has directed a housing project developer in Phulnakhra to execute a sale agreement for a flat booked in 2018, overturning an earlier ORERA order that had granted only a refund with interest.
• The tribunal ruled that the buyer qualified as an allottee under the Real Estate (Regulation and Development) Act, 2016, even though the advance payment was below 10% of the total flat value.
• It found the builder's cancellation of the allotment to be arbitrary and discriminatory, noting that similarly placed buyers in the same project were given sale agreements years after booking.
• The order also reiterated that housing is a part of the fundamental right to life under Article 21 of the Constitution and that homebuyers cannot be treated merely as parties to a commercial transaction.
The Odisha Real Estate Appellate Tribunal (OREAT) has directed the developer of a major housing project in Phulnakhra to execute a sale agreement for a flat booked in 2018, setting aside an earlier order of the Odisha Real Estate Regulatory Authority (ORERA) that had directed only a refund of the booking amount. The appellate tribunal held that the builder's decision to cancel the allotment was arbitrary and discriminatory, while reaffirming the legal rights of homebuyers under the Real Estate (Regulation and Development) Act, 2016.
The dispute relates to a flat booked in November 2018 in a residential project located along NH-16. According to the case records, the buyer paid an advance of INR 1 lakh towards the total flat consideration of nearly INR 53.6 lakh. The buyer stated that he repeatedly approached the developer to complete the sale agreement and make the remaining payments. However, the developer neither executed the agreement nor responded to his requests. He later learnt that the allotment had been cancelled verbally. The buyer also alleged that the developer had issued a demand notice in February 2019 before construction work had commenced.
The developer argued that the INR 1 lakh paid by the buyer was only an expression of interest and not the mandatory 10% booking amount required for confirming the allotment. It further submitted that the buyer had failed to make subsequent payments despite reminders and that the signed terms allowed the company to reject applications without assigning any reason. The developer maintained that the allotment was cancelled because of non-payment and that the unit had subsequently been allotted to another purchaser.
ORERA had earlier treated the transaction as terminated and directed the developer to refund the buyer's INR 1 lakh along with 9.5% annual interest from 2018. However, the appellate tribunal disagreed with that view and held that the buyer continued to qualify as an allottee under the RERA Act. It observed that once the promoter accepted the advance payment, a legal relationship between the parties had been established, irrespective of whether the amount paid was below 10% of the total sale consideration.
The tribunal further clarified that while Section 13 of the RERA Act permits promoters to accept advance payments of up to 10% before executing an agreement for sale, it does not prohibit them from accepting a lower amount. Therefore, accepting less than 10% could not later be used as a reason to deny the buyer's rights after the payment had already been received by the promoter.
While examining the records, the tribunal also found that other buyers in the same housing project, who were similarly placed, had been allowed to execute sale agreements years after making their bookings. In contrast, the complainant was denied the same opportunity despite expressing willingness to complete the transaction. The tribunal observed that this reflected a discriminatory approach and double standards on the part of the developer.
Referring to Supreme Court judgments, the appellate tribunal said the right to housing forms part of the fundamental right to life under Article 21 of the Constitution. It observed that homebuyers cannot be treated merely as participants in a commercial transaction and that the objectives of the RERA Act are to safeguard their interests while ensuring transparency and fairness in the real estate sector.
The ruling is significant as it clarifies that promoters cannot rely solely on the quantum of the initial booking amount to deny an allottee's rights once the payment has been accepted. It also reinforces that developers must adopt a uniform approach while dealing with buyers in the same project and cannot selectively cancel allotments without valid and consistent reasons.
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