Synopsis

As per the sale agreement, the villa measured 5069 square feet, but the builder delivered a 3900 square feet villa and said 30% of the area is open space; Telangana RERA slaps a Rs 98 lakh penalty on the builder and orders a Rs 20 lakh refund for the villa buyer. Laxmi Narayana Jannu and K. Srinivasa Rao, esteemed members of the Telangana RERA gave this judgement.

The Telangana RERA in a recent judgement gave relief to a homebuyer by ruling that a builder can’t promote a villa as having a saleable area of 5,068.96 sq. ft., if they only deliver a 3900 sq ft villa, claiming that 1,169.76 sq. ft. is just the "setback area" of the plot. The Telangana RERA authority observed this is a serious misrepresentation of a key feature of the property, as buyers paid money thinking they will get a big villa, only to find out it was smaller.



This judgement was in response to a case filed by a concerned homebuyer, Mr P. Krishna Reddy, from Old Bowenpally, Hyderabad, Telangana . He raised the issue of alleged malpractices by a builder from Chikalguda Hyderabad, Telangana. Mr. Baddam Laxma Reddy was the authorised representative of the builder.

Why did P. Krishna Reddy’s villa turn out smaller than promised?

Mr P. Krishna Reddy came across ads for an upcoming gated villa project by the builder on Facebook, Google and physical banners around Bowenpally and Kompally.

This project, called “Bentley Woods”, is located at Quthbullapur Mandal, Medchal–Malkajgiri District and it spans roughly 2.7 acres and includes 44 villas in total.



Reddy says that on October 12, 2024, he paid a token advance of Rs 20 lakh (Rs 15 lakh cash+ Rs 5 lakh NEFT transfer) for a villa priced at Rs 3.6 crore, with stated built-up area of 5068.96 sq. ft.



But when it came to sign the sale agreement, Reddy noticed that both the area and the price didn’t match what he had been promised or what the brochure said.



The builder had initially assured him that the villa measured 5068.96 sq. ft. , But at the agreement stage, that figure shrank: only 3900 sq. ft. was now attributed to the villa itself with the remaining 1169.76 sq. ft. Being reclassified as “open space” belonging to the entire project. Reddy maintains that the open space charge was never mentioned beforehand and appears nowhere in the earlier documentation.



Because of this nearly 30% open space addition, Reddy said he was effectively overcharged by Rs 90 lakh, which he termed as unethical and unlawful.



The builder rejected Reddy’s allegations and said that the villa sale was not based on a per square foot valuation or linked to precise area measurements.



The builder also said that any mention of area in the sale agreement was only indicative and approximate, provided merely for reference to building plans and municipal requirements, and not as a basis for pricing or claims.



On top of it, the builder claimed that P. Krishna Reddy was fully aware of the villa’s dimensions, structure, and features from the outset and had agreed to the total price with full knowledge and satisfaction.



The builder said that at no point during the negotiation or execution phase did Reddy raise any objection to the terms, and there was no discussion about adjusting the price on a per square foot basis. The Advocate for the builder, Baddam Laxma Reddy said that the open area referred to by P. Krishna Reddy pertained to the setback area within the individual plot.



Worried about his money and the legality of the project since it did not have a RERA registration, P. Krishna Reddy decided to cancel the booking and filed a case in Telangana RERA against the builder. On August 24, 2026, he won the case in Telangana RERA.



In addition to P. Krishna Reddy’s case in the Telangana RERA tribunal, the original landowner of the Bentley Woods project, Mr. Chittaboina Raj Kumar, has lodged an FIR against the builder for cheating and criminal breach of trust.



Also read: Builder delayed possession and charged Rs 75 lakh extra on the basis of super area instead of carpet area; homebuyers partly win case in Punjab RERA for delayed possession

How did P. Krishna Reddy win the case?

Ravi Charan Pentapati, Partner at Dentons Link Legal explained to ET Wealth Online about how Mr P. Krishna Reddy won the case in Telangana RERA:

1. Core Legal Principle: Promoter's Duty of Transparency

The Telangana RERA Authority held that a promoter cannot, after execution of an Agreement of Sale, unilaterally re-characterise saleable area as "open space" or common area. Such post-execution re-characterisation breaches the promoter's duty of transparency and fair dealing, and constitutes a material departure from the agreed terms of sale.

2. Misrepresentation and Section 12 of the RERA Act

The shortfall between the represented area of 5,068.96 sq. ft. and the actual villa area of approximately 3,900 sq. ft. amounted to a material misrepresentation under Section 12 of the RERA Act. The purchaser was therefore entitled to withdraw from the project and claim a full refund with interest.

3. Project Fragmentation and the "Unified Development" doctrine

The Authority rejected the promoter's attempt to fragment the 44-villa development into individual units to circumvent RERA registration. Where villas form part of a single integrated layout with shared infrastructure and common amenities, the entire development constitutes one "project" under Section 2(v) of the Act.

4. Contractual compliance and consequences under Telangana RERA rules

The promoter was penalised for failing to provide the area and charge break-ups mandated under the Telangana RERA Rules. The non-refundable clauses were invalidated, the balance consideration was directed to be refunded with interest, and penalty under Section 61 along with compensation under Section 71 was imposed.



Charan says: "The Telangana RERA Authority’s decision rests on the “Principle of Contractual Transparency” and reinforces that RERA registration, transparency in area disclosures, and adherence to unified project norms are non-negotiable obligations of promoters, and that purchasers cannot be denied refunds where material misrepresentation or contractual non-compliance is established."

Telangana RERA order discussion

Villas were marketed to buyers but shown as individual plots to the government

The Telangana RERA authority observed that the builder took RERA registration after being questioned by the authority, but the registration showed this gated villa society as individual plots. The sale agreement and the builder’s own marketing material, online advertisements had consistently and unmistakably described and promoted the properties as "Villas", not as plots.



Telangana RERA said this internal contradiction of selling villas with common infrastructure while registering as a plotted layout shows a deliberate evasion of registration as a villa project by artificially fragmenting the composite project into individual plots of below 500 sq. metres.



Telangana RERA stated that they condemn such tactics used by the builder, as this cheating clearly violates Section 3 of the RE(R&D) Act and makes the builder liable for penalty.

Sale agreement records that P. Krishna Reddy paid Rs 20 lakh

The builder had denied getting Rs 20 lakh from P. Krishna Reddy and said that he only paid them Rs 5 lakh. However, the Telangana RERA authority observed that the agreement of sale dated October 12, 2024, unequivocally records the payment of Rs 20 lakh as the token advance received from P. Krishna Reddy. The builder could not submit any document, receipt, or correspondence to substantiate his claim that Rs 15 lakh was merely a notional entry for loan facilitation purposes.

Open space area must be disclosed in sale agreement, else it cannot be included in total area

The Telangana RERA said that the builder has misrepresented the total area of the villa. The price list produced by P. Krishna Reddy records the "super built-up area" and "total saleable area" of his villa as 5068.96 sq. ft and based on this, the total price of Rs 3.8 crore was agreed upon.



However, the fact that 30% (1,169.76 sq. ft.) is open space area was disclosed for the first time in the sale agreement.



Thus Telangana RERA said that while the law permits inclusion of proportionate common area in the saleable area, such inclusion must be explicitly disclosed to the allottee and clearly reflected in the Agreement of Sale.



The Telangana RERA said: “A promoter cannot unilaterally alter or recharacterise the composition of the agreed area after execution of the agreement.”



The Telangana RERA said that plot area and constructed built-up area are distinct legal concepts. The plot area including setbacks, open yards, or any unbuilt portions cannot be merged with the built-up area of a villa and charged as part of the "constructed area" or "saleable area" without disclosing it clearly from the beginning along with the informed consent of the purchaser.



The Telangana RERA said: “The attempt to represent the combined figure of 5,068.96 sq. ft. as the saleable area of the villa, without clearly demarcating the plot-related open areas, amounts to a material misrepresentation of a significant attribute of the property contracted for.”



So based on the above discussion, the Telangana RERA authority ordered Rs 20 lakh to be refunded to P. Krishna Reddy and slapped a penalty of Rs 98 lakh (98,03,458) on the builder, to be paid to TGRERA fund.

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