No Agreement, Only a Brochure: Tribunal Enforces It, Strikes a Rs 21 Lakh Price Hike

On 13 June 2014, a Bhubaneswar buyer was allotted a four-bedroom deluxe flat in a state housing board project at a provisional cost of Rs 67,25,000, after a draw of lots. No agreement for sale was ever signed. The only document setting out the terms was the brochure. In February 2017, with the project unfinished, the board raised the price to Rs 91,63,000, later trimming it to Rs 88,40,875. The flat was due by 12 June 2017.

The Odisha Real Estate Appellate Tribunal has now held that, where there is no written agreement, "certainly the brochure can be treated as" the agreement for sale. Applying the brochure's own terms, it set aside the Rs 21,15,875 price increase, ordered interest for delay from 13 June 2017, and held that a brochure cannot stretch "force majeure" beyond the narrow list in Section 6 of the RERA Act. Bengaluru buyers of development authority and housing board flats, which can be sold on a brochure and an allotment letter as this one was, should take note.

The short answer. In OREAT Appeal No. 34(T)/2020, the tribunal treated the Odisha State Housing Board's brochure as the agreement, held the mid-construction escalation "illegal" because the brochure allowed a final price only after completion, and directed interest at 10.15% per annum on Rs 14,73,137 from 13 June 2017 until possession, setting aside quarterly compounding. It rejected the board's broad brochure definition of force majeure and its land-encroachment excuse. The trade-off: the buyer kept the original price and won interest, but only after a complaint filed in 2018 and an appeal heard years later.

What happened in the Kharavela Enclave case?

According to the Odisha REAT judgment in OREAT Appeal No. 34(T)/2020, the Odisha State Housing Board launched Kharavela Enclave, a multi-storeyed apartment complex at Dharma Vihar, Jagamara, Bhubaneswar, in 2011, inviting applications through a brochure. The project was not complete when the RERA Act commenced and was registered with Odisha RERA on 11 September 2018 as RP/19/2018/00196.

The buyer deposited Rs 7,00,000 as earnest money, and then Rs 14,08,000 with service tax of Rs 65,137 on 30 June 2014. By a letter dated 2 February 2017, the board raised the cost to Rs 91,63,000. After the buyer objected, it reduced the figure to Rs 88,40,875 by letter dated 18 July 2018, but refused further reduction. The expected completion date was pushed to 30 June 2020. The buyer complained to Odisha RERA on 29 October 2018.

The complaint asked for the escalation to be cancelled, for the flat to be delivered at the original Rs 67,25,000, and for the completion date to be declared as 12 June 2017. The board argued that the allotment letter was provisional, that costs had risen, that the delay was caused by encroachment of the site, and that the buyer had accepted the brochure terms and chosen to stay in the project. Odisha RERA's order of 4 June 2019 accepted part of this. It declined to declare the increased price illegal, accepted that the time taken to clear encroachments from the site was a delay beyond the board's control, and allowed interest only from 24 November 2018, compounded quarterly. The buyer appealed on all three points: the price, the due date and the start of interest. By the time the complaint was filed, the tribunal noted, the delay was already more than 16 months.

Can a brochure be treated as the agreement for sale?

Yes, on the facts of this case. The tribunal said: "In absence of a formal agreement for sale between the parties in writing, certainly the brochure can be treated as same." It then read the brochure's clause under "Other Details", which said the "final sale price of the flat will be intimated to the allottees after completion of the project" and that "minimum cost escalation is expected".

The board raised the price while the project "had still not been completed", and the tribunal said "no prudent mind would accept" an increase from Rs 67,25,000 to Rs 91,63,000 as minimum escalation. It found the Rs 21,15,875 increase was "without any reasonable explanation", called it "exorbitant and arbitrary", and held it "illegal". Odisha RERA had treated the increase as a "fait accompli"; the tribunal set that finding aside.

What did the tribunal say about force majeure in a brochure?

The brochure defined force majeure very widely, including delays in tender approval, shortage of steel, cement, labour, water or power, strikes, disputes with contractors, decisions of statutory bodies and "any other reason beyond the control" of the board. It also said no interest would be paid for delay due to factors beyond the board's control, while charging allottees interest at 15% per annum for late instalments.

The tribunal held that for a project under the RERA Act, force majeure "can only include" the circumstances in Section 6, which it described as war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature. It called the brochure's terms one-sided, citing the Supreme Court's decision in Pioneer Urban Land and Infrastructure v. Govindan Raghavan, and held that the promoter "is not entitled to keep a clause in the brochure which will be violative of" the allottee's right to interest under Section 18(1).

Was land encroachment a valid excuse for the delay?

No. The board said encroachers on the land had to be removed through legal proceedings, including an eviction order that was challenged and dismissed by the District Judge, Khurda, on 24 November 2015. The tribunal said the encroachments were "not an over-night development", that the board knew of them while advertising, and that it "should not have made advertisement inviting public to apply" and collected money "without first ensuring the project land to be free from encroachments".

It also rejected the board's argument that the buyer, having been offered options to withdraw, could not now complain. No allottee who got a flat "at his affordable price would readily want to withdraw" four years later, it said. The board was held to be a promoter under Section 2(zk), bound by the Act.

What should a Bengaluru buyer of an authority or board flat check?

Our explainer on development authority and housing board flats under RERA covers how public bodies fall within the definition of promoter. For the brochure itself, this ruling suggests a simple routine.

1. Keep a dated copy of the brochure under which you applied, along with the allotment letter.
2. Note the "zero date" from which the completion period runs, such as the date of allotment or selection.
3. Find the clause that says when the final price is fixed and how much escalation it allows.
4. Read the force majeure clause and compare it with the events listed in Section 6 of the RERA Act.
5. Check whether the brochure charges you interest for late payment but gives you none for delay.
6. Ask whether the land is free of encroachments and litigation before you pay the earnest money.
7. If the price is raised mid-construction, object in writing and keep a record of every revision letter.

How does this ruling apply in Karnataka?

This is an Odisha decision on an Odisha project, and Bengaluru buyers should read it as persuasive guidance rather than a Karnataka ruling. Its central points, however, turn on the RERA Act that applies across states: the definition of promoter, Section 6 on force majeure and Section 18(1) on interest. Brochure terms have been tested elsewhere too; our report on the Allahabad High Court's ruling on a development authority brochure clause shows a court examining one such clause.

The tribunal also corrected the interest method. Odisha RERA had allowed quarterly compounding; the tribunal set that aside because compounding "is not prescribed" under the Odisha rules, and applied the Rule 16 rate of 10.15% per annum, described as 8.15% plus 2%. Rates and rules differ by state, so check the Karnataka rules before estimating your own claim.

Frequently asked questions

Can a project brochure be treated as an agreement for sale?

The Odisha REAT held that in the absence of a formal written agreement for sale, the brochure can be treated as the agreement. It then enforced the brochure's term that the final price would be fixed only after completion, and set aside a price increase made while construction was still under way.

Can a builder define force majeure broadly in a brochure?

According to the Odisha REAT, for a project under the RERA Act, force majeure for delay can only include the circumstances in Section 6, described as war, flood, drought, fire, cyclone, earthquake or other natural calamity, and not the wider list in the housing board's brochure.

From when does delay interest run in the Kharavela Enclave case?

The tribunal held possession was due on 12 June 2017, 36 months from allotment on 13 June 2014. It directed interest at 10.15% per annum on Rs 14,73,137 from 13 June 2017 until actual possession, and set aside the quarterly compounding allowed by Odisha RERA.

Is land encroachment a valid reason for a builder's delay?

Not in this case. The Odisha REAT said the housing board knew of the encroachments while advertising and should not have invited applications and collected money without first ensuring the land was free of encroachment. It held the delay was not beyond the board's control and protected the buyer's right to interest.

Last updated 2026-11-15. PropNewz Team.