7 Year Delay In Project Completion, Tamil Nadu RERA Orders Refund To Homebuyer, Imposes Penalty On Builder For Non-Registration

Background Facts

The homebuyer (Complainant) purchased a flat in the builder's (Respondent) project named "Crescent Parc Dewy Terraces" located in Kancheepuram District, with a total sales consideration of Rs. 27,92,528.

On 11.06.2012, the builder and the homebuyer entered into a Sale and Construction Agreement, under which the builder was obligated to deliver possession of the flat within 24 months plus a 3-month grace period (i.e., by 11.09.2014). The homebuyer also took a loan of Rs. 23,00,000 from HDFC Bank to finance the purchase.

The homebuyer contended that on 28.11.2014, the builder sent a letter falsely claiming that the project was completed. Based on this letter, the builder obtained the entire consideration for the flat from the bank. However, Despite receiving the payments, the builder failed to complete the project, and more than seven years have passed since the agreement was executed, with the project still incomplete.

Feeling aggrieved, the homebuyer filed a complaint before the authority seeking a refund of Rs. 27,92,528 with interest.

Observation and Direction by Authority

The Authority noted that since the project is still incomplete and construction is ongoing, it falls under the category of an ongoing project. Therefore, it requires registration under Section 3 of RERA, 2016, which the builder failed to do. As a result, the Authority imposed a penalty of Rs. 1 lakh on the builder for the violation.

The Authority referred to Section 18(1) of the Real Estate Regulation and Development Act 2016, which states:

18. Return of amount and compensation.

(1) If the builder fails to complete or is unable to give possession of an apartment, plot, or building—

(a) by the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or (b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the homebuyers, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act.

Based on the reference, the Authority observed that Section 18 of RERA gives homebuyers the choice to either continue with a delayed project and get interest or withdraw and receive a refund with interest. In this case, since the homebuyers chose a refund, they are entitled to the refund of Rs. 27,92,528 with interest.

Case – R. Palanisamy & anr Versus M/s. Sare Shelters Projects Private Limited

Citation - RCP No. 36 of 2024

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