Tamil Nadu RERA Orders Builder To Provide Full Refund Of Homebuyer's Money Without Charging Any Cancellation Fee

Background Facts

The homebuyer (Complainant) was allotted a villa in the builder's (Respondent) project named “Alliance Humming Gardens, Phase II” at Thaiyur, Kancheepuram. The total cost of the villa was Rs. 1,36,30,699/-, out of which the homebuyer paid Rs. 1,26,84,686/- to the builder. Both parties entered into a sale agreement and a construction agreement on 05.10.2018, wherein the builder was obligated to hand over possession of the villa by June 2020.

However, the homebuyer contended that the builder delayed the project from the beginning and failed to complete the construction by the agreed deadline. On 12.01.2021, the homebuyer communicated her intention to withdraw from the project and requested a refund of the entire amount paid, but received no response.

On 22.03.2021, the builder informed the homebuyer that in the event of cancellation, Rs. 15,00,000/- would be deducted as cancellation charges. The builder also communicated in April 2020 that the villa was ready for occupation and invited the homebuyer for an inspection. However, during the inspection in July 2021, the homebuyer found the villa incomplete and unfit for occupation.

Despite the builder's claim that the villa was completed, the homebuyer noted that essential works such as electrical, plumbing, carpentry, and painting were still pending, and there was no road access to the villa. Aggrieved by these delays and the incomplete status of the villa, the homebuyer now seeks to withdraw from the project and has filed a complaint before the authority seeking a refund of Rs. 1,26,84,686/- with interest.

Observation and Direction by Authority

The authority observed that, despite receiving a 6-month extension to complete the project, the builder failed to hand over possession of the villa to the homebuyer on the promised date. Therefore, Section 18 of RERA, 2016 applies to address the grievance of the aggrieved homebuyer.

The authority referred to Section 18 of RERA, 2016, which stipulates that if the builder fails to hand over the homebuyer's unit as per the agreement, the homebuyer has the option to either withdraw from the project and seek a refund with interest or continue with the project and receive interest for the delayed period of possession.

The authority held that the builder is not entitled to retain the booking amount as cancellation charges because the builder failed to hand over the villa by the agreed date. Therefore, the homebuyer is entitled to a refund of the amount paid, along with interest, due to the delay in possession.

Therefore, the Authority directed the builder to refund the total amount of ₹1,26,84,686 paid by the homebuyer for the villa, along with interest at 9.30% per annum.

Case – Twinkle Preethy Sivakumar Versus M/s. Alliance Villas Pvt Ltd.

Citation - CCP No. 369 of 2021