Tamil Nadu RERA Orders Refund To Homebuyer And Imposes Penalty On SAM Foundation For Selling Unregistered Project

Background Facts

In the first week of June 2017, the builder (Respondent) informed the homebuyer (Complainant) about their real estate project named 'Lake Shore Apartments' at Korattur. As the homebuyer was interested, he was allotted a flat in the project, with an area of 1550 sq.ft., including the common area.

An unregistered agreement for sale was entered into between the homebuyer and the builder on June 26, 2017, for a consideration of Rs. 12,31,259/- for land measuring 799 sq.ft. of undivided share. On the same day, an unregistered construction agreement was also executed for a construction cost of Rs. 66,68,741/-, making the total consideration Rs. 79,00,000/-.

Despite the homebuyer paying Rs. 54,00,000/- to the builder and the lapse of four years since the execution of the construction agreement and sale deed, there was no significant progress in the construction of the flat.

Aggrieved by the lack of progress, the homebuyer filed a complaint before the authority seeking refund of the amount paid by him, along with interest, compensation, and litigation costs.

Contention of Builder

The builder contended that the project was built on an area of 294.5 square meters, with a stilt floor plus two floors housing six dwelling units. Therefore, the project does not fall within the jurisdiction of RERA, and hence the complaint should be dismissed.

Observation and Direction by Authority

To determine whether the project falls within its jurisdiction, the Authority referred to the project brochure. The brochure, issued by the builder, stated that they were developing 22 luxury apartments over an area of 5.35 grounds, consisting of four blocks with stilt floors and apartments on the first and second floors. Therefore, the Authority held that the project is eligible for registration under Section 3 of the Real Estate (Regulation and Development) Act, 2016, and confirmed its jurisdiction over the project.

The Authority observed that according to the construction agreement, possession of the flat was supposed to be handed over to the homebuyer by 20/07/2018. However, upon examining the photos of the construction site, it became clear that the project was far from completion. Therefore, the Authority held that the builder had failed to fulfill their commitment under the agreement. Consequently, the homebuyer is entitled to receive a refund of Rs. 54,00,000/- with interest.

Therefore, the Authority directed the builder to refund the amount paid by the homebuyer with interest within 30 days and imposed a penalty of Rs. 100,000 on the builder for selling/marketing the project without registration.

Case – D. Narayanasami Versus M/s. SAM Foundations & another

Citation - CCP No. 298 of 2021