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

Background Facts

The homebuyer (Complainant) decided to purchase two villas based on the builder's (Respondent) advertisement. Initially, on 29.04.2016, the homebuyer paid an advance of Rs. 1,00,000 and was allocated Villa Nos. 10 and 11 for a total of Rs. 1,01,12,336.

The allotment letter required the homebuyer to pay 20% of the total amount to proceed with the sale and construction agreement. It also stated that upon paying an additional 40%, the Undivided Share (UDS) would be registered in the homebuyer's name. However, the bank rejected the homebuyer's loan application due to insufficient legal clearance for the project land.

As a result, on 10.08.2016, the homebuyer cancelled the booking and requested a refund of Rs. 10,11,234. Seeking resolution, the homebuyer initially filed a complaint before the District Consumer Disputes Redressal Forum, Coimbatore (CC No. 231/2017), which redirected the case to the State Commission for exceeding the forum's pecuniary jurisdiction.

While awaiting the refund, the homebuyer learned that the builder had sold Villas 10 and 11 to a third party. Aggrieved by the delay and conduct of the builder, the homebuyer filed a complaint before the authority seeking a refund of Rs. 10,11,234 with interest. Additionally, the homebuyer seeks direction for the respondent to register the project with RERA and reimbursement for litigation expenses.

Observation and Direction by Authority

The authority held that the builder violated Section 12 of the RERA Act by falsely claiming title to the project land in their brochure, which misled the homebuyer. As a result, the authority concluded that the homebuyer is entitled to a refund of Rs. 9,11,234 with interest at 10.75% per annum.

Further, the authority referred Section 12 of The Real Estate (Regulation and Development) Act, 2016, which is read as follows:

12. Obligations of promoter regarding veracity of the advertisement or prospectus.

Where any person makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building, as the case may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be compensated by the promoter in the manner as provided under this Act:

Provided that if the person affected by such incorrect, false statement contained in the notice, advertisement or prospectus, or the model apartment, plot or building, as the case may be, intends to withdraw from the proposed project, he shall be returned his entire investment along with interest at such rate as may be prescribed and the compensation in the manner provided under this Act.

Furthermore, the authority imposed a penalty of Rs. 1 Lakh on the builder for marketing/selling the unregistered project and directed the builder to register the project within 30 days.

Case – V. Saravanan Versus M/s. Spring Field Shelters (P) Ltd.

Citation - RCP No. 169 of 2023