In a significant ruling, the Tamil Nadu Real Estate Regulatory Authority (TNRERA) directed M/s Sare Shelters Projects Private Limited, a real estate developer, to refund the amount paid by a homebuyer for a flat purchase. The authority also imposed a penalty of ₹1 lakh on the builder for failing to register the project under RERA.

Case Background

The case revolves around the purchase of a flat by the homebuyer in the builder’s project “Crescent Parc Dewy Terraces,” located in Kanchipuram district, Tamil Nadu. The total sale price of the flat was ₹27,92,528. The builder and the homebuyer entered into a sale and construction agreement on 11th June 2012, where the builder committed to handing over possession within 24 months, with an additional grace period of three months, i.e., by 11th September 2014.

The homebuyer had secured a loan of ₹23,00,000 from HDFC Bank to finance the purchase. However, the builder falsely claimed the project’s completion in a letter dated 28th November 2014 and managed to receive the full payment from the bank. Despite receiving the payment, the builder failed to complete the project, leaving it incomplete even after more than seven years since the agreement.

Homebuyer’s Complaint

Frustrated by the prolonged delay, the homebuyer filed a complaint with TNRERA, seeking a refund of ₹27,92,528 along with interest. The buyer claimed that the builder had failed to deliver on the promises made in the agreement, and despite the payment being collected, the project remained incomplete.

TNRERA’s Directive

The authority observed that the project is still unfinished, and construction is ongoing, which classifies it as a “continuing project.” As such, the builder was required to register the project under Section 3 of the Real Estate (Regulation and Development) Act (RERA) of 2016, which they failed to do. Consequently, the authority imposed a fine of ₹1 lakh on the builder for non-compliance with RERA.

Legal Standpoint: Section 18 of RERA

Referring to Section 18(1) of RERA, the authority highlighted the rights of homebuyers in cases where a builder fails to complete the project or hand over possession by the agreed date. The law grants homebuyers the option to either continue with the delayed project while receiving interest or seek a refund along with interest.

In this case, the homebuyer opted for a refund. Therefore, TNRERA ruled that the homebuyer is entitled to receive ₹27,92,528 along with interest for the delay.

This ruling is a reminder for builders to adhere to RERA guidelines and complete their projects within the stipulated timelines. For homebuyers, it reinforces the protection provided under RERA, ensuring that they are compensated fairly in case of delays or non-compliance by developers.