Appeal No.104 of 2021
The Tamil Nadu Real Estate Appellate Tribunal, Chennai, issued its order in Appeal No.104 of 2021 on 17 October 2022, dismissing an appeal by M/s. Color Home Developers Private Limited against a penalty imposed by the Tamil Nadu Real Estate Regulatory Authority. The Tribunal upheld the penalty of Rs.1,00,000 and directed the developer to pay the remaining Rs.50,000 forthwith.
What the case concerns
Appeal No.104 of 2021 concerns a dispute between M/s. Color Home Developers Private Limited, M/s. First Venture and M/s. Religare Housing Development Finance Corporation Limited. The developer challenged the Tamil Nadu Real Estate Regulatory Authority order in C.No.471 of 2019, dated 30 June 2021, which imposed a penalty of Rs.1,00,000.
M/s. First Venture had agreed on 31 May 2016 to purchase five villas in a project proposed at Sorancheri Village, Poonamallee Taluk, Thiruvallur District. It paid Rs.1,50,00,000 as an advance. According to the case record, those villas were sold to third parties, and the developer later offered seven villas in another project at Kanchipattinam in Karai Village, Kanchipuram Taluk.
Dispute over Villa No.101B
The dispute ultimately concerned Villa No.101B, one of the seven alternatively offered villas.
Key facts accepted by the Tamil Nadu Real Estate Appellate Tribunal were:
- The developer asked M/s. First Venture to pay Rs.15,00,000 to the finance company and obtain a no objection certificate for registration of Villa No.101B.
- M/s. First Venture made that payment to the credit of the developer.
- The finance company issued a no objection certificate on 31 July 2019.
- The developer nevertheless sold Villa No.101B to a third person, Giftson Samuel.
Tribunal's findings
The Tamil Nadu Real Estate Appellate Tribunal found that selling Villa No.101B to a third party amounted to a violation of Section 11(4)(a) of the Real Estate (Regulation and Development) Act, 2016.
The Tribunal stated that a promoter remains responsible for obligations under the Act, the applicable rules and the agreement for sale until completion of the conveyance deed. It also found that the Tamil Nadu Real Estate Regulatory Authority had power under Section 61 to impose a penalty on a promoter who contravenes the Act.
Result and practical effect
Appeal No.104 of 2021 was dismissed, with no order as to costs. The Tribunal held that the Rs.1,00,000 penalty was justified and that the regulatory authority's decision contained no illegality.
M/s. Color Home Developers Private Limited had already deposited Rs.50,000, representing half of the penalty. The Tribunal directed it to pay the remaining Rs.50,000 forthwith to the Tamil Nadu Real Estate Regulatory Authority, failing which the authority could take lawful recovery steps.
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Common questions
Did the developer succeed in cancelling the penalty?
No. The Tamil Nadu Real Estate Appellate Tribunal dismissed the appeal and upheld the Rs.1,00,000 penalty.
Why was the developer penalised?
The Tribunal found that the developer sold Villa No.101B to a third party after offering it to M/s. First Venture and asking that firm to pay Rs.15,00,000 to obtain a no objection certificate for registration.
What amount remained payable after the appeal?
The developer had already deposited Rs.50,000. It was directed to pay the remaining Rs.50,000 forthwith to the Tamil Nadu Real Estate Regulatory Authority.
Does the ruling say when a promoter's responsibilities end?
The Tribunal stated that a promoter remains responsible for obligations under the Act, the rules and the agreement for sale until the conveyance deed is completed.
