Appeal No. 73 of 2021, Army Welfare Housing Organization
The Tamil Nadu Real Estate Appellate Tribunal issued Appeal No. 73 of 2021 on 6 October 2021, allowing an appeal by the Army Welfare Housing Organization against Tamil Nadu Real Estate Regulatory Authority order No. TNRERA/A3/2661/2021 dated 10 June 2021. The Tribunal set aside the penalty order because the promoter was not heard before the penalty was imposed, and held that the Authority may impose a penalty only after following the principles of natural justice.
What the case concerns
The Tamil Nadu Real Estate Appellate Tribunal decided Appeal No. 73 of 2021 on 6 October 2021. The Army Welfare Housing Organization and its Project Director challenged Tamil Nadu Real Estate Regulatory Authority order No. TNRERA/A3/2661/2021 dated 10 June 2021, which imposed a penalty for failure to register a housing project.
The Army Welfare Housing Organization develops houses for serving and retired Army personnel and widows. Its project began in May 2012, and possession of the homes involved in the complaints was handed over on different dates in 2019 and 2020.
Background
The Tamil Nadu Real Estate Regulatory Authority had initially closed allottee complaints on the basis that the structurally completed project was exempt from registration. The Tamil Nadu Real Estate Appellate Tribunal later set that decision aside and directed registration. Following proceedings before the High Court and a fresh decision, the Authority held on 25 March 2021 that the development was an ongoing project and directed registration before 30 April 2021.
The promoter filed separate appeals against that decision on 30 April 2021. While those appeals were awaiting processing, the Authority imposed the disputed penalty on 10 June 2021 without serving notice on the promoter.
Tribunal's findings
The Tamil Nadu Real Estate Appellate Tribunal found that:
- The promoter had presented appeals against the registration decision before the penalty was imposed.
- The Tribunal office had limited staffing because of summer vacation and lockdown, and the appeals were numbered only after defects were corrected.
- The Real Estate (Regulation and Development) Act, 2016 gives the Authority power to impose penalties or interest for contraventions.
- When exercising that power, the Authority must be guided by the principles of natural justice.
- Although the Act does not expressly require notice under the penalty provisions relied upon, the promoter still had to be given an opportunity to be heard.
- A hearing would have revealed that appeals against the registration direction were already pending.
The Tribunal therefore concluded that the penalty order was liable to be set aside. It also stated that the Authority remains empowered to impose a penalty after hearing the affected party and following the principles of natural justice.
Who may be affected
The decision directly affects the Army Welfare Housing Organization and its project. It is also relevant to promoters facing penalties from the Tamil Nadu Real Estate Regulatory Authority, particularly where no opportunity to explain the circumstances was provided before the penalty was imposed.
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Common questions
Did the Tribunal cancel the penalty against the Army Welfare Housing Organization?
Yes. The Tamil Nadu Real Estate Appellate Tribunal concluded that the penalty order dated 10 June 2021 was liable to be set aside because the promoter was not heard before it was imposed.
Can the Tamil Nadu Real Estate Regulatory Authority impose a fresh penalty?
Yes. The Tribunal stated that the Authority may impose a penalty after hearing the affected party and following the principles of natural justice.
Did this appeal decide whether the project must be registered?
No. The source records that separate appeals had been filed against the decision treating the development as an ongoing project and directing registration. Appeal No. 73 of 2021 concerned the later penalty order.
Why had the promoter's registration appeals not been numbered before the penalty was imposed?
The Tribunal recorded that its office was operating with limited staff because of summer vacation and lockdown. The appeal papers were later returned for correction and were numbered on 28 June 2021.
