Appeal No. 80 of 2021, Order
The Tamil Nadu Real Estate Appellate Tribunal issued its order in Appeal No. 80 of 2021 on 2 December 2022, concerning payments made by a plot buyer to a real estate company that the landowners denied appointing as their agent. The Tribunal allowed the landowners’ appeal and set aside the Tamil Nadu Real Estate Regulatory Authority order in C.No.429 of 2019 dated 19 April 2021, which had directed them to execute a sale deed after receiving the stated balance consideration.
What the case concerned
Appeal No. 80 of 2021 before the Tamil Nadu Real Estate Appellate Tribunal concerned Plot No. 4A, measuring 1,350 square feet, in the Thillai Nataraja Nagar layout at Chikkarayapuram Village, near Mangadu, Chennai. The appellants were the joint owners and promoters of the layout. The first respondent was the proposed buyer, and M/s. KNR Realty Properties Private Limited was the second respondent.
The landowners challenged the Tamil Nadu Real Estate Regulatory Authority order in C.No.429 of 2019 dated 19 April 2021. That order had directed them to execute a sale deed in favour of the buyer after receiving a balance of Rs.5,00,000.
Payments and sale agreement
The Tamil Nadu Real Estate Appellate Tribunal recorded the following points:
- The buyer paid Rs.34,50,000 to M/s. KNR Realty Properties Private Limited on various dates from 29 June 2015 to 6 February 2016.
- During November 2015, the buyer entered into a sale agreement directly with the landowners.
- The agreement fixed the sale consideration at Rs.27,00,000, and the buyer paid Rs.10,000 as an advance to the landowners.
- After entering into that agreement, the buyer continued paying M/s. KNR Realty Properties Private Limited rather than the landowners.
- M/s. KNR Realty Properties Private Limited later issued two cheques to repay Rs.34,50,000 with compensation of Rs.4,84,500. Both cheques were returned for insufficient funds.
Tribunal’s findings
The Tamil Nadu Real Estate Appellate Tribunal found that the circumstances relied on by the Tamil Nadu Real Estate Regulatory Authority were not sufficient to establish a principal and agent relationship between the landowners and M/s. KNR Realty Properties Private Limited. It also found that the buyer had not paid the sale consideration to the landowners and had failed to meet his obligations under the direct sale agreement.
The Tribunal stated that the buyer could blame himself for the payments or proceed against M/s. KNR Realty Properties Private Limited to recover the money.
Result and practical effect
The Tamil Nadu Real Estate Appellate Tribunal allowed Appeal No. 80 of 2021 on 2 December 2022 and set aside the Tamil Nadu Real Estate Regulatory Authority order in C.No.429 of 2019 dated 19 April 2021. The direction requiring the landowners to execute the sale deed therefore no longer stood. Any connected miscellaneous applications were closed.
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Common questions
Did the Tribunal require the landowners to register the plot in the buyer’s name?
No. The Tamil Nadu Real Estate Appellate Tribunal set aside the regulatory authority’s direction requiring the landowners to execute the sale deed.
Did the Tribunal find that M/s. KNR Realty Properties Private Limited was the landowners’ agent?
No. The Tribunal found that the circumstances relied on by the Tamil Nadu Real Estate Regulatory Authority were insufficient to establish a principal and agent relationship.
Why were the buyer’s payments to the real estate company not treated as payments to the owners?
The Tribunal found that the buyer had entered into a direct sale agreement with the landowners but continued paying M/s. KNR Realty Properties Private Limited. It concluded that the sale consideration had not been paid to the landowners.
Could the buyer seek recovery from M/s. KNR Realty Properties Private Limited?
The Tribunal stated that the buyer could proceed against M/s. KNR Realty Properties Private Limited for recovery of the amount paid to it.
