Case law, Tamil Nadu land law
Appeal No.42 of 2022
The Tamil Nadu Real Estate Appellate Tribunal (Tamil Nadu, Puducherry, Andaman and Nicobar Islands) issued its order in Appeal No.42 of 2022 on 21 November 2022, dismissing M/s Alliance Villas Pvt Ltd's appeal against the refund order in C.C.P.No.172 of 2020. The tribunal rejected the promoter's claim to deduct 10% of the villa cost because the promoter had not established its title to the property, and it left the refund order undisturbed. It also allowed the Tamil Nadu Real Estate Regulatory Authority's preliminary inquiry into the project's registration and further sales to continue.
What the tribunal decided
Appeal No.42 of 2022 concerned a refund ordered by the Single Member Bench of the Tamil Nadu Real Estate Regulatory Authority on 27 July 2022. The Tamil Nadu Real Estate Appellate Tribunal dismissed the promoter's appeal at the admission stage and closed any connected miscellaneous applications.
The tribunal found that the allottee had made the purchase conditional on his lawyer confirming clear title. It rejected the promoter's argument that the allottee had accepted the title by making further payment.
Property and payments involved
M/s Alliance Villas Pvt Ltd was the promoter of "Alliance Humming Gardens" Phase II at Thaiyur Village, Thiruporur Taluk, Kanchipuram District. P.S.Srinivasan booked Villa No.624 and paid:
- Rs.1,00,000 as an initial payment on 31 August 2019.
- Rs.25,00,000 on 30 December 2019.
The booking form recorded that the purchase was subject to the allottee's lawyer verifying clear title deeds and that the amount had to be returned if the title was not clear. After reviewing the documents and seeking clarifications, the allottee cancelled the booking and demanded a refund.
Reasons for dismissing the appeal
The Tamil Nadu Real Estate Appellate Tribunal relied on the following points:
- Title documents were provided after the allottee paid Rs.25,00,000, rather than before that payment.
- The promoter's responses to the title queries contained insufficient particulars.
- The promoter failed to plead and provide necessary title details during the proceedings before the Tamil Nadu Real Estate Regulatory Authority.
- The allottee could withdraw when dissatisfied with the promoter's title, particularly because title verification was an express condition from the beginning.
- The promoter could not deduct 10% of the total villa cost because it had failed to establish title.
The tribunal also noted that Rule 17(1)(e)(ii)(B) of the Tamil Nadu Real Estate (Regulation and Development) Rules, 2017 requires specified authenticated title, encumbrance and revenue records to be available on the project's website. The record did not show compliance by the promoter.
Effect on the project
The Tamil Nadu Real Estate Regulatory Authority had directed notice concerning possible revocation of the project's registration and stopping further sales until the title issue was settled. The appellate tribunal held that the authority could conduct that inquiry under Sections 35 and 36 of the Act. Because no final order had been passed, the promoter was directed to face the inquiry and could file a separate appeal if an adverse order was later made.
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Common questions
Did the buyer receive protection despite signing sale and construction agreements?
Yes. The tribunal found that the buyer had clearly made the purchase conditional on his lawyer verifying clear title, and it upheld the refund outcome.
Could the promoter deduct 10% of the villa cost from the refund?
Not in this case. The tribunal rejected the proposed deduction because the promoter had failed to establish its title to the property.
Did the tribunal finally revoke the project's registration?
No. The possible revocation and restriction on further sales were still at the preliminary inquiry stage, with no final order passed.
What title records did the tribunal say should be available on the project website?
The tribunal referred to an authenticated copy of the legal title deed, an up to date encumbrance certificate, and an extract or certificate from revenue authorities reflecting the promoter's title to the land.
