Appeal No. 71 of 2023 and M.A. No. 210 of 2023
The Tamil Nadu Real Estate Appellate Tribunal, in Appeal No. 71 of 2023 and M.A. No. 210 of 2023 delivered on 3 November 2023, dismissed the appeal by M/s. Vetri Nagar Real Estate India Private Limited and its director concerning the Vetri Nagar Rich Land layout at Kalangal Village, Sulur, Coimbatore District. The Tribunal upheld the Tamil Nadu Real Estate Regulatory Authority's directions to register the project, complete plot sales under the agreements, provide roads and basic amenities, and pay a comprehensive penalty of Rs.5,00,000.
What the case concerned
The Tamil Nadu Real Estate Appellate Tribunal considered the Vetri Nagar Rich Land layout promoted at Kalangal Village, Sulur, Coimbatore District. During 2015 and 2016, the promoters advertised vacant plots measuring 1,200 square feet for Rs.2,49,000, payable in 72 monthly instalments, and entered into sale agreements with prospective buyers.
Vetri Nagar Rich Land (Sulur) Members Welfare Association stated that more than 3,000 people joined the scheme. Its 62 member allottees had paid nearly 61 of the 72 instalments and were willing to pay the balance. The association complained that the layout lacked approval from the Directorate of Town and Country Planning and was not registered with the Tamil Nadu Real Estate Regulatory Authority.
Tribunal's findings
The Tamil Nadu Real Estate Appellate Tribunal rejected the promoters' claim that no specific area had been fixed or promised. The sale agreements described the property proposed for development, the plot extent, the total price and the advance of Rs.40,000 paid by prospective buyers.
The Tribunal also rejected the argument that the Real Estate (Regulation and Development) Act, 2016 did not apply because the second promoter signed agreements in his individual capacity. It held that the Act can apply whether a project is promoted by a company or an individual.
Key findings were:
- The promoters should have prepared the layout and obtained approval from the Directorate of Town and Country Planning before entering into agreements and collecting advances.
- The project remained an ongoing project because no such approval had been obtained.
- The promoters' willingness to repay buyers supported the finding that the second appellant was also a promoter.
- The violations and the comprehensive penalty imposed by the Tamil Nadu Real Estate Regulatory Authority were upheld.
Result and effect on buyers
The Tamil Nadu Real Estate Appellate Tribunal dismissed the appeal at the admission stage. It upheld directions requiring the promoters to:
- Register the layout project on or before 30 October 2023.
- Execute sale deeds after receiving the balance consideration strictly under the sale agreements.
- Hand over possession of the plots to the allottees.
- Provide approach roads and basic amenities under the relevant regulations of the Local Planning Authority and local body.
- Remit the entire Rs.5,00,000 penalty to the Tamil Nadu Real Estate Regulatory Authority forthwith, if not already paid.
The connected miscellaneous application was closed.
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Common questions
Does the decision require the promoters to complete the plot sales?
Yes. The promoters were directed to execute sale deeds after receiving the balance sale consideration strictly under the sale agreements and to hand over the plots to the allottees.
Did the Tribunal accept that the project was outside the Real Estate Act because an individual signed the agreements?
No. The Tamil Nadu Real Estate Appellate Tribunal held that it is immaterial whether a real estate project is promoted by a company or an individual.
Was planning approval obtained for the Vetri Nagar Rich Land layout?
No. The decision records that no approval from the Directorate of Town and Country Planning had been obtained for the proposed layout.
What happened to the Rs.5,00,000 penalty?
The penalty was upheld. The promoters were directed to remit the entire amount to the Tamil Nadu Real Estate Regulatory Authority forthwith if it had not already been paid.
