TN RERA Orders Developer to Pay ₹3 Lakh Compensation for Project Delay

The Tamil Nadu Real Estate Regulatory Authority (TN RERA) has taken a strong stand against a developer for failing to complete a project on time, causing significant mental distress to a homebuyer. The regulatory body has ordered the builder to pay ₹3 lakh in compensation to the homebuyer for the hardship caused by the delayed possession. Additionally, the developer must pay ₹50,000 for legal expenses.

The complainants had to undergo considerable mental agony due to the developer’s failure to complete the project, hand over the property, and register the relevant documents on time, the order stated. The homebuyers booked an apartment in the Casagrand Millenia project in July 2022, paying a booking advance of ₹1 lakh. The total cost of the apartment was ₹2.11 crore.

They later entered into a sale agreement and construction agreement with the developer in September 2022, with a handover date of June 2023. However, the completion and delivery of the apartment were extended to March 2024 instead of December 2023. Despite this, the completion and handover did not happen. By August 2023, the complainants had paid ₹1.92 crore, leaving a balance of ₹17.6 lakh to be paid by the bank. Thus, the developer had received almost 91% of the sale value of the subject unit.

TN RERA noted that in July 2023, the developer issued a termination notice, cancelling the allotment and citing overdue payments. The developer claimed it would retain 20% of the booking amount while refunding the balance. However, the complainants had to face a lot of mental agony and distress due to the developer’s failure to meet the agreed timelines.

The developer refuted the claims, stating that the complaint was not maintainable and that the buyers had defaulted on scheduled payments. According to the developer, the project was properly developed after securing statutory approvals and legal compliance. The construction agreement, signed in December 2022, clearly stated that the apartment would be delivered by December 2023, with a grace period acknowledged and signed by the complainants. The developer also claimed that the complainants continuously defaulted on making the scheduled payments, with a balance of ₹32.1 lakh still payable.

After examining the agreements, payment records, and email communications between the parties, TN RERA observed that the developer had failed to hand over the apartment within the agreed timeline. The authority noted that the developer had undertaken to complete the construction of the apartment by December 2023, with a three-month grace period. Therefore, the undertaking period would expire by March 2024, and the developer was bound to complete the construction and deliver possession of the apartment to the complainants.

The authority also observed that the complainants had been prompt in making the payments, even before the filing of the counter-statement by the developer. The total cost of the subject unit was ₹2.10 crore, and the complainants had already paid ₹1.92 crore by August 2023, primarily through a home loan. There was no evidence showing that the developer issued regular reminders to the buyers regarding the alleged outstanding balance. The authority concluded that it was neither fair nor justified for the developer to retain a substantial portion of the construction cost and then abruptly issue a termination notice.

In these circumstances, the delay caused by the developer is not acceptable, and the complainants are entitled to a compensation of ₹3,00,000 towards the mental agony they have sustained due to the delay, TN RERA said. The regulatory body’s decision sends a strong message to developers about the importance of adhering to agreed timelines and the consequences of failing to do so.