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IN THE HIGH COURT OF JUDICATURE AT MADRAS
J. NISHA BANU, R.KALAIMATHI, JJ.
Army Welfare Housing Organisation(AWHO) - Appellant
Versus
Capt.Nagarajan Vasudeva Rao - Respondent
CMSA.Nos. 23, 24, 25 of 2024 and CMSA. 30 & 31 of 2023
Decided on : 05-06-2025
Key Points: - The Court holds that a "No Profit No Loss" organization remains subject to RERA registration and liability for delays; ongoing projects without completion certificates must be registered (!) (!) (!) (!) . - Section 18(1) enforces interest to be paid for delay till possession if the allottee does not withdraw, and compensation may be awarded under Section 18, with remedies and limits governed by Rule 18 and other provisions; the appellate authorities have rightly granted interest at SBI MCLR + 2% and mandated mental agony compensation and litigation costs (!) (!) (!) (!) (!) (!) (!) . - Section 72 provides factors to be considered in awarding compensation (disproportionate gain, loss, repetition, and other just factors); the court confirms that these factors are guidance for quantum, while interest under Section 18 is separate (!) (!) (!) (!) . - Registration is mandated for ongoing projects under Section 3, including projects deemed structurally completed but not fully completed; exemptions under Rule 2(h)(ii) were considered but ultimately the project was held to require registration (!) (!) (!) (!) . - Appeals by AWHO were dismissed; TNREAT and TNRERA orders directing registration and payment of interest and compensation were upheld (!) .
| Table of Content |
|---|
| 1. introduction of the case and parties involved. (Para 1 , 2) |
| 2. key issues to be resolved under rera. (Para 3 , 8) |
| 3. findings of the adjudicating authority. (Para 5 , 6 , 12) |
| 4. arguments from the appellants regarding their liability under rera. (Para 10 , 13 , 14 , 15 , 18) |
| 5. arguments from appellants concerning quantification of compensation. (Para 19 , 20 , 22) |
| 6. examination of legal principles concerning interest liability. (Para 23 , 27 , 28) |
| 7. court's observation on regulatory compliance. (Para 30 , 31) |
| 8. conclusion on the necessity for project registration. (Para 32 , 33 , 34) |
| 9. final ruling of the court. (Para 36) |
JUDGMENT :
J. Nisha Banu, J
The above appeals in C.M.S.A.Nos.23 to 25 of 2024 and 30 & 31 of 2023 have been filed by the Army Welfare Housing Organisation (AWHO) under Section 58 of the Real Estate (Regulation & Development) Act, 2016 (hereinafter referred to as "the Act"), read with Section 100 of the CIVIL PROCEDURE CODE , challenging the impugned orders dated 20.12.2023 and 21.04.2023 passed in Appeal Nos. 12, 13 & 51 to 53 of 2023, on the file of the Tamil Nadu Real Estate Appellate Tribunal, Chennai (hereinafter referred to as "the Tribunal"). These orders confirmed the common orders dated 21.11.2022 and 21.12.2022 passed in Complaint Nos. 291, 293 & 294 of 2019 and 193 & 300 of 2021, respectively, by the Tamil Nadu Real Estate Regulatory Authority, Chennai (for brevity, "the Authority").
2. Before embarking on the main issue, the facts of the case is set out as under:-
(a) The appellants herein are the promoters/developers of the residential project "Dinesh Vihar", situated at Thazhambur village, Chengalpaet District, while the Respondents herein are the purchasers/Complainants.
(b) The undisputed facts are that the appellants are engaged in the business of construction of dwelling units for serving/retired Army personnel on a "No Profit, No loss" basis. The respondents in the respective appeals evinced interest in purchasing a plot which was promoted and sold by the appellants herein. Accordingly, the respondents submitted an application and in response, the appellants alloted the respective apartments to them.
(c) In so far as C.M.S.A.Nos. 23 to 25 of 2024 are concerned, the respective respondents filed complaints concerning the issue of "Registration" of this Real Estate Project. After hearing the matter in detail and examining the available records, the Hon'ble Adjudicating Authority disposed of the complaints in C.Nos.291, 293 &294 of 2019 by order dated 21.12.2022.
(d) The Authority held that the project was an ongoing project as on 01.05.2017 and not a real estate project completed in all respects as of 01.05.2017 based on the examination of the MLPA [Mammalapuram Local Planning Authority] and the officials concerned. Consequently, directed the promoter/appellant herein to file an application for registering this real estate project with this Authority before 31.03.2023. The said order was confirmed by the Hon'ble Appellate Authority by the Impugned Order dated 20.12.2023, passed in Appeal Nos. 51 to 53 of 2023. Challenging the same, the present Civil Miscellaneous Second Appeal have been preferred.
3. Insofar as appeals in CMSA.Nos. 23 to 25 of 2024 are concerned, the issue to be decided is as under:-
i) Whether the direction for Registration under Section 3 of the Tamil Nadu Real Estate (Regukation and Development) Act, 2017, issued by the Hon'ble Appellate Tribunal (TNREAT) as well as the Hon'ble Adjudicating Authority (TNRERA )is valid and legally sustainable?
4). While taking the appeals in C.M.S.A.No. 30 & 31 of 2023, it is seen that the respective respondents filed complaints claiming 'Compensation and other reliefs' from the appellant herein on various grounds including the delay in construction and delivery of the Apartments.
5. After hearing the matter in detail and examining the available records, the Adjudicating Authority, by order dated 21.11.2022, in Complaint Nos.193 & 300 o
A 'No Profit No Loss' organization must comply with the Real Estate Act's provisions, including registration and liability for compensation due to delays.
Enforcement of Act, 2016, comes under the purview of ‘promoter’, as defined under Section 2(zk) of Act, 2016, and necessary compliance of pre-deposit, as enshrined under Section 43(5) of Act, 2016
Complaints under RERA can only be filed for projects capable of registration; lack of necessary permissions renders a project unregistrable, barring complaints.
The court established that a project with delays in completion falls under RERA's provisions, and mere local authority certifications do not suffice as valid completion certificates.
The Real Estate (Regulation and Development) Act does not grant promoters the right to claim compensation from allottees, and such claims must be pursued in civil court.
The court affirmed that ongoing real estate projects must be registered under RERA to protect allottee interests, regardless of title transfer.
The Real Estate (Regulation and Development) Act does not provide promoters with a substantive right to claim compensation from allottees; claims must be pursued in civil courts.
The Real Estate (Regulation and Development) Act mandates registration for ongoing projects, where completion certificates are absent, emphasizing consumer protection in real estate transactions.
The definition of 'promoter' under RERA allows for developers without land ownership to register projects, and failure by UPRERA to act within statutory timeframes results in deemed registration.
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