Tamil Nadu RERA Directs Alliance Group To Refund Money Deducted As Cancellation Fee To Homebuyer
Pranav B Prem
The Tamil Nadu Real Estate Regulatory Authority (TNRERA), Chennai, comprising Dr. L. Subramanian (Member) and Adv. M. Krishnamoorthy (Member), has directed Alliance Group to refund Rs. 50,000 to a homebuyer. The amount had been deducted as a cancellation fee when the homebuyer cancelled her booking after the possession date was shifted from December 2018 to July 2020.
Background
The complainant, K.S. Aruna Vasumathi, had booked Flat No. 1210 in Alliance Group’s residential project Augustus Alliance Galleria at Pallavaram. The total cost of the flat was Rs. 42,17,100. She paid Rs. 10,000 as booking advance on 21.03.2018, followed by Rs. 2,40,000 in March 2018. However, the draft sale and construction agreements issued by the builder mentioned that the Chennai Metropolitan Development Authority (CMDA) revised approval plan was still pending. Concerned about the status of approvals, she raised queries via email on 03.05.2018. The builder only gave a vague reply that her queries had been forwarded to the concerned team.
Initially, possession had been promised for December 2018, but the builder later revised the date to July 2020. Aggrieved by the unexplained delay and lack of clarity on approvals, the complainant cancelled the booking on 18.05.2018 and sought a refund. The builder refunded only Rs. 2,00,000, withholding Rs. 50,000 as cancellation charges for what the complainant described as a “never-constructed imaginary flat.” She then filed a complaint before TNRERA seeking refund of Rs. 50,000 along with 24% interest and costs.
Builder’s Defence
The builder denied the allegations and argued that it had obtained necessary approvals and RERA registration for the project. It further claimed that it never assured possession by December 2018, and that the complainant was aware of the July 2020 delivery timeline. Referring to Clause 5 of the booking form, the builder stated that in case of cancellation, Rs. 50,000 would be deducted as cancellation charges and the balance refunded. Hence, according to the builder, the deduction was lawful and the complaint deserved dismissal.
Authority’s Findings
TNRERA examined affidavits, documents (Ex.A1 to A26), and written arguments filed by both sides. The bench noted that the complainant’s payment of Rs. 2,50,000 and subsequent refund of Rs. 2,00,000 were undisputed. The key issue was whether the retention of Rs. 50,000 as cancellation charges was lawful.
The bench observed that the builder’s reply to the complainant’s repeated emails was vague and failed to provide clarity on statutory approvals or the possession timeline. The sudden shift of the delivery date from December 2018 to July 2020 was significant. The Authority held that the complainant was justified in cancelling the booking, as the builder failed to deliver on the commitments made at the time of booking.
Citing Section 18(1) of the Real Estate (Regulation and Development) Act, 2016, the bench emphasized that if a builder fails to complete or hand over possession within the agreed timeframe, the allottee has a right to withdraw and obtain a refund with interest. In such cases, retention of cancellation charges is impermissible.
Accordingly, TNRERA directed Alliance Group to:
Refund Rs. 50,000 withheld as cancellation fee.
Pay the refund with the prescribed rate of interest under the RERA framework.
Additionally, pay Rs. 25,000 as costs to the complainant.
The order mandated compliance within 90 days from the date of the judgment.
Cause Title: K.S. Aruna Vasumathi V. M/s. Alliance Group
Case No: RCP No. 62 of 2023
Coram: Dr. L. Subramanian (Member), Adv. M. Krishnamoorthy (Member)
