Promoter sells villas to third parties, real estate tribunal upholds penalty

CHENNAI: Upholding an order of Tamil Nadu Real Estate Regulatory Authority (TNRERA) imposing penalty against a promoter, who sold villas to third party despite receiving an advance from a buyer, Tamil Nadu Real Estate Appellate Tribunal (TNREAT) dismissed an appeal filed the promoters.

Color Home Developers Private Limited, the appellant, entered into a memorandum of understanding with First Venture to sell five residential villas from a project developed at Sorancheri village. The First Venture paid Rs. 1.50 Crore as advance.

Meanwhile, the First Venture approached the TNRERA complaining that the appellant sold the villas to third parties without knowledge, consent and permission.

As per the complaint, the promoter also refused to return the advance but alternately offered to sell seven villas in Karal village.

The complaint alleged that the promoter sold one of the seven villas to third person.

TNRERA, after holding the promoter had violated section 11 (4) (a) of the Real Estate (Regulation and Development) Act, 2016, and imposed a penalty of Rs. 1 lakh against the promoter.

After hearing the sides, the Tribunal observed that the promoter is responsible for all obligations, responsibilities and functions under the Act. As per section 61 of the Act, TNRERA is empowered to impose penalty upon the promoters who contravene the provisions. The Tribunal also found that the imposition of penalty of Rs. 1 lakh against the promoter is justified.

As the promoter had already deposited Rs. 50,000 of the total penalty, the Tribunal ordered it to deposit remaining penalty amount and dismissed the appeal.