Madras High Court
M.S.Builders vs G.K.Vijay on 3 October, 2023
C.M.S.A.No.35 of 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.10.2023
CORAM :
THE HONOURABLE MR.JUSTICE R.MAHADEVAN
and
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
C.M.S.A.No.35 of 2023
and
CMP.No.15720 of 2023
1. M.S.Builders,
Represented by its Director,
No.407-A, Trunk Road, Karaiyanchavadi,
Poonamallee, Chennai - 600 102.
2. MS Foundations Pvt. Ltd.,
(Formerly known as MS Land Promoters
Private Limited)
Represented by its Directors,
554, Kundrathur Main Road,
Kumananchavadi, Poonamallee,
Chennai - 600 056. .. Appellants
Versus
G.K.Vijay .. Respondent
This Civil Miscelleneous Second Appeal filed under Section 58 of the
Tamil Nadu Real Estate (Regulation and Development) Act read with Section 100 of
C.P.C, praying to set aside the order dated 26.04.2023 passed in Appeal No. 166 of
2023 by the Tamil Nadu Real Estate Appellate Tribunal, Chennai confirming the
order dated 03.01.2023 passed in C.C.P.No.140 of 2021 by the Tamil Nadu Real
Estate Regulatory Authority, Chennai.
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C.M.S.A.No.35 of 2023
For Appellants : M/s. Rajeni Ramadass
For Respondent : M/s. Kavitha Nithyanandan
JUDGMENT
(Judgment of the Court was delivered by R. MAHADEVAN, J.)
The appellants herein are the builders / land promoters and the respondent
herein is the purchaser / complainant.
2. The undisputed facts are that the appellants are engaged in the business
of land development and sales. Since the respondent evinced interest in purchasing a
plot in the Kamatchi Nagar Layout at Vayalanallur, Poonamallee Taluk, Tiruvallur
District, which was promoted and sold by the appellants herein, the respondent was
given the option to choose the plot and accordingly, he had chosen Plot No.10. It was
in the year 2014. There was no proposal or assurance of getting CMDA approval for
the plots at that point of time. After change in law, necessary approval from CMDA
was obtained. The respondent paid a sum of Rs.10 lakhs towards advance booking
of the said plot. It is the case of the appellants that after paying the said sum, the
respondent had not turned up for a long time. At one point of time, the respondent
approached the appellants and asked for refund of the advance amount and
accordingly, the respondent managed to get a security cheque from the appellants.
During the process of approval, the said Plot No.10 was earmarked for the park area.
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C.M.S.A.No.35 of 2023
While so, the respondent misused the security cheque and issued a notice to the
appellants under Section 138 of the Negotiable Instruments Act, alleging dishonour
of cheque, followed by a complaint against the appellants before the Tamil Nadu
Real Estate Regulatory Authority, Chennai. In the complaint, it was alleged that
since the project was not making much headway and the appellants did not respond
properly, the respondent stopped making payments; and that after approval by
CMDA, the respondent came to know that the said plot was earmarked as park area
and the project was not registered under Section 3 of the RERA Act; and the prayer
made by the respondent herein was to get refund of the amount paid by him to the
tune of Rs.10,00,000/- with compensation and litigation costs.
3. The appellants stated that they have been genuine in their transactions
and were ready to sell the plot to the respondent, as and when the respondent booked
the plot. Since there was inordinate delay on the part of the complainant in paying
the balance sale consideration, the sale could not materialise. A counter affidavit has
been filed on behalf of the appellants before the Tamil Nadu Real Estate Regulatory
Authority stating that it was not their fault that Plot No.10 was earmarked as Park
Area; and that the respondent has misused their cheque and issued a frivolous notice
under Section 138 of the Negotiable Instruments Act.
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C.M.S.A.No.35 of 2023
4. Since there was no communication to prove that the appellants had
continued to pressurise the respondent to pay the balance sale consideration and that
after receiving the money from the respondent, no alternate plot was allotted to him
due to conversion of Plot No.10 into Park Area, the Tamil Nadu Real Estate
Authority, Chennai, passed an order on 03.01.2023 observing that these facts would
exhibit the intention of the appellants of not taking any steps to address the
requirement of the respondent. Holding so, the authority directed the appellants to
refund Rs.10 lakhs to the respondent along with payment of Rs.25,000/- towards
litigation expenses and Rs.1,00,000/- as penalty for non-registration of the project.
5. Challenging the aforesaid order of the authority, the appellants
approached the Tamil Nadu Real Estate Appellate Tribunal by way of filing an
appeal in Appeal No.16 of 2023, which ended in dismissal at the admission stage
itself. Hence, this appeal by the appellants.
6. The learned counsel for the appellants submitted that the authorities
below have erroneously awarded penalty of Rs.1,00,000/- for non-registration of the
project, without confirming whether the project was registered as per Section 3 of the
RERA Act. Further, there is no fault on the side of the appellants in not obtaining
CMDA approval for sale of the plot in the year 2014, since it was not mandatory at
that point of time and the plot was proposed to be sold only as an unapproved plot. It
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C.M.S.A.No.35 of 2023
is also submitted that the respondent paid a sum of Rs.10 lakhs towards advance
booking of the said plot and thereafter, not turned up for a long time; and when he
approached the appellants for refund of advance amount, the appellants genuinely
gave a security cheque, but the same was misused by the respondent by depositing
the same into bank and thereafter, issuing a frivolous notice under section 138 of the
Negotiable Instruments Act. Without considering all these factors, the Regulatory
Authority erroneously entertained the complaint filed by the respondent and directed
the appellants to refund Rs.10 lakhs and Rs.25,000/- towards litigation expenses,
besides penalty of Rs.1,00,000/- for non-registration of the project, as per the RERA
Act; and the said order was also affirmed by the Tamil Nadu Real Estate Appellate
Authority. Stating so, the learned counsel prayed for allowing this appeal by setting
aside the orders passed by the authorities below.
7. Per contra, the learned counsel for the respondent submitted that both
the authorities below have properly analysed the facts and circumstances of the case
and have passed orders, which do not require any interference by this Court. To
elaborate her case, it was submitted that since the plot for which the complainant had
paid advance, cannot now be allotted as it has been earmarked for 'park' in the
approved layout and hence, the complainant is entitled to a refund of the advance
paid. The learned counsel further submitted that the cheque issued to the
complainant by the appellants, has nothing to do with the present transaction and
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C.M.S.A.No.35 of 2023
in-fact, it was not issued by either of the appellants, but by one of the Directors in his
personal capacity in respect of a different transaction between the parties.
8. Heard the learned counsel on either side and perused the records.
9. In this writ appeal, the appellants / promoters challenged the concurrent
findings of the authorities below.
10. It is clear from the documents on record that the appellants had
received advance money from the respondent / complainant, but dishonoured their
commitment for registering a plot to him. The Tamil Nadu Real Estate Regulatory
Authority, Chennai, in its order dated 03.01.2023, had taken note of the case of the
complainant that despite obtaining approval from CMDA for the project on
04.11.2019, the appellants had failed to register the project with TNRERA and held
that the appellants have violated Section 3 of the RERA Act and therefore,
appropriate penalty as per Section 59 of the Act has to be imposed. In respect of
failure to register the project, the Authority has observed that the appellants have
neither countered the allegations nor submitted any evidence to show otherwise.
These findings were confirmed by the Appellate Tribunal. However, it is the stand of
the appellants that the authorities below have erroneously awarded penalty of
Rs.1,00,000/- for non-registration of the project, without confirming whether the
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C.M.S.A.No.35 of 2023
project was registered as per Section 3 of the Act. It is also their stand that there was
no fault on the side of the appellants in not obtaining CMDA approval for sale of the
plot in the year 2014 since it was not mandatory at that point of time and the plot was
proposed to be sold only as an unapproved plot.
11. Taking note of the facts and circumstances of the case and having
regard to the submissions so made by the learned counsel for the appellants, this
Court is of the considered view that to meet the ends of justice, the penalty amount
imposed on the appellants to the tune of Rs.1,00,000/- has to be set aside and the
same shall be directed to be refunded to the appellants. Except the same, the orders
passed by the authorities below shall stand confirmed, in respect of all other aspects.
In the impugned order dated 26.04.2023, it has been observed by the Appellate
Tribunal that the appellants have already deposited a total sum of Rs.19,32,661/-, out
of which, the penalty amount of Rs.1,00,000/- has been remitted to the Government
on 13.04.2023. Therefore, the respondent is entitled to withdraw the balance amount
of Rs.18,32,661/- with accrued interest from the bank investment; and the appellants
are directed to make an application with all particulars to the concerned authority
along with a copy of this judgment for refund of Rs.1,00,000/- within a period of two
weeks from the date of receipt of a copy of this judgment. On making such
application, the amount of Rs.1,00,000/- shall be refunded to the appellants within a
period of two weeks thereafter. It is open to the parties to agitate their respective
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C.M.S.A.No.35 of 2023
cases in the pending proceedings under section 138 of the Negotiable Instruments
Act; and this order shall have no bearing on the same and the court below shall
proceed with the cases purely, on merits.
12. Accordingly, the orders passed by the authorities below stand modified
and this appeal stands disposed of. No costs. Consequently, connected miscellaneous
petition is closed.
[R.M.D., J.] [M.S.Q., J.]
03.10.2023
Index : Yes / No
Internet : Yes / No
To
1.The Tamil Nadu Real Estate Regulatory Authority, Chennai.
2.The Tamil Nadu Real Estate Appellate Tribunal, Chennai.
https://www.mhc.tn.gov.in/judis
C.M.S.A.No.35 of 2023
R. MAHADEVAN, J
and
MOHAMMED SHAFFIQ, J
rk
C.M.S.A.No.35 of 2023
and
CMP.No.15720 of 2023
03.10.2023
https://www.mhc.tn.gov.in/judis
