Collecting deposit without entering sale deed, a violation: TNRERA

27 Aug 2021 CW Team

Recently, the Tamil Nadu Real Estate Regulatory Authority (TNRERA) observed that the partial payments under the Expression of Interest (EOI), promising to refund the amount and designed to bypass legal procedure.

A complaint registered for The Goodwood Residence in Cenotaph road in Chennai, developed by Cenotaph Developers LLP and Olympia Tech Park Chennai Pvt Ltd, according to it, Rs 3.63 crore was paid to the developers under the non-binding EOI for a flat in 2016 in its housing project. After a year, the complaint was withdrawn and sought a money refund.

The developers refunded Rs 3.5 crore after deducing Rs 12.8 lakh as service taxes. The complaint was submitted to TNRERA and demanded a refund of the deduced amount. The developers denied the allegations and said that the registered complaint was prima facie and not maintainable for jurisdiction.

The developers said they paid Rs 12.8 lakh for other service tax, Swachh Bharat cess and Krishi Kalyan cess, and returned the remaining amount.

After hearing both sides, TNRERA announced that the developers collected nearly 80% of the cost without entering into a construction or sale agreement, which is a violation of Section 13 of the RERA Act.

The developers received Rs 95 lakh towards the EOI. G Saravanan, an officer of TNRERA, said that such payments with a promise to refund the sum were to bypass legal procedure.

Additionally, the developers failed to prove taxable services against the complaints, those registered with the service tax authorities for payment for the project. As per the regulatory order, the complaint was entitled to Rs 12.8 lakh, along with 10.2% interest.

Image Source

Also read: Update IBC code for builders to give data of all buyers: Parl panel

Tamil Nadu's real estate regulatory told the media that the housing developers are collecting a deposit from homebuyers without entering into a sale agreement or construction, a clear violation of the Real Estate Regulatory Authority (RERA) Act. Recently, the Tamil Nadu Real Estate Regulatory Authority (TNRERA) observed that the partial payments under the Expression of Interest (EOI), promising to refund the amount and designed to bypass legal procedure. A complaint registered for The Goodwood Residence in Cenotaph road in Chennai, developed by Cenotaph Developers LLP and Olympia Tech Park Chennai Pvt Ltd, according to it, Rs 3.63 crore was paid to the developers under the non-binding EOI for a flat in 2016 in its housing project. After a year, the complaint was withdrawn and sought a money refund. The developers refunded Rs 3.5 crore after deducing Rs 12.8 lakh as service taxes. The complaint was submitted to TNRERA and demanded a refund of the deduced amount. The developers denied the allegations and said that the registered complaint was prima facie and not maintainable for jurisdiction. The developers said they paid Rs 12.8 lakh for other service tax, Swachh Bharat cess and Krishi Kalyan cess, and returned the remaining amount. After hearing both sides, TNRERA announced that the developers collected nearly 80% of the cost without entering into a construction or sale agreement, which is a violation of Section 13 of the RERA Act. The developers received Rs 95 lakh towards the EOI. G Saravanan, an officer of TNRERA, said that such payments with a promise to refund the sum were to bypass legal procedure. Additionally, the developers failed to prove taxable services against the complaints, those registered with the service tax authorities for payment for the project. As per the regulatory order, the complaint was entitled to Rs 12.8 lakh, along with 10.2% interest. Image Source Also read: Update IBC code for builders to give data of all buyers: Parl panel

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