Letter Issued By Panchayat President Not Equivalent To Completion Certificate U/S 2 Of TN RERA: Madras High Court

A division bench of Justice J Nisha Banu and Justice R Sakthivel observed that as per the Act, since there was no provision and procedure prescribed for projects under execution outside the Chennai Metropolitan Area, the same was to be intimated to the concerned Local Planning Authority or Regional Deputy Director of the Town and Country Planning Department within 15 days from the date of notification of the rules after which the same was made public in the RERA website. The court thus concluded that there was no provision to substitute a letter from the Panchayat President as a completion certificate.

“Moreover, in the above said clause 2(h) (ii) of the TN RERA Act, the competent Authority to issue Completion Certificate will be the Chennai Metropolitan Development Authority. For projects under execution outside Chennai Metropolitan Area, as no such provision and procedure are prescribed for issue of completion certificate yet, such projects shall be intimated to the concerned Local Planning Authority or Regional Deputy Director of the Town and Country Planning Department within 15 days from the date of notification of these rules with a copy marked to the office of the Director of Town and Country Planning. After which, the Director of Town and Country Planning will make public the list of all such projects in his official website, on the 16th day of notification of the rules besides publication of the same in the website of Real Estate Regulatory Authority,” the court observed.

The court thus compensation to a buyer for delayed completion and handover of the building. The court noted that the promoter had only obtained a letter from the Panchayat, before the act came into force under the pretext that the construction was completed when in reality, the completion of the construction happened much after the act came into force.

The court was hearing a petition filed by one Anandasundaresan challenging the order of the Tamil Nadu Real Estate Appellant Tribunal through which an order of the TNRERA, directing compensation was reversed.

The appellant had approached the respondent promoter for purchasing an apartment complex and a Memorandum of Agreement was entered into by the parties. As per the agreement, the flat was to be constructed within 30 months (with a grace period of 90 days) from the date of obtaining sanction from the authorities concerned. The promoter also agreed to provide ten other amenities such as Club House, ATM, Restaurant, Supermarket etc.

The appellant's case was that the possession of the flat was handed over after a 4-year delay while the other amenities were handed over with a 7-year delay. Thus, he approached the TNRERA which directed the Promoter to pay a sum of Rs.5,56,358/- as compensation for delay and interest on the said amount at 10.05% per annum along with an additional sum of Rs.1,00,000/- towards compensation of mental agony, loss and hardship and additionally a sum of Rs.20,000/- towards litigation expenses. This order was however reversed by the appellate authority.

The appellant argued that though there was a delay in construction, the promoter insisted the appellant to make payments and also collected amounts towards Service Tax, VAT, interest for delayed payment, etc. It was also submitted that the appellate tribunal should have discredited the completion certificate submitted by the Promoter since the same was not a completion certificate within the meaning of the act. It was added that the completion certificate could only be issued by the CMDA, after verification of the compliance of the approved plan and completion of the project.

On the other hand, the promoter argued that the provisions of the Act were not applicable in the present case since the completion certificate was obtained much before the commencement of the rules. It was also argued that as per the agreement, the appellant could claim rental compensation only if he had made timely stage-wise payments without any delay. He further argued that the compensation was filed after 1 year and 7 months of taking possession.

The court, upon perusal of the materials, concluded that the document produced by the promoter could not be considered as a valid completion certificate since at that point, the construction of the building was not completed which was evident from the emails sent by the promoter to the buyers. Thus, the court observed that when the rules came into force, the project was an ongoing project for which the promoter was duty-bound to obtain a completion certificate.

Thus, observing that the promoter could not evade paying compensation for the delayed handover, the court allowed the appeal and set aside the order of the appellate authority. In doing so, the court also upheld the compensation awarded by the TNRERA.

Counsel for the Petitioner: Mr. C. K. Chandrasekar For Mrs. W. R. Subhashini

Counsel for the Respondent: Mr. Mani Sundaragopal

Case Title: P. Anandasundaresan v. M/s. Akshaya Pvt Ltd

Citation: 2025 LiveLaw (Mad) 25

Case No: C.M.S.A.No.41 of 2022