RERA Act Contains No Provision To Appoint Receiver For Sale Of Unsold Flats: Tamil Nadu RERA

The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has dismissed an application filed by more than 100 homebuyers of Ozone Projects Private Limited's "Metrozone" project seeking appointment of a receiver to effectuate the sale of unsold flats.

The Authority, however, directed the developer to file a status report on construction in Phase IV, an encumbrance certificate for the unsold inventory and an updated quarterly progress report.

The order was passed on May 25 by a coram comprising Chairperson Thiru Shiv Das Meena and Members Dr. L. Subramanian and Adv. M. Krishnamoorthy while dealing with an interlocutory application filed by Tvl. G. Sathya and 110 others in a batch of pending complaints concerning the project.

“Upon perusal of the documents and hearing both the parties, the Authority finds no provision under the Real Estate (Regulation and Development) Act, 2016 to appoint a receiver to address the relief sought in the interlocutory application.”,the authority ruled.

The applicants are homebuyers in the "Metrozone" project developed by Ozone Projects Private Limited. According to the order, the Authority had earlier appointed a Monitoring Committee to review the status of the project on a monthly basis in order to safeguard the interests of the homebuyers.

The homebuyers submitted that there had been persistent delays in completion and handover of apartments. They stated that the Authority, during a review meeting held on July 15, 2022, directed the developer to file an affidavit detailing a concrete action plan for completion of the project within the timeline stipulated under a Memorandum of Understanding (MoU), execute and register pending undivided share registrations on or before July 29, 2022, and infuse additional funds to expedite completion.

According to the applicants, the developer thereafter attributed the delay to non-mobilisation of funds by homebuyers. The applicants contended that the delay was attributable to alleged mismanagement of funds by the developer.

They submitted that the developer had sold 1,228 units in Phases I, II and III and most of the units in Phase IV. They further submitted that the developer had collected approximately ₹2,500 crore as sale proceeds and had reportedly raised borrowings of ₹2,600 crore against the project. Despite this, they contended that the project remained incomplete.

The applicants also referred to an MoU dated March 1, 2022 entered into with the developer. They submitted that the agreement was entered into in view of the developer's alleged precarious financial condition and pendency of proceedings, including before the National Company Law Tribunal.

Under the MoU, the association of homebuyers agreed, on a best-efforts basis, to mobilise advance payments in six instalments. The arrangement was subject to the condition that it would not absolve the developer of its obligation to complete and hand over the project.

The developer undertook that funds collected, up to ₹55 crore or the actual funds required, whichever was higher, would be deposited in an escrow account and utilised on priority for completion of Phase IV. The developer also agreed to make good any shortfall.

The applicants further submitted that they had paid up to 95% of the sale consideration in most cases. They stated that out of 329 units in Phase IV, 259 units had been sold and 60 units measuring approximately 1,26,045 square feet remained unsold, apart from 10 guest suites. According to them, monetisation of the unsold inventory was necessary for completion of the project.

The applicants therefore sought appointment of a receiver to effectuate the sale of the unsold inventory. They also sought a direction that the realisations be utilised on priority for completion of Phase IV.

Opposing the application, Ozone Projects submitted that the project was already under review by a Monitoring Committee appointed by the Authority.

It contended that appointment of a receiver would only prolong the completion process. The developer also stated that it had already contributed ₹9.38 crore, representing 20% of the total construction cost of ₹46.40 crore required to complete the project. According to it, the balance amount of ₹24.52 crore would be mobilised from receivables relating to sold units.

The developer further submitted that steps had been initiated to expedite collections, cancel defaulted units and re-sell such units. It stated that the receivables would be deposited in a no-lien account exclusively for construction purposes. It also denied the allegation regarding the 60 unsold units, stating that the units were mortgaged and not available for sale.

After hearing the parties, the Authority held that there was no provision to appoint a receiver for the relief sought in the application. It accordingly dismissed the interlocutory application without costs.

“The Authority directs the Respondent promoter to file the status report of the construction of the project specifically Phase IV and the encumbrance certificate for the unsold inventories in the project. Further, the Respondent Promoter is directed to file an updated Quarterly progress report on the next hearing date.”

The Authority posted the batch of complaints for further hearing on June 22, 2026.