Tamil Nadu RERA Orders Registration Of Prestige Silver Springs As An 'Ongoing' Project

The Tamil Nadu Real Estate Regulatory Authority (TN RERA) on 4 February, directed Prestige South City Holdings to register the project “Prestige Silver Springs” under RERA within 60 days, holding that where villas remained incomplete when the Real Estate (Regulation and Development) Act, 2016 came into force, the project must be treated as an “ongoing project” requiring registration under Section 3.

A Bench comprising Chairperson Shiv Das Meena with Members Dr. L. Subramanian and M. Krishnamoorth, directed that amounts collected towards corpus fund must be kept in a separate interest-bearing account and transferred to the Association in terms of the construction agreement. The Authority, however, rejected the prayer for refund of the clubhouse membership fee.

The Bench observed:

“Ultimately, the villas were provided with water sewerage connection only on 06.06.2023. Therefore, the project "Prestige Silver Springs" was not completed on the date of coming into force of RERA Act. Therefore, it is an ongoing project only.”

The complainant is the Villa Owners Association formed by purchasers of villas in “Prestige Silver Springs”, located at ECR Link Road, Sholinganallur. The project was developed over 18.06 acres under a Joint Development Agreement, under which 54% of the developed area was allotted to the builder (1st Respondent) and 46% to the land owner (2nd Respondent).

The Chennai Metropolitan Development Authority (CMDA), approved the layout on 23 August 2013 for 125 plots and a supplementary agreement was executed on 21 November 2013. The land owner gifted internal roads and open space to the local authority. Villas with amenities including a clubhouse, swimming pool and other facilities were constructed.

Sale deeds were executed for plots and construction agreements were entered into for building the villas. From 2019 onwards, composite sale deeds were executed for land and villa together. The respondents collected corpus fund, advance maintenance charges, clubhouse membership fee of Rs.3,00,000 per villa and infrastructure charges.

The Association was registered on 11 October 2018. Maintenance was carried out by Prestige Property Maintenance Services Chennai till 31 March 2023. The Association did not take over maintenance citing arrears and incomplete amenities, including water and sewerage connection, which was provided only on 6 June 2023.

The complainant contended that the project was not completed when RERA came into force on 1 May 2017 and therefore constituted an ongoing project requiring registration under TN RERA. It sought registration, refund of corpus fund and clubhouse fees with interest, handover of service plots and title documents, and penalty under the Act.

Examining the agreement to sell, sale deeds and Joint Development Agreement, the RERA observed that the respondents had undertaken a real estate project where land was sold along with construction of individual villas. Though a completion certificate was issued for the clubhouse in April 2017, a construction agreement dated 8 March 2017 showed that the villas were yet to be constructed. The agreement mentioned a possession date earlier than its execution, which the Authority found unacceptable.

Noting that only 53 days remained before RERA came into force on 1 May 2017, the Authority held that villas of such size could not have been completed within that period. It therefore treated the project as an ongoing project and directed registration under Section 3 within 60 days.

On the issue of corpus funds, the RERA noted that Rs.95.32 lakhs had been collected. Clause 9(c) of the construction agreement required the amount to be kept in a separate interest-bearing account and transferred to the Association after its formation. Holding that the builder could not divert this amount, the Authority directed refund of the corpus fund with interest at 10.85% per annum.

As regards the clubhouse membership fee, the Authority found that the agreement required payment of a one-time fee and did not confer exclusive ownership rights over the clubhouse. Since this was a contractual term accepted by the parties, the prayer for refund of the membership fee was rejected.

However, in view of the builder's letter dated 1 August 2022, agreeing to convey the land over which the clubhouse and amenities stand, the Authority directed transfer of that land to the individual villa owners within 60 days.

Accordingly, the RERA disposed of the complaint.

For the Complainant: M/s. T.S. Baskaran & N. Nathami

For Respondent No. 1: M/s. Dua Associates

For Respondent No. 2: M/s. G. Vijay Anand Associates