Delayed Possession Does Not Restart Three-Year Limitation For RERA Compensation Claims: TN REAT

The Tamil Nadu Real Estate Appellate Tribunal (Tamil Nadu REAT) on 14 October held that compensation claims for breach of contractual obligations under the Real Estate (Regulation and Development) Act, 2016, must be filed within three years under Article 27 of the Limitation Act, 1963.

A Bench comprising Chairperson Justice M. Duraiswamy and Judicial Member K. Babu dismissed an appeal filed by Five Mount Villa Owners Welfare Association against Bahri Estates Private Limited and Bahri Realty Management Services Private Limited, upholding the rejection of its compensation claims as time-barred. It held:

“The act of handing over possession is not a breach. The cause of action to file a complaint remains invariable and static on the date of breach as occurred on the date of completion as specified in the Agreement, irrespective of the subsequent performance of handing over of possession.”

The dispute concerned the Bahri Beautiful Country residential project near Kodaikanal, Tamil Nadu, developed by Bahri Estates. The project was promoted as an integrated township offering villas and amenities, including a clubhouse, swimming pool, golf course, hospital facilities and recreational infrastructure.

The Association alleged that several promised amenities remained incomplete, construction quality was deficient and common area maintenance charges were collected despite inadequate services.

On 22 February 2022, the Association approached the Tamil Nadu RERA Adjudicating Officer seeking Rs. 10 lakh in compensation for each member for losses caused by the non-provision of promised amenities, Rs. 5 lakh for each member for mental suffering, a 50% refund of common area maintenance (CAM) charges, a refund of Preferred Location Charges (PLC) with 24% annual interest, and legal expenses.

On 23 December 2025, the Adjudicating Officer dismissed the complaint as time-barred. The Association appealed to the Tribunal under Section 44 of RERA.

The Association argued that the Adjudicating Officer had incorrectly calculated limitation with reference to a meeting held on 20 September 2017 and failed to account for the Supreme Court's extension of limitation periods during the COVID-19 pandemic.

Bahri Estates contended that the project had been completed in 2010 and that purchasers were aware of its status. Bahri Realty Management Services disputed its liability, arguing that it was merely a service provider and not a promoter.

Examining whether limitation applied to compensation proceedings under RERA, the Tribunal relied on the Supreme Court's decisions in Property Co. P. Ltd. v. Rohinten Daddy Mazda and Deputy Commissioner and Special Land Acquisition Officer v. S.V. Global Mill Limited, concerning the applicability of limitation principles to proceedings under special legislation.

It noted that Section 18(2) of RERA expressly exempts compensation claims arising from defective land titles from limitation, but contains no corresponding exemption for other compensation claims.

Applying Article 27 of the Limitation Act, the Bench held that compensation claims for breach of a promise to perform an obligation within a specified time must be filed within three years of the breach. It said:

“On a reading of Article 27, it is clear that the period of limitation of three years for claiming compensation for breach of a promise begins to run when the time specified arrives or the contingency happens,”

The Construction Agreement dated 4 July 2015 required possession to be delivered by 4 October 2016. The Tribunal held that the cause of action arose on 5 October 2016 and the limitation period expired on 5 October 2019.

It further held that handing over possession after the contractual deadline did not create a fresh or continuing cause of action or restart limitation. It rejected the Association's reliance on the Supreme Court's COVID-19 limitation extension, noting that the limitation period had expired before the exclusion period began on 15 March 2020.

Accordingly, the REAT dismissed the appeal and the connected miscellaneous application.

Appearances for appellant (Five Mount Villa Owners Welfare Association): Advocate R. Ramasubramaniam Raja.