Delay Due To Labor, Material Shortage Not Valid: TNRERA Orders Selene Estate To Allot Alternate Flat To Homebuyer

The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has recently held that labour shortage, material scarcity and delay in approvals are not valid excuses for construction delay and found Selene Estate Limited in violation of its agreement with complainant R. Jagan Kumar after cancelling the allotment and reselling the flat to a third party.

The Authority, comprising Chairperson Thiru Shiv Das Meena and Members Dr. L. Subramanian and Thiru Sukumar Chittibabu, held that the complainant had complied with the payment schedule and that the resale at a higher price showed a profit motive.

It directed the developer to allot an alternate flat with similar specifications in the same project on the originally agreed terms. It further held that if the complainant is unwilling to accept the alternate flat, he would be at liberty to seek refund before the Authority and may pursue compensation separately before the Adjudicating Officer in accordance with law.

“The Respondent has submitted that delay in construction occurred due to natural calamities, labour and material shortage, delay in statutory approvals etc. All these reasons are very generic in nature and cannot be held as valid reasons for delay. It is the responsibility of the Respondent to arrange labour and construction material and obtain statutory approvals. It is beyond the apprehension of this Authority that what kind of statutory approvals the Respondent is talking about when the project has already been registered with TNRERA,” the Authority observed.

In March 2021, Jagan Kumar booked a 2.5 BHK flat in Tower E5 of the project at Jalladianpettai, Chennai, for Rs 62.59 lakh.

He paid Rs 50,000 as an advance and executed the sale and construction agreements on March 24, 2021. A tripartite loan arrangement was also entered into with State Bank of India. Over time, payments were made as per the schedule, and by July 2023 the amount paid had reached ₹14.12 lakh, which included Rs 5 lakh towards lift works.

As per the agreement, possession was to be handed over by June 30, 2021, with a grace period extending up to December 31, 2021. The project, however, did not show the expected progress. Instead, the developer issued a termination letter dated October 7, 2023 cancelling the allotment.

The complainant later came to know, on obtaining an encumbrance certificate, that the very same flat had been sold to Sanjana Sathyanarayanan on October 24, 2024 for Rs 1,11,67,500.

According to the complainant, he had complied with the payment obligations, and the delay was not attributable to him. He stated that the cancellation and resale caused financial strain as he continued to pay both house rent and bank installments.

The developer, on the other hand, blamed the delay on natural calamities, shortage of labour, non-availability of construction materials and delays in statutory approvals. It also alleged that the complainant had failed to make further payments despite reminders

Rejecting the explanation, the authority noted that the complainant was required to pay only about ₹6.26 lakh initially, while the balance was payable on possession, but he had already paid more than ₹14 lakh. It held that the developer cancelled the allotment instead of handing over possession, in breach of the agreement.

The Authority also noted that the flat was sold to a third party for a higher price, showing that the cancellation was done to realise more profit.

“The Respondent has sold the apartment to a 3rd party at Rs.1,11,67,500/- which is much higher than the rate agreed with the Complainant. It shows that the Respondent resorted to this action for realising more profit which amounts to unjust enrichment at the cost of the Complainant,” the authority held.

Holding that the developer violated the construction agreement, the agreement for sale, and the tripartite agreement, the Authority directed Selene Estate Limited to hand over an alternate flat with specifications similar to the agreed flat on or before April 5, 2026.

It further held that if the complainant does not accept the alternate flat, he is free to file a refund claim before the Authority and may also file a separate complaint before the Adjudicating Officer seeking compensation for mental agony and hardship

For Complainant Advocates Amar K Panwar.

For Respondent (Selene Estate Limited): Advocates Chandramouli Prabhakar.