The Tamil Nadu Real Estate Regulatory Authority (TNRERA) has held that an individual homebuyer cannot seek a direct refund of the corpus fund from a real estate promoter once the fund and maintenance accounts have been formally handed over to the registered residents’ association. The ruling highlights the importance of the role played by apartment owners’ associations in managing common funds and resolving accounting-related disputes.
TNRERA Rejects Individual Refund Claim
In Saranya Jeyasundaram v. K.G. Foundations (P) Ltd. & Anr., Case No. C.No.58 of 2025, TNRERA considered a complaint concerning the KG Chandra Vista residential project at Semmancherry, Chennai.
The complainant had purchased a flat in the project on 11 January 2021 for approximately ₹77.99 lakh. The consideration included ₹40,000 towards the corpus fund and ₹47,820 towards advance maintenance charges.
The homebuyer later alleged that the corpus fund had been exhausted and that the developer subsequently collected another ₹20,000 from each apartment owner. Following a fire incident in the building on 11 April 2024, residents sought greater transparency regarding maintenance expenditure and utilisation of the collected funds.
The complainant alleged discrepancies in the accounts and approached TNRERA seeking, among other reliefs, refund of the corpus fund and disclosure of the relevant financial records.
Corpus Fund Had Already Been Handed Over
The developer, K.G. Foundations (P) Ltd., disputed the allegations and submitted that it had already handed over the maintenance, administration and reconciled accounts to the KG Chandravista Owners Residents Association on 5 January 2021.
The Authority examined the builder-buyer agreement and noted that the corpus fund was intended for long-term and major maintenance requirements. Under the arrangement, the fund was to be transferred to the owners’ association after its formation.
Since the promoter had handed over the corpus fund and maintenance accounts for Blocks A and B to the registered association, together with detailed statements of accounts and common-area maintenance expenditure, TNRERA concluded that an individual allottee could not demand repayment of the corpus amount directly from the promoter.
The Authority observed that if there were discrepancies in the accounts, the residents’ association was the appropriate body to raise the issue with the promoter.
Individual Allottee Can Raise Grievance Through Association
TNRERA clarified that the decision did not prevent the complainant from examining the association’s accounts or pursuing a genuine grievance regarding utilisation of the corpus fund.
As a member of the residents’ association, the allottee could access the relevant financial records and raise any objection before the appropriate forum. However, an individual member could not seek a personal refund from the promoter merely because questions had been raised regarding the association’s accounts after the funds had been transferred.
The ruling therefore distinguishes between an individual allottee’s contractual rights and matters relating to funds that have already been transferred to an apartment owners’ association for collective maintenance purposes.
₹10 Lakh Penalty for Non-Registration Under RERA
While TNRERA rejected the individual corpus fund refund claim, it found a separate violation by the developer concerning registration of the project under the Real Estate (Regulation and Development) Act, 2016.
The Authority noted that the completion certificate for KG Chandra Vista was issued only on 26 March 2019, after RERA had come into force. Consequently, the project was required to comply with the applicable registration requirements.
For failure to register the project, TNRERA imposed a ₹10 lakh penalty under Section 59(1) of RERA and directed K.G. Foundations to complete the registration process by 21 August 2026.
Key Takeaway for Homebuyers
The ruling is significant for apartment purchasers because corpus funds are generally collected for long-term maintenance and major repairs of common facilities. Once such funds and the corresponding accounts are properly handed over to a duly constituted residents’ association, disputes concerning their utilisation may primarily have to be addressed through the association rather than through an individual refund claim against the promoter.
At the same time, promoters remain subject to their statutory obligations under RERA, including project registration wherever required.
Case: Saranya Jeyasundaram v. K.G. Foundations (P) Ltd. & Anr.
Case No.: C.No.58 of 2025
Authority: Tamil Nadu Real Estate Regulatory Authority (TNRERA)
Order Date: 7 August 2026