Karnataka RERA Orders Ozone Developers Group To Refund ₹1.10 Crore To Homebuyer Over Possession Delay

The Karnataka Real Estate Regulatory Authority has recently held that a developer in this case could not deduct 20 percent of the amount paid by a homebuyer after failing to deliver possession within the agreed timeline.

A coram of Member G.R. Reddy directed Ozone Developers Pvt Ltd and Ozone Urbana Infra Developers Pvt Ltd to refund about 1.10 crore rupees to a homebuyer who had booked an apartment in the project “Urbana Pavilion” in Bengaluru

The Authority observed, “It is undisputed fact that the respondents failed to handover possession of the flat to the complainant as per the timeline prescribed in the agreement of sale.”

The Authority rejected the developer's attempt to retain part of the amount and held that such deduction could not be allowed when the apartment had not been handed over as agreed. “Since the Respondent failed to handover the apartment as per the time line agreed the respondent cannot deduct 20% of the total amount received,” the authority said.

The homebuyer had entered into an agreement of sale on May 30, 2014, for the purchase of an apartment in the project. The agreed date of completion was April 23, 2016. The buyer paid about 54.59 lakh rupees towards the apartment. The complaint stated that the developer failed to complete the project within the promised timeline and did not provide any update regarding its progress.

It was also stated that there was no construction activity at the site and the project remained stalled. The buyer later cancelled the booking and sought refund with interest after the developer did not return the amount.

During the proceedings, the developer stated that it was willing to refund the amount after deducting a sum equivalent to 20 percent of the total amount received. The buyer sought a refund of the entire amount along with interest on the ground that possession had not been delivered within the agreed timeline.

Rejecting the developer's contention, the Authority held that the buyer was entitled to full refund with interest. Referring to the Supreme Court's ruling in Newtech Promoters v. State of Uttar Pradesh, it noted, “Section 18(1) of the Act spells out the consequences if the promoter fails to complete or is unable to give possession of an apartment… the allottee/home buyer holds an unqualified right to seek refund of the amount with interest.”

The Authority also relied on the Supreme Court's decision in Imperia Structures Ltd. v. Anil Patni, which clarified that if a promoter fails to complete the project or deliver possession by the date specified in the agreement, the allottee who chooses to withdraw from the project is entitled to seek refund of the amount paid. The promoter is then liable to return the amount received along with interest.

It further noted, “The right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest.”

Accordingly, the Authority directed the developers to refund about 1.10 crore rupees to the homebuyer within sixty days.