Karnataka HC orders Ozone Group Promoters to solve the money-related disputes for Home-buyers

Recently, in a lawsuit filed by flat buyers from a project by Ozone Group, the Karnataka High Court ordered that the company's promoters be added as parties to the case to facilitate the attachment of their personal properties and assets. The case, filed with the Karnataka Real Estate Regulatory Authority (KRERA), seeks to recover funds paid by buyers for homes in the delayed Bengaluru project, Ozone Urbana.

However, advocates and legal advisors to Karnataka RERA have stated that the Real Estate (Regulation and Development) Act, 2016, does not include provisions for making promoters a party to execution proceedings. Execution proceedings refer to the process of enforcing a court's or tribunal's judgments. 

In this case, the state government failed to recover the money buyers had invested in the delayed township. According to the real estate law, if a builder fails to pay compensation or refund money to buyers, the regulatory authority can direct the state revenue department or the district commissioner (urban) to recover the dues from the builders.

A KRERA document obtained by Moneycontrol indicates that developers in Karnataka owe homebuyers more than Rs.486 crore in refunds due to delays in apartment deliveries. As of January 31, 2024, the state revenue department had successfully completed 138 recoveries, while 1,110 recovery proceedings remain unresolved.

The representative of the homebuyer Reynold D'Souza said, “However, the slow-moving process at the DC office has made such recovery cases go on for years, so much so that the homebuyers have turned to the high court for recovery of their investments."

Upon the petition of approximately 20 homebuyers, the state high court observed in its May 27 order that the directives issued by KRERA solely targeted the company in question, namely Ozone Urbana Infra Developers Private Limited, and not its promoters.

D'Souza added that, as a result, the court ordered the homebuyers to include the promoters as parties in the new execution proceedings.

The high court order highlighted that since no orders had been issued against the promoters, the tahsildar did not possess authority over their personal properties.

Under the Real Estate Act, courts can execute orders like a civil court, and if the state real estate regulator cannot execute an order, it can be sent to a local civil court. However, an advocate and legal advisor to KRERA noted that even then, enforcing court orders is challenging because the RERA Act lacks provisions for prosecuting promoters in execution proceedings.