Homebuyers in Bengaluru's delayed Ozone Urbana project, developed by Ozone Group, have achieved a key victory. The Karnataka High Court ruled that Ozone Group promoters can be included in legal proceedings. Buyers had sought refunds exceeding INR 4 crore (USD 4.8 million) through the Karnataka Real Estate Regulatory Authority (KRERA). The ruling allows targeting promoters' personal assets, addressing a major gap in the Real Estate (Regulation and Development) Act, 2016. Despite regulations, KRERA reports developers owe over INR 486 crore (USD 5.8 million) for delayed projects, highlighting the need for further reforms to protect homebuyers.
Homebuyers in Bengaluru facing delays with their apartments in the Ozone Urbana project, developed by Ozone Group, have secured a small victory in their fight for compensation. The Karnataka High Court recently ruled that the promoters of Ozone Group can be included in legal proceedings.
The buyers filed a case with the Karnataka Real Estate Regulatory Authority (KRERA) seeking a refund for their investments exceeding INR 4 crore (approximately USD 4.8 million) in the stalled project. However, they faced a hurdle. The Real Estate (Regulation and Development) Act, 2016, does not have clear provisions to include promoters in the recovery process. This means the authorities could only target the developer company, Ozone Urbana Infra Developers Private Limited, and not the personal holdings of the promoters.
This lack of recourse frustrated the homebuyers. Despite regulations, a KRERA document revealed that Karnataka developers owe homebuyers over INR 486 crore (approximately USD 5.8 million) for delayed projects. While some recoveries have been made, 1110 recovery proceedings out of 1248 were yet to be concluded as of January 31, 2024. The slow pace of the recovery process through the district commissioner's office often leads to years of delays, pushing homebuyers like those in the Ozone Urbana project to seek alternative solutions in the high court.
The high court's decision allows the homebuyers in the Ozone Urbana case to include the promoters in their legal case. This paves the way for potentially attaching the promoters' personal assets if a judgement is ruled in favour of the buyers. This ruling could be a significant precedent for future cases involving delayed projects.
While this is a positive development for the homebuyers in this specific case, legal experts point out loopholes in the RERA Act. The act lacks clear guidelines for prosecuting promoters in execution proceedings. This creates challenges for homebuyers seeking compensation for delayed projects. Advocates are calling for amendments to the RERA Act to provide more clarity and streamline the process of holding promoters accountable.
The inclusion of promoters in legal proceedings is a step forward for homebuyer protection in India. However, further reforms are needed to address the shortcomings in the RERA Act and ensure a more efficient system for resolving disputes related to delayed real estate projects.
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