By Legal Cell
The Karnataka Real Estate Regulatory Authority (KRERA) has taken a decisive step to protect homebuyers’ interests by ordering the Ozone Group to refund the entire amount invested by a buyer in a delayed apartment in Bengaluru. The directive was issued after the developer failed to pay the pre-EMI (equated monthly installment) to the bank from which the homebuyer had availed a loan.
Pre-EMI is a payment method where only the interest is paid initially, and no amount is allocated towards the principal repayment. As part of the agreement, the developer was obligated to hand over the completed project to the homebuyer by December 2022 and simultaneously pay the pre-EMI to the bank until the handover.
According to the order issued on July 26, the developer, Ozone Group, is now directed to refund a sum of Rs 53.1 lakh to the homebuyer, GY Rajasekhar, along with interest calculated at the Marginal Cost of Funds based Lending Rate (MCLR). Additionally, the interest is to be levied at a rate of 2 percent from May 2017 until April 2023.
GY Rajasekhar had initially booked an apartment in Ozone Urbana, a residential project developed by Ozone Group, for Rs 62.3 lakh in 2019 under the interest subvention scheme.
Interest subvention refers to the practice of reducing the interest rate when granting a loan to a borrower. In this case, Rajasekhar had already paid approximately Rs 38.4 lakh as part of the housing loan and pre-EMI to the bank.
The Karnataka RERA’s decision to direct the developer to refund the entire investment comes as a significant relief to the homebuyer who had faced financial strain due to the delayed handover and the failure to pay the pre-EMI. The order seeks to restore the buyer’s confidence in the real estate sector and emphasizes the accountability of developers in meeting their commitments to homebuyers.
Moreover, the ruling holds importance not only for private developers like Ozone Group but also for government agencies, including municipalities, Urban Improvement Trusts, development authorities, Rajasthan State Industrial Development and Investment Corporation, and housing boards. The standardization of refund norms and the implementation of interest rates based on MCLR are measures aimed at promoting transparency and fostering a more reliable real estate market in Karnataka.
The KRERA’s proactive approach in safeguarding homebuyers’ rights and ensuring timely project deliveries sets a precedent for other states in India, encouraging a fair and trustworthy environment for both buyers and developers.