KRERA Pulls Up Developer for Failing to Comply with Orders; Slaps Penalty of Up to 5% of Project Cost

Bengaluru, April 15: The regulatory action comes after repeated non-compliance by Ozone Urbana Infra Developers Private Limited in refunding homebuyers, despite previous orders and subsequent enforcement proceedings.

The Case

Homebuyers in the Ozone Urbana project approached KRERA after facing significant delays and defaults by the developer in delivering apartments. On August 5, 2023, KRERA ordered the developer to refund:

• ₹1.42 crore in one complaint

• ₹1.13 crore in another complaint

Despite issuance of Recovery Certificates, the developer failed to comply within stipulated timelines.

Penalty Imposed

KRERA directed its secretary to initiate penalty proceedings under Section 63 of the RERA Act , with fines that could extend up to 5% of the estimated project cost.

Directors Also Liable

Invoking Section 69 of the Act , KRERA issued show-cause notices to the managing director and other directors responsible for the company's operations, asking them to appear within 30 days to explain why penal action should not be initiated against them.

Authority's Observation

"The order dated 05/08/2023 is undisputed. The burden to demonstrate compliance lies upon the developer once the existence of the order and lapse of the compliance period is established. The developer has not placed material demonstrating full compliance within the stipulated time."

Legal Expert's View

Advocate Akash Bantia (representing the homebuyers) called it a landmark ruling: "This groundbreaking order by RERA marks the first-ever invocation of its penal provisions, imposing hefty penalties on the promoter for non-compliance with authority orders. It holds directors jointly and severally liable, unprecedented in RERA jurisprudence."