The Karnataka Real Estate Regulatory Authority (KRERA) has pulled up a developer for failing to comply with the authority's directions and orders and has imposed a penalty of up to 5% of the project cost.

“The Secretary, KRERA, to initiate penalty proceedings under Section 63 of the Act upon the Respondent Company for failure to comply with the earlier orders of this Authority. The penalty shall be cumulatively extended up to 5% of the estimated project cost payable within 60 days,” the order said.

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 initiated by the authority.

The case

In this case, the homebuyers in the Ozone Urbana project had approached KRERA after facing significant delays and defaults by the developer in delivering the apartments. Citing failure to meet both contractual and statutory obligations, the complainants sought a refund of the amounts paid along with applicable interest.

“This authority, after affording sufficient opportunities to the developer and upon detailed consideration of the matter over a period of time, was pleased to pass orders in favour of the buyers directing the developer to refund ₹1.42 crore in one complaint and ₹1.13 crore in another vide order dated 05/08/2023 respectively along with specific directions issued to the developer for compliance within the stipulated period,” KRERA said.

However, despite the issuance of these orders, and even after execution proceedings were issued, initiated, and Recovery Certificates (RRCs) were issued, the developer failed to comply with the refund directions within the stipulated timelines, the order said.

“The buyers submit that such non-compliance constitutes a clear violation of the orders of this authority and attracts penal consequences under Section 63 of the Real Estate (Regulation and Development) Act, 2016, which provides for the imposition of a penalty for failure to comply with orders or directions of the Authority,” the authority said in the order.

The authority also said that, since the developer is a company, provisions under Section 69 would apply, making all individuals responsible for the conduct of its business, including directors, managers, and officers, liable under the Act.

“The earlier order was passed only against the company. The directors were not parties in the earlier proceedings. The corporate veil cannot be lifted routinely. The respondent further submits that RERA's jurisdiction extends only to promoters, allottees, and real estate agents. The directors cannot be fastened with liability absent specific allegations. The sale agreements were executed between the company and the complainants. The cirectors are not being signatories, cannot be made personally liable,” the order said.

A list of questions has been sent to the developer. The story will be updated once a response is received.