In a landmark ruling, the Karnataka Real Estate Regulatory Authority (KRERA) has ordered GVG Infrastructure Pvt Ltd, a Bengaluru-based developer, to refund the entire amount of Rs 34.7 lakh to a homebuyer. The order came after the developer failed to deliver possession of the apartment within the promised 12-month period. This decision highlights the growing issue of delayed real estate projects in Bengaluru and the role of regulatory authorities in protecting homebuyers.
The Case of Mulberry Mist
The dispute centers around the Mulberry Mist project located in Bengaluru’s Varthur area. Homebuyers Dhimosh Mangadan and Jipsy Simon entered into a sale agreement with GVG Infrastructure Pvt Ltd in August 2018, paying an advance of Rs 23.2 lakh. The developer had committed to delivering the apartment by August 2019. However, the project remained far from completion even after the stipulated time, prompting the homebuyers to approach KRERA for relief.
The KRERA order, dated July 10, underscored the developer’s failure to comply with the terms of the sale agreement despite receiving a significant portion of the sale consideration. “This entitles the homebuyers to claim a refund along with interest,” the order stated. Consequently, KRERA has directed the developer to refund the entire amount to the homebuyers, along with a delayed interest of Rs 11.5 lakh, within two months. Furthermore, the order mandates the cancellation of the agreement signed with the homebuyer once the refund is initiated.
Widespread Issue of Delayed Projects in Bengaluru
Bengaluru, known for its booming real estate market, is currently grappling with a high number of delayed projects. According to an analysis by real estate consultancy Anarock, the city faces over 26,030 delayed units, amounting to more than Rs 28,072 crore in stalled projects. These delays are part of a broader national trend, with approximately 5 lakh homes worth Rs 4.48 lakh crore stuck across seven micro-markets in India.
The National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) account for 77% of these delayed projects. Pune holds a 9% share, while Kolkata accounts for 5%. The southern metros of Bengaluru, Chennai, and Hyderabad together represent the remaining 9% of delayed projects. Specifically, Hyderabad has about 11,450 units worth over Rs 11,310 crore delayed, and Chennai has 5,190 units valued at around Rs 3,731 crore facing similar issues.
KRERA’s Role in Protecting Homebuyers
KRERA’s intervention in the case of Mulberry Mist is a significant move towards safeguarding the interests of homebuyers. It reflects the authority’s commitment to enforcing timely project delivery and ensuring that developers adhere to the agreed timelines. The ruling also sets a precedent for other homebuyers facing similar issues, empowering them to seek redressal through regulatory channels.
Former KRERA Chairman Kishore Chandra has previously suggested that homebuyers can approach the authority to take over and complete delayed projects themselves. This approach could provide a viable solution to the widespread issue of project delays, offering homebuyers a more direct role in the completion of their homes.