In a landmark decision, the Karnataka Real Estate Regulatory Authority (KRERA) has directed Bengaluru-based Ozone Group to repay a home loan of Rs. 65 lakh on behalf of a homebuyer, Malarselvan Tamilmani, who was not provided possession of his flat. This case sets a significant precedent as it holds the developer responsible for clearing the buyer’s financial obligations under a subvention scheme, which the developer failed to honor.
In 2015, Malarselvan Tamilmani booked a flat in the Ozone Urbana Aqua II project under a buyback scheme with guaranteed returns within 24 months. The agreement involved a subvention scheme where the buyer paid a portion of the flat’s cost upfront, while the remaining amount was financed through a home loan from Indiabulls Housing Finance. Under the terms of the agreement, the developer was to pay the pre-EMI (Equated Monthly Installment) on the loan until possession was given or the buyback period ended.
However, Ozone Group failed to provide possession as agreed and ceased paying the pre-EMI to Indiabulls, despite having received the loan disbursal of Rs. 64 lakh out of the sanctioned Rs. 75 lakh. The developer then shifted blame to the buyer, claiming that the buyer was responsible for the default. This led Tamilmani to approach KRERA for a refund of the amount paid, along with the closure of the home loan.
KRERA’s ruling was a major blow to Ozone Group, emphasizing the developer’s accountability in the tripartite agreement. The authority recognized that the loan repayment responsibility lay solely with the developer, not the homebuyer. In its order, KRERA held Ozone Group liable for the full repayment of the home loan, amounting to Rs. 64.6 lakh, along with any accrued interest and charges. This decision also cleared the homebuyer of any further liabilities related to the loan.
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Advocate Akash Bantia, representing Tamilmani, hailed the decision as a game-changer for homebuyers, stating that the ruling would protect their interests in similar future cases. The decision was also based on a previous ruling by the Karnataka High Court, which had already directed the developer to pay the pre-EMI and protect the buyer from coercive action by the lender.
Ozone Group, however, denied the allegations and defended its position, stating that according to the tripartite agreement, in case of cancellation, the lending institution was to reclaim the funds invested in construction. Despite these claims, KRERA maintained that the responsibility for loan repayment rested with the developer.
Conclusion
This ruling is a landmark case in the real estate sector, highlighting the need for developers to honor their financial commitments to homebuyers. It underscores the importance of enforcing tripartite agreements and ensuring that developers are held accountable for any delays or defaults. The decision provides much-needed relief to the homebuyer, while also setting a precedent for future disputes involving subvention schemes.
