Karnataka High Court orders the state to retrieve stalled homebuyers’ funds in four months.

Under the guidelines of the Karnataka RERA, homebuyers in Bengaluru projects with up to four years of delays are waiting for the state to reimburse them for their money. According to experts, the government should expedite recovery as they pinpointed the crucial issue. 

The Karnataka High Court has given the state government of Karnataka four months to recover the money the buyers of the Ozone Urbana project in Bengaluru paid. It happened due to the state government’s inability to comply with an order from the Karnataka Real Estate Regulatory Authority (RERA) requiring it to recover the funds starting in 2022.  

The delayed execution of the Karnataka RERA order to recover the money by the state government is the homebuyer’s grievance, according to the high court order. As per the high court order uploaded last week, “The order shall be complied with within four months.”

The Real Estate (Regulation and Development) Act 2016 stipulates that if a builder fails to provide buyers with apartments, the regulatory authority may issue a revenue department to start a recovery against the builder. If the builder does not reimburse or compensate homebuyers, the recovery department may commence against the builder. 

Legal experts state the deputy commissioner’s (DC) office will collect the funds from the developer as revenue from land arrears once an RR order has taken effect. 

Homebuyers, some of whom have invested crores of rupees, are stuck because of the state government’s sluggish recovery. 

Sluggish rebound

Based on the most recent information available, the revenue department has only been able to collect roughly Rs 26 crore from builders in the state as refunds or compensation for delayed apartment deliveries to buyers. It is still necessary to recover more than Rs. 245 crore. 

Moneycontrol claims that the state government still needs to retrieve 114 orders issued by KRERA for the Ozone Urbana projects, worth more than Rs 50 crore. 

“This project alone still has over Rs 50 crore that needs to be recovered. Homebuyers who have been waiting since 2020 have turned to the high court in hopes of receiving relief due to the delayed recovery process, according to homebuyers’ advocate Akash Banita. 

The requirement for substitute remedies 

Ani Kalagi, the founder of the Bangalore City Flat Owners’ Association, who is also working with the DC office, says that the main problem with this case is that the RRC orders attach the projects that have already been delayed and put up for auction. Most of these projects are still ongoing or involve unresolved land title issues. Most of these projects are still ongoing or involve unresolved land title issues. The state government is having difficulty selling the properties at auction to recoup the funds.”

Experts claim that in recovery cases in states like Maharashtra and Uttar Pradesh, the RERA has frequently acted suo moto. However, Karnataka has never enacted any legislation of this kind since 2016. 

One feasible way to solve this issue is to identify the auctionable assets builders own and provide a list to the DC office and tahsildars for attachment. The state government will be able to auction these assets and get the money much quicker in this way, Kalgi continued. 

The president of the Karnataka Home Buyers Forum, Dhananjaya Padmanabhachar, claims that the absence of a recovery timeline indicates that the state department fails to provide buyers with adequate support. He says the state government must set a deadline for the revenue department’s and the RERA’s procedures. 

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