The Karnataka Real Estate Regulatory Authority (KRERA) has directed Ozone Group to refund the entire amount invested by a homebuyer after the developer failed to pay pre-EMI or equated monthly instalment to the bank the buyer had taken a loan from.
Pre-EMI is where only the interest is paid and nothing goes towards repaying the principal. The developer was supposed to hand over the project by December 2022 and pay the pre-EMI to the bank till such time.
"The developer is directed to pay Rs 53.1 lakh towards refund with interest calculated at Marginal Cost of Funds based Lending Rate (MCLR) with an additional 2 percent from May 2017 till April 2023," the order dated July 26 said.
The buyer, GY Rajasekhar, booked an apartment in Ozone Urbana developed by Ozone Group for Rs 62.3 lakh under the interest subvention scheme in 2019.
Interest subvention is the reduction of interest rate when granting a loan to a party. Rajasekhar paid about Rs 38.4 lakh in housing loan and pre-EMI to the bank.
Rajasekhar told KRERA that the developer had stopped paying the pre-EMIs thus putting more financial burden on him. He approached the authority for a refund with interest.
KRERA finding
The authority noted that the developer had failed to hand over the project within the stipulated timeline.
"As per the terms and conditions of the subvention scheme letter dated 2019, the developer has agreed to pay the pre-EMI to the bank till handover of the apartment. Though Ozone Group had paid till 2019, it later stopped paying," the order said.
Rajasekhar told the authority that he has paid Rs 7.09 lakh in pre-EMIs to the bank until January 2023.
However, Ozone Group denied all allegations and told KRERA that according to the triparty agreement signed in 2019, the homebuyer is supposed to continue paying the pre-EMIs to the bank.
Additionally, it said that the company has paid Rs 1.74 lakh towards the subvention scheme which may be considered as the final amount due and payable to the homebuyer.
The order
KRERA noted that the project has been stalled for the last three years and the developer is nowhere close to completing it.
"Having failed to pay the pre-EMIs as promised by the developer, the homebuyer is entitled to claim the entire refund amount with interest," it said.
KRERA said the homebuyer has submitted proof of the pre-EMIs paid by him that has also been acknowledged by the developer's legal and accounts section.
"The Authority concludes that the homebuyer is entitled to refund with interest as per the calculation submitted in April 2023," the order said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
