Karnataka developers owe Rs 486 crore to homebuyers in refunds

Listed developers in the state owe around Rs 10 crore in total refunds pending contributing to about 2 percent of the total share of refunds.

Developers in Karnataka owe homebuyers more than Rs 486 crore in refunds for delayed delivery of apartments, a Karnataka Real Estate Regulatory Authority (KRERA) document accessed by Moneycontrol shows.

The state revenue department has managed to complete 138 recoveries as of January 31, 2024, and 1110 recoveries are yet to be concluded.

According to the Real Estate (Regulation and Development) Act, 2016, if a builder fails to pay compensation or refund money to homebuyers, the regulatory authority can issue a revenue recovery certificate (RRC) directing the state revenue department to  recover the money from the builders.

Listed developers owe Rs 10 crore

Listed developers in the state owe around Rs 10 crore in refunds, comprising  about 2 percent of the total  refunds outstanding.

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Sub Editor|Moneycontrol

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The document shows that Puravankara Ltd owes Rs 0.24 crore, and its subsidiary Provident Housing owes about Rs 4.3 crore.

Shriram Properties owes more than Rs 5.1 crore,  while Unitech Ltd owes Rs 0.9 crore.

Slow wait for homebuyers

The total money to be recovered by the state's revenue department has almost doubled from Rs 245 crore in July 2022.

Till July 2022, of the 683 recovery orders passed by the KRERA, money was collected from builders in 84 cases. The state government has collected money in only 54 cases between July 2022 and January 2024.

Sudhakar Lakshmanaraja, a homebuyer in a Mantri Group project in Bengaluru, said he has been  waiting for over two years for his refund.

"Despite my persistent efforts, including emails and complaints to the deputy commissioner's (DC's) office, I am yet to receive a response.  I recently escalated the matter to the Chief Minister, and await a response," he added.

Currently, the Mantri group owes over Rs 4 crore to homebuyers.

One reason for the delay in recoveries is that the money to be collected from builders is categorised as revenue from land arrears. Advocates say there is no time limit for the recovery of money in the case of land arrears.

“The recovery is done as land revenue. There has been no development as such in the last two years,” said Anil Kalagi, founder of the Bangalore City Flat Owners’ Association. “The DC is  a coordinating authority for several districts . However, we find the DCs are not acting on the orders promptly. We have to get  homebuyers to prompt DCs to attach other assets of the developers to get their money back.”

In the first week of February2024, the Karnataka High Court gave the state government four months to recover homebuyers' monies in the delayed Ozone Urbana project. The Ozone group owes homebuyers a whopping Rs 93.6 crore in refunds, according to the KRERA document.

The absence of a recovery timeline, according to Dhananjaya Padmanabhachar, President,  Karnataka Home Buyers Forum, indicates that the state department is not doing its bit to assist buyers. He said that the state government needs to make this process time-bound for both the revenue department and the RERA.