SC asks Mantri Developers to refund maintenance deposit for Bengaluru project, upholds NCDRC order

In this case, Mantri Developers is one of several defendants in the case, including Mantri Estate Management

The Supreme Court has upheld a National Consumer Disputes Redressal Commission (NCDRC) order that directed Mantri Estate Management Pvt Ltd to return the refundable maintenance deposit of about Rs 7.1 crore to the homebuyers for a Bengaluru-based project, giving hope for homebuyers of other projects who face a similar situation.

"We are of the opinion that the NCDRC has given just and valid reasons for the conclusion arrived at. We see no reason to interfere with the well-reasoned order," said the SC order, uploaded in November and dated October 6.

In this case, Mantri Developers is one of several defendants in the case, including Mantri Estate Management.

Being a class-action suit, legal experts say the order will apply to all homebuyers in the project. However, this comes at a time when multiple cases remain pending at the Karnataka Real Estate Regulatory Authority (RERA) where developers have not refunded the maintenance deposits.

The case was argued by senior advocate Bishwajit Bhattacharyya at the Supreme Court and was instructed by advocate Chandrachur Bhattacharyya.

Related stories

Souptik Datta

Sub Editor|Moneycontrol

• 
  If illegal floors can't be razed, demolish the building, says Karnataka High Court
• 
  Karnataka RERA asks Ozone Group to repay homebuyer's home loan, clears all liabilities on buyer
• 
  India turns 2nd fastest-growing data center market in Asia-Pacific with 28% growth in capacity

The case

In the case of the Mantri Residency project in south Bengaluru, Mantri Estate Management collected a lumpsum refundable maintenance deposit of Rs 90 per square foot of the super built-up area from each of the flat buyers after completion of the project.

The project has more than 570 apartments sprawling 11-12 acres of land, according to Rajagopal Sethuraman, one of the early buyers in the project in 2007.

In 2016, the transfer of this deposit was made from Mantri Estate Management to Propcare Private Limited, a company responsible for the maintenance of the project. The contract was valid till 2019, and it was agreed that after the termination or expiry, the deposit would be refunded to the homebuyers.

"The contract was terminated in 2017 itself and the maintenance was handed over to Mantri Residency Apartment Owners Welfare Association. However, the developer failed to refund the deposit, despite several requests," Sethuraman said.

Following this, the homebuyers moved to the NCRDC court on the matter.

NCDRC relief

NCRDC noted that a maintenance agreement was signed between the Mantri Residency Apartment Owners' Association and Mantri Estate Management in 2004.

"It was clearly mentioned that the refundable maintenance deposit will be returned on the expiry of the agreement or termination as per provisions," it said.

The Commission directed the developer to refund the amount within six weeks with a delay compensation of 6 percent. It added that any delay beyond this will attract an interest of 9 percent per annum.

"However, the developer decided to appeal against the order in the Supreme Court where SC decided not to interfere," advocate Chandrachur Bhattacharyya who represented the homebuyers in NCDRC said.

Moneycontrol has confirmed that the developer has told the NCRDC that they will refund the pending amount at 9 percent interest. A list of questions has been sent to the developer and the report will be updated after receiving a response.

The impact

Homebuyers in Bengaluru say there have been many instances of promoters or servicing companies not returning the maintenance deposit they have taken from the homebuyers.

"As per Section 17 of the RERA Act, it is the responsibility of the promoters to transfer the common areas to the association of allottees and until such time, they are bound to maintain the apartment. We recommend all our home buyers of Karnataka to be aware of section 17 of RERA compliance," Dhananjaya Padmanabhachar, President of Karnataka Home Buyers Forum, who has also filed a Karnataka RERA case on a similar issue, said.

On the other hand, the advocates say that the order will have a major impact on homebuyers' rights to maintenance collections.

"Several developers collect a refundable deposit that is supposed to be returned after possession. However, in this case, the developer decided to withhold it. The NCRDC and the Supreme Court order can be used for ongoing RERA cases in different states to provide relief to homebuyers," advocate Bhattacharyya added.