Home buyers in Karnataka, who had invested large amounts to purchase property, were hopeful of falling back on the provision for a full refund from the builder as per the Real Estate Regulatory Act (RERA) in case things went wrong.
However, complaints have been pouring in from those who were given favourable orders by RERA Karnataka that the refund is yet to reach them several months after the orders had been passed.
Nirmal R., who got tired of waiting for completion of his flat, approached RERA Karnataka last year seeking a full refund. In September 2018, the RERA court told the builder to refund the money along with a compensation amount. Almost six months later, Mr. Nirmal has neither heard from the builder nor from RERA.
“After waiting for over three years, I decided to let go of the flat and asked for a refund. The builder was asked to pay ₹67.5 lakh to me, which included a delay compensation. This was in September. I agreed to the ₹7 lakh compensation amount provided the refund was made immediately. I have made multiple attempts since then to track the file, which they say is in the DC’s office. The builder is not responding. The worst thing is that according to the rules, I cannot approach the consumer court now as the case is with RERA,” he said.
According to the RERA Karnataka rules, which mention a timeline for refund, “Any refund of money along with the applicable interest and compensation, if any,...shall be payable by the promoter to the allottee within 60 days from the date on which such refund...becomes due.”
But home buyers alleged that this remains on paper.
Narayanan had invested ₹20 lakh in a flat in 2016, but work did not commence even two years later. In February 2018, he cancelled his agreement, which the developer accepted, but did not return any money. In August, he approached RERA, and received a judgment in January 2019 ordering a refund. “I am waiting for the 60-day window to end before I take any further action. The signing authority of the builder is absconding. We have filed a police complaint too,” he said.
Those who are awaiting orders said they have little optimism left.
“I approached RERA for a refund in December 2018. The project was to be completed in August 2016, failing which the agreement said I could take my money back along with interest and that the builder would clear the housing loan. In 2018 too, the project was incomplete. I am paying ₹20,000 rent, ₹65,000 as EMI, apart from the ₹24 lakh I have invested in the project in Hennur. The developer is not honouring the other judgments, and I fear mine will go the same way,” said Pramod, another home-buyer.
‘See reason for delay’
CREDAI Karnataka Treasurer S. Suresh Hari said the authority should look for the reason for the delay. “It goes against justice otherwise. They should see if there is a genuine reason. Justice has to be done to both parties,” he said.
Mr. Hari advised buyers should opt for RERA registered properties. “Once registered, members will follow orders. The authority has powers to haul them up,” he said.
‘Procedures have to be followed’
RERA Karnataka Secretary K.S. Latha Kumari said orders had been passed in 820 cases so far, which would include directions for a full refund, handover of house, or to finish incomplete work, among others.
“Orders to refund the full amount will also include the interest rate, which in some cases will be higher because of the agony caused to the complainant,” she said. She said most builders were following orders. “It is only very small builders or who have no affinity to federations and associations of developers who don’t,” she said.
Responding to complaints of the refund amount not reaching home-buyers several months after orders were passed, Ms. Latha Kumari said there were processes to be followed once the DC and the Revenue Department are brought into the picture, which will take time.
‘There are alternatives’
M.S. Shankar from the Forum for People's Collective Efforts, Karnataka Chapter (formerly Fight for Rera) said there are two ways of doing it according to sections of the Act.
According to the Act, in case of failure to pay interest, penalty or compensation imposed, it will be recoverable “as may be prescribed as an arrears of land revenue”. It also mentions that failure to comply with an order or direction “shall be enforced, in such manner as may be prescribed”.
“The Revenue Department will have thousands of other cases. If the Act is empowering the RERA authority to decide on other courses of action, they should look at stringent options, such as putting a project on hold until there is a response, not allowing sale or new launch, or blacklisting such developers until the matter is resolved. Then they will start taking these orders seriously,” said Mr. Shankar.
