A file photo of workers at a construction site. The complainants had booked a flat in the 185-acre Ozone Urban Township. In 2015, they paid 90% of the total cost. However, the builder failed to hand over the flat.
| Photo Credit: PICHUMANI K
In a significant ruling, the Karnataka Real Estate Regulatory Authority (K-RERA) has ordered the impleading of seven directors of Ozone Urbana Infra Developers Pvt. Ltd., a Bengaluru-based company, in an ongoing execution case. The decision comes after repeated failures by the company to comply with refund orders issued in favour of homebuyers Vinod Kumar and Parul Chaudhary.
The complainants have said this ruling will protect the interest of homebuyers who are at the mercy of realtors.
The plaintiffs in 2020 approached K-RERA under Section 31 of the Real Estate (Regulation and Development) Act (RERA Act), demanding a refund with interest. The complainants had booked a flat in the 185-acre Ozone Urban Township and in 2015 paid 90% of the total cost. However, the builder failed to hand over the flat.
Their plea was allowed by the authority and an order was issued for refund in 2022. However, the execution of the order faced hurdles as the company reportedly had no assets. At the requests of K-RERA, the tahsildar had issued auction notices to the directors of the company to recover the money. The company owes over ₹170 crore. The notices were issued for properties of the directors as the company did not have any assets in its name.
In December 2024, the Central Crime Branch registered a cheating case against Ozone Urbana Infra Developers Pvt. Ltd. along with officials of private banks for allegedly cheating homebuyers and diverting the loan amount availed in the names of the buyers.
Based on a complaint by Ozone Urbana Buyers’ Welfare Association, the CCB officials charged the company, its members, and bank officials with criminal breach of trust, criminal conspiracy, and cheating under The Karnataka Protection of Interest Depositors in Financial Establishment Act.
Meanwhile, the directors of the company moved the High Court seeking to quash the notices issued by the tahsildar. The petitioners contended that the assets which received notices were not registered under the name of the company but were private properties in the name of private individuals (or directors).
The HC had quashed the notices. As the buyers had impleaded in the HC, the court instructed K-RERA to bring the company’s directors into the proceedings asking the buyers to reapproach the authority.
K-RERA which heard the complaints again noted that the HC had already established a prima facie case of cheating by the builder. The authority observed that the company owed more than ₹170 crore in various execution orders but had no assets to satisfy them. This prompted the need to hold the directors personally accountable under the legal doctrine of lifting the corporate veil.
K-RERA stated that while a company is a separate legal entity, it cannot function without its directors. The authority stressed that shielding directors behind corporate identity would amount to an abuse of the law, leaving homebuyers helpless.
“This decision strengthens homebuyer protection and serves as a warning to real estate developers who attempt to evade financial liabilities through legal loopholes. By implementing the directors, K-RERA has ensured that individuals behind the company’s operations are held accountable for non-compliance,” said Mr. Vinod Kumar.
K-RERA chairman Rakesh Singh said the authority was committed and issued the order after looking at the merits of the case.
Efforts to reach the directors of the company did not yield any results.
Published – February 09, 2025 07:00 am IST
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