Karnataka State Commission Holds Ozone Urbana Liable For Delay In Flat Possession; Orders Refund, Loan Discharge And Compensation

The Karnataka State Consumer Disputes Redressal Commission, Bengaluru (Principal Bench), comprising Justice T.G. Shivashankare Gowda (President) and Mrs. Divyashree M (Member), has held Ozone Urbana Infra Developers Pvt. Ltd. guilty of deficiency in service for failing to complete its “Urbana Avenue” residential project and for not delivering possession of the complainant's flat despite receiving the entire sale consideration, including a ₹75 lakh home loan disbursed by SBI. The Commission allowed the complaint in part and directed the builder to refund ₹22 lakh with 9% interest, discharge the ₹75 lakh home loan with applicable interest, and pay ₹10 lakh compensation and ₹1 lakh litigation costs. Brief Facts of the Case: The complainant, Ms. A. Padmavathy, booked Flat No. F-902 (2 BHK, 1320 sq. ft.) in the “Urbana Avenue” project developed by Ozone Urbana Infra Developers Pvt. Ltd. The total sale consideration was ₹94,48,818/-, out of which she personally paid ₹22,00,000 and availed a home loan of ₹75,00,000 from State Bank of India. A Tripartite Agreement among the complainant, the builder, and the bank was executed, and the entire loan amount was disbursed to the builder. As per the Sale Agreement dated 07.09.2022, the builder was required to complete the project and hand over possession by September 2023, with a grace period of six months. However, even after the grace period, construction was incomplete, and possession was not delivered. Due to non-execution of the sale deed and non-delivery of the flat, the complainant also faced action from the bank for non-payment of EMIs and was compelled to challenge the bank proceedings before the High Court. Repeated notices were issued to the builder to comply with the agreement terms, but with no progress, the complainant filed the present consumer complaint alleging deficiency in service and seeking refund, discharge of loan, and compensation. Contentions of the Complainant The complainant submitted that although she had paid the entire sale consideration—₹22 lakh from her own funds and ₹75 lakh through an SBI loan—the builder failed to complete the “Urbana Avenue” project or deliver possession within the stipulated period of September 2023, including the six-month grace period. She argued that the non-execution of the sale deed and the incomplete state of construction prevented her from servicing the EMIs, leading to recovery action by SBI. The complainant contended that the inordinate delay and failure to hand over the flat amounted to clear deficiency in service and sought refund of the amount paid, discharge of the ₹75 lakh loan, and compensation for the financial loss and hardship suffered. Contentions of the Opposite Party No.1 (Builder) – The builder's written version was rejected for being filed belatedly. However, its affidavit evidence was considered. Through the affidavit, the builder attempted to justify its conduct but failed to offer any explanation for the delay in completion of the project or the failure to deliver possession within the contractual deadline. No material was produced to rebut the complainant's allegations or to demonstrate that construction had progressed as agreed. Contentions of the Opposite Party No.2 (State Bank of India) SBI contended that it had sanctioned and disbursed the ₹75,00,000 loan under the Tripartite Agreement, and as per the terms, either the complainant or the builder must discharge the loan liability. The bank stated that because the builder did not complete the project, the sale deed could not be executed, preventing SBI from creating an equitable mortgage in its favour. SBI sought directions compelling the builder to execute the sale deed so that the bank could secure its loan. It maintained that its role was limited to financing, and that loan recovery action was initiated only due to non-payment of EMIs. Observations of the Commission The Commission observed that the complainant had paid the entire sale consideration—₹22 lakh personally and ₹75 lakh through SBI—under a valid Sale Agreement and Tripartite Agreement. The builder, however, failed to complete the project or deliver possession by September 2023, even after the six-month grace period. No justification for the delay was offered. The Commission also criticised SBI for releasing the entire loan amount in bulk rather than in stages, noting that this aggravated the complainant's financial hardship. While SBI's conduct was placed “under the lens,” no direct liability was imposed on the Bank. The Commission concluded that the builder's actions amounted to clear deficiency in service. Decision of the Commission The Commission partly allowed the complaint and directed the builder (OP No.1) to refund ₹22,00,000 to the complainant with 9% interest, and to discharge the ₹75,00,000 loan taken from SBI along with applicable interest. The complainant...

Karnataka State Commission Holds Ozone Urbana Liable For Delay In Flat Possession; Orders Refund, Loan Discharge And Compensation

Praveen Mishra

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Praveen Mishra

Karnataka State Commission Holds Ozone Urbana Liable For Delay In Flat Possession; Orders Refund, Loan Discharge And Compensation

Praveen Mishra

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Praveen Mishra

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