Karnataka State Commission Holds Ozone Urbana Guilty of Delay; Orders ₹22 Lakh Refund, ₹75 Lakh Loan Discharge and ₹11 Lakh Compensation
Pranav B Prem
The Karnataka State Consumer Disputes Redressal Commission, Bengaluru (Principal Bench), has held Ozone Urbana Infra Developers Pvt. Ltd. liable for deficiency in service for failing to complete its “Urbana Avenue” residential project within the contractually agreed timeline and for not delivering possession of the complainant’s flat despite receiving the entire sale consideration. The Commission allowed the complaint in part and directed the builder to refund ₹22 lakh with 9% interest, discharge the ₹75 lakh home loan availed by the complainant from State Bank of India, and pay ₹10 lakh as compensation and ₹1 lakh as litigation costs.
The complaint was filed by Ms. A. Padmavathy, who booked Flat No. F-902 (2 BHK, 1320 sq. ft.) in the “Urbana Avenue” project for a total consideration of ₹94,48,818. She paid ₹22,00,000 from her personal funds and availed a ₹75,00,000 home loan from SBI pursuant to a Tripartite Agreement among the complainant, the builder, and the bank. The entire loan amount was disbursed to the builder. As per the Sale Agreement dated 07.09.2022, the builder was contractually obligated to complete the project and hand over possession by September 2023, with a further grace period of six months. However, even after expiry of the grace period, construction remained incomplete and possession was not delivered.
The complainant submitted that due to the failure to execute the sale deed and deliver the flat, she could not service the loan EMIs, which resulted in recovery proceedings initiated by SBI. She contended that the prolonged delay caused significant financial distress and constituted clear deficiency in service. The complainant issued multiple notices to the builder seeking compliance, but no progress was made, compelling her to approach the Commission.
Although the written version filed by the builder (Opposite Party No.1) was rejected for being belated, its affidavit evidence was considered. The builder did not furnish any justification for the delay in project completion nor did it produce material to demonstrate progress in construction. The Commission also noted that despite an opportunity to address the allegations, the builder failed to reconcile or rebut the complainant’s assertions.
SBI (Opposite Party No.2) submitted that loan disbursement was undertaken in terms of the Tripartite Agreement and that either the complainant or the builder was obligated to discharge the loan. It stated that because the builder failed to complete the project, the sale deed could not be executed, preventing the bank from securing its loan through an equitable mortgage. The bank contended that its actions were limited to loan recovery due to non-payment of EMIs.
Upon examining the Sale Agreement, Tripartite Agreement and documents on record, the Commission observed that the complainant had paid the full sale consideration—₹22 lakh personally and ₹75 lakh through SBI—and yet did not receive possession within the stipulated period. It also noted that release of the entire loan amount in one go rather than in stages contributed to the complainant’s financial hardship; however, no direct liability was imposed on the bank for this lapse.
The Commission held that, having failed to honour the contractual timeline without offering any explanation, the builder was guilty of deficiency in service. On these findings, the Commission partly allowed the complaint and directed the builder to refund ₹22,00,000 to the complainant with 9% interest from the dates of payment, and to discharge the ₹75,00,000 loan along with applicable interest and liabilities in favour of SBI. It further awarded ₹10,00,000 as compensation and ₹1,00,000 as litigation costs, directing compliance within three months.
Cause Title: Ms. A. Padmavathy vs. Ozone Urbana Infra Developers Pvt. Ltd. & State Bank of India
Cas No: SC/29/CC/1/2024
Coram: Hon’ble Mr. Justice T.G. Shivashankare Gowda (President), Mrs. Divyashree M (Lady Member)
