No, Demonte Colony is a not a true story and does not depict real-life incidents. Demonte Colony is a 2015 Indian Tamil-language supernatural horror thriller film written and directed by R. Ajay in his directorial debut. The movie is produced by Mohana Movies and stars Arulnithi, Ramesh Thilak and Sananth in lead roles.
Demonte Colony is a fictional script. However, the movie is inspired by urban legends and rumours surrounding a neighbourhood in Chennai called De Monte Colony, located in Alwarpet off T.T.K Road. The writers have built upon the haunted image of De Monte Colony to create a fictional plot, complete with supernatural elements that are not rooted in reality.

Plot Summary
Four close friends, Raghavan, Sajith, Vimal and Srinivasan, get heavily drunk on a rainy night. In their drunken state, they decide to explore the infamous haunted mansion in Demonte Colony for thrills. They sneak into the dilapidated mansion and experience eerie events. One of the four friends impulsively steals a valuable diamond necklace from the house.
The group returns home without incident. However, supernatural events, such as objects moving on their own and terrifying visions, starts haunting them. A supernatural power targets the four friends one by one. The terrified friends learn through research that the colony belonged to John De Monte, a wealthy businessman whose mentally ill wife and family tragedies led to a curse on the necklace. Anyone who steals it faces deadly consequences since the spirit ensures its return to the colony.
Trapped in their apartment with no hope of escape, the four friends face intense horror, leading to a gripping climax with twists.
Real Aspects
De Monte Colony is a real place in Chennai. It is a secluded and near-abandoned area in the city. The place was owned by John De Monte who lived there with his wife, Marie. The De Montes owned several acres of land, including some of the poshest localities in the city currently. He reportedly led a tragic life, with his wife suffering from mental illness and the untimely death of his son.
A little more than a decade ago, ghost stories and rumours of hauntings began surfacing in De Monte Colony. This led to the mass exodus of residents from the colony. De Monte Colony is now an abandoned ruin and a hub of crime and antisocial activities.