No Principle Of Law That Interest In Default Charged By Builder Can Never Be Granted To Buyer: Supreme Court

The appeal before the Apex Court was filed challenging the order passed by the National Consumer Disputes Redressal Commission, New Delhi, disposing of a consumer complaint lodged before it by the appellant.

The Division Bench of Justice Dipankar Datta and Justice Augustine George Masih held, “Suffice it to say, there is no principle of law that interest in default charged by the builder can never be granted to the buyer.”

“Having noted thus, we agree with Mr. Nayyar that before compensation can be granted by the NCDRC, actual loss must be proved to have been suffered by the consumer. The objective of granting compensation cannot be altered such that it amounts to a windfall gain to the other party. Proof of actual loss would require evidence to be tendered, for, it is a guiding lamp for grant of compensation. Be that as it may, in this case, we are not deciding the actual loss suffered by the appellant. We are only concerned with deciding the rate of interest to be awarded to the appellant on the principal amount paid by him to the respondent”, it added.

Advocate Vivek Malik represented the Appellant, while AOR Kaushik Poddar represented the Respondent.

Factual Background

The appellant booked a plot in a project of the respondent named Park Land for a total sale consideration of Rs. 36,03,692 in the year 2006. By April, 2011, the appellant had paid a sum of Rs 28,79,065. In 2011, more than 5 years after the first payment, the respondent informed the appellant that, due to changes in the layout plan, it had decided to allot an alternative plot to the appellant. Since the new plot was 7 sq. yards larger than the original plot, the respondent further demanded a sum of Rs 2,30,784 as an additional amount. Accordingly, an addendum to the AGREEMENT was executed between the parties and Clause 7 provided for allotment of an alternative plot if a change in layout plan was required by any statutory authority.

Aggrieved by the respondent’s inaction in allotting the plot, the appellant terminated the AGREEMENT and issued a legal notice informing the respondent about such termination and seeking a refund of Rs 43,13,212 along with interest on account of loss of appreciation of the property. Ultimately, in April 2018, the appellant lodged the consumer complaint before the NCDRC. After the lodging of the complaint, the respondent offered the possession of the plot subject to payment of a further amount of Rs 7,60,900.33. Vide the impugned order, the consumer complaint was disposed of with directions to the respondent to refund the entire principal amount along with simple interest @ 9% p.a. from the date of each payment till the date of refund. Additionally, Rs. 25,000 was awarded towards litigation costs to the appellant.

Reasoning

The Bench, at the outset, explained, “Law is well settled that the amount of interest should be reasonable. What is reasonable varies from case to case. The same is to be granted considering the facts and circumstances of each case. The series of judgments cited by the respondent to buttress its argument that this Court has consistently granted interest @ 9% p.a. will make no difference to the decision in this lis, as all the said cases were decided in light of the peculiar facts of each case”, it stated.

The Bench noted that as per clause 22 of the AGREEMENT, possession of the plot was to be handed over within 24 months of the sanction of service plans of the entire colony. Admittedly, no offer for possession was made until the year 2018.

The Bench took note of the delay caused by the respondent in offering the plot, the fact that the respondent charged the appellant delay compensation @ 18% p.a. on the due amount, and the long wait that the appellant had to endure over a period of a decade, causing harassment and anxiety. The Bench thus held that this was an appropriate case where refund of the principal amount with interest @ 9% p.a., as awarded by the NCDRC, would not have served the purpose. The Bench was of the view that equity and fairness demanded that the respondent be put to the same rigours for charging 18% interest and face consequences similar to those imposed on the appellant for the default committed by him.

Partly allowing the appeal, the Bench ordered, “We, therefore, substitute the rate of interest awarded by the NCDRC and increase it from 9% to 18% per annum, while keeping the other terms intact. Respondent shall refund the requisite amount within a period of two months from date.”

Cause Title: Rajnesh Sharma v. M/s. Business Park Town Planners Ltd. (Neutral Citation: 2025 INSC 1149)

Appearance

Appellant: Advocate Vivek Malik, AOR Gaurav Goel, Advocates Rajesh Kumar, Aparna Rohtagi Jain, Jns Tyagi, Vivek Sinha

Respondent: AOR Kaushik Poddar, Advocate Akash Dalal

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