SC orders builder to refund ₹43L with 18% interest for delayed possession

In a significant ruling reinforcing homebuyer rights, the Supreme Court on Wednesday directed M/s Business Park Town Planners Ltd to refund over ₹43 lakh to a plot purchaser along with 18% annual interest, enhancing the compensation earlier fixed at 9% by the National Consumer Disputes Redressal Commission (NCDRC).

A bench of Justices Dipankar Datta and Augustine George Masih partly allowed the appeal of Rajnish Sharma, who had booked a plot in the company’s “Park Land” project back in 2006. He alleged undue delay, unfair charges, and harassment spanning more than a decade.

“Keeping in mind the delay caused by the respondent, the unfair imposition of 18% penalty on the buyer for delays, and the long wait endured by the appellant, a refund with only 9% interest would not serve the ends of justice,” Justice Datta wrote in the judgment.

The court noted that while builders cannot automatically be made to pay buyers the same penalty charged on them, in this case, equity and fairness demanded parity.

“If we hold otherwise, we will be perpetuating a manifestly wrong bargain,” the bench observed, adding that the firm “cannot be permitted to escape with a nominal liability for its default.”

A Long Battle Since 2006

Sharma booked the plot for ₹36.03 lakh in March 2006, paying ₹7.86 lakh upfront.

Under the 2007 agreement, the developer was bound to hand over possession within 24 months of approval of service plans, with a clause imposing 18% penalty on buyers for late payments.

By 2011, Sharma had paid nearly ₹29 lakh, but instead of the allotted plot, he was offered an alternative one and asked to pay ₹2.3 lakh more.

Despite payments totaling ₹43.13 lakh by 2015, the promised possession was never delivered. Instead, the company charged him 18% interest for alleged payment delays.

Sharma terminated the agreement in 2017 and approached the NCDRC in 2018.

In January 2023, the NCDRC ordered the firm to refund the principal with 9% interest and ₹25,000 in litigation costs. Sharma appealed, seeking higher compensation.

Relief for Homebuyers

With the Supreme Court’s ruling, the builder must now pay back the full ₹43.13 lakh along with 18% annual interest, a move seen as strengthening accountability in the real estate sector.  With inputs from PTI