SC Orders 18% Interest Refund to Homebuyer After 12-Year Delay in Plot Handover
The Supreme Court has ordered a real estate developer to refund the full amount paid by a homebuyer, along with 18% annual interest, after failing to hand over possession of a plot for nearly 12 years.
A Bench of Justices Dipankar Datta and Augustine George Masih modified the 2023 order of the National Consumer Disputes Redressal Commission (NCDRC), which had only directed a refund with 9% interest.
The Court said that since the builder had charged 18% interest on delayed instalments from the buyer, fairness required that the builder face the same liability for its own delay.
The case dates back to 2006, when Rajnesh Sharma booked a plot and regularly deposited large sums as demanded by the developer. However, the builder did not hand over possession within the promised time. In 2011, the builder unilaterally changed the allotment, raised additional charges such as enhanced external development costs, preferential location charges and penal interest, but still failed to deliver possession. Even by 2018, possession was offered only on the condition of paying fresh charges.
Frustrated, Sharma cancelled the agreement in 2017 and approached the NCDRC in 2018. The builder offered to refund the principal with 9% interest, which the Commission accepted, awarding only ₹25,000 as litigation costs.
Aggrieved, Sharma moved the Supreme Court. He argued that awarding only 9% interest was unfair since the builder had imposed 18% penal interest on him. The builder, however, defended the NCDRC order, saying consumer compensation should reflect actual loss and pointed to earlier cases capping interest at 9%.
The Supreme Court rejected this view, noting that there is no fixed rule against granting the same rate of interest that builders impose on buyers. The Court emphasised that reasonableness must be judged case by case. In this matter, the long delay, arbitrary charges, and lack of evidence for layout changes showed clear misconduct by the builder.
The Court concluded that granting only 9% interest would amount to an “unfair bargain” against the buyer. It therefore ordered the developer to refund the full amount with 18% simple interest per annum from the dates of deposit.
