Homebuyer can refuse delayed flat, gets refund with 9% interest and reduced compensation from builder

SC partly allowed the appeal, holding that the homebuyer could not be compelled to take possession of the flat after inordinate delay and was entitled to refund with reasonable interest. It restored the NCDRC's direction granting interest at 9% p.a. on the deposited amount till actual payment, finding the HC's enhancement to 15% p.a. excessive and unjustified. SC also reduced the compensation from Rs. 10,00,000 to Rs. 7,50,000, noting the builder's character as a state instrumentality and balancing equities. The modified NCDRC order, as restored and adjusted, governs the parties' rights.

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Issues: (i) Whether the High Court was justified in setting aside the NCDRC order and enhancing the rate of interest from 9% p.a. to 15% p.a. and awarding enhanced compensation; and (ii) Whether the compensatory award of Rs. 10,00,000/- should be maintained.

Issue (i): Whether the High Court was justified in enhancing the rate of interest from 9% p.a. (as awarded by NCDRC) to 15% p.a.

Analysis: The question required assessment of whether interference by the High Court under Article 227 was warranted in modifying a fact-sensitive, reasoned determination made by the NCDRC which had considered delay, option for refund by the allottee, and the circumstances of the allotment. Precedent establishes that where possession is not delivered within specified time, the allottee is entitled to refund with reasonable interest; the appropriate rate depends on the facts and equitable balancing. The NCDRC's award of 9% p.a. followed evaluation of evidence and choice of refund by the complainant. The High Court's enhancement to 15% p.a. was not shown to be compelled by the factual matrix or legal standards applicable to such consumer disputes.

Conclusion: The High Court's enhancement of interest to 15% p.a. was not justified; the NCDRC's award of interest at 9% p.a. is restored.

Issue (ii): Whether the compensation awarded of Rs. 10,00,000/- should be sustained.

Analysis: Consideration was given to the nature of the respondent (an instrumentality of the State), the course of conduct, and proportionality of the compensatory sum relative to ends of justice. The Court found that a reduction would adequately meet justice without unduly penalising the public authority, having regard to deposits already made and the factual circumstances.

Conclusion: The compensation is reduced from Rs. 10,00,000/- to Rs. 7,50,000/-.

Final Conclusion: The appeal is partly allowed by setting aside the High Court's enhancement of interest to 15% p.a., restoring the NCDRC's award of interest at 9% p.a., and reducing the compensation awarded to Rs. 7,50,000/-. The remainder of the NCDRC order as to refund with interest is maintained.

Ratio Decidendi: Where a specialised forum has made a reasoned, fact-based determination of refund and a reasonable rate of interest for delay, supervisory interference is improper unless the rate or compensation is shown to be legally unsupportable or manifestly excessive; courts should restore a fact-based reasonable award and may moderate excessive compensation in the interest of proportionality.

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