2025 (3) TMI 1396 - SCH - Indian Laws

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 ... Modification of National Consumer Disputes Redressal Commission's (NCDRC) order by awarding an increased interest rate of 15% per annum on the refund amount - delay on the part of the respondent in not completing the construction within the agreed period - HELD THAT:- The NCDRC having taken note of the relevant aspects including the factum of delay and the fact that petitioner had opted for refund of money deposited, rightly held that as a home buyer, petitioner cannot be compelled to take possession of the flat after such long time, and as such ordered for refund of entire amount deposited with interest of 9% p.a. Placing reliance on the law laid down by this Court in Bangalore Development Authority v. Syndicate Bank, [2007 (5) TMI 565 - SUPREME COURT] wherein a coordinate Bench of this Court dealing with the question of grant of relief to a consumer in cases of delay of delivery of possession held that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid with reasonable interest thereon from the date of payment till the date of refund. In the present case, the High Court by the impugned order modified the finding of NCDRC and awarded interest @ 15% p.a. primarily relying upon the judgment of this Court in ‘Rohit Chaudhary and another v. Vipul Ltd. [2023 (9) TMI 1569 - SUPREME COURT], wherein this Court in order to balance the equities and to compensate the loss caused to the purchaser/complainant who had booked an office premise for his use, directed the refund of the amount paid along with interest @ 12% p.a. from the date of complaint till the date of payment. However, the issue in the instant case relates to allotment of a 3 BHK flat after payment of sale consideration and delay in delivery of same. As such, the NCDRC considering the entirety of the facts and circumstances of the case, had awarded interest @ 9% p.a., which in our view was fair and reasonable. The interest @ 15% p.a. awarded by High Court is excessive. Therefore, the impugned order hereby is setaside and the order dated 27.07.2022 passed by NCDRC in so far as it relates to award of interest @ 9% on the respective deposit till the date of actual payment is restored. Conclusion - i) The NCDRC's award of 9% interest per annum is deemed fair and reasonable, considering the complainant's choice for a refund and the delay in possession. ii) The High Court's enhancement of interest to 15% per annum is excessive and not justified under the circumstances. iii) The compensation amount is reduced from Rs. 10,00,000 to Rs. 7,50,000 to balance the interests of justice, considering the appellant's status as a state instrumentality. The appeal stands partly allowed. 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.