Institute of Legal and Management Studies

In an interesting order, the Supreme Court granted relief to homebuyers by enhancing interest from 9% to 18% for the delayed handover of a plot possession, observing that a builder who imposes 18% interest on buyers for delayed payments cannot evade the same liability when failing to deliver possession on time to the consumer.

“there is no principle of law that interest in default charged by the builder can never be granted to the buyer.”, the court said.

The Court observed that while the interest rate charged by a builder on delayed payments from a homebuyer cannot automatically serve as the benchmark for compensating delays in handing over possession, principles of equity and fairness may justify applying the same standard to the builder.

In this case, the Appellant had booked a plot in 2006 and paid over ₹28 lakhs, yet possession was not offered until May 2018. Therefore, it filed a consumer complaint claiming back the principle amount with interest.

A Bench of Justices Dipankar Datta and A.G. Masih disagreed with the NCDRC's award of 9% interest, holding it inadequate, and instead directed that interest be paid at 18% per annum—the same rate the builder had charged the buyer for delayed payments.

“In view of the conduct of the respondent, it cannot be permitted to escape with a nominal liability for its default, while it charged interest @ 18% on default committed by the appellant. Although, the rate of interest charged by the builder cannot be granted to the buyer as a rule of thumb, however, in the present case, equity and fairness demands that the respondent be put to the same rigours for charging 18% interest and face consequences similar to those imposed on the appellant for default committed by him. If we hold otherwise, we will be perpetuating a manifestly wrong bargain.”, the court observed.

"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 court added.

Considering the large delay involved, the judgment authored by Justice Datta found 9% interest to be insufficient, looking towards the plight of the Appellant.

“Keeping in mind the overall conduct of the respondent: the delay caused by it 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, which are writ large, we find that this is an appropriate case where refund of the principal amount with interest @ 9% p.a., as awarded by the NCDRC, will not serve the ends of justice.”, the court said.

“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.”, the court ordered.

Accordingly, the appeal was allowed.

Cause Title: RAJNESH SHARMA VS. M/S. BUSINESS PARK TOWN PLANNERS LTD.

Citation : 2025 LiveLaw (SC) 951

Click here to read/download the judgment

Appearance:

For Appellant(s) : Mr. Vivek Malik, Adv. Mr. Gaurav Goel, AOR Mr. Rajesh Kumar, Adv. Mrs. Aparna Rohtagi Jain, Adv. Mr. Jns Tyagi, Adv. Mr. Vivek Sinha, Adv.

For Respondent(s) :Mr. Nikhil Nayyar, Sr. Adv. Mr. Kaushik Poddar, AOR Mr. Akash Dalal, Adv. Mr. Kshitij Maheshwari, Adv. Ms. Arpita Mishra, Adv.