Supreme Court Orders Developer to Refund Home Buyers with Increased Interest

The Supreme Court has upheld a National Consumer Disputes Redressal Commission order directing a developer to refund home buyers their payments for delayed possession of a flat. The rate of interest on the refund was increased from 9% to 12%, and the ruling emphasized the prolonged suffering of the buyers.

The Supreme Court on Monday upheld an order by the National Consumer Disputes Redressal Commission (NCDRC), requiring a developer to refund the entire amount paid by home buyers due to delayed possession of their flats.

A bench comprising Justices B R Gavai and Sandeep Mehta raised the interest rate from the 9% awarded by the NCDRC to 12%, citing the undue suffering of the buyers for no fault of their own.

According to the judges, "The commission should have awarded at least 12% annual interest per clause 7(b) of the agreement. The appeal is partially allowed, upholding the commission's directive for a full refund." They mandated that the new interest rate be applied from the date of deposit to the date of refund.

Furthermore, the bench ordered that the outstanding amount be paid within three months of the judgment. The justices emphasized the project's significant delays, stressing that buyers, despite paying in full, were deprived of their promised possession in due time.

The home buyers had challenged a September 29, 2022 NCDRC order that partially allowed their complaint against M/s Parsvnath Developers Limited. This order had originally set a 9% interest refund, which the Supreme Court found insufficient given the circumstances.

In 2008, Parsvnath Developers launched the 'Parsvnath Paramount' housing project, and buyers paid around INR 16 lakh initially in July 2008. They were assured possession within 30 months, with an additional six months' grace period. However, upon failing to receive possession within the agreed time frame, buyers lodged several complaints with no substantial updates from the developer.

Frustrated by the delays, buyers moved to the NCDRC for a refund at the current market value, interest at 24% per annum, and compensation. The Supreme Court has now modified the interest to 12% and maintained the refund directive.

(With inputs from agencies.)