Supreme Court Restores 9% Interest Award And Reduces Compensation In Housing-Delay Consumer Dispute

A Bench of Justices J.K. Maheshwari and Aravind Kumar heard an appeal against a Bombay High Court, Nagpur Bench order that had allowed a writ petition and enhanced relief in a consumer dispute arising from delay in delivery of possession of a group-housing flat. The appeal challenged the High Court's direction that the allottee be awarded interest at 15% per annum and enhanced compensation after earlier orders from the State Consumer Disputes Redressal Commission (SCDRC) and the National Consumer Disputes Redressal Commission (NCDRC).

The Court partly allowed the appeal, set aside the High Court's enhancement of interest to 15% p.a., and restored the NCDRC's order awarding refund with interest at 9% p.a. The Bench held that the NCDRC had “taken note of the relevant aspects” and had “balanced the scale by evaluating the evidence of the parties,” and that the High Court's award of interest at 15% p.a. was excessive. The Court, in its reasoning, observed: “(f) Where the plot/flat/house has been allotted at a tentative or provisional price, subject to final determination of price on completion of the project (that is acquisition proceedings and development activities), the development authority will be entitled to revise or increase the price. But where the allotment is at a fixed price, and a higher price or extra payments are illegally or unjustifiably demanded and collected, the allottee will be entitled to refund of such excess with such interest, as may be determined with reference to the facts of the case.” The Bench further noted that the NCDRC's award of interest at 9% p.a. was “fair and reasonable.” The Court also reduced the compensation previously awarded by the SCDRC from Rs.10,00,000 to Rs.7,50,000 in view of the institutional character of the appellant and the facts of the case.

Background

The dispute arose from allotment of a 3 BHK flat in a group housing project launched in 2009. The allottee deposited Rs.4,00,000 on 23.09.2009 and was allotted a flat by lottery on 03.01.2010. The allottee paid seven instalments between 31.12.2011 and 31.03.2013 and paid the eighth instalment on 26.08.2013 after assurances of timely possession. Possession was delayed and the allottee alleged deficiency in service and unfair trade practices; he also faced demands for additional amounts under threat of cancellation. He filed a complaint before the SCDRC, which allowed the complaint on 20.02.2017 and directed completion/delivery within six months and interest at 15% p.a. from July 2013 until possession. On appeal remitted to the SCDRC, the SCDRC on 07.02.2019 partly allowed relief: directed completion or refund with interest at 15% p.a., ordered compensation of Rs.10,00,000 and Rs.1,00,000 for harassment plus Rs.25,000 litigation costs.

The respondents (developer/authority) appealed to the NCDRC which, by order dated 27.07.2022, directed refund of the entire amount with interest at 9% p.a. and Rs.50,000 consolidated costs; a review petition was dismissed. The allottee challenged the NCDRC order before the Bombay High Court, which allowed the writ petition and awarded interest at 15% p.a. The authority challenged the High Court order before this Court.

On issuance of notice, this Court recorded that the appellants had deposited the entire disputed amount with interest at 15% p.a. and Rs.10 lakh; it passed interim directions regarding receipt of amounts and short-term deposits pending adjudication. The Supreme Court heard submissions of learned counsel and the allottee in person. The Bench relied on this Court's precedents, notably Bangalore Development Authority v. Syndicate Bank (2007) for the principle that where possession was not delivered within the specified time the allottee was entitled to refund with reasonable interest, and distinguished the recent decision in Rohit Chaudhary v. Vipul Ltd. (2024) on its facts. The Court restored the NCDRC's award of 9% interest on deposits till actual payment, reduced compensation to Rs.7,50,000, allowed the appeal partly and made no order as to costs.

Case Details: Case No.: 2025 INSC 398 (Special Leave Petition (Civil) No. 3802 of 2024 / Civil Appeal No. of 2025) Case Title: The Chief Officer, Nagpur Housing and Area Development Board (A MHADA Unit) and Others v. Manohar Burde Appearances: For the Petitioner(s): Mr. Shyam Divan, Senior Counsel (instructed earlier) For the Respondent(s): Mr. Tushar Mehta, Solicitor General; Shri Manohar Burde, appearing in person