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Synopsis

The Supreme Court, on July 29, 2024, upheld the National Consumer Disputes Redressal Commission's decision to refund the cost of a flat deposited by buyers in Delhi due to an inordinate delay in the housing project but enhanced the rate of interest from 9% to 12% per annum as per the agreement.

A bench of Justices B. R. Gavai and Sandeep Mehta partly allowed an appeal filed by Vidya and others against the NCDRC's order of September 22, 2022, which directed M/s Parsvnath Developers Ltd, the sole respondent, to refund the entire sum deposited by the complainants-appellants with interest at the rate of 9% per annum from the date of respective deposit until the date of refund, within a period of two months.

"Undisputedly, the facts of the case show that the project was delayed inordinately. The complainant appellants were made to suffer for long, for no fault of their own. Despite making the entire payment, they were deprived of possession within the stipulated time," the bench said.

In this case, the complainants-appellants paid a total sum of Rs 1,30,62,971 between July 15, 2008, and December 21, 2013, as per the demand of the respondent-Developer. The sum deposited was about 95% of the total sale price of a 3 BHK flat at Subhash Nagar in Delhi near the metro station.

The respondent-Developer also unilaterally transferred Flat No. 301 in Tower 3, initially allotted to the complainants-appellants, to Flat No. 702 in Tower 2, measuring 1,942 sq ft in April 2011.

In the interregnum, the period of 36 months set out in the agreement, including the grace period of 6 months, had expired. 

On the failure of the respondent-Developer to hand over possession of the flat within the expected deadline, despite timely payments and several reminders, the complainants-appellants approached the NCDRC, which resulted in the impugned order.

The complainants prayed for a refund of the entire amount paid by them at the current market value along with interest at the rate of 24% per annum from the date of booking the flat until the date of payment, as well as compensation amounting to Rs 1,37,36,350 along with interest at the rate of 24% per annum thereon, among other reliefs.

Before the top court, the complainants-appellants contended that the agreement provided that, in case of delay in completion of the project by the respondent-Developer, it was liable to pay interest at the rate of 12% per annum. Their counsel submitted that there is no logic in making the flat purchaser liable for payment of interest at the rate of 24% per annum whereas the respondent-Developer was liable to pay interest only at the rate of 12% per annum.

Applying the principle of parity, the counsel argued that the Commission ought to have awarded interest at the rate of 24% per annum. In any case, interest at the rate of 9% per annum is not sustainable in law.

The respondent-Developer, on the contrary, submitted that the delay in completion of the project was not deliberate. He argued that, since there was a delay in sanctioning of the plans by the Delhi Development Authority, the project could not be completed. He submitted that the case was duly covered under the force majeure clause and as such, interest even at the rate of 9% was not liable to be imposed upon it.

Referring to "DLF Home Developers Limited (earlier known as DLF Universal Limited) and Another Vs Capital Greens Flat Buyers Association and Others (2021)," the bench said the contention regarding force majeure is without substance.

The bench noted that the Commission had rightly directed the respondent-Developer to refund the entire amount deposited by the complainants-appellants. 

"However, we find that, insofar as the award of interest at the rate of 9% per annum is concerned, the Commission was not justified in the facts of the case to award a lesser interest than even the one agreed upon in the agreement," the bench said.

The court opined that the Commission, at least, ought to have awarded interest at the rate of 12% per annum in view of clause 7(b) of the agreement.

As a result, the bench upheld the Commission's order for a refund of the entire amount deposited by the complainants-appellants but modified the rate of interest to 12% per annum from the date of respective deposit until the date of refund. 

The court directed the respondent-Developer to pay the unpaid amount within a period of three months.