SC Orders Builder to Refund Plot Seeker with 18% Interest in Delayed Possession Case

The Supreme Court, on September 24, 2025, observed that there is no absolute principle of law that interest charged by a builder on a buyer's default can never be granted to the buyer for the builder's own default.

The observation was made in a property dispute where the court allowed a plea by a plot seeker to receive a refund with interest at 18 per cent per annum.

A bench of Justices Dipankar Datta and Augustine George Masih, hearing the appeal by Rajnesh Sharma against M/s Business Park Town Planners Ltd, stated that the amount of interest should be reasonable and that what is reasonable varies on a case-by-case basis, considering the specific facts and circumstances.

"It cannot be said that this court has always rejected the claim of parity,'' the bench said.

The bench held that while the rate of interest charged by the builder cannot be a "rule of thumb" for the buyer, in the present case, equity and fairness demanded 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," court said.

The court, however, agreed that the objective of granting compensation cannot be altered to amount to a "windfall gain" for the other party. It also noted that proof of actual loss would require evidence to be presented, as it serves as "a guiding lamp for grant of compensation".

The appellant, Rajnesh Sharma, had challenged the order of the National Consumer Disputes Redressal Commission (NCDRC), New Delhi, dated January 13, 2023. The NCDRC had disposed of his complaint with directions to the respondent to refund the entire principal amount of Rs 43,13,212 along with simple interest at the rate of 9% p.a. Sharma contended that he had paid Rs 43,13,313, while the initial sale consideration was Rs 36,03,692. He submitted that the respondent had charged him interest at the rate of 18% p.a. but agreed to give back the principal amount with only 9% interest, which he argued was "in defiance of logic and reason".

The respondent, M/s Business Park Town Planners Ltd, argued that the Supreme Court has consistently granted interest at the rate of 9% p.a. to consumers for deficiency in services. It also contended that its claim for charging interest at 18% on default was supported by the agreement, while the appellant's claim for the same interest could not be sustained as he had not provided evidence to prove actual loss. The respondent added that a consumer cannot, as a matter of routine, be awarded compensation at the rate charged by the builder and that if the builder-buyer agreement is found to be one-sided, it cannot be enforced even at the instance of the buyer.

Court rejected these contentions, observing that the prior cases cited by the respondent were decided "in light of the peculiar facts of each case" and that those verdicts did not give "elaborate reasons for rejecting the claim for parity".

The bench found that in those matters, the rate of interest was reduced or increased "based on other factors peculiar to the facts and circumstances of each case, such as the prevailing market conditions, lockdown due to COVID, et cetera".

The bench noted that in view of the respondent's conduct, including the long delay, it could not be permitted "to escape with a nominal liability for its default".

Court noted that the plot, booked in 2006, was to be handed over within 24 months of the sanction of service plans, but no offer for possession was made until 2018. It also noted the developer’s conduct in April 2011, when it invoked clause 7 of the agreement and allotted an alternative plot “due to changes in the layout plan".

Clause 7 provided that the location of the plot may be changed if required by the government or any statutory authority. The respondent contended that the alternative allotment was made in 2011 and the appellant raised no protest until 2018. The bench countered, "The answer is neither here nor there. Whether or not the appellant raised a demur is not relevant for validation of the respondent’s conduct".

The bench observed that this was an appropriate case where a refund of the principal amount with interest at 9% p.a., as awarded by the NCDRC, would not serve the ends of justice.

It kept in mind the overall conduct of the respondent, the delay in offering the plot, and the fact that the respondent had charged the appellant delay compensation at the rate of 18% p.a. Court further noted that the appellant had to "endure a long wait over a period of a decade, causing harassment and anxiety, which are writ large".

Court, therefore, partly allowed the appeal, substituting the rate of interest awarded by the NCDRC and increasing it from 9% to 18% per annum, while keeping the other terms intact. The bench ordered the respondent to "refund the requisite amount within a period of two months from date".

Case Title: Rajnesh Sharma Vs M/s Business Park Town Planners Ltd

Judgment Date: September 24, 2025

Bench: Justices Dipankar Datta and Augustine George Masih