Homebuyer Cannot Be Forced To Accept Possession Of Flat After Long Delay, Entitled To Refund : Supreme Court

The Supreme Court reaffirmed that homebuyers cannot be forced to accept possession of a property after an undue delay and are entitled to a refund if the unit is not delivered within the agreed timeframe.

The bench comprising Justices JK Maheshwari and Aravind Kumar heard the case which revolves around a homebuyer's right to refund when a developer fails to deliver possession of a flat within a reasonable time.

A homebuyer booked a 3BHK flat in 2009 in a project by the Nagpur Housing and Area Development Board MHADA Unit), paying the full amount (Rs 4 lakhs) by 2013, but possession was delayed. The State Commission (SCDRC) initially ordered delivery of possession; but after the matter was remanded to it in appeal, the SCDRC, in 2019, directed the Board to complete the construction of the allotted flat along with a direction to pay interest @ 15% p.a. to the complainant for the delayed period w.e.f. 01.07.2013 till delivery of the possession of flat on the amount paid by the complainant. It was further ordered that, in the event construction is not completed, the amount paid by the complainant should be refunded along with interest @ 15% p.a. from the date of respective payments till realization along with compensation of Rs. 10,00,000/- towards loss suffered by him.

In appeal by the Board, the NCDRC (2022) directed the refund of the amount with reduced interest to 9% on the refund, but the Bombay High Court (2024) restored SCDRC's 15% interest on the refund, citing excessive delay by the Appellants.

Challenging the High Court's decision, the builder-appellant appealed to the Supreme Court.

Upholding the decision to refund the deposit amount, the judgment authored by Justice Aravind Kumar noted that forcing possession after much delay would be unfair because the homebuyers cannot be compelled to accept possession after unreasonable delays.

"we are of the considered view that the NCDRC having taken note of the relevant aspects including the factum of delay and the fact that petitioner had opted for refund of money deposited, rightly held that as a home buyer, the petitioner cannot be compelled to take possession of the flat after such long time, and as such ordered for refund of entire amount deposited with interest of 9% p.a.", the court observed.

The Court cited the case of Bangalore Development Authority v. Syndicate Bank, (2007) 6 SCC 711, wherein a coordinate Bench of this Court dealing with the question of grant of relief to a consumer in cases of delay of delivery of possession held that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid with reasonable interest thereon from the date of payment till the date of refund.

However, the Court modified the impugned judgment noting that the interest @15% p.a. was excessive, and instead restored the 9% p.a. decided by the NCDRC to be "reasonable".

“As such, the NCDRC considering the entirety of the facts and circumstances of the case, had awarded interest @ 9% p.a., which in our view was fair and reasonable. The interest @ 15% p.a. awarded by High Court is excessive. Therefore, the impugned order hereby is setaside and the order dated 27.07.2022 passed by NCDRC in so far as it relates to award of interest @ 9% on the respective deposit till the date of actual payment is restored.”, the court observed.

In terms of the aforesaid, the appeal was partly allowed.

Case Title: THE CHIEF OFFICER, NAGPUR HOUSING AND AREA DEVELOPMENT BOARD (A MHADA UNIT) AND OTHERS VERSUS MANOHAR BURDE

Citation : 2025 LiveLaw (SC) 360

Click here to read/download the judgment

Appearance:

For Petitioner(s) : Mr. Tushar Mehta, Solicitor General Mr. Chirag M. Shroff, AOR Mr. Digvijay Dan, Adv. Mrs. Mahima C Shroff, Adv. Mr. Anand Thumbayil, Adv. Mr. Sushant Dogra, Adv.

For Respondent(s) : Respondent-in-person