Interest Charge on Balance Amount from Homebuyers in Case of Delayed Possession Unjustified: Supreme Court

In a significant judgment, the Supreme Court of India, comprising Justices B.R. Gavai and Sandeep Mehta, set aside the National Consumer Disputes Redressal Commission’s order that allowed a developer to charge 9% per annum interest on the balance amount from homebuyers due to delayed possession of a property.

The apex court emphasized the unjust nature of charging interest from appellants (homebuyers) in the context of delayed possession of their property. The judgement underscores the rights of consumers in real estate transactions, particularly in cases where the possession of the property is not handed over by the scheduled date.

The appellants, Sanjay Chaudhary and another, filed a consumer case against Pioneer Urban Land & Infrastructure Ltd. And another, after facing a delay in the possession of their flat. The National Consumer Disputes Redressal Commission had partly allowed their claim but permitted the developer to charge interest on the balance amount from November 14, 2017. The Supreme Court found this to be unjustified.

Non-Delivery of Possession: The Court noted that the developer failed to hand over possession by the scheduled date of March 16, 2014, despite the homebuyers having paid 90% of the total sale consideration.

Unjustified Interest Imposition: Justice Mehta remarked that allowing the developer to charge interest on the remaining amount from the homebuyers was erroneous and unjustified.

Protection of Consumer Rights: The judgement focused on the importance of safeguarding consumer rights in real estate transactions, stressing the need for equitable treatment and justice.

Directive for Conveyance and Possession: The Supreme Court directed the respondent-developer to convey the outstanding amount within two months and to hand over possession within 30 days of the final payment.

The apex court quashed the part of the National Consumer Disputes Redressal Commission’s order that permitted the developer to charge 9% interest. The developer was ordered to settle the account and hand over possession without delay, thereby providing relief to the appellants.

Date of Decision: April 10, 2024

Sanjay Chaudhary & Anr vs. Pioneer Urban Land & Infrastructure Ltd. & Anr