SC: Parity for builders, buyers on interest rate

In a ruling that seeks to level the playing field between builders and homebuyers, the Supreme Court has held that real estate developers, who delay handing over possession, can be ordered to compensate buyers at the same punitive rate of interest they themselves levy on buyers for late payments.

- Utkarsh Anand

A bench of justices Dipankar Datta and AG Masih directed M/s Business Park Town Planners Ltd to refund the principal amount to a buyer with interest at 18% per annum -- the same rate the builder had earlier imposed on the buyer for missing a payment deadline.

"Equity and fairness demand 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," ruled the bench on Wednesday, rejecting the National Consumer Disputes Redressal Commission's (NCDRC) earlier award of 9% interest.

The dispute dates back to 2006, when the buyer, Rajnesh Sharma, booked a plot in the builder's Park Land project in Haryana for ₹36.03 lakh. By 2011, Sharma had paid more than ₹28 lakh, but possession was not offered. Instead, the builder sought to allot him an "alternative plot" and even charged additional sums for this.