Supreme Court Overturns NCDRC Order, Rules in Favor of Homebuyer
In a significant ruling delivered on November 9, 2022, the Supreme Court (SC) has overturned an order issued by the National Consumer Disputes Redressal Commission (NCDRC). This directive involves Lodha Crown Buildmart, a subsidiary of the publicly listed real estate giant, Macrotech Developers (Lodha), being instructed to refund ₹2.25 crore to a homebuyer, in addition to providing a 12% annual simple interest.
Case Background
The reimbursement is associated with the reported delay in handing over possession of a 1,966-square-foot apartment initially purchased in November 2013. For a 4-BHK apartment in the Lodha Evoq project, situated in Wadala, within Mumbai’s New Cuffe Parade, Venkataraman Krishnamurthy paid ₹7.55 crore. As per the agreed-upon payment schedule, the homebuyer had deposited ₹2.25 crore, with the remaining ₹5.83 crore earmarked for payment upon commencement of fit-outs.
According to the agreement between the buyer and the developer, the apartment was scheduled for delivery, enabling fit-outs, by June 30, 2016, which could be extended until June 30, 2017, with a grace period. The buyer contended that the developer breached the contract by failing to deliver the apartment by the stipulated deadline for fit-outs.
NCDRC's Initial Ruling
Consequently, the homebuyer approached the NCDRC seeking a refund of the amount paid, along with compound interest at 18% per annum. The claim also included compensation for harassment, mental anguish, and associated litigation expenses.
On November 9, 2022, the NCDRC addressed the consumer complaint lodged by the homebuyers, directing the developer to grant actual physical possession of the unit within a three-month timeframe. The NCDRC further mandated that the developer provide compensation for the delay, calculated as simple interest at an annual rate of six percent. This interest was to be applied to the total amount paid between June 30, 2016—the initial commitment date for possession—and November 29, 2017, the date when the offer to take possession was extended.
Despite acknowledging “some delay” in the developer's delivery of the apartment, the NCDRC rejected the buyer’s request for a refund, stating that the delay was not deemed an "unreasonable" one and that the buyer retained the option to terminate the contract and pursue a refund.
Supreme Court's Intervention
Subsequently, the homeowner appealed the NCDRC’s order before the Supreme Court.
In its ruling on February 22, the Supreme Court referenced Clause 11.3 of the agreement. This clause specifies that should the developer fail to deliver the apartment for fit-outs by the agreed-upon date, a notification must be issued to the buyer within 30 days of the grace period’s expiry. This notice should detail the revised date for when the unit will be prepared for occupancy, and, contingent on the buyer’s approval, an extension to the contract.
Supreme Court's observations
The Supreme Court critically remarked on the NCDRC's approach, stating that “It was not for the NCDRC to rewrite the terms and conditions of the contract between the parties and apply it subjective criteria to determine the course of action to be adopted by either of them.”
The apex court firmly asserted that the NCDRC had exceeded its jurisdictional boundaries by disregarding the legally binding provisions of the agreement. This decision underscores the importance of adhering to contractual obligations and respecting the autonomy of parties in defining the terms of their agreements.
Consequently, the Supreme Court allowed the complaint, nullifying the NCDRC order dated November 9, 2022. The developer is now required to reimburse the deposited sum of ₹2.25 crore within a year, along with simple interest calculated at 12 percent annually. The payment schedule includes an initial installment due on April 5, 2024, followed by subsequent installments due on the fifth day of each calendar month until the total amount is settled.