The Supreme Court held that while there is no absolute rule for parity in interest rates between builders and buyers, the principle of equity and fairness may warrant it in cases of one-sided agreements and egregious conduct. The Court modified the awarded interest from 9% to 18% p.a., aligning the builder’s liability for delay with the rate it charged the buyer, to serve the ends of justice.
Facts Of The Case:
The appellant booked a plot in the respondent’s project in 2006, paying a significant advance. A Plot Buyer Agreement was executed in 2007, stipulating possession within 24 months of sanction of service plans and allowing the respondent to charge 18% p.a. interest on delayed payments by the appellant. By 2011, the appellant had paid over ₹28 lakhs. That year, the respondent invoked a clause to allot an alternative plot citing layout changes, demanding an additional amount. Possession was never offered. In 2017, the appellant terminated the agreement and filed a consumer complaint seeking a refund with 24% interest. The National Consumer Disputes Redressal Commission (NCDRC), based on the respondent’s offer during proceedings, ordered a refund of the principal amount with only 9% simple interest. The appellant challenged this in the Supreme Court, arguing the interest rate was insufficient given the respondent’s decade-long delay, its own practice of charging 18% interest, and the levy of various unjustified additional charges.
Procedural History:
The consumer complaint was initially lodged by the appellant before the National Consumer Disputes Redressal Commission (NCDRC). During the proceedings, the respondent’s counsel offered to repay the principal amount with simple interest at 9% per annum. The NCDRC disposed of the matter by accepting this offer and passed an order to that effect without adjudicating the case on its merits. Aggrieved by this order, which awarded what he considered to be an insufficient interest rate, the appellant, as the partly successful complainant, appealed to the Supreme Court of India under its civil appellate jurisdiction, leading to the present judgment.
READ ALSO:Supreme Court Settles Dadra & Nagar Haveli Land Case, Vacates Status Quo After Decades
Court Observation:
The Supreme Court made several key observations. It noted that while there is no absolute legal principle mandating parity of interest rates between builders and buyers, the rate of interest awarded must be reasonable and determined on the facts of each case. The Court heavily emphasized the respondent builder’s conduct, including an inordinate delay of over a decade in offering possession and its failure to justify the invocation of the clause for an alternative plot. Critically, the Court observed that the builder had itself charged the appellant interest at 18% per annum for delays. In light of this one-sided conduct and to ensure equity and fairness, the Court held that allowing the builder to escape with a liability of only 9% interest would perpetuate a “manifestly wrong bargain” and not serve the ends of justice.
Final Decision & Judgement:
The Supreme Court partly allowed the appeal. It set aside the National Consumer Disputes Redressal Commission’s (NCDRC) award of 9% simple interest. Holding that the nominal interest rate would not serve the ends of justice given the respondent’s egregious conduct and the one-sided nature of the agreement, the Court substituted the rate. It directed the respondent to refund the entire principal amount of ₹43,13,212/- to the appellant with interest at the rate of 18% per annum from the date of each payment until the date of refund. The respondent was ordered to make this payment within a period of two months from the date of the judgment.
Case Details:
Case Title: Rajnesh Sharma Versus M/S. Business Park Town Planners Ltd. Citation: 2025 INSC 1149 Appeal Number: Civil Appeal No. 3988 of 2023 Date of Judgement: September 24, 2025 Judges/Justice Name: Justice Dipankar Datta and Justice Augustine George Masih
Download The Judgement Here