The Hon’ble Supreme Court of India (Supreme Court) in Sanjay Chaudhary and Anr v. Pioneer Urban Land & Infrastructure Ltd. And Anr. has overturned a National Consumer Disputes Redressal Commission (NCDRC) order permitting a developer to charge interest on outstanding payments from homebuyers.
The dispute between the parties centered around a residential flat purchase where the appellants, i.e., the homebuyers, had paid 90% of the total sale consideration by June 23, 2014. However, the developer failed to deliver the possession by the scheduled date of March 16, 2014, leading to a consumer complaint being filed by the homebuyers. The NCDRC, in its order dated January 23, 2023, partially allowed the complaint and directed the developer to issue a fresh statement of account, compensate for delays, and execute the conveyance deed upon settlement of outstanding amounts. Notably, the commission also allowed the developer to charge interest at 9% per annum on the balance amount from November 14, 2017, until payment.
The Supreme Court, in the present matter, observed that while the appellants had made substantial payments well in advance, the developer’s failure to meet the possession deadline constituted a breach of contract, triggering consumer protection concerns. NCDRC’s decision to permit the developer to levy interest, unfairly burden the homebuyers who had already fulfilled a significant portion of their financial obligations. Accordingly, the Court quashed the portion of the NCDRC order to the extent of interest being applicable on the outstanding total sale consideration payable by homebuyers.