SC orders Lodha to refund Rs 2.25 cr to homebuyer with interest over delivery delay

The Supreme Court has directed Lodha Crown Buildmart, part of the listed real estate developer Macrotech Developers (Lodha), to refund Rs 2.25 crore to a homebuyer in 12 months, along with simple interest of 12 percent per annum. The refund is over alleged delay in handing over possession of a 1,966-sqft apartment bought in November 2013.

Venkataraman Krishnamurthy purchased the 4-BHK apartment for Rs 7.55 crore in the Lodha Evoq project in New Cuffe Parade at Wadala, Mumbai. As per the payment schedule, homebuyer has paid Rs 2.25 crore and the balance Rs 5.83 crore was to be paid on initiation of fit-outs.

The agreement signed between the homebuyer and the developer had mentioned that the apartment would be delivered to the homebuyer for fit-outs by June 30, 2016, or with a grace period, by June 30, 2017. However, the homebuyer alleged that the developer did not deliver possession of the apartment for fit-outs by the said date and that they had terminated the agreement.

The homebuyer approached the National Consumer Disputes Redressal Commission (NCDRC) and prayed for refund of the amount paid with compound interest thereon at 18 percent per year along with compensation for the harassment, mental agony and torture suffered by them, apart from litigation costs.

The NCDRC in November 9, 2022, disposed of the homebuyers’ consumer complaint and ordered the developer to deliver the actual physical possession of the unit in question within three months.

The NCDRC ordered that the developer shall pay delay compensation in the form of simple interest at 6 percent per annum on the total amount paid from the committed date of possession, June 30, 2016 till the date of offer of possession, November 29, 2017.

Additionally, rejecting the claim of refund by the homebuyer, the NCDRC noted that there was "some delay" in handing over possession of the apartment by the developer, but said that it was not "unreasonable", whereby the homebuyer could cancel the agreement and seek a refund.

Following this, the homebuyer approached the Supreme Court, challenging the NCDRC order.

The SC on February 22 said that Clause 11.3 of the agreement makes it clear that delay in delivery of possession of the apartment for fit-outs would result in the developer having to inform the purchaser within 30 days of the expiry of the grace period, the revised date by which the unit was likely to be ready for being offered for possession for fit-outs and if the same is accepted by the purchaser, the contract would stand extended.

The SC came down on the NCDRC stating, "It was not for the NCDRC to rewrite the terms and conditions of the contract between the parties and apply its own subjective criteria to determine the course of action to be adopted by either of them."

The SC said that it had no hesitation in holding that the NCDRC overstepped its power and jurisdiction in ignoring the binding covenants in the agreement and in introducing its own logic and rationale to decide as to what the future course of action of the parties and more particularly, the homebuyers, should be.

The SC set aside the NCDRC order of November 9, 2022 and allowed the complaint by directing the developer to refund the deposited amount of Rs 2.25 crore in 12 months with simple interest thereon at 12 per cent per annum. The first such instalment shall be payable on April 5, 2024, and the succeeding instalments shall be payable on the 5th of each calendar month thereafter, till fully paid.

An email query sent to Macrotech Developers did not get any response till the time of filing this story.