Supreme Court Orders Real Estate Developers to Pay Same Interest on Delayed Possession
The Supreme Court has ruled that real estate developers who delay handing over possession must pay the same rate of interest they charge buyers for late payments. This decision aims to protect homebuyers from harassment and financial loss.
Real EstateSupreme CourtHomebuyersDelayed PossessionInterest RateReal EstateSep 26, 2025
It should be noted that real estate developers impose an 18% interest on buyers for delayed payments. The apex court observed that “…it cannot be said that this Court has always rejected the claim of parity. Suffice it to say, there is no principle of law that interest in default charged by the builder can never be granted to the buyer.”
The Supreme Court noted that the law is well settled that the amount of interest should be reasonable. “What is reasonable varies from case to case. The same is to be granted considering the facts and circumstances of each case. The series of judgments cited by the respondent to buttress its argument that this Court has consistently granted interest @ 9% p.a. will make no difference to the decision in this lis, as all the said cases were decided in light of the peculiar facts of each case.”
A bench of Justices Dipankar Datta and AG Masih disagreed with the National Consumer Disputes Redressal Commission's (NCDRC) award of 9% interest, holding it inadequate. They instead directed that interest be paid at 18% per annum, the same rate the builder had charged the buyer for delayed payments. “In view of the conduct of the respondent, it cannot be permitted to escape with a nominal liability for its default, while it charged interest @ 18% on default committed by the appellant. Although, the rate of interest charged by the builder cannot be granted to the buyer as a rule of thumb, however, in the present case, equity and fairness demands 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,” the court observed, adding that the firm “cannot be permitted to escape with a nominal liability for its default.”
Considering the delay involved, the judgment found 9% interest to be insufficient, considering the plight of the buyer. “Keeping in mind the overall conduct of the respondent: the delay caused by it in offering the plot, the fact that the respondent charged the appellant delay compensation @ 18% p.a. on the due amount, and the long wait that the appellant had to endure over a period of a decade, causing harassment and anxiety, which are writ large, we find that this is an appropriate case where refund of the principal amount with interest @ 9% p.a., as awarded by the NCDRC, will not serve the ends of justice.”
The Supreme Court modified the NCDRC ruling and directed the developer to refund the homebuyer’s principal amount with 18% simple interest from the date of payment until refund within two months.
The case involves a buyer who had booked a plot in the Park Land project in 2006 in Haryana for ₹36.03 lakh. He paid around ₹28 lakh in the next five years but instead of being allotted the plot, the builder sought to allot an ‘alternative plot’ to him and charged an additional sum for it. Despite payments totaling ₹43.13 lakh by 2015, the plot was not delivered, and the company charged the buyer 18% interest for alleged payment delays. Sharma terminated the agreement in 2017 and approached the NCDRC in 2018. In January 2023, the NCDRC ordered the firm to refund the principal with 9% interest and ₹25,000 in litigation costs. Dissatisfied, the buyer approached the Supreme Court.
The principle of fairness and parity has been applied in this matter as it is essential to protect the homebuyers for the harassment and delay caused by the developer in handing over the possession of booked plots/ units, Sunil Tyagi, Managing Partner, ZEUS Law Associates told HT.com. “This judgement would act as a deterrent for the builders and set an important precedent on the consequences of delayed project handovers. Although, interest of 18% was granted on the refundable sums in the aforementioned case, nevertheless, it has been made clear that the exact amount of interest will depend on each individual matter and should not be regarded as a general norm,” he said.
Frequently Asked Questions
What is the main ruling of the Supreme Court in this case?
The Supreme Court ruled that real estate developers who delay handing over possession must pay the same rate of interest (18%) that they charge buyers for late payments.
Why did the Supreme Court find the 9% interest rate inadequate?
The court found 9% interest inadequate because it did not serve the ends of justice, considering the long wait and harassment faced by the buyer.
What was the initial decision by the NCDRC?
The NCDRC ordered the developer to refund the principal amount with 9% interest and ₹25,000 in litigation costs.
What was the total amount paid by the buyer by 2015?
The buyer paid a total of ₹43.13 lakh by 2015.
How does this ruling impact future cases involving delayed possession?
This ruling sets a precedent for fairness and parity, acting as a deterrent for builders and emphasizing the consequences of delayed project handovers.
Related News Articles
The Future of Trump Towers in India: A Luxury Real Estate Empire
Donald Trump's connection with India is deeply intertwined with his global real estate empire, particularly through the Trump Organization's ventures in luxury residential projects.
NRI Wins Landmark Case Against Godrej Properties, Receives Refund with Interest
An NRI based in London has won a case against Godrej Properties, receiving a refund with interest for two canceled flats. The NRI had purchased the flats in Godrej's 'The Trees' project, but the builder canceled the booking and forfeited the advance payme
Unlocking the Metaverse Economy: A Comprehensive Guide to Earning Money
Discover the various ways to earn money in the Metaverse, from virtual currencies and NFTs to virtual real estate and content creation.
Investigations Deepen: SRA Project Dispute Under Scrutiny in Baba Siddique's Murder Case
Mumbai police are delving into various angles, including real estate disputes, in the murder of former minister Baba Siddique. His involvement in SRA projects has raised several eyebrows.
Pune Municipal Corporation Issues Stop Work Notices to 158 Real Estate Developers
The Pune Municipal Corporation (PMC) has issued stop work notices to 158 real estate developers for violating the Maharashtra Municipal Corporation Act and Section 54 of the Maharashtra Regional and Town Planning Act, 1966. This decision comes after a com
Brigade and Gruhas Join Forces to Launch Rs 300 Crore Earth Fund for Proptech and UrbanTech
Brigade and Gruhas have announced the launch of the Rs 300 crore Earth Fund, aimed at driving innovation in proptech, construction tech, real estate solutions, and sustainability.