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The Supreme Court has ruled that builders must refund the purchase amount with agreed interest in case of delayed possession but are not liable to reimburse buyers' home-loan interest. The case involved a Mohali project where buyers withdrew due to a 2-3 year delay and sought both the refund with 8% contractual interest and their SBI loan interest. The Court allowed only the contractual interest, stating that developers are not responsible for buyers' private financing. The decision overturns earlier consumer forum rulings and affirms that builders' obligations stem from contracts and statutory terms-not from individual loan burdens taken by buyers.
The Supreme Court recently ruled that builders are obligated only to refund the purchase amount with agreed-upon interest when possession is delayed and not to compensate for any separate home-loan interest paid by buyers. Advertisement
The case stemmed from a Mohali housing project where buyers paid 10% upfront, expecting delivery within three years. Discovering delays of another 2-3 years, they withdrew and sought a full refund plus contractual 8% interest and SBI loan interest. Consumer forums ordered both, but the apex court accepted the refund and contractual interest only, citing absence of 'exceptional or strong reasons' to cover loan interest.
The bench clarified that developers' liabilities derive solely from the contract and statutory norms not from buyers' private financing decisions. It highlighted that the 8% rate is compensation for denied capital use, not for external loan costs.
The ruling overturns earlier consumer?forum decisions and aligns with prior high?court precedents that reject blanket awards tied to financing choices. Builders are now secure against open?ended liabilities, but buyers must bear financing risks if delays extend beyond timelines.
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