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Madhu Kudapa (formerly K. Madhusudhan Rao) v. M/s Lodha Healthy Constructions and Developer Private Limited (LHCPL) & Anr.

Civil Appeal · 2026 INSC 1131Decided 15 Oct 2026
Civil Appeal No. 8994 of 2022
Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

Background

An NRI buyer booked a Hyderabad flat in 2009 for about Rs. 2.3 crore, financing most of it through an HDFC loan under a tripartite agreement that disbursed about 95% of the price directly to the builder. The builder failed to deliver possession on time and lacked required clearances. The buyer sought a full refund with interest and compensation; the bank, meanwhile, pursued him for unpaid loan interest.

Decision Breakdown

The consumer commission had ordered the builder to refund the entire amount paid, including the bank's disbursed loan money, with 9% interest, and found the bank deficient for disbursing funds without verifying construction progress. The Supreme Court held the buyer was entitled only to the amount he personally paid (not the bank's loan disbursement, which remained a separate debt matter), with 12% interest as fixed in his own sale agreement. It upheld the bank's deficiency finding and modest compensation, rejected a separate rent-reimbursement claim as double compensation once a refund remedy was elected, but awarded a lump-sum Rs. 15 lakh for the 15-year ordeal.

Lesson Learnt

In tripartite home-loan arrangements, a bank's disbursal to the builder doesn't automatically become the buyer's own money for refund purposes: only amounts paid from the buyer's own pocket are recoverable as a refund, and electing a refund remedy with a fixed interest rate generally forecloses an additional rent claim for the same period.

Official source (sci.gov.in)View Judgment (PDF)

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