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Vidya and Others vs M/S Parsvnath Developers Ltd.

Not available · 2024 INSC 557Decided 29 Jul 2024
Not available
Justice B.R. Gavai · Justice Sandeep Mehta · Justice K.V. Viswanathan

Background

The appellants had booked a flat in a Delhi housing project developed by Parsvnath Developers in 2008 and paid nearly the entire sale price (about 95%) over several years. The developer unilaterally shifted their allotment to a different flat and then failed to complete construction or hand over possession even after the contractual deadline (36 months, including grace period) had long passed. The National Consumer Disputes Redressal Commission ordered a refund of the entire deposited amount with 9% annual interest, and the buyers appealed for a higher interest rate.

Decision Breakdown

The Supreme Court rejected the developer's argument that delay in getting government approvals amounted to a "force majeure" excuse, relying on its own earlier ruling in a similar DLF case. It upheld the Consumer Commission's direction for a full refund but held that 9% interest was too low, given that the buyer-side default interest rate under the agreement itself was 24% and the developer's own default rate was 12%. The Court raised the interest rate to 12% per annum, applying the rate that the agreement itself fixed for the developer's delay, and ordered payment within three months.

Lesson Learnt

A builder cannot escape liability for years of construction delay by blaming approval delays or market conditions, and courts will look to the buyer agreement's own interest clauses, not just what a lower forum awards, to fix a fair rate of compensation for the money tied up.

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

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