Kiran Raj

The Supreme Court of India, comprising of Justice J.K. Maheshwari and Justice Aravind Kumar, adjudicated an appeal concerning the quantum of compensation and rate of interest awarded in a consumer dispute involving the Nagpur Housing and Area Development Board, a unit of MHADA. The Court partly allowed the appeal, setting aside the order of the Bombay High Court which had directed payment of interest at 15% per annum, and restored the rate of interest as 9% per annum as originally awarded by the National Consumer Disputes Redressal Commission. The compensation amount was also modified from Rs. 10,00,000 to Rs. 7,50,000.

The dispute arises from a Group Housing Project launched in 2009 by the Nagpur Housing and Area Development Board. The complainant, Manohar Burde, applied for a 3 BHK flat, depositing Rs. 4,00,000 on 23.09.2009. He was allotted a flat through lottery on 03.01.2010. As per the terms, he had to pay the remaining consideration in eight instalments. Seven instalments were paid between 31.12.2011 and 31.03.2013, and the final instalment was paid on 26.08.2013 based on the assurance of timely possession.

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The complainant alleged two primary grievances: delayed possession and an additional demand amount accompanied by threats of cancellation. Despite compliance, the flat was not delivered, leading him to file a complaint before the State Consumer Disputes Redressal Commission (SCDRC).

On 20.02.2017, SCDRC allowed the complaint, ordering possession within six months and interest at 15% per annum from July 2013 until delivery. The respondents appealed, and the matter was remanded to SCDRC for adjudication afresh.

On remand, the SCDRC partly allowed the complaint on 07.02.2019, directing completion of the flat and payment of 15% per annum interest from 01.07.2013 until possession. Alternatively, if construction was not completed, the amount paid was to be refunded with 15% per annum interest, Rs. 10,00,000 as compensation for losses, Rs. 1,00,000 for physical and mental harassment, and Rs. 25,000 as litigation costs.

The respondents appealed to NCDRC, which partly allowed the appeal on 27.07.2022, ordering refund with 9% per annum interest and Rs. 50,000 as consolidated costs. A review petition (R.A. No. 180 of 2022) was dismissed by NCDRC on 26.08.2022. A Special Leave Petition (C) No. 25157 of 2023 against this order was also dismissed by the Supreme Court on 06.11.2023.

Subsequently, the complainant filed Writ Petition No. 5052 of 2022 before the Bombay High Court, Nagpur Bench, which set aside the NCDRC's order and reinstated the reliefs sought, awarding interest at 15% per annum from the date of deposit to refund.

This led to the appeal before the Supreme Court.

In the Supreme Court proceedings, Mr. Tushar Mehta, Solicitor General of India, appearing for the respondents, contended that the High Court erred in exercising jurisdiction under Article 227 of the Constitution to modify NCDRC's findings. He submitted that the NCDRC had evaluated the evidence fairly and awarded a reasonable interest. He argued that 15% interest and Rs. 10,00,000 compensations were unjustified.

The complainant, appearing in person, defended the High Court's order, asserting persistent defaults and service deficiencies on part of the authorities, justifying the higher interest.

The Supreme Court recorded that the NCDRC had rightly observed, "as a home buyer, petitioner cannot be compelled to take possession of the flat after such long time," and therefore refund was appropriate.

It referred to the precedent in Bangalore Development Authority v. Syndicate Bank, (2007) 6 SCC 711, stating that "when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid with reasonable interest thereon from the date of payment till the date of refund."

The Court noted that NCDRC had awarded 9% interest after considering the facts, which it found fair. The judgment also distinguished the case from Rohit Chaudhary and another v. Vipul Ltd., (2024) 1 SCC 8, where 12% interest was awarded. The Court found that the facts did not justify 15% interest in the current case.

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Regarding compensation, the Court observed that the appellant is a statutory authority and the delay cannot be attributed to personal animosity. Therefore, "we deem it proper to reduce the compensation payable from Rs. 10,00,000/- to Rs.7,50,000/- as it would meet the ends of justice."

The Supreme Court allowed the appeal in part. The Court stated:

"The impugned order hereby is set-aside and the order dated 27.07.2022 passed by NCDRC in so far as it relates to award of interest @ 9% on the respective deposit till the date of actual payment is restored."

Further, it directed:

"The compensation payable is reduced  from Rs. 10,00,000/- to Rs.7,50,000/- as it would meet the ends of justice."

All pending applications were disposed of.

Case Title: The Chief Officer, Nagpur Housing and Area Development Board (A MHADA Unit) and others v. Manohar Burde

Neutral Citation: 2025 INSC 398

Case Number: Civil Appeal No. of 2025 

Bench: Justice J.K. Maheshwari and Justice Aravind Kumar

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