Developers are responsible to refund amount with interest equivalent to Home loan interest rate – NCDRC.

By Abhay Shah, Realty Quarter

The National Consumer Disputes Redressal Commission (NCDRC) has said that developers should repay money for delayed projects with interests at the rate at which the nationalized bank such as SBI provides home loans during the era concerned, in order to guarantee that homebuyers retrieve their cash, including interest on house loans.

The Apex Consumer Commission has stated that developers must repay homebuyers for compensation and litigation costs. In the absence of uniformity in consumer interest-rate forums, the NCDRC stated that the link with the interest rate of the house loan is ‘suitable and logical’.

The commission placed an order on request of 20 homebuyers who had invested around Rs 10 crore in the housing project Wave Garden in Mohali in 2012. The developer Country Colonisers Pvt Ltd pledged to give the apartment ownership within 3 years, but in the past 7 years, it has not been completed.

“There can be no two views regarding the repayment of the sum deposited by the complainant with the builder. The developer is required to repay the complainant incomplete. Regarding the interest on the sum deposited, it is always desirable and preferable to the fullest extent possible and appropriate, in the facts and specifics of the case,” said a bench of S M Kantikar and Dinesh Singh.

“The interest rate cannot be voluntary or whimsical, it must be apparent that a certain rationale is sensible and appropriate, and subjectivity must be minimized. Given that the subject unit in question is the housing unit, the interest rate on the house construction lease would be appropriate and logical in a residential housing project for the period in question for a scheduled nationalized bank, and if floating/variable/different rate of interest were prescribed the higher interest rate would have to be taken into account,” it added.

It also instructed the developer to repay each homebuyer Rs 1 lakh and Rs 1 lakh for the cost of litigation. The commission slashed the company for unfair business practices with a penalty of Rs 5 Lakh and ordered it to settle all of its funds within 4 weeks.

The NCDRC stated that home buyers were “placed to loss and injury, mental and physical harassment, hardship, trouble and difficulty,” even after having paid a significant sum, and that the developer was required to repay the principal amount deposited with them at equitable interest, in addition to the payment and price for litigation.