Supreme Court orders Lodha to refund Rs 2.25 cr to homebuyer

The Supreme Court (SC) has instructed Lodha Crown Buildmart, a division of the real estate developer Macrotech Developers (Lodha), to reimburse Rs 2.25 crore to a homebuyer within a year, alongside a simple interest of 12% per annum. This reimbursement is due to an alleged delay in handing over possession of a 1,966-square-foot apartment that was purchased in November 2013.

Venkataraman Krishnamurthy bought the 4-bedroom apartment for Rs 7.55 crore in the Lodha Evoq project situated in New Cuffe Parade, Wadala, Mumbai. According to the payment plan, the homebuyer paid Rs 2.25 crore, with the remaining Rs 5.83 crore due upon initiation of fit-outs.

The contract signed between the homebuyer and the developer stipulated that the apartment would be delivered for fit-outs by June 30, 2016, or with a grace period, by June 30, 2017. However, the homebuyer claimed that the developer failed to hand over possession of the apartment for fit-outs by the specified date, leading to termination of the agreement.

Seeking redress, the homebuyer approached the National Consumer Disputes Redressal Commission (NCDRC) and requested a refund of the amount paid, with compound interest at 18% per year, along with compensation for the distress and expenses incurred, in addition to legal costs.

In a decision dated November 9, 2022, the NCDRC disposed of the homebuyer’s complaint and instructed the developer to deliver physical possession of the unit within three months. The NCDRC also ordered the developer to pay delay compensation in the form of simple interest at 6% per annum on the total amount paid from the agreed possession date of June 30, 2016, until the date of possession offer, November 29, 2017.

Furthermore, the NCDRC dismissed the homebuyer’s refund claim, citing that while there was “some delay” in possession, it was not “unreasonable” enough for the agreement to be cancelled and a refund sought. Dissatisfied with this ruling, the homebuyer appealed to the Supreme Court.

On February 22, 2024, the Supreme Court ruled that Clause 11.3 of the agreement stipulated that a delay in possession for fit-outs would necessitate the developer informing the purchaser within 30 days of the grace period’s expiry about the revised possession readiness date. The Court criticised the NCDRC, stating that it was not within their purview to rewrite contract terms or impose subjective criteria.

Consequently, the Supreme Court overturned the NCDRC’s November 9, 2022, order and accepted the complaint, directing the developer to refund the deposited Rs 2.25 crore within 12 months, with a simple interest of 12% per annum. The initial payment is due on April 5, 2024, followed by subsequent payments on the 5th of each month until the full amount is repaid.