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Home Buyers Entitled for Interest on Refund Even After Accepting Refund: National Commission

The National Consumer Disputes Redressal Commission (NCDRC) has ruled that a dissatisfied home-buyer can claim interest on the refund amount received by him post the builder’s inability to deliver possession of the booked flat, despite the fact that he had earlier accepted the refund amount without any protest on the lack of interest.

It all started when Vivek Kishorchandra Mehta and Komal Vivek Mehta booked a three room flat from Puranik Builders by paying a consideration of Rs.60,00,000/- However, there was no construction, so, the couple asked for the refund of the same and the amount was refunded by the builder. However, the builder did not pay any interest on the amount, therefore, the couple filed a complaint at Maharashtra State Commission. The complaint was resisted by the builder stating that only Rs.40,00,000/- were paid by the couple and the same was refunded without any deduction.  On this argument of the builder, the State Commission dismissed the complaint by stating that the couple has received back the entire amount paid towards consideration without any protest. It further stated that the relationship of the couple with the builder as consumer and service provider ended when the paid amount was refunded. It had further emphasised on the fact that the amount of refund was accepted by the couple without any protest.

However, the Hon’ble National Commission rejected the finding of the State Commission by stating that even if the agreement is cancelled and one party is aggrieved by non-implication of that agreement/understanding, Consumer Protection Act, 1986 allows the consumer to file complaint within a period of two years and in the present case the complaint has been filed within a period of two years. Hence, the finding of the State Commission does not stand on a firm legal footing. On question of protest by the couple while receiving the amount is concerned, the Supreme Court said, any protest on their part would have denied them the benefit of receiving the amount of refund and the prudence at that time demanded that they should first accept the refund and later claim for interest. Hence, both the grounds on which the complaint was dismissed by the State Commission are not sustainable.

The National Commission stated that since the amount remained with the builder for about one year and therefore, they are liable to pay the interest on this amount. Also, the builder is not entitled to deduct earnest money or any amount for that matter as there was no agreement between the parties. The Commission quoted a case of Supreme Court case Alok Shanker Pandey Vs. Union of India &Ors., II (2007) CPJ 3 (SC) wherein it was held that if money has remained for some time with the opposite parties, they are liable to pay some interest on that amount. With this the National Commission directed the builder to pay interest @6% p.a. on the amount refunded of Rs.40,00,000/- for one year i.e.  Rs.2,40,000/- (rupees two lakhs forty thousand only).

Advice from VOICE: If you had a dispute with your builder and as a consequence of which you decided to end the agreement and received the refund of the amount paid, you can still demand interest after accepting the refund amount. All you have to do is file the complaint within two years from the last cause of action. Chances are if you claim interest after receiving the refund amount, builder will deny it. However, this is a right of a consumer which no one shall refuse and doors of Consumer Forums/Commission are always open for such disputes.


Divya Patwal


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