CASE NAME: Greater Mohali Area Development Authority (GMADA) V. Anupam Garg & Ors
CASE NUMBER: Civil Appeal Nos.___ of 2025 (Arising out of SLP(C) Nos. 27847—27848 of 2019)
DATE OF JUDGMENT: 4 June 2025
QUORUM: Justice Sanjay Karol and Prasanna B. Varale
FACTUAL BACKGROUND
On account of appeals instituted by GMADA against orders of the NCDRC and the State Consumer Disputes Redressal Commission, Punjab, this case came into existence. The respondents, Anupam Garg and Rajiv Kumar, were allotted under GMADA 2011 housing scheme ‘Purab Premium Apartments,’ Sector 88, Mohali.
Respondents paid substantial amounts for allotment of flats and were promised possession within 36 months from issuance of the Letter of Intent (LOI) dated 21 May 2012. However, development was not completed within the stipulated period, and the respondents, aggrieved by the delay, sought a refund of the amount deposited along with interest, compensation for harassment, and litigation costs. The State Commission upheld the complainants’ plea and directed GMADA to refund the full deposited amounts with 8% interest compounded annually, along with additional compensation. NCDRC upheld this order and added ₹20,000 in costs.
ISSUES FOR DETERMINATION
- Whether GMADA was liable to refund the entire amount paid by the respondents with 8% interest due to delay in delivering possession.
- Whether GMADA could also be directed to reimburse interest paid by the respondents on home loans.
- Whether consumer forums exceeded their jurisdiction by awarding compound interest and additional compensation beyond the contractual terms.
LEGAL PROVISIONS
- Consumer Protection Act, 1986
- Principles from Bangalore Development Authority v. Syndicate Bank [(2007) 6 SCC 711]
- GDA v. Balbir Singh [(2004) 5 SCC 65]
- DLF Homes Panchkula (P) Ltd. v. D.S. Dhanda [(2020) 16 SCC 318]
APPELLANT’S CONTENTIONS
GMADA argued that the award of additional interest (i.e., on the bank loans taken by the respondents) lacked legal basis and violated the terms agreed upon. They contended that refund with 8% interest as per LOI was adequate and that the Commissions erred by treating the bank interest as compensable loss directly payable by GMADA.
RESPONDENT’S CONTENTIONS
The respondents asserted that they had suffered financial loss, mental harassment, and had paid significant interest to banks on loans taken to invest in the project. They argued that these factors warranted additional compensation beyond the contractual 8% interest. They relied on Priyanka Nayyar’s case, where compensation was awarded considering higher loan interest paid.
ANALYSIS
The Supreme Court agreed that consumers must be compensated for delay in possession but held that the consumer forums misinterpreted Priyanka Nayyar. The interest on loans could be considered as a factor while quantifying compensation but could not be awarded separately in addition to the stipulated 8% interest under LOI.
The Court emphasized that a uniform rule cannot be applied for compensation. Compensation must be awarded based on individual facts, keeping in mind factors like stage of construction, reasons for delay, and financial impact. It clarified that interest already awarded (8% compounded annually) covers loss for deprivation of property, and separate reimbursement of bank loan interest would be duplicative.
JUDGMENT
The Supreme Court partially allowed GMADA’s appeals. It upheld the order for refund of deposited amount with 8% interest, mental agony, and litigation costs, but set aside the direction to pay the bank loan interest incurred by the respondents.
The Court ruled that such interest cannot be passed on to the developer absent exceptional circumstances or a statutory mandate. It ordered disbursement of the deposited amount (excluding loan interest) to the respondents and concluded that GMADA was under no further financial obligation.
CONCLUSION
This judgment clarifies the scope of compensation in delayed housing delivery disputes. While affirming consumer rights to refund and interest for deficiency in service, the Supreme Court curtailed excessive compensation beyond contractual obligations. It reinforced that compensation for delay must reflect actual deprivation, not include personal financial arrangements like bank loan interest, unless exceptional hardship is proven.
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WRITTEN BY HARINI S
