The Supreme Court reinforced the sanctity of contractual terms, ruling that, in cases of delayed property possession, the buyer is entitled to seek a refund along with interest at the rate specified in the original contract. The Court further emphasized that judicial bodies cannot alter mutually agreed-upon contracts.
- In the case of Venkataraman Krishnamurthy and Another (“Buyers”) vs Lodha Crown Buildmart Pvt. Ltd. (“Developer”), the Supreme Court ruling deals with a dispute over a delayed property possession. The case primarily involves the interpretation and enforcement of a contract between the Buyers and the Developer, with both parties disagreeing over the consequences of the delayed possession.
- The Buyers entered into an agreement to buy an apartment from the Developer on November 29, 2013, with a total sale consideration of INR 7,55,50,956. The agreement stipulated that possession of the apartment should be delivered by June 30, 2016, or with a grace period by June 30, 2017. However, the Developer failed to meet this deadline, prompting the Buyers to seek legal recourse.
- The Buyers approached the National Consumer Disputes Redressal Commission (NCDRC), seeking a refund of the application money of INR 2,25,31,148 paid to the Developer along with compound interest at 18% per annum, compensation for harassment, and mental agony.
- NCDRC issued a decision on November 9, 2022, directing the Developer to deliver possession within three months and offering compensation in the form of simple interest at 6% per annum from the due date of possession until the actual offer of possession. However, if the Buyers opted for a refund, the NCDRC ruled that the Developer could deduct earnest money and pay the refund with 6% interest per annum.
- Unsatisfied with NCDRC’s decision, the Buyers appealed to the Supreme Court, asserting that the NCDRC had overstepped its jurisdiction by altering the terms of the contract and by reducing the interest rate for the refund to 6%, whereas the original agreement stipulated 12% interest per annum. They also argued that the Developer had caused undue delay in delivering possession, thereby justifying the termination of the agreement.
- The Supreme Court overturned the NCDRC’s decision, stating that the NCDRC has overstepped its authority by introducing subjective criteria to alter the terms of the agreement. It emphasized that Courts and adjudicating bodies are bound by the contract and cannot rewrite or change the obligations agreed upon by the parties. The role of the Court is to interpret and enforce the terms that the parties had voluntarily agreed to.
- The Court held that the Developer had indeed delayed the delivery of possession beyond the agreed-upon period. The issuance of a “Part Occupancy Certificate” was not equivalent to handing over possession as required under the contract. This delay justified the Buyers’ decision to terminate the agreement.
- The Supreme Court ordered that the Buyers were entitled to a refund of the full amount they had paid, with interest at 12% per annum, as per the original contract, rather than the 6% per annum set by the NCDRC. The refund was to be paid in 12 equal monthly installments, beginning in April 2024.
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Venkataraman Krishnamurthy and another vs. Lodha Crown Buildmart Pvt. Ltd.
Civil Appeal No. – 971 of 2023
