Buyers deserve interest from builders in case of default: Consumer court

Satya Prakash

Tribune News Service

New Delhi, June 14 

Noting that builder-buyer agreements are normally framed in favour of builders, the national consumer court has said home buyers deserve to receive same interest from builders in cases of default or deficiency in service. 

The National Consumer Disputes Redressal Commission termed such agreements as “unconscionable contracts”. 

“The builder exercises his right to charge penalty or interest at 18-24 per cent on the delayed payment of instalments. Thus, in our view, in the interest of natural justice the consumers at large deserve to receive same interest from opposite parties (builders) in cases of fault or deficiency,” it said in a judgment on Monday. 

The top consumer court’s observations came on the plea of two UP-based buyers who demanded interest on the amount deposited by them with the Kanpur Development Authority (KDA) for a plot in 2005. 

It asked KDA to pay an amount of Rs 8,91,880 as interest on an amount of over Rs 1.53 crore paid by complainants Prakash Gupta and Sanjay Gupta for purchase of a plot in an auction in 2005. 

The complainants were allotted the plot in 2005 for Rs 1,53,62,528. But due to an order from a Kanpur civil court, the KDA cancelled the allotment, they alleged. 

Following an order of the Allahabad High Court in 2006, the KDA refunded the amount to the buyers, but without any interest. 

The Gupta duo moved the Uttar Pradesh State Consumer Commission demanding an interest of Rs 32,49,174 but their plea was dismissed after the KDA had submitted that it had refunded the entire amount to the buyers in 2006 in accordance with rules. 

But the top consumer court took note of the fact that after the Kanpur civil court’s injunction order, the KDA "kept the matter lingering" and refunded the amount only after the complainants moved the Allahabad High Court.