Case at a glance: In a dispute over an undelivered flat in Lodha Bellezza, Hyderabad, the Supreme Court has held that refunding the bank-funded part of the price to the buyer would be unjust enrichment. The buyer gets his own contribution of Rs 1,27,34,726 with 12 per cent interest under the agreement, plus Rs 15 lakh global compensation, while the bank's recovery claim is left to its pending High Court appeal.
In 2009 an NRI booked a flat for about Rs 2.31 crore, paying about Rs 51.1 lakh himself. A housing finance company disbursed about Rs 1.69 crore directly to the builder under a tripartite agreement. Possession was due by June 2011 but never came.
In 2022 the NCDRC ordered the builder to refund the entire deposit with interest and found deficiency against the lender. Both the buyer and the bank appealed.
The Key Question Before the Court
When a homebuyer's flat is not delivered, should the refund include the portion funded by the bank, and can the buyer claim rent in addition to interest?
No Double Recovery
The Court held that the tripartite agreement made the buyer liable to repay the loan but did not make the bank's money his, so refunding it to him would be unjust enrichment. He receives his own contribution (Rs 51.1 lakh paid to the builder plus about Rs 76.2 lakh repaid to the bank) at the 12 per cent rate fixed by the agreement; his plea for 18 per cent was rejected.
The rent claim failed because the Consumer Protection Act did not provide for it here, rent on top of interest would compensate the same default twice, the revised figures lacked proof, and by choosing a refund he gave up the flat. Rs 15 lakh was awarded as global compensation. The bank's deficiency was upheld because it released money without inspections, but its recovery claim belongs in its pending High Court appeal.
What the Court Actually Held
- Rs 1,27,34,726 to be released to the buyer with 12 per cent interest from each deposit date.
- A further Rs 15 lakh compensation within one month.
- The balance of the builder's deposit to remain invested pending the bank's High Court appeal.
- Appeals disposed of; no costs.
Why This Judgment Matters
- It sets out how refunds work in builder-buyer-bank tripartite arrangements.
- It limits double compensation through rent plus interest.
- It holds lenders accountable for releasing funds without checking progress.
What Should Advocates Take Away From the Judgment?
For Homebuyers' Counsel
- Separate the buyer's own payments from bank disbursements in refund claims.
- Prove any rent claim with lease deeds and receipts.
For Lenders' Counsel
- Document construction-linked inspections before releasing funds.
Key Takeaways
- Bank-funded portion is not refunded to the buyer.
- Interest follows the agreement rate.
- No rent on top of interest.
- Lender deficiency upheld.
Frequently Asked Questions
No. He gets his own contribution; refunding the bank's money to him would be unjust enrichment.
12 per cent, the rate fixed in the agreement for sale.
No, but Rs 15 lakh global compensation was granted.
Conclusion
The judgment brings clarity to the three-way relationship between buyers, builders and lenders.
Practical takeaway: In refund claims involving home loans, compute the buyer's own outflow separately and expect the lender's dues to be decided elsewhere.