‘Interest on refund is like compensation in consumer disputes'

Time of India

3 hours ago

New Delhi: The National Consumer Disputes Redressal Commission (NCDRC), while holding builders liable for deficiency in service, observed that in consumer cases, awarding interest along with a refund serves as a form of compensation.
The commission's bench of Justice Sudip Ahluwalia and Sadhna Shanker was hearing an appeal filed by a builder against the orders of a state commission. The state commission had found the builder's service deficient and directed a refund of Rs 34,27,747 with 12% interest, Rs 1 lakh as compensation, and Rs 11,000 as litigation costs to the complainant.
On June 16, NCDRC modified the state commission's order based on legal precedents.
It set aside the Rs 1 lakh compensation but increased the litigation costs from Rs 11,000 to Rs 40,000.
In 2011, the complainants booked a flat in a project by Barnala Builders on the Chandigarh-Ambala Highway after seeing advertisements that claimed it was fully developed and clear of legal issues. They paid a large portion of the price, but the builder did not provide the buyer's agreement at first. Later, the builder gave them an agreement with many unexpected and unfair terms.
The complainants also received several arbitrary service tax demands without a proper explanation. Despite paying over Rs 34 lakh, they were only given a paper possession letter, while actual development, utility connections, and statutory certificates were still missing. They asked for a refund, but the builder only threatened forfeiture.
They filed a complaint before the state commission of Punjab in 2014. The commission in 2016 held that the builder had been deficient in service and ordered a refund of Rs 34,27,747 with 12% interest, Rs 1 lakh compensation, and Rs 11,000 as litigation costs. Aggrieved, the builder filed an appeal before the National Commission.
The national commission reaffirmed that in consumer cases, giving interest and a refund is a kind of compensation.