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Supreme Court: Developer Not Liable to Pay Loan Interest; Directions on Flat Possession Issued by Apex Court

In a significant ruling, the Supreme Court today stated that if there is a delay in handing over possession of a flat or if it becomes impossible to deliver the possession, the developer is not liable to pay the interest on the home loan taken by the buyer.

This verdict has clarified the rights of homebuyers and the responsibilities of developers. If there is a delay in giving possession of a flat or if possession cannot be given at all, the developer must return the principal amount to the buyer along with interest. However, if the buyer has taken a loan to purchase the property, the developer is not responsible for paying the interest on that loan, the bench comprising Justice Sanjay Karol and Justice Prasanna B. Varale stated in the judgment.

In this case, Anupam Garg had booked a flat in 2011 under a project by the Greater Mohali Area Development Authority (GMADA) in Mohali, Punjab, by paying 10% of the amount as an advance. He was supposed to receive possession of the flat within 36 months. However, in May 2015, it was revealed that the construction was still incomplete and that possession would be delayed by another 2-3 years. As a result, Garg demanded a refund and filed a complaint in the consumer court.

Court Terms Loan Interest Irrelevant
While ruling on the petition filed by GMADA against this decision, the Supreme Court upheld the directive issued by the consumer commission to pay 8% interest on the deposited amount. However, it clarified that the developer’s liability is limited only to compensation for the delay. The Court noted that whether the buyer had deposited the amount from personal savings or through a bank loan is irrelevant to the developer, and hence, the developer is not obligated to pay the interest on the bank loan.
“State Cannot Raise Objection in Such Cases”

In another important ruling, the Supreme Court stated that a state government cannot object to an interfaith marriage that has taken place with the consent of both families. The bench comprising Justice B.V. Nagarathna and Justice S.C. Sharma ruled that if a couple has married with family consent and is living peacefully, the state cannot object based on external pressures.

The Court granted bail to Aman Siddiqui, who had been arrested by the Uttarakhand police over allegations of forced religious conversion following an interfaith marriage. Certain organizations had accused Siddiqui of converting his spouse illegally after the marriage. He had been in jail for the past six months. After the Uttarakhand High Court rejected his bail plea, the Supreme Court granted bail upon reviewing the petition.

Consumer Commission’s Ruling
The State Consumer Disputes Redressal Commission had ruled in favor of Garg. It directed GMADA to refund the amount of ₹50,46,250 deposited by Garg with 8% annual compound interest. The Commission noted that Garg had suffered mental agony due to the issue and directed GMADA to bear the legal expenses. It also ordered GMADA to pay the interest on the home loan taken by Garg from the State Bank of India for purchasing the flat.

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