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Builder liable to pay interest on booking amount even in the absence of agreement

In VIVEK KISHORCHANDRA MEHTA vs PURANIK BUILDERS PVT. LTD. & ANR., this appeal was filed by the appellant against the order of dismissal of the complaint by the State Consumer Disputes Redressal Commission, Maharashtra.  

The complainant alleged that an amount of Rs.40,00,000/- were paid as booking advance on 25.4.2014.  However, the complainants came to know on 22.3.2015 that there was no three BHK flat in the project though the booking was made for three BHK flat.  Accordingly, the complainants objected to issue of any allotment letter by the opposite parties and sought refund of the paid amount.  Opposite parties agreed to repay on current market price or atleast 18% p.a. interest on the paid amount.  The actual amount was refunded from August, 2015 to October, 2015.  However, no interest has been paid by the opposite parties though the money remained with opposite parties for over a year. 

The State Commission mentioned that the amount of refund was received by the complainants without any protest, and concluded that the relationship of the complainants with the opposite parties as consumer and service provider ended when the paid amount was refunded by the opposite parties to the complainants. 

The NCDRC decided that the question is even if the agreement is cancelled and one party is aggrieved by non-implication of that agreement/understanding, Consumer Protection Act allows the consumer to file complaint within a period of two years and in the present case the complaint has been filed within a period of two years.  Hence, the finding of the State Commission does not stand on a firm legal footing.  So far as the question of protest by the complainants while receiving the amount is concerned, any protest on their part would have denied them the benefit of receiving the amount of refund and the prudence at that time demanded that they should first accept the refund and later claim for interest. Hence, both the grounds on which the complaint has been dismissed by the State Commission are not sustainable.

Coming to the question of interest, the NCDRC referred to the judgment of Hon’ble Supreme Court in Alok Shanker Pandey Vs. Union of India where the Apex court said that it may be mentioned that there is misconception about interest.  Interest is not a penalty or punishment at all, but it is the normal accretion on capital.  For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount.  Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period.  Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B. it is clear that if money has remained for some time with the opposite parties, they are liable to pay some interest on that amount.

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