The Supreme Court held that developers must refund the principal amount paid against a sale of property with interest for delays in delivering homes, but are not liable to pay interest on personal loans taken by buyers to finance their properties.
Anupam Garg had secured a flat allotment under the Greater Mohali Area Development Authority’s (GMADA) 2011 housing scheme. Possession was due by May 2015. As GMADA failed to deliver on time, Garg opted out and sought a refund as per the Letter of Intent, which promised the return of all deposited amounts with 8 percent compounded interest, without any further liability. Garg filed a consumer complaint. Both the State and National Commissions directed GMADA to refund the amount with interest and with interest that Garg paid on his loan.
The Supreme Court reaffirmed that the 8 percent interest paid on the refund amount already covered the consequences of delay; additional damages under separate heads, such as loan interest, were impermissible.
Greater Mohali Area Development Authority (GMADA) v Anupam Garg
4 June 2025
Citations: 2025 INSC 808 | 2025 SCO.LR 6(2)[8]
Bench: Justices Sanjay Karol and P.B. Varale
Read the Judgement here.
Case Comment
Held, What flows from the above is that the amount of interest awarded is the compensation to the investment maker for the amount of money and the time he has been denied the fruits of that investment. The 8% interest awarded in this case on top of the entire amount that is being invested, is the compensation for being deprived of the investment of that money. Apart from this no amount of interest on the loan taken by the respondents could have been awarded.
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