Alok Singh
On 4th June, 2025, the Supreme Court of India in Greater Mohali Area Development Authority (GMADA) v. Anupam Garg & Others [2025 INSC 808] ruled that a developer cannot be held liable for paying the bank loan interest incurred by a homebuyer due to delays in the delivery of possession. The matter was presented before the bench comprising Justice Sanjay Karol and Justice Prasanna B. Varale.
The case involves the 2011 project of GMADA, ‘Purab Premium Apartments’, Mohali. Homebuyers Anupam Garg and Rajiv Kumar were allotted flats in 2012, with possession promised within 36 months (by May 2015). The Letter of Intent (LOI) allowed buyers to withdraw and receive a refund with 8% annual interest in case of delays.
When possession was delayed, the buyers, who had loans from the State Bank of India and the State Bank of Hyderabad, filed complaints seeking refunds, damages, and reimbursement of loan interest.
In 2018, the State Consumer Disputes Redressal Commission of Punjab ruled in favour of the buyers, ordering GMADA to refund ₹50,46,250 and ₹41,29,619 with 8% interest. Additionally, GMADA was required to pay ₹60,000 for mental harassment and ₹30,000 for litigation costs. The National Consumer Disputes Redressal Commission (NCDRC) upheld this decision, citing a previous case on loan interest compensation.
The Supreme Court, while partially allowing GMADA’s appeal, set aside the direction to reimburse the home loan interest. Justice Sanjay Karol observed that the method by which flat buyers obtain the necessary finances, whether through their savings, a loan, or any other permissible means, is not something that the developer of the project needs to consider.
The Court ruled that an 8% compound interest on the refunded amount fairly compensates the buyers for the possession delay. It noted that the commissions misapplied the GMADA v. Priyanka Nayyar, where ₹2 lakh was awarded as general compensation, considering loan interest. This decision aligns with prior rulings in DLF Homes Panchkula v. D.S. Dhanda and Bangalore Development Authority v. Syndicate Bank, which state that multiple compensatory awards for the same breach are not allowed without strong justification.
Case Name: Greater Mohali Area Development Authority (GMADA) v. Anupam Garg & Others
Case Number: 2025 INSC 808
Bench: Justice Sanjay Karol and Justice Prasanna B. Varale
Click here to access the judgment.
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