Judgment Intelligence
OtherMadhu Kudapa (formerly K. Madhusudhan Rao) v. M/s Lodha Healthy Constructions and Developer Pvt. Ltd. (LHCPL) & Anr. (with HDFC Ltd.'s appeals)
2026 INSC 1131
Civil Appeal No. 8994 of 2022 with Civil Appeal Nos. 4622-4623 of 2023
- Court
- Supreme Court of India
- Date of Decision
- 15 October 2026
- Bench
- Justices Pamidighantam Sri Narasimha and Alok Aradhe
- Relevant Acts & Sections
- Consumer Protection Act, 1986 — Sections 2(1)(g), 14(1)(d), 22, 23; Indian Contract Act, 1872 — Sections 64, 65, 70, 72, 73
Final Outcome
Appeals disposed of and the NCDRC order modified. From the builder's deposit, the NCDRC will release Rs.1,27,34,726 with 12% interest from each deposit and Rs.15 lakh compensation to the buyer, keeping the rest pending HDFC's appeal in the High Court; HDFC's Rs.2 lakh liability stands (paras 44, 47-48).
Key holdings
- A tripartite-agreement fiction that disbursal to the builder is disbursal to the borrower fixes his repayment liability but does not make the unrepaid loan his money (para 28).
- Where the agreement for sale fixes interest for the builder's default, strong reasons are needed to depart from it; 18% interest is not a uniform rule (paras 30-31).
- Rent and interest for the same delay amount to double compensation, and a buyer who elects a refund cannot also claim rent (paras 37, 39).
- A lender that disburses without verifying construction progress, as its own sanction letter required, is deficient in service (para 43).
Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.
Brief Facts
In 2009 the buyer booked a flat in Lodha Bellezza, Hyderabad, for about Rs.2.31 crore, paying Rs.51.11 lakh himself; HDFC disbursed about Rs.1.69 crore to the builder under a tripartite agreement (paras 3-5). Possession due in June 2011 was not delivered, and in 2013 he sought a refund before the NCDRC (paras 6, 8). He paid HDFC Rs.76.23 lakh towards the loan; HDFC's recovery suit was dismissed and its appeal is pending (paras 9, 13). The NCDRC ordered the builder to refund the entire Rs.2.19 crore with 9% interest and HDFC to pay Rs.2 lakh for deficiency in service (para 10). The buyer and HDFC both appealed (para 15).
Court's Findings
Unjust enrichment, rooted in Sections 64 to 72 of the Contract Act, restores a benefit to the person at whose expense it was received; it does not reward (paras 22-25). The tripartite agreement's fiction that disbursal to the builder is disbursal to the borrower fixes his liability to repay but does not make unpaid loan money his own, so refunding all Rs.2.19 crore to him would be unjust enrichment; he gets the Rs.1.27 crore he paid (paras 27-28). Clause 24 of the agreement fixed 12% interest; Rajnesh Sharma turned on its own facts, and 18% is no uniform rule (paras 29-31). The NCDRC ignored the compensation claim (para 33). Rent cannot be added: it was first raised in a rejoinder, would compensate twice for a delay already met by interest, was unproved, and the buyer elected a refund (paras 35-40). For fifteen years of uncertainty and lost price escalation, Rs.15 lakh is awarded (para 41). HDFC produced no inspection reports though bound to verify construction, so the deficiency finding stands; its claim against the buyer is for the High Court (paras 43-45).
Legal Principle
When a refund is ordered on a builder's default in a purchase funded by a home loan, the buyer is entitled only to what he paid from his own funds; the lender's unrepaid money cannot be paid to him. Interest compensates the deprivation of money, so rent cannot also be awarded for the same delay (paras 28, 37).