High Courts Must Not Exceed Their Jurisdiction Under Article 227 – Supreme Court’s Verdict on Consumer Disputes

Case Summary

• Case Name: The Chief Officer, Nagpur Housing and Area Development Board (A MHADA Unit) and Others v. Manohar Burde

• Court: Supreme Court of India

• Date of Judgment: 26th March 2025

• Bench: Hon’ble Justice J.K. Maheshwari and Hon’ble Justice Aravind Kumar

• Advocates: Mr. Tushar Mehta (Solicitor General) for the appellants, Mr. Manohar Burde (appearing in person) for the respondent

• Acts & Sections: 

  • Article 227 of the Constitution of India,

  • Consumer Protection Act

• Cited Judgments:

  • Bangalore Development Authority v. Syndicate Bank, (2007) 6 SCC 711

  • Rohit Chaudhary & Another v. Vipul Ltd., (2024) 1 SCC 8

Introduction

The Supreme Court of India, in its recent judgment in The Chief Officer, Nagpur Housing and Area Development Board v. Manohar Burde, examined issues of deficiency in service, delayed possession of real estate property, and consumer rights. The case centred around the failure of the Nagpur Housing and Area Development Board (a MHADA unit) to provide a homebuyer possession of an allotted flat within the stipulated period, resulting in prolonged litigation before various forums, including the State and National Consumer Disputes Redressal Commissions (SCDRC and NCDRC) and the High Court of Bombay.

Background of the Case

The respondent, Manohar Burde, had applied for a 3BHK flat under the housing project launched in 2009. He was allotted a flat through a lottery system in January 2010 and duly made the necessary payments in instalments, completing the payment in August 2013. However, despite fulfilling his financial obligations, possession of the flat was significantly delayed. Additionally, the Board imposed an additional payment demand, threatening cancellation of the allotment in case of non-payment.

Dissatisfied with these developments, Burde filed a complaint with the SCDRC, alleging deficiency in service and unfair trade practices. The Commission ruled in his favour, ordering the authorities to hand over possession of the flat within six months and pay 15% interest per annum for the delay. The matter escalated to the NCDRC, which reduced the interest to 9% per annum and granted a consolidated compensation of Rs. 50,000. This decision was then challenged before the Bombay High Court, which reinstated the 15% interest rate, prompting the present appeal before the Supreme Court.

Key Legal Issues

1. Jurisdiction of the High Court under Article 227 of the Constitution

   • The appellants contended that the High Court exceeded its jurisdiction by modifying the NCDRC’s well-reasoned decision.

   • The Supreme Court had to determine whether the High Court’s intervention was justified.

2. Rate of Interest for Delayed Possession

   • The core issue was whether 15% interest per annum, as awarded by the High Court, was excessive or whether the 9% per annum interest rate, as determined by NCDRC, was more appropriate.

3. Compensation for Deficiency in Service

   • The Court had to consider whether additional compensation of Rs. 10,00,000 awarded by SCDRC was justified or required modification.

Supreme Court’s Observations and Ruling

On the Jurisdiction of the High Court

The Supreme Court reiterated that High Courts have limited scope of interference under Article 227 of the Constitution. It emphasised that:

“The High Court was not justified in modifying the findings of the NCDRC, which had balanced the scale by evaluating the evidence of both parties.”

By overturning the NCDRC’s decision and reinstating the higher interest rate, the High Court overstepped its jurisdiction.

On the Rate of Interest

The Supreme Court referenced Bangalore Development Authority v. Syndicate Bank, which laid down the principle that in cases of prolonged delay in possession, homebuyers are entitled to a reasonable rate of interest. It further noted that in Rohit Chaudhary v. Vipul Ltd., the Court awarded 12% interest per annum in a commercial property dispute.

Applying these precedents, the Supreme Court held that:

“Considering the overall facts and circumstances, the interest rate of 9% per annum awarded by the NCDRC is fair and reasonable, and the 15% awarded by the High Court is excessive.”

Accordingly, it reinstated the NCDRC’s order of 9% per annum interest.

On Compensation for Deficiency in Service

The Court recognised that while the statutory body was responsible for delays, the additional compensation of Rs. 10,00,000 awarded by the SCDRC was excessive. The judgment stated:

“Considering the institution’s status as a statutory authority, which was discharging its duties without personal animosity, we deem it proper to reduce the compensation to Rs. 7,50,000.”

Thus, the Supreme Court modified the compensation accordingly.

Conclusion

This case underscores the importance of balancing consumer rights against institutional responsibilities. While the Supreme Court reaffirmed that homebuyers are entitled to compensation for undue delays, it also highlighted the need for reasonable judicial intervention. The ruling provides clarity on:

• The limits of High Court’s jurisdiction under Article 227;

• Fair interest rates in consumer disputes;

• The role of statutory authorities in executing housing projects.

With this judgment, the Supreme Court has set a precedent for similar consumer disputes in real estate, ensuring that justice is meted out equitably while maintaining judicial propriety.