Builder-buyer-bank disputes: Supreme Court orders refund on unjust-enrichment principle

The Supreme Court has ordered a flat buyer's refund in a stalled housing project, grounding the relief in the Indian Contract Act's provisions on quasi-contractual obligations rather than in the loan or sale agreements themselves. Madhu Kudapa, earlier named K. Madhusudhan Rao, had booked a flat with Lodha Healthy Constructions and Developer Pvt. Ltd. and taken a home loan from a bank under a tripartite arrangement, but the builder failed to deliver possession. Before the National Consumer Disputes Redressal Commission and then the Supreme Court, the buyer sought a full refund with interest and compensation, while a related claim by the bank against the buyer remained pending in a separate appeal.

The Court invoked the maxim nemo debet locupletari ex aliena jactura — no one should be enriched at another's loss — as codified in Sections 68 to 72 of the Contract Act, 1872, which govern 'relations resembling those created by contract' even where no completed contract exists between the parties being compensated. On that basis it directed the consumer commission to release about ₹1.27 crore to the buyer with 12% interest and ₹15 lakh compensation. It also upheld a separate finding that the bank was guilty of deficiency of service for disbursing the loan without verifying the pace of construction, awarding the buyer a further ₹2 lakh.