A) ABSTRACT / HEADNOTE

This judgment records and accepts a comprehensive settlement between three commercial actors the borrowers (flat purchasers), the developer (Rajsanket Realty Ltd.) and the lender (ICICI Bank Ltd.) in four consolidated consumer appeals arising from the National Consumer Disputes Redressal Commission decision dated 02.01.2023.

The Supreme Court, through orders dated 23.10.2024 and 06.11.2024, delineated precise financial adjustments: waiver components, 30% discount on pre-EMI interest by the Bank, 50% share of pre-EMI by the Builder, and timelines for deposits and reconciliations.

The parties complied and filed affidavits proving performance; the Bank issued a certificate that no further dues remained. The Court addressed three residual contentions:

(i) removal of the word “settlement” from loan account records and substitution with “re-paid” or treating the account as fully paid up;

(ii) completion and handing over of possession of apartments by 31.03.2025; and

(iii) formal written acknowledgment by the Builder for payments received.

The Court directed the Bank to close accounts and withdraw recovery proceedings before the DRT, directed the Builder to issue acknowledgments and complete possession, and required appellants to withdraw RERA proceedings. The appeals were disposed of with directions to ensure “complete quietus to the litigation”, thereby converting a negotiated commercial compromise into a final judicial closure.

Keywords: Settlement; Consumer Protection Act, 1986; Loan account closure; Pre-EMI waiver & adjustment; Possession and acknowledgment.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The appeals arose from consumer complaints filed by flat purchasers against the Bank’s loan recall notice and alleged unfair trade practices under the Consumer Protection Act, 1986. Proceedings before the NCDRC resulted in an adverse decision dated 02.01.2023.

Thereafter, on appeal, iterative judicial interventions culminated in the Court-facilitated commercial settlement recorded on 23.10.2024 and crystallized on 06.11.2024. The settlement aimed to reconcile three inter-locking defaults: borrowers’ outstanding principal and pre-EMIs, the Bank’s claim to interest/charges, and the Builder’s default in paying its share of pre-EMI and in completing physical possession.

The Supreme Court’s role was supervisory and facilitative ensuring fairness of the bargain, fixing quantums, setting precise timelines for deposit/adjustment, and converting the agreed terms into enforceable judicial directions. The settlement mechanism included: a 30% waiver on pre-EMI interest by the Bank, the Builder bearing 50% of pre-EMI outstanding, and allowances for specific adjustments between pre-EMI and the remaining 5% sale consideration.

The Court retained an enforcement posture by directing withdrawals of parallel recovery and RERA proceedings once compliance was demonstrated. The background thus presents a hybrid of commercial negotiation validated by judicial process to secure finality and protect consumer interests within a regulatory banking context.

D) FACTS OF THE CASE

The appellants (flat purchasers) had taken housing loans from ICICI Bank Ltd. for apartments developed by Rajsanket Realty Ltd. Defaults occurred on multiple fronts: the Builder defaulted on pre-EMI obligations; certain appellants continued to pay pre-EMIs directly; and the Bank issued loan recall notices and pursued recovery. The parties approached the Supreme Court on appeal from the NCDRC order.

On 23.10.2024, the Bank presented a chart of outstanding principal, interest and charges. The parties agreed commercial adjustments: the Bank agreed to waive outstanding charges and grant 30% discount on pre-EMI interest if upfront principal was paid; the Builder agreed to pay 50% of pre-EMI; appellants agreed to pay their residual liabilities including outstanding 5% sale consideration subject to adjustment.

On 06.11.2024 the Court recorded detailed figures as of 30.11.2024, fixed timelines (Builder to deposit by 20.12.2024, borrowers to pay within a week thereafter), and directed that interest would be frozen up to 30.11.2024 provided payments occurred within specified windows. Parties complied and filed affidavits by 23.01.2025.

The Bank issued a certificate that nothing further remained. Appellants raised three residual issues:

(i) removal of the term “settlement” from loan records;

(ii) completion and handing over of possession;

(iii) formal written acknowledgment of payments by the Builder.

The Court issued final directions addressing these matters and ordered withdrawal of recovery and RERA proceedings to ensure finality.

E) LEGAL ISSUES RAISED

i. Whether the commercial compromise recorded in Court can be enforced by directional relief by the Supreme Court so as to achieve finality between lender, borrower and builder?
ii. Whether the Bank must treat the loan account as re-paid or fully paid up and remove “settlement” notation that could impede future credit?
iii. Whether, after monetary compliance under a Court-recorded settlement, the Builder is under an enforceable obligation to complete works and hand over possession by a judicially fixed date?
iv. Whether the Bank must withdraw recovery proceedings before DRT/other fora upon satisfaction of dues?
v. What formal documentary acknowledgments must the Builder provide upon receipt of payments under the Court orders?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioners/appellants submitted that:
i. The loan account description as “settlement” is prejudicial to future creditworthiness and must be replaced with “re-paid” or fully paid up;
ii. Possession remains incomplete; minor works must be completed and physical possession handed over promptly;
iii. The Builder must issue written acknowledgment of payments pursuant to the Court’s settlement to enable administrative and registrarial clarity;
iv. Having complied with monetary obligations as per Court directions, appellants seek withdrawal of any lingering implications that might hinder registration or further financing.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondents (Bank and Builder) submitted that:
i. The Bank had complied with the settlement, issued a No Dues Certificate and would make necessary entries in its records;
ii. The Builder undertook to complete pending works and bound itself to hand over possession by 31.03.2025;
iii. The Builder accepted the obligation to issue written acknowledgment of the payments received; iv. Recovery proceedings would be withdrawn upon proof of payment; these actions are administrative and required time for execution but were uncontentious given compliance.

H) JUDGEMENT 

The Court recorded that the parties had substantially complied with the terms set out in the 23.10.2024 and 06.11.2024 orders and accepted the affidavits filed by appellants and certificates issued by the Bank. Given the performance, the Court exercised its supervisory jurisdiction to clarify three residual matters.

First, treating upfront payment by the borrowers as full repayment, the Court directed the Bank to close the loan account treating it as repaid or fully paid up and to make necessary incorporations in its records thereby addressing practical credit-reporting consequences of the label “settlement”.

Second, recognizing the Builder’s undertaking, the Court ordered that possession, fully completed in all respects as required by law, be handed over to appellants on or before 31.03.2025.

Third, to remove any uncertainty, the Court directed the Builder to issue a written acknowledgment of receipt of the entire due amount; the Court also ordered the Bank to withdraw recovery proceedings before DRT or any other Forum in respect of the loans concerned.

Finally, appellants who had initiated proceedings before RERA were directed to withdraw those proceedings. The Court framed these steps to ensure complete quietus to the litigation and disposed of the appeals accordingly.

a. RATIO DECIDENDI

The operative ratio is that where parties, under judicial supervision, enter a comprehensive settlement that is fair and performed, the Court will convert that commercial compromise into a final, enforceable decree with precise directions to give effect to the settlement and ensure finality.

The Court can and will issue ancillary administrative directions (such as modification of bank records, issuance of NOC/No Dues Certificates, withdrawal of recovery/RERA proceedings, and timelines for physical delivery of possession) to remove practical impediments to enforcement and future transactions.

Judicial endorsement thus operates to protect consumer-borrower rights and to secure transactional certainty between lender, borrower and developer.

b. OBITER DICTA 

While primarily declaratory and directory, the Court’s observations underscore the normative preference for negotiated settlements in commercial-dispute contexts and the utility of precise timelines.

The Court observed that upfront payment coupled with Bank and Builder compliance suffices to treat accounts as repaid, subject to administrative entries, and that absence of a formal receipt is mitigated where bank-certified proof of transfer exists; nonetheless a written acknowledgment from the Builder is appropriate.

These remarks reflect the Court’s pragmatic stance toward reconciling regulatory/administrative formalities with substantive performance.

c. GUIDELINES 

i. Where a settlement involves loan repayment, banks should update records to reflect “re-paid” or “fully paid up” status to prevent adverse credit consequences.
ii. Courts recording settlements should fix clear timelines for complementary acts (e.g., builder completion, issuance of NOCs) and require evidence of compliance by affidavit.
iii. Banking and recovery proceedings before statutory fora (DRT) must be withdrawn once courts record satisfaction of dues; parallel regulatory matters (RERA) should similarly be withdrawn to prevent multiplicity of proceedings.
iv. Proof of payment by bank transfer constitutes prima facie proof of discharge; however, the payee’s written acknowledgment is desirable for registry and conveyancing purposes.
v. Judicially recorded settlements that confer discounts/waivers must specify cut-off dates for calculation of interest to avoid disputes about accruals post-agreement.

I) CONCLUSION & COMMENTS

The file demonstrates effective judicial mediation producing a binding commercial compromise that the Court converted into enforceable directions, thereby achieving finality. The Court’s insistence on concrete timelines and administrative act-steps (NOC, record modifications, withdrawal of parallel proceedings and possession date) is salutary for dispute finalization and consumer protection.

The judgment reinforces that courts will supervise and enforce settlement terms where fairness and compliance are demonstrated, and will give ancillary relief to remove practical impediments (credit-report labels, possession delays, lack of written receipts).

Practitioners should ensure that settlement terms recorded before courts specify:

(a) precise financial charts and cut-off dates for interest calculations;

(b) obligation matrix (who pays what and by when);

(c) clear stipulations on records/NOCs and the outward conduct (withdrawals before DRT/RERA); and

(d) specific timelines for handing over physical possession and issuing acknowledgments.

The ruling is a useful precedent (procedural and practical) for resolving multi-party housing-finance disputes where contractual defaults and recovery proceedings overlap with consumer rights.

J) REFERENCES

a. Important Cases Referred
i. Akshay Gupta & Anr. v. ICICI Bank Limited & Ors., Civil Appeal No. 1708 of 2023, [2025] 3 S.C.R. 1122 : 2025 INSC 391.

b. Important Statutes Referred
i. Consumer Protection Act, 1986.

c. Other Instruments / Materials
i. Reserve Bank of India (RBI) guidelines