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CASE NO.: Appeal (civil)  7960 of 2004

PETITIONER: Saurabh Prakash                                                  

RESPONDENT: DLF Universal Ltd.                                               

DATE OF JUDGMENT: 24/11/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T WITH CIVIL APPEAL NO. 5179 OF 2006 [Arising out of SLP (C) No. 26795 of 2004] CIVIL APPEAL NO.5180 OF 2006 [Arising out of SLP (C) No. 3788 of 2005] S.B. SINHA, J :

       Leave granted in the SLPs.

       Extent of jurisdiction of the Monopolies and Restrictive Trade  Practices Commission (for short "the Commission") is the question involved  in these appeals, although they arose under different fact situations.   

       We would notice the fact involved in both the appeals separately.   

       In Civil Appeal arising out of SLP (C) No. 26795 of 2004, Sunil  Gulati, Respondent herein entered into an agreement with Respondent No. 1  (DLF) for purchasing a flat in a building known as Windsor Court, DLF  City, Gurgaon  and made payment of a sum equivalent to 10% of the agreed  price as earnest money at the first instance.  The balance payment was to be  made in instalments.  Clause 17 of the Agreement entitled the allottee to  cancel the allotment at any time and take refund of the amount paid by him  without interest, but the earnest money was liable to be forfeited in the  following terms:

"17. In case the allotment is got cancelled by the  Allottee himself, he shall be entitled to the refund  of the amount paid by him, after deducting the  earnest money, but without payment of any interest  on the balance amount, paid by him."

       Clause 8 of the said Agreement reads as under:

"8. That the time of payment of installments as  stated in schedule of payments (Annexure II) and  applicable stamp duty, registration fee,  maintenance charges and other charges payable  under this agreement as and when demanded is the  essence of this Agreement.  It shall be incumbent  on the Apartment Allottee to comply with the  terms of payment and/ or other terms and  conditions of sale, failing which he shall forfeit to  the Company the entire amount of earnest money  and the Agreement of sale shall stand cancelled  and the Apartment Allottee shall have no right,  title, interest or claim of whatsoever nature on the

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said premises.  The company shall thereafter be  free to resell and deal with the said premises in any  manner, whatsoever, at its sole discretion.  The  amount(s), if any paid over and above the earnest  money shall however be refunded to the  Apartment Allottee by the Company without any  interest or any compensation of whatsoever  nature."

       Respondent paid some instalments but allegedly was unable to pay the  same from the month of June, 1996.  One of his cheques bounced which fact  was intimated to him by Appellant by a letter dated 7th January, 1998.

       He entered into an Apartment Buyers Agreement on 8.4.1996.  At his  request a 2 and = year payment plan was converted into a 7 year payment  plan in May, 1996.  Respondent did not pay the instalment in due time  wherefor allegedly reminders were sent.

       A demand letter was also sent to him.  Respondent on or about   3.8.1998 showed his inability to make any payment and informed Appellant  that he was in desparate need of funds so as enable him to make a new  beginning in India, requested Appellant to promptly make payment of the  amount with interest at the rate of 24% per annum.  A reminder was sent by  him on 10th September, 1998.  On 3.11.1998, he suggested that he may be  allotted some other smaller property.  The said letter reads as under:

"The Chairman, DLF Universal Limited New Delhi.

Dear Sir,

Re: SO8B Windsor Court

I am writing this letter with the hope that due  regard and consideration will be extended to me by  your goodselves.

I was working in Bangkok and due to the Asian  fallout I have lost my job and I am back home  trying to settle my family and myself.  I have been  paying my instalments against the above stated  property, but now due to my present  circumstances, I will not be able to pay any further  instalments.  Till date I have already paid a sum of  Rs. 24,96,685/- towards the said property.

Since I do not have a house, my immediate need is  to settle down my family.  I have been talking to  your sales people and they have suggested me to  look for some other smaller property where I could  swap the amount paid against the new property.   On getting a list of the limited available options, I  have chosen property No. L19/97 in Phase \026 II (a  town house unit) for which an application form has  already been handed over by me to your sales  department.  The cost of the property is Rs.  24,85,428/- plus Rs. 2,60,000/- towards  registration.

The figure works out as under:

Total amount paid:      Rs. 24,96,685/- + parking  charges Cost of townhouse: Rs. 23,45,428/-

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The amount suits my budget and the balance  amount should be refunded to me so that I can get  the interiors done and settle down my family.

I have been told that the earnest money of Rs.  602,221/- will not be adjusted against the new  property and will be forfeited.  Since I am  swapping from one property to another I don’t see  why this amount would not be adjusted against the  cost of the townhouse, this townhouse is a  backside unit and is lying unsold since it was  constructed.  The drawback of a backside unit is  evident by itself.  To add to this, my dream of  property an ’A’ class unit in Windsor Court is not  coming true as I am now settling down for a lesser  grade property.  If I am told that my earnest money  will be forfeited, inspite of the fact that I am  swapping from one property to another, I will not  be able to pay any further difference and in that  case would request you to refund my money of Rs.  18,94,464/- immediately so that I can go  somewhere else and buy a house and settle my  family.

I have always believed in the name DLF and  inspite of my present financial situation I would  still like to be a part of your colony.  The rest  depends on your goodselves I hope that my earnest  money will not be forfeited but adjusted in this  new property as it is a case of swapping.

Hoping for a favourable consideration.

With due regards,

Sd/- SUNIL GULATI Nov. 3, 1998"

       Respondent through his advocate by a notice dated 26th March, 1999  called upon Appellant to pay the entire amount i.e., Rs. 25,83,625/-  along  with interest at the rate of 24% as also damages.

       As Appellant did not accede to his request, he filed an application  before the Commission purported to be under Section 12-B of the  Monopolies and Restrictive Trade Practices Act, 1969 (for short "the Act")  contending:

"The Applicant desired to swap the amount paid  for this property against another property which  was less expensive.  The Applicant indicated his  choice of property in this letter and requested the  Respondent to adjust the amount paid in  installments by the Applicant towards the cost of  the new property.  In the alternative the  Respondent was asked to refund the money of the  Applicant at the earliest.  Thereafter the Applicant  visited the office of the Respondent and inquired  about the possible options now that it was decided  that the Applicant was not proceeding with the  purchase of this property.  The Applicant was told  by the Respondent to go in for a corporate discount  scheme and then adjust the moneys already paid by

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him against a new property which the Respondent  would help him identify.  Thereafter on many  occasions the Applicant went to the office of the  Respondent but was denied any sort of change in  the situation.  In fact on 28.08.98 the Applicant  sent a fax and letter to the respondents from  McCreade Software (Asia) Pvt. Ltd. to clarify that  the applicant was working for them as a SAP  Consultant.  The respondent replied to this letter  by their letter dated 12.12.98 that they had not  received any intimation from the applicant on the  subject of swapping and so were closing that  option."

       The application filed by Respondent herein was allowed by the  Commission on arriving at the following findings:

"The Respondents did not reciprocate and took no  steps to refund the amount even consequent to the  terms of the agreement by retaining the earnest  money and making the necessary payment to  which the Applicants were entitled in law. The  Applicants sent a legal notice through their  Counsel dated March 26, 1999 which also had no  effect and the Respondent continued to withhold  the amount which was allegedly and validly due to  the Applicants even according to the terms of the  agreement.  These facts illustrate that the  Respondent was clearly guilty of unfair and  restrictive trade practices causing immense  damage to the Applicants. In this background, it is  neither understood nor appreciated in what context  the Respondent has made lengthy legal  submissions taking shelter of the law which will  not apply to the facts and circumstances of the  present case.  It is unfortunate that the Respondent  only treated cancellation from 26th February, 2004  and claimed recovery from the Applicants for a  sum of Rs. 33,21,290/-.  This is a preposterous  claim and cannot be given any credence.  In this  background we feel that even the forfeiture of  earnest money by the Respondent cannot be  justified as immense delay in the refund of the  amount requested by the Applicants as far back as  in 1998 was without any just and bonafide reason  and is clearly an arbitrary and discriminatory  exercise of power which does not vest in the  Respondent.  The gross delay in return of the  money even in terms of the agreement by the  Respondent is an unfair trade practice within the  meaning of Section 36-A as well as restrictive  trade practice within the meaning of Section 2(o)  and the Compensation Application filed by the  Applicants is maintainable and the Applicants are  entitled for the relief as prayed for.  The  Respondent has also not proved any loss which  may have occurred by the action of the Applicants  to justify retention of alleged earnest money.   Clause 7 of the agreement may also be referred to  reiterate that the Respondent is not entitled to  retain the earnest money in the facts and  circumstances of the case.  Furthermore the law is  well settled that the party to a contract taking  security deposit from the other party to ensure due  performance of the contract is not entitled to forfeit

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the deposit on ground of default when no loss is  caused to it in consequence of such default."

       Appellant was directed to refund the entire amount together with the  interest at the rate of 12% per annum from the date of filing of the  Compensation Application till the date of payment.

       Mr. Anil B. Divan, learned senior counsel appearing on behalf of  Appellant principally raised three contentions:

(i)     The Commission had no jurisdiction to entertain the application as  no case of indulgence in unfair trade practices or restrictive trade  practices was made out. (ii)    Respondent did not prove as to how he suffered any damage by  reason of any action on the part of Appellant. (iii)   In any event, in terms of Clause 17 of the Agreement, refund could  be directed to be made only after deduction of earnest money.

       Mr. O.P. Dua, learned counsel appearing on behalf of Respondent, on  the other hand, would submit that Appellant in the instant case has accepted  that a sum of more than Rs. 25 lakhs was paid.  The only contention raised  by Appellant, it was pointed out, was that such refund of the amount would  be subject to deduction of the earnest money.  It was contended that  Appellant had been constructing flats.  It had been promoting sale of  apartments including promotion of the services which would come within  the purview of the provisions of the said Act.

       The fact involving Civil Appeal No. 7960 of 2004 is as under:

       On 3.6.1995, Appellant made an application to DLF for sale of an  apartment and a parking space for a total consideration of Rs. 54,37,664 and  paid Rs. 5.48 lakhs as earnest money.  In the application form, it was stated  that the possession would be given in 4 years.  Under clause 9 of the  application form, it was stated that the existing fire fighting safety code/  regulations were already covered and extra fire-fighting charges would be  levied if further measures are required to be taken due to additional  requirements imposed by the authorities.  It was also stipulated that DLF  would send the buyer an Apartment Buyers’ Agreement which the buyer  would have to sign.   

       On 8.8.1998, DLF sent Appellant an unsigned Apartment Buyers’  Agreement for his signatures thereupon.  In this Agreement, DLF  unilaterally altered the time period for handing over the possession.  It  extended the time period by a grace period of 90 days in terms of clause 15  of the application form.  It also added several other exclusion clauses on  various grounds and limited their liability for delay.  However, Appellant  signed the Agreement and returned it to DLF.   

       On 31.10.1995, DLF sent the Agreement signed by it at a future date,  i.e., 6.11.1995.  It had subsequently taken this date, i.e., 6.11.1995 as the  base date for computing the compensation payable by it for delay.  On the  other hand, it purported to have counted delay on Appellant’s part with  reference to the date of application and, thus, it had burdened Appellant with  interest for such prior period also.  However, the said period is not a long  one.

       Appellant contended that Respondent had taken an advantage of eight  months for which no compensation had been paid to anyone.  Even at the  rate it had offered compensation, this could have come to Rs. 120,000 for  Appellant’s flat.  Since there were 134 flats in Windsor Court, DLF had  gained well over Rs. 1.5 crores.

       In a letter dated 14.10.1999 issued by DLF, it was stated that the  apartment would be completed by January, 2000.  It demanded an additional  amount of Rs. 2,08,099.22 which included:

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(i)     Rs. 50,943.33 towards additional fire-fighting equipment.  (ii)    Rs. 59,767.53 towards increase in area of 3.026 sq. mts.  (iii)   Rs. 97,388.76 towards DG sets to provide about 7 to 10 KW per  apartment.   

       It was further stated in the aforesaid letter:

"We are in the process of submitting these figures  for independent auditing and we wish to assure  you that if during the process of audit any  reduction is effected, the same shall be credited to  your account".  

       However, it allegedly never gave any accounts despite repeated  requests.  Appellant paid these amounts.

       On 29.5.2000, Appellant requested DLF for the audited statement of  accounts.  DLF in its letter dated 9.6.2000 stated that the audit was not  complete and it would inform him thereabout as and when the same is  completed.  It has not supplied audited accounts.  However, it has only  offered to show Appellant the accounts in its office when they become  available.

       On 25.7.2000, Appellant asked DLF for a statement of accounts  which was denied by DLF.   

       On or about 31,7.2000, DLF asked Appellant to furnish an  undertaking in the following terms:

Clause 11       "\005.Further, I hereby agree not to  raise any claim or dispute on any account  whatsoever."

Clause 16       "That I/We undertake not to approach  HSEB for individual electric connection to the  Apartment in view of the Power Back up being  provided by the Company."

       Appellant objected to the said terms of undertakings and on 5.8.2000  offered to submit the same without the objectionable clauses.  DLF gave no  reply thereto.   

       It may be mentioned that as of this date Appellant had paid all  principal amounts.  There was no demand for interest outstanding as on that  date. On 11.11.2000, Appellant invoked Clause 18 of the agreement and  cancelled his booking.  He also exercised his option of taking immediate  refund of the full amount in the alternative.  As DLF did not act according to  Clause 18, Appellant filed the application before the Commission.

       The Commission held that Appellant was not seeking possession of  the apartment but was seeking refund of the money deposited by him along  with interest.  It stated:

"Looking at the totality of facts and circumstances  as discussed in the foregoing order, a case of unfair  trade practice as defined in Section 36-A of the  MRTP Act, is made out against the respondent.   We have, therefore, no hesitation in holding that  the applicant is entitled to refund of the amount  deposited by him with interest.  Although the  applicant has claimed interest @20% per annum  and he has also cited case law in support of his  claim.  He has also referred to the ruling of

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Hon’ble Supreme Court to justify award of interest  @18% per annum.  However, in Ghaziabad  Development Authority Vs. Union of India’s case  (supra), the Hon’ble Supreme Court has  considered that it is reasonable to award interest  @12% per annum.  In a recent case in Sunil Gulati  and another Vs. DLF Universal Limited in  Compensation Application No. 222/1999 also,  which is similar to the instant case, the MRTP  Commission has ordered refund of the amount  deposited by the applicant at a rate of 12% per  annum.

In view of the above, we order that the respondent  shall refund the entire amount of Rs. 57,45,763.22  (Rupees fifty seven lacs forty five thousand seven  hundred sixty three and paise twenty two only)  deposited by the applicant with interest @ 12% per  annum from the date of filing of the present  Compensation Application till the date of refund.   We also award costs which are quantified at Rs.  30,000=00 (Rupees thirty thousand only).  The  respondent is directed to comply with this order  within two months from the date of receipt of this  order and file an affidavit of compliance within  two weeks thereafter."

       Appellant, who appeared in person, submitted that in the instant case  Section 36-A of the Act was clearly attracted as the action on the part of  DLF would come within the purview  of the expression "for the purpose of  promoting the sale".  According to him, as there had been no cancellation,  the offer remained valid and, thus, he was entitled to purchase the self-same  flat at the rate which was prevailing in the year 2000 upon deducting the  amount which has already been paid.

       Mr. Anil Diwan, learned senior counsel appearing on behalf of  Respondent would submit that the Commission in the facts and  circumstances of this case had no jurisdiction to grant any relief to Appellant  and in any event, it has not determined the jurisdictional fact.

       The Act was enacted to provide that the operation of the economic  system does not result in the concentration of economic power to the  common detriment for the control of monopolies, for the prohibition of  monopolistic and restrictive trade practices and for matters connected  therewith or incidental thereto.  The Act, therefore, primarily deals with the  control of monopolies and prohibition of monopolistic and restrictive trade  practices.

       ’Trade Practice’ has been defined in Section 2(u) to mean any practice  relating to the carrying on of any trade, and includes\027 (i)     anything done by any person which controls or affects the price  charged by, or the method of trading of, any trader or any class of  traders, (ii)    a single or isolated action of any person in relation to any trade.

       Section 2(o) defines ’restrictive trade practice’ to mean a trade  practice which has, or may have, the effect of preventing, distorting or  restricting competition in any manner  and in particular,\027

(i)     which tends to obstruct the flow of capital or resources into the stream  of production, or (ii)    which tends to bring about manipulation of prices, or conditions of  delivery or to affect the flow of supplies in the market relating to  goods or services in such manner as to impose on the consumers

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unjustified cost or restrictions.

       The expression ’service’ has been defined in Section 2(r) in the  following terms:  

"service" means service which is made available to  potential users and includes the provision of  facilities in connection with banking,  financing,  insurance chit fund, real estate, transport,  processing, supply of electrical or other energy,  board or lodging or both, entertainment,  amuse- ment or the purveying of news or other  information, but does not include the rendering of  any service free of charge or under a contract of   personal service."

       ’Unfair trade practice’ has been defined in Section 36-A of the Act  to  mean a trade practice which, for the purpose of promoting the sale, use or  supply of any good or for the provision of any services, adopts any unfair  method or unfair or deceptive practice including any of the practices  enumerated therein.

       Sub-section (1) of Section 36-A enumerates various kinds of visible  representation.   

       The power of the Commission is enumerated under Section 12 of the  Act.  Section 12-A provides for the power of the Commission to grant  temporary injunction.  Power to award compensation by the Commission is  contained in Section 12-B of the Act, sub-section (1) whereof reads as  under:

"12B. Power of the Commission to award  compensation.\027(1) Where, as a result of the  monopolistic or restrictive, or unfair trade practice,  carried on by any undertaking or any person, any  loss or damage is caused to the Central  Government, or any State Government or any  trader or class of traders or any consumer, such  Government or, as the case may be, trader or class  of traders or consumer may, without prejudice to  the right of such Government, trader or class of  traders or consumer to institute a suit for the  recovery of any compensation for the loss or  damage so caused, make an application to the  Commission for an order for the recovery from  that undertaking or owner thereof or, as the case  may be, from such person, of such amount as the  Commission may determine, as compensation for  the loss or damage so caused."

       The power of the Commission to award compensation, therefore, is  restricted to a case where loss or damage had been caused as a result of  monopolistic or restrictive or unfair trade practice.  It has no jurisdiction  where damage is claimed for mere breach of contract.

       It was not a case where a notice of inquiry had been directed.  If there  had been no inquiry, the petitioner has to file a suit wherein the relevant  particulars are required to be stated as to how loss or damage occurred  owing to one or the other trade practices referred to therein.  The power of  the Commission is not in addition to the power of the civil court.  An  application under Section 12-B of the Act would not lie where a complaint is  confined to a breach of contract.  Purchases on the part of Respondent must  necessarily relate to one or the other trade practices contemplated under sub- section (1) of Section 12-B of the Act.

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       The question came up for consideration before this Court in Colgate  Palmolive (India) Ltd. v. MRTP Commission and Others [(2003) 1 SCC  129] and Hindustan Ciba Geigy v. Union of India and Others [(2003) 1 SCC  134].  In Colgate Palmolive (supra), it was stated:  

"16. A bare perusal of the aforementioned  provision would clearly indicate that the following  five ingredients are necessary to constitute an  unfair trade practice: 1. There must be a trade practice [within the  meaning of Section 2(u) of the Monopolies and  Restrictive Trade Practices Act]. 2. The trade practice must be employed for the  purpose of promoting the sale, use or supply of any  goods or the provision of any services. 3. The trade practice should fall within the ambit  of one or more of the categories enumerated in  clauses (1) to (5) of Section 36-A. 4. The trade practice should cause loss or injury to  the consumers of goods or services. 5. The trade practice under clause (1) should  involve making a "statement" whether orally or in  writing or by visible representation."

       Yet again in Premier Engineers v. Taj Rubber Industries and Another,  [(2005) 6 SCC 610], following Colgate Palmolive (supra), this Court  categorically held:

"12. In the present case, we find that in the  application filed by the respondent applicant apart  from saying that the defective machinery fitted  with old/second-hand parts had been supplied after  considerable delay the respondent did not say a  word regarding the actual loss and injury or a  notional loss caused to the respondent. There is  nothing on the record to suggest that any actual  loss or injury was caused to the respondent. The  application filed by the respondent applicant was  not only cryptic but lacked in particulars to fall  within the definition of unfair trade practice as  defined in Section 36-A read with Section 2(u) of  the MRTP Act. The MRTP Commission in its  order has not adverted to this fact and has not  recorded a finding as to any actual loss or injury  caused to the respondent."

       We have noticed hereinbefore that the issue addressed before us  veered around the question as to whether it was a sheer breach of contract or  deficiency in service.  There had been allegations and counter-allegations.   The fact remains that the applicant before the Commission did not pay the  amount.  They intended to get refund of the amount which had already been  paid.  They sought for grant of interest also.

       In Civil Appeal arising out of SLP (C) No. 26795 of 2004, Appellant  was entitled to deduct the amount of earnest money.  A distinction exists  between the security and earnest money.  The Commission unfortunately  lost sight of the said issue.

       In H.U.D.A. and Another v. Kewal Krishan Goel and Others, [(1996)  4 SCC 249, the law was stated in the following terms:

"7. A combined reading of the aforesaid three

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clauses of letter of allotment together with the  advertisement issued indicates that the scheme of  allotment was that an applicant could make an  application along with 10% of the tentative price  of the land as earnest deposit. On receipt of the  letter of allotment he is required to indicate either  his letter of acceptance or letter of refusal within  30 days from the date of the receipt of the  allotment letter. In case of acceptance he would be  further required to make an additional deposit  which deposit together with the earnest money  already deposited would constitute 25% of the  total tentative price. If he fails to accept the  allotment within 30 days from the date of receipt  of the letter then the authority is entitled to forfeit  the earnest money. Further the balance amount  could be deposited in instalments. Thus under the  allotment in question an allottee was required to  deposit 10% of the tentative price of the land as  earnest money which is given to bind the contract  and the said earnest money could be forfeited by  the authority in case the allottee does not  communicate the letter of refusal within 30 days  from the date of receipt of the allotment order."

       In the facts of the matter, it was held that the demand was not  unreasonable.   

       Yet again in Union of India v. Rampur Distillery & Chemical Co. Ltd.  [(1973) 1 SCC 649], this Court stated:

"3. Only one contention was urged on behalf of the  appellants before us: that the security deposit was  taken from the respondents in order to ensure the  due performance of the contract and respondents  having defaulted, the entire amount was liable to  be forfeited. A similar contention was advanced  before this Court but was rejected in Maula Bux v.  Union of India.The appellant therein had entered  into a contract with the Government of India for  the supply of certain goods and had deposited a  certain amount of security for the due performance  of the contract. As in the instant case, it was  stipulated in the contract there that the amount of  security deposit was to stand forfeited in case the  appellant neglected to perform his part of the  contract. On the appellant committing default in  the supply, the  Government rescinded the contract  and forfeited the security deposit. It was held by  this Court that forfeiture of earnest money under a  contract for sale of property does not fall within  Section 70 of the Contract Act, if the amount is  reasonable, because the forfeiture of a reasonable  sum paid as earnest money does not amount to the  imposition of a penalty. But, "where under the  terms of the contract the party in breach has  undertaken to pay a sum of money or to forfeit a  sum of money which he has already paid to the  party complaining of a breach of contract, the  undertaking is of the nature of a penalty". It was  further held that the amount deposited by way of  security for guaranteeing the due performance of  the contract cannot be regarded as earnest money."

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       The distinction between a security and an earnest money has also been  pointed out by this Court in Maula Bux v. Union of India [(1969) 2 SCC  554] in the following terms:

"4. Under the terms of the agreements the amounts  deposited by the plaintiff as security for due  performance of the contracts were to stand  forfeited in case the plaintiff neglected to perform  his part of the contract. The High Court observed  that the deposits so made may be regarded as  earnest money. But that view cannot be accepted.  According to Earl Jowitt in Dictionary of English  Law at p. 689; "Giving an earnest or earnest- money is a mode of signifying assent to a contract  of sale or the like, by giving to the vendor a  nominal sum (e.g. a shilling) as a token that the  parties are in earnest or have made up their  minds". As observed by the Judicial Committee in  Kunwar Chiranjit Singh v. Har Swarup: "Earnest money is part of the purchase price when  the transaction goes forward; it is forfeited when  the transaction falls through, by reason of the fault  or failure of the vendee." In the present case the deposit was made not of a  sum of money by the purchaser to be applied  towards part payment of the price when the  contract was completed and till then as evidencing  an intention on the part of the purchaser to buy  property or goods. Here the plaintiff had deposited  the amounts claimed as security for guaranteeing  due performance of the contracts. Such deposits  cannot be regarded as earnest money."

       Referring to Section 74 of the Indian Contract Act, it was observed:

"There is authority, no doubt coloured by the view  which was taken in English cases, that Section 74  of the Contract Act has no application to cases of  deposit for due performance of a contract which is  stipulated to be forfeited for breach, Natesa Aiyar  v. Appayu Padayachi; Singer Manufacturing  Company v. Raja Prosad; Manian Pattar v. Madras  Railway Company. But this view is no longer good  law in view of the judgment of this Court in Fateh  Chand case. This Court observed at p. 526: "’Section 74 of the Indian Contract Act deals with  the measure of damages in two classes of cases: (i)  where the contract names a sum to be paid in case  of breach, and (ii) where the contract contains any  other stipulation by way of penalty\005,’ ’The  measure of damages in the case of breach of a  stipulation by way of penalty is by Section 74,  reasonable compensation not exceeding the  penalty stipulated for.’ "

The Court also observed: "It was urged that the section deals in terms with  the right to receive from the party who has broken  the contract reasonable compensation and not the  right to forfeit what has already been received by

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the party aggrieved. There is however no warrant  for the assumption made by some of the High  Courts in India, that Section 74, applies only to  cases where the aggrieved party is seeking to  receive some amount on breach of contract and not  to cases whereupon breach of contract an amount  received under the contract is sought to be  forfeited. In our judgment the expression "the  contract contains any other stipulation by way of  penalty" comprehensively applies to every  covenant involving a penalty whether it is for  payment on breach of contract of money or  delivery of property in future, or for forfeiture of  right to money or other property already delivered.  Duty not to enforce the penalty clause but only to  award reasonable compensation is statutorily  imposed upon courts by Section 74. In all cases,  therefore, where there is a stipulation in the nature  of penalty for forfeiture of an amount deposited  pursuant to the terms of contract which expressly  provides for forfeiture, the court has jurisdiction to  award such sum only as it considers reasonable,  but not exceeding the amount specified in the  contract as liable to forfeiture, and that, "There is no ground for holding that the expression  ’contract contains any other stipulation by way of  penalty’ is limited to cases of stipulation in the  nature of an agreement to pay money or deliver  property on breach and does not comprehend  covenants under which amounts paid or property  delivered under the contract, which by the terms of  the contract expressly or by clear implication are  liable to be forfeited."

                DLF, therefore, cannot be said to be wrong in exercising its right to  forfeit the earnest amount.

       It may be so, but we have noticed hereinbefore that Respondent in its  letter dated 3.11.1998 gave three offers.  It was expected that at least the  amount would be refunded after deducting the earnest amount.  DLF,  however, did not do so.

       In Civil Appeal arising out of SLP (C) No. 26795 of 2004, we,  therefore, are of the opinion that the interest of justice would be subserved if  we, in exercise of our discretionary jurisdiction under Article 142 of the  Constitution of India keeping in view the facts and circumstances of this  case, direct DLF to pay a sum of Rs. 37 lakhs to Respondent herein.  Such  payment should be made within four weeks from date failing which interest  at the rate of 9% per annum shall be levied till actual payment is made.  The  appeal is disposed of accordingly.

       In Civil Appeal No. 7960 of 2004, the principal contention of  Appellant was his insistence on the part of the developer not to deposit  further amount by way of additional fire fighting equipments as the same  was not necessary.  Our attention has further been drawn to the fact that DLF  insisted on furnishing of undertakings which is contrary to law.  Appellant  also questions the levy of holding charges and/ or maintenance charges.   There had been some delay also in handing over of the possession.  DLF,  however, appears to have treated all the allottees on similar terms.

       The validity or otherwise of the conditions imposed by DLF is not in  question.  It was, therefore, not a case which could be entertained by the  Commission.  However, we suggested as to whether Appellant herein can be  given possession of the flat on his clearing of the dues, DLF agreed thereto.  

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The total amount payable in respect of the flat is a sum of Rs.17,27,612/-.   DLF has agreed to deduct a sum of Rs.93,745/- which was agreed to be paid  by way of compensation.  The total amount payable, therefore, would be  Rs.16,33,867/-.   The amount has been calculated on the premise that the  registration would be done in the name of Appellant’s wife and/or daughter  on the rate of stamp duty and charges payable in case of family allottee.

       We furthermore clarify that Appellant, upon getting possession of the  said flat shall be treated by DLF at par with all others similarly situated.   Appellant may pay the aforementioned amount of Rs.16,33,867/- within  eight weeks from date, whereupon, Respondent shall execute and/or register  the requisite documents in favour of the wife of Appellant.

       We are passing this order on broad consensus arrived at by the parties  as also in exercise of our jurisdiction under Article 142 of the Constitution of  India.            This order shall not be treated to be a precedent.            

       We are, therefore, of the opinion that in a case of this nature the  Commission had no jurisdiction.  Civil Appeal No. 7960 of 2004 and Civil  Appeal arising out of SLP (C) No. 3788 of 2005 are disposed of accordingly.