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PETITIONER: GHAZIABAD DEVELOPMENT AUTHORITY

       Vs.

RESPONDENT: UNION OF INDIA & ANR.

DATE OF JUDGMENT:       12/05/2000

BENCH: R.C.Lahoti, S.R.Babu

JUDGMENT:

     R.C.  Lahoti, J.

     Leave granted in SLP(C) No.18897/99.  In this batch of appeals,  Ghaziabad Development Authority constituted  under Section   4  of  the  Uttar   Pradesh  Urban  Planning   and Development  Act, 1973 is the appellant.  The Authority  has from  time  to time promoted and advertised several  schemes for  allotment  of  developed   plots  for  construction  of apartments  and/or  flats for occupation by  the  allottees. Several persons who had subscribed to the schemes approached different  forums  complaining  of failure  or  unreasonable delay  in  accomplishing  the   schemes.   Some  have  filed complaints  before  the  Monopoly   and  Restrictive   Trade Practices  Commission  and some have raised disputes  before the  Consumer Disputes Redressal Forum.  In two cases  civil writ  petitions  under Article 226 of the Constitution  were filed  before  the High Court seeking refund of  the  amount paid or deposited by the petitioners with the Authority.  In all  the cases under appeal the Court or Commission or Forum concerned has found the appellant-Authority guilty of having unreasonably  delayed  the accomplishment of  the  announced scheme  or guilty of failure to perform the promise held out to  the claimants and therefore directed the amount paid  or deposited  by the respective claimants to be returned  along with  interest.  In the cases filed before the High Court of Allahabad  there  was a term in the brochure issued  by  the Authority that in the event of the applicant withdrawing its offer  or surrendering the same no interest whatsoever would be  payable to the claimants.  The High Court has held  such term  of the brochure to be unconscionable and arbitrary and hence violative of Article 14 of the Constitution.  The High Court has directed the amount due and payable to be refunded with  interest  calculated  at the rate of 12 per  cent  per annum  from  the date of deposit to the date of refund.   In all the other appeals before us the impugned order passed by the  Commission  or the Forum directs payment of the  amount due and payable to the respective claimants with interest at the  rate of 18 per cent per annum.  In Civil Appeal No.8316 of 1995, G.D.A.  Vs.  Brijesh Mehta, the MRTP Commission has held  the  claimants  entitled to an amount  of  Rs.50,000/- payable  as compensation for mental agony suffered by  the claimants for failure of the Authority to make available the plot as promised by it.

     As  all  these  appeals  raise  the  following  common questions  of  law,  they have been heard together  and  are

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being  disposed  of by this common judgment.  The  questions arising for decision are :-

     (i)  Whether  compensation can be awarded for  mental agony suffered by the claimants?

     (ii) Whether in the absence of any contract or promise held  out by the Ghaziabad Development Authority any  amount by  way of interest can be directed to be paid on the amount found due and payable by the Authority to the claimants?

     (iii)  If  so, the rate at which the interest  can  be ordered to be paid?

     In C.A.  No.8316/1995, Ghaziabad Development Authority had  announced  a  scheme for allotment of  developed  plots which  was  known  as Indirapuram Scheme.   The  Authority informed  the  claimants that a plot of 35 sq.   metres  was reserved  for  them,  the estimated cost of which  plot  was Rs.4,20,000/-   payable   in   specified  instalments.    An allotment  of plot was also informed.  Then at one point  of time   the  claimants  were  informed   that  due  to   some unavoidable reasons and the development work not having been completed  there has been delay in handing over  possession. Having  waited  for  an  unreasonable  length  of  time  the claimants approached the MRTP Commission.

     When  a  development authority announces a scheme  for allotment  of  plots, the brochure issued by it  for  public information  is an invitation to offer.  Several members  of public  may  make applications for availing benefit  of  the scheme.   Such applications are offers.  Some of the  offers having  been  accepted  subject  to  rules  of  priority  or preference laid down by the Authority result into a contract between   the  applicant  and   the  Authority.   The  legal relationship  governing  the  performance  and  consequences flowing from breach would be worked out under the provisions of  the  Contract Act and the Specific Relief Act except  to the  extent governed by the law applicable to the  Authority floating  the scheme.  In case of breach of contract damages may  be  claimed by one party from the other who has  broken its  contractual  obligation in some way or the other.   The damages  may  be  liquidated  or  unliquidated.   Liquidated damages  are such damages as have been agreed upon and fixed by  the parties in anticipation of the breach.  Unliquidated damages  are  such damages as are required to  be  assessed. Broadly the principle underlying assessment of damages is to put  the aggrieved party monetarily in the same position  as far  as possible in which it would have been if the contract would  have been performed.  Here the rule as to  remoteness of damages comes into play.  Such loss may be compensated as the  parties could have contemplated at the time of entering into  the  contract.  The party held liable to  compensation shall  be obliged to compensate for such losses as  directly flow  from  its breach.  Chitty on Contracts (27th  Edition, Vol.1,  para  26.041)  states  - Normally,  no  damages  in contract  will  be  awarded for injury  to  the  plaintiffs feelings,  or  for his mental distress, anguish,  annoyance, loss  of reputation or social discredit caused by the breach of contract;..The exception is limited to contract whose performance  is  to provide piece of mind or  freedom  from distress.Damages  may also be awarded for nervous shock or an anxiety state (an actual breakdown in health) suffered by  the plaintiff, if that was, at the time the contract was made,  within  the  contemplation of the parties  as  a  not

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unlikely  consequence  of the breach of  contract.   Despite these developments, however, the Court of Appeal has refused to  award  damages  for  injured feelings  to  a  wrongfully dismissed  employee, and confirmed that damages for  anguish and  vexation caused by breach of contract cannot be awarded in an ordinary commercial contract.

     The  ordinary heads of damages allowable in  contracts for  sale  of  land are settled.  A vendor  who  breaks  the contract  by failing to convey the land to the purchaser  is liable  to  damages for the purchasers loss of  bargain  by paying  the  market value of the property at the fixed  time for  completion less the contract price.  The purchaser  may claim  the  loss  of  profit  he intended  to  make  from  a particular  use  of  the land if the vendor  had  actual  or imputed  knowledge  thereof.  For delay in  performance  the normal nature of damages is the value of the use of the land for the period of delay, viz.  usually its rental value (See Chitty on Contracts, ibid, para 26.045).

     In  our  opinion, compensation for mental agony  could not  have  been  awarded  as  has  been  done  by  the  MRTP Commission.

     However,  the learned counsel for the respondents  has invited  our attention to Lucknow Development Authority  Vs. M.K.  Gupta - (1994) 1 SCC 243 wherein this Court has upheld the award by the Commission of a compensation of Rs.10,000/- for  mental  harassment.  The basis for such award is to  be found in paras 10 and 11 wherein this Court has stated inter alia  -  Where it is found that exercise of discretion  was mala  fide  and the complainant is entitled to  compensation for  mental and physical harassment then the officer can  no more  claim to be under protective cover.  When the  citizen seeks  to  recover compensation from a public  authority  in respect  of injuries suffered by him for capricious exercise of  power  and the National Commission finds it duly  proved then  it has a statutory obligation to award the same.  The Court  has further directed the responsibility for the wrong done  to  the citizens to be fixed on the officers who  were responsible   for  causing  harassment   and  agony  to  the claimants  and then recover the amount of compensation  from the  salary  of  officers found responsible.   The  judgment clearly shows the liability having been fixed not within the realm  of  the law of contracts but under the principles  of adminstrative law.  We do not find any such case having been pleaded  much less made out before the Commission.   Indeed, no such finding has been arrived at by the Commission as was reached  by  this Court in the case of  Lucknow  Development Authority (Supra).  The award of compensation of Rs.50,000/- for mental agony suffered by the claimants is held liable to be set aside.

     The  next  question is the award of interest  and  the rate  thereof.   It is true that the terms of  the  brochure issued  by the Authority relevant to any of the cases  under appeal  and  the correspondence between the parties  do  not make  out  an  express or implied contract  for  payment  of interest  by the Authority to the claimants.  Any  provision contained   in  the  Consumer   Protection  Act,  1986,  the Monopolies  and  Restrictive Trade Practices Act,  1969  and U.P.   Urban Planning and Development Act, 1973 enabling the award  of such interest has not been brought to our  notice. The  learned counsel for the claimants have placed  reliance on a recent decision of this Court in Sovintorg (India) Ltd.

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Vs.   State  Bank  of India, New Delhi - (1999)  6  SCC  406 wherein  in  similar  circumstances  the  National  Consumer Disputes  Redressal Commission directed the amount deposited by the claimants to be returned with interest at the rate of 12  per  cent  per annum.  This Court enhanced the  rate  of interest to 15 per cent per annum.  To sustain the direction for payment of interest reliance was placed on behalf of the claimants  on Section 34 of the CPC and payment of  interest at the rate at which moneys are lent or advanced by National Banks  in relation to commercial transactions was  demanded. This Court did not agree.  However, it was observed :-

     There  was no contract between the parties  regarding payment  of  interest  on delayed deposit or on  account  of delay  on  the  part  of the opposite party  to  render  the services.  Interest cannot be clamed under Section 34 of the Civil  Procedure  Code  as  its  provisions  have  not  been specifically  made  applicable to the proceedings under  the Act.   We,  however,  find  that the  general  provision  of Section  34  being  based  upon  justice,  equity  and  good conscience   would  authorise  the   Redressal  Forums   and Commissions  to also grant interest appropriately under  the circumstance  of each case.  Interest may also be awarded in lieu  of  compensation or damages inappropriate cases.   The interest can also be awarded on equitable grounds.

     The   State  Commission  as   well  as  the  National Commission  were,  therefore,  justified   in  awarding  the interest  to  the appellant but in the circumstances of  the case  we feel that grant of interest at the rate of 12%  was inadequate  as admittedly the appellant was deprived of  the user  of  a sum of Rs.  one lakh for over a period of  seven years.   During  the aforesaid period, the appellant had  to suffer  the winding-up proceedings under the Companies  Act, allegedly  on the ground of financial crunch.  We are of the opinion  that  awarding interest at the rate of 15 per  cent per annum would have served the ends of justice.

     We  are  therefore  of the opinion  that  interest  on equitable  grounds can be awarded in appropriate cases.   In Sovintorg  (India)  Ltd.s case the rate of 15 per cent  per annum  was considered adequate to serve the ends of justice. The  Court  was apparently influenced by the fact  that  the claimant  had  to  suffer winding-up proceedings  under  the Companies  Act and the defendant must be made to share  part of  the blame.  However, in the cases before us, the parties have not tendered any evidence enabling formation of opinion on  the rate of interest which can be considered ideal to be adopted.   The  rate  of interest awarded in  equity  should neither  be  too high nor too low.  In our opinion  awarding interest  at the rate of 12 per cent per annum would be just and  proper and meet the ends of justice in the cases  under consideration.   The  provision  contained in  the  brochure issued  by  the Development Authority that it shall  not  be liable  to  pay  any interest in the event  of  an  occasion arising  for  return  of  the amount should be  held  to  be applicable  only  to  such cases in which  the  claimant  is itself  responsible  for  creating  circumstances  providing occasion  for  the  refund.  In the cases under  appeal  the fault has been found with the Authority.  The Authority does not therefore have any justification for resisting refund of the claimants amount with interest.

     For  the foregoing reasons, the direction made by  the MRTP  Commission for payment of Rs.50,000/- as  compensation

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for  mental  agony suffered by the claimants-respondents  in Civil  Appeal  No.8316/1995 is set aside.  In all the  other cases  the direction for payment of interest at the rate  of 18 per cent shall stand modified to pay interest at the rate of 12 per cent per annum.

     Civil Appeal No.8482/1997

     This  case  relates to allotment of a flat.  The  MRTP Commission  has held the claimant entitled to allotment of a flat.   An  option has been given to the claimant.   If  the claimant  may  refuse  to  take the flat  in  terms  of  the direction  made by the Commission he will be entitled to the refund  of the amounts deposited by him with interest at the rate  of 18 per cent per annum from the dates of deposit  of the  various amounts by the claimant.  During the course  of hearing before this court the possibility of the claim being satisfied  by allotment of an alternative flat was  explored but  that  could  not materialise as the  claimant  was  not agreeable  to  accept  the  flat offered  by  the  Authority submitting  that  it was located in a deserted area and  was heavily  priced.   That being the position the direction  of the  Commission for refund of the amount shall stand  though the  rate  of interest shall be 12 per cent and not  18  per cent.

     All  the appeals and contempt petitions stand disposed of accordingly.  No order as to the costs.