03 December 2004
Supreme Court
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GHAZIABAD DEVELOPMENT AUTHORITY Vs BALBIR SINGH

Case number: C.A. No.-007173-007173 / 2002
Diary number: 19088 / 2001
Advocates: Vs RAVINDRA KUMAR


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CASE NO.: Appeal (civil)  7173 of 2002

PETITIONER: Ghaziabad Development Authority  

RESPONDENT: Balbir Singh

DATE OF JUDGMENT: 03/12/2004

BENCH: H.K. SEMA & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

O R D E R  

       Heard the parties.   

       This appeal is directed against the judgment and award passed by the  National Consumer Disputes Redressal Commission (in short ‘the  Commission’) awarding interest @ 18% per annum.  In view of the order  that we propose to pass, necessary facts leading to the filing of the present  appeal are obviated.  In fact, the appellant has deposited/paid the entire  amount of 18% interest and in that view of the matter the appeal is virtually  rendered infructuous in view of the order rendered by this Court in  Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65: 24.     "We clarify that in all cases where interest has already  been paid @ 18% irrespective of the above order, the  authority will not be entitled to call upon the party to  refund the amount which has already been paid."

This Court after threadbare consideration of the submissions in Balbir  Singh’s case (supra) in paragraphs 8, 9, 22 and 23, by way of illustrations,  as to under what circumstances interest @ 18% would be justifiable.   8.      "However, the power and duty to award compensation  does not mean that irrespective of facts of the case  compensation can be awarded in all matters at a uniform  rate of 18% per annum.  As seen above, what is being  awarded is compensation i.e. a recompense for the loss or  injury.  It therefore necessarily has to be based on a  finding of loss or injury and has to correlate with the  amount of loss or injury.  Thus the Forum or the  Commission must determine that there has been  deficiency in service and/or misfeasance in public office  which has resulted in loss or injury.  No hard-and-fast  rule can be laid down, however, a few examples would  be where an allotment is made, price is received/paid but  possession is not given within the period set out in the  brochure.  The Commission/Forum would then need to  determine the loss.  Loss could be determined on basis of  loss of rent which could have been earned if possession  was given and the premises let out or if the consumer has  had to stay in rented premises then on basis of rent  actually paid by him.  Along with recompensing the loss  the Commission/Forum may also compensate for  harassment/injury, both mental and physical.  Similarly,  compensation can be given if after allotment is made  there has been cancellation of scheme without any  justifiable cause.

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9.      That compensation cannot be uniform and can best be  illustrated by considering cases where possession is being  directed to be delivered and cases where only monies are  directed to be returned.  In cases where possession is  being directed to be delivered the compensation for  harassment will necessarily have to be less because in a  way that party is being compensated by increase in the  value of the property he is getting.  But in cases where  monies are being simply returned then the party is  suffering a loss inasmuch as he had deposited the money  in the hope of getting a flat/plot.  He is being deprived of  that flat/plot.  He has been deprived of the benefit of  escalation of the price of that flat/plot.  Therefore the  compensation in such cases would necessarily have to be  higher.  Further if the construction is not of good quality  or not complete, the compensation would be the cost of  putting it in good shape or completing it along with some  compensation for harassment.  Similarly, if at the time of  giving possession a higher price or other amounts are  collected unjustifiably and without there being any  provision for the same the direction would be to refund it  with a reasonable rate of interest.  If possession is refused  or not given because the consumer has refused to pay the  amount, then on the finding that the demand was  unjustified the consumer can be compensated for  harassment and a direction to deliver possession can be  given.  If a party who has paid the amount is told by the  authority that they are not in a position to ascertain  whether he has paid the amount and that party is made to  run from pillar to post in order to show that he has paid  the amount, there would be deficiency of service for  which compensation for harassment must be awarded  depending on the extent of harassment.  Similarly, if after  delivery of possession, the sale deeds or title deeds are  not executed without any justifiable reasons, the  compensation would depend on the amount of  harassment suffered.  We clarify that the above are mere  examples.  They are not exhaustive.  The above shows  that compensation cannot be the same in all cases  irrespective of the type of loss or injury suffered by the  consumer.   

22.     In Civil Appeal No. 7224 of 2002 the respondent had  applied for a house in a scheme floated in 1992.  He had  paid the entire cost.  He had been allotted a flat and  issued a reservation letter.  Yet no possession was given.   Thereafter, in 1996 the respondent was informed that for  unavoidable reasons the house has been allotted to  somebody else and if he desires, he can obtain an  alternate flat at a much higher price.  This, therefore, is  also a case where there is absolutely no justifiable reason  why the party has not been delivered possession of the  flat which had been allotted to him nor has any offer been  made to return his money with interest.  Instead the body  has asked the party to apply for an alternate flat at a  higher rate.  In our view, on these facts the award of  interest at the rate of 18% is justified.  It is not just  interest on the amount invested but is also compensation  for the harassment and agony caused to the allottee.  We  have given these two instances only by way of  illustrations.   

23.     As stated above, the interest, in both these cases will be  payable from the date the monies were paid till they are

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retained or deposited in court/tribunal.  We, however,  clarify that merely because we are maintaining awards of  interest, it must not be taken to mean that in future the  Commission/Forum must not work out compensation  under various heads and that they can continue to grant  interest only by way of damages/ compensation."

Mr. Vijay Hansaria, learned Senior counsel, however, contended that  interest should be reckoned from the "date" of deposit to the "date" of offer  of possession and not actual taking of possession.   He, therefore, contended  that when the body offers to the allottee for taking of possession and if the  allottee does not take possession without assigning any reasons nor reply to  the offer of possession, no interest from the date of offer would be accrued  on the amount deposited by the allottee.  There is some substance in this  contention.  Now the consumers are aware that interest are being awarded  for belated delivery of possession/non-delivery of possession and  unscrupulous consumer may, on one pretext or the other, deliberately avoid  taking of possession with a design to earn more interest.   In the present case,  possession was offered on 26.2.1996.  The allottee did not take the  possession nor furnished any reply to the offer of possession.  He filed a  complaint on 28.2.1996 before the District Forum and ultimately, possession  was delivered on 14.8.1996.  In our view, in such a situation, if there is no  reply filed by the allottee assigning the reasons for not being able to take  possession, the rate of interest would be reckoned from the date the amount  is deposited to the date the offer for possession is made by the body.    Similarly, if the allottee replies to the offer stating thereunder the reason for  not taking over the possession, as offered by the body, and the reason  assigned is reasonably acceptable the Commission may then examine the  reasons assigned by the allottee and may pass necessary order.  In the  present case, the offer of possession was made on 26.2.1996.  Instead of  taking possession or filing reply to the offer, the allottee filed a complaint  before the District Forum on 28.2.1996.  Thereafter, the allottee took the  possession only on 14.8.1996.  There is nothing on record to show that the  allottee has replied to the letter of offer of 26.2.1996.  This being the  position, the allottee would not be entitled to the interest from 26.2.1996 till  possession was delivered on 14.8.1996.  As explained above, the position  would have been different had the allottee filed reply to the letter of offer.   As this type of litigation is recurring in nature, we are of the view that  other contentions of Mr. Vijay Hansaria also deserve consideration.   Learned Senior counsel submits that in case of delivery of possession,  albeit belatedly, the rate of interest could be different from non-delivery of  possession/ cancellation of scheme/ offer of alternative plots/flats at higher  price which has already been dealt with by this Court in Balbir Singh’s case  (supra).  Normally, a case of delivery of possession, though  belatedly,  stands on a different footing from non-delivery of possession at all because  in case of delivery of possession, though  belatedly, the allottee also enjoys  the benefit of plot/flat.  Generally, in such a situation the rate of interest  should not exceed 12%.  However, as already observed by this Court in  Balbir Singh’s case (supra) no hard-and-fast rules can be laid down.  In a  specific case where it is found that delay was culpable and there is no  contributory negligence by the allottee resulting in harassment/injury, both  mental and physical, the Forum/Commission would not be precluded from  making an award in excess of 12% interest per annum.  Such order must,  however, be supported with reasons. There is yet another contention of the learned counsel for the  appellant, which requires consideration.  Mr. Hansaria submits that the  period the stay granted by the High Court/Court remains operative should  not be counted towards the award of interest.   In the present case, the stay  order was operative from 24.4.1991 to 16.12.1993.  This Court in Balbir  Singh’s case (supra) has dealt with this contention and held that after the  enquiry if it was found that the authority was prevented from delivery of  possession to anybody by the stay order the interest for the period for which  the stay was operative could be refused.  We reiterate the view that in such a  situation the authority could make an inquiry and if the enquiry report

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discloses that the developmental activities/construction of the plot/flat comes  to a standstill by reason  of interim order thereby prevented the body from  delivery of possession, the interest for the period the stay was operative  could be refused.  Similarly, if the inquiry report shows that despite the  operation of the interim order the developmental activities/construction  continued and the body was not prevented from delivery of possession, the  interest could be awarded during such period also.   As the appellant has already deposited/paid 18% interest amount, they  are precluded from calling upon the party to refund the same.   The appeal is, accordingly, disposed of in the above terms.