IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.7727 of 2002

Punjab Urban Planning & Development  Authority           ... Appellant

Vs.

Bhupinder Singh          ...Respondents

With

Civil Appeal No. 7728 of 2002 Civil Appeal No. 7730 of 2002 Civil Appeal No. 7726 of 2002 Civil Appeal No. 7729 of 2002

& C.A. No……. of 2008 (Arising out of SLP(C) No. 7280 of 2002

J U D G M E N T

ALTAMAS KABIR,J. 1. Civil Appeal Nos. 7726 to 7730 arise out of a

common order dated 18th September, 2001, passed

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by  the  National  Consumer  Disputes  Redressal

Commission  in  respect  of  Revision  Petitions

Nos. 1056, 1057, 1058, 1136 and 1055 of 2001.

Special Leave Petition (C) No. 7280 of 2002

arises out of a similar order of the National

Commission dated 7th November, 2001, passed in

Revision Petition No. 1743 of 2001.  Since the

five appeals arise out of a common order of the

National Commission and the issue involved in

the special leave petitions is the same, all

the six matters were taken up for hearing and

final disposal together.  Leave is granted in

Special Leave Petition (C) No. 7280 of 2002.

2. As will appear from the materials on record, in

1989 the Punjab Urban Planning and Development

Authority  (hereinafter  referred  to  as  the

“PUDA”),  the  appellant  herein,  invited

applications from persons who wished to acquire

Higher  Income Group  (Single Storey)  category

houses  at  Phase  IX  SAS  Nagar.   Interested

applicants were required to deposit a sum of

Rs.4,000/-  while making such application.  In

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the advertisement inviting applications, it was

categorically mentioned that no interest would

be payable on the earnest money.  About 5416

applications were received by PUDA in response

to the said advertisement and draw of lots for

houses immediately available in Phase IX SAS

Nagar  was  held  on  10th November,  1989.

According  to  PUDA,  the  information  sheet,

supplied along with the prescribed application

forms, made it clear that allotment of houses

would be made on the basis of draw of lots and

that the deposit of earnest money would not

create any vested right of allotment to any of

the  applicants.   According  to  PUDA,  earnest

money  was  refunded  to  those  unsuccessful

applicants who desired that their earnest money

be  returned  to  them.   However,  out  of  the

unsuccessful  applicants,  1965  applicants  did

not seek refund of their earnest money.  

3.   It transpires that in 1991 the Department of

Housing and Urban Development of the Government

of Punjab was merged with the Punjab Housing

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Development Board.  In 1995, the Punjab Housing

Development  Board which  had been  constituted

under the Punjab Housing Development Board Act,

1972, was abolished by virtue of the provisions

of the Punjab Regional and Town Planning and

Development Act, 1995 (hereinafter referred to

as  “the  1995  Act”).   The  Punjab  Urban  and

Development  Authority  was  thereafter

constituted  with  effect  from  1st July,  1995,

under the provisions of the 1995 Act and was

given the responsibility for the effective and

planned development of housing schemes and for

undertaking  Urban  Development  and  Housing

Programmes for establishing new towns in the

State of Punjab.  It appears that on account of

non- availability of suitable land with PUDA,

no High Income Group Scheme could be formulated

for construction of Higher Income Group houses

between 1989 and July, 1996.   

4. In  1996  PUDA  formulated  a  scheme  for

construction of 354 Higher Income Group Houses

on land available in Sector 70 SAS Nagar.  It

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also appears that under Section 23 of the 1995

Act, the authority is competent to appoint one

or  more  committees  for  securing  efficient

discharge of the functions of the authority.

Under Regulation 8 of the Punjab Urban Planning

and  Development  Authority  (Committees  and

Conduct  of  Business)  Regulations,  1996,  the

Finance  and  Accounts  Committee  was  duly

constituted  to  perform  the  function  of

determining prices and policies for disposal of

land,  plots  and  houses,  besides  discharging

other functions.  The said committee at its

meeting held on 24th July, 1996, considered the

question  of  disposal  of  the  proposed  354

partially finished duplex houses in Sector 70,

SAS Nagar and took the following decision:  

“Item  No.  9.07.  Disposal  of  354 independent  partially  finished  duplex houses in Sector 70, SAS Nagar. Approved  with  the  modification  that  154 houses  be  offered  to  old  applicants  and 200 to fresh applicants at present rates. It may be ensured that money deposited by old or new applicants be refunded to all unsuccessful  applicants  immediately  after draw of lots.”

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5. Pursuant to the aforesaid decision, a public

notice  was  published  in  the  Tribune  on  12th

September, 1996, wherein it was announced that

the  applicants  who  had  applied  in  1989  for

Higher  Income  Group  Scheme  by  deposit  of

Rs.4,000/- and had not received refund of the

same would be considered for allotment by draw

of lots for 154 such houses in Sector 70, SAS

Nagar.   Subsequently, on 20th September, 1996,

it  appears  that  those  applicants  who  had

participated  in  the  draw  of  lots  on  10th

November,  1989,  and  had  not  withdrawn  their

earnest money, were included in the draw of

lots for the 154 Higher Income Group Houses in

Sector 70 SAS Nagar.

6. That all the applicants who were successful in

the draw of lots conducted on 20.9.1996 were

issued  allotment  letters  and  those  who  were

unsuccessful were returned the earnest money of

Rs.4,000/- which had been deposited by them.

Since the said earnest money was returned by

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PUDA without any interest calculated thereupon,

some  of  the  unsuccessful  candidates  filed

complaints  before  the  District  Forum

complaining  that despite  having retained  the

earnest money of Rs.4,000/- since 1989, PUDA

had refunded only the said amount without any

interest  thereupon.  The  complainants  in  the

several  complaints  claimed  compensation  from

PUDA in respect of the earnest money deposited

by them by way of interest at the rate of 24%

per  annum  apart  from  compensation  for

harassment,  mental  agony  and  inconvenience.

The applicants also prayed for costs of the

proceedings.  

7.  The  appellant  herein  contested  the  several

proceedings  initiated  by  the  unsuccessful

applicants and took a plea that no interest was

required to be paid on the amount deposited by

the complainants on account of the fact that it

had  been  categorically  mentioned  in  the

advertisement  inviting  applications  that  no

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interest would be payable on the earnest money.

On  the  basis  of  the  evidence  before  it  the

District  Forum  allowed  the  complaints  and

awarded a cost of Rs.550/-  in each case and

also  directed  PUDA  to  pay  interest  on  the

amount deposited as earnest money at the rate

of 18% per annum for the period up to the date

of  payment  of  the  total  amount  to  the

complainants, less a period of two years from

the date of deposit.

8. Aggrieved  by  the  aforesaid  order  of  the

District Forum, PUDA filed appeals before the

Consumer  Disputes  Redressal  Commission,

Chandigarh.  The submissions made before the

District Forum that interest was not payable on

the earnest money was reiterated and it was

also  indicated  that  since  the  earnest  money

deposited by the respondents in 1989 had not

been returned to them, as the respondents had

not asked for refund of the same, they had been

given a second opportunity to participate in

the draw of lots on the basis of their original

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deposit,  although,  the   deposits  for

participating in the subsequent draw of lots

held on 20.9.1996 was much higher.  PUDA’s case

appears  to  be  that  on  the  strength  of  the

earnest  money deposited  once the  respondents

had been given two opportunities to participate

in the draw of lots and that it could not,

therefore,  be  contended  that  the  said  sums

deposited  by  way  of  earnest  money  had  been

retained by PUDA with an ulterior objective in

mind.

9. Concurring  with  the  view  expressed  by  the

District Forum and relying upon the decision of

the National Commission in the case of S.P.

Davaskar  vs.  Housing  Commissioner  Karnataka

Housing Board, reported in 1977 CCJ 360, the

Appellate  Forum  came  to  the  conclusion  that

according  to  the  law  as  explained  by  the

National Commission in its above decision, PUDA

was required to pay interest on the amounts

deposited which were kept by the Board for a

period  of  2  years  or  more.  The  Consumer

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Disputes  Rederessal  Commission,  Chandigarh,

accordingly dismissed the appeals preferred by

PUDA upon holding that the District Forum had

rightly allowed the interest at a rate which

was neither excessive nor unreasonable.

10. The  said  decision  of  the  Consumer  Disputes

Redressal   Commission,  Chandigarh  was

challenged by PUDA before the National Consumer

Disputes  Redressal Commission,  New Delhi,  by

way  of  Revision.   The  same  was,  however,

dismissed  by  the  National  Commission  which

agreed with the decision of the District Forum

directing PUDA to pay interest on the deposits

made in 1989 and left unreturned till 1996, at

the  rate  of  18%  per  annum  for  the  period

commencing from two years after the date of

deposit till the date of payment.

11. It is against the said order of the National

Commission that the present appeals have been

filed.

12. Right at the outset it was submitted on behalf

of  PUDA  that  the  proceedings  taken  by  the

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respondents  before  the  Consumer  Forum  were

invalid and ought not to have been entertained

by the District Forum, inasmuch as, no case of

deficiency  of  service  had  been  made  out  on

behalf  of  the  respondents  to  attract  the

provisions  of  the  Consumer   Protection  Act,

1986.  Appearing for the appellant, Ms. Rachna

Joshi  Issar  submitted  that  it  had  been

consistently held by this Court that the onus

of proving deficiency of service  is upon the

complainant seeking relief under the Consumer

Protection Act.  The respondent did not have

any  vested  right  of  allotment  unless  they

succeeded  in  the  draw  of  lots.   It  was

submitted  that  the  respondents  on  their

application had only a right to be considered

for allotment if they were otherwise eligible

and  that  they  have  been  so  considered  for

allotment on 10.11.1989 and also on 20.9.1996

when  the  earnest  money  was  fixed  at

Rs.62,700/-, as against Rs.4,000/- deposited by

them at the time of the first draw of lots held

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on 10.11.1989. Ms.Issar urged that neither had

any  malafide  been  alleged  or  proved  against

PUDA in the conduct of proceedings relating to

the  draw  of  lots  on  both  the  dates.

Accordingly, in the absence of any case for

deficiency  of  service  or  breach  of  contract

made  out  by  the  applicants,  the  application

before  the  District  Forum    was  entirely

misconceived and wholly without jurisdiction.

13. Ms.Issar  also  urged  that  when  initially  the

draw  of  lots  was  held  on  10.11.1989,  those

unsuccessful applicants who desired refund of

their  earnest  money  were  given  such  refund

immediately.   Out  of  the  unsuccessful

candidates 1965 applicants did not seek refund

of their earnest money which was retained by

PUDA to give such applicants an opportunity to

participate in the next draw of lots. Mr. Issar

also  reiterated  that  in  the  advertisement

inviting  applications  it  had  been  clearly

indicated that no interest would be payable on

the  earnest  money  deposited  and  that  having

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regard to the above the respondents should have

asked for refund of the amount deposited by

them  without  waiting  for  the  same  to  be

refunded by PUDA.

14. Ms. Issar submitted that the respondents should

not be allowed to approbate and reprobate in

the  same  breath  having  participated  in  the

second draw of lots on the basis of the earnest

money deposited by them earlier, and, on the

other hand, claiming interest thereupon after

being unsuccessful in the draw of lots. Ms.

Issar submitted that this amounted to malice in

law and the claim of the respondents, instead

of  being  allowed,  should  have  been  rejected

with appropriate costs.

15. At this stage it may be indicated that when the

appeals  were  taken  up  for  final  hearing  on

3.4.2008,  no  one  appeared  on  behalf  of  the

respondents  in  any  of  the  appeals,  and,

accordingly, fresh notices were issued to the

respondents indicating that in the event they

were  not  represented  on  the  next  date  of

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hearing,  the  appeals  would  be  heard  and

disposed  of  finally  in  the  absence  of  the

respondents. The Office Report dated 5.5.2008,

indicates that notices had been issued to all

the respondents on 9.4.2008 but neither the AD

Cards  nor  the  unserved  covers  have  been

received back. Since one month had expired when

the appeals were again listed  for hearing  and

still  no  one  was  present  on  behalf  of  the

respondents,  the  appeals  were  taken  up  for

hearing in their absence.

16. From  the  materials  placed  before  us  by

Ms.Issar,  the  admitted  position  is  that  the

earnest money deposited by the respondents in

1989,  when making  applications for  acquiring

Higher  Income Group  (Single storey)  Category

Houses at Phase IX, SAS Nagar, had not been

returned  to  the  respondents,  while  in  other

cases the same was returned to the applicants.

The explanation given by PUDA that such earnest

money was refunded to those who had claimed

such refund, but was not refunded to those who

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did not, is not very convincing. It cannot,

however, be overlooked that the respondents did

get  the  benefit  of  such  retention  by  being

permitted to participate in the draw of lots

held for the second time on 20.9.1996. Apart

from that, there is also no explanation as to

why the respondents had not asked for refund of

the  earnest  money  and  allowed  the  same  to

remain with PUDA.

17. Furthermore, the respondents did not object to

the contents of the public notice published in

the  “Tribune”  on  12th September,  1996,

categorically indicating that those applicants

who had earlier applied for allotment of Higher

Income Group Houses and had not withdrawn the

deposit of Rs.4,000/- made by them would also

be included in the draw of lots scheduled to be

held  on  20th September,  1996  for  154  such

houses in Sector 70 SAS Nagar.  On the other

hand, the respondents allowed themselves to be

included in the draw and only when they proved

to  be  unsuccessful,  then  they  moved  the

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Consumer  Forum  contending  that  they  were

entitled to interest on the deposit which had

been made in 1989 and had not been returned to

them by PUDA.  Of course, there is also nothing

on record to show that the respondents had even

asked for return of their individual deposits

of  Rs.4,000/-,  with  or  without  interest

thereupon,  from  PUDA  before  the  same  was

returned to them after they were unsuccessful

in the second draw of lots.   Despite, the

stipulation  in  the  advertisements  that  no

interest would be paid on the earnest money,

the District Forum allowed the complaints made

by the respondents and awarded cost in each

case together with interest at the rate of 18%

per  annum  for  the  period  from  the  date  of

deposit up to the date of payment of the total

amount, less a period of two years from the

date of deposits.  Since no one had appeared on

behalf of PUDA before the District Forum, the

matter was proceeded with ex-parte and merely

upon recording that it was specified that PUDA

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had retained the amount of Rs.4,000/- from 10th

March,  1989  till  19th January,  1997,  without

any  reasonable  cause,  which  amounted  to

deficiency in service on the part of PUDA, it

granted interest to the complainant at the rate

of 12% in the manner indicated herein above.   

18. In  the  appeal  filed  by  PUDA  the  State

Commission did not give much importance to the

stipulation contained in the advertisement that

no  interest  would  be  payable  on  the

registration  fee,  and  without  taking  into

account the fact that on the basis of the said

deposits the respondents had been included in

the second draw of lots, affirmed the order

passed  by  the  District  Forum  mainly  on  the

basis of a decision of the National Commission

in the case of S.P. Davaskar (supra) the facts

of  which  are  not  only  distinguishable  but

completely  different  from  the  facts  of  the

present case.   

19. Even the facts of the other decision of the

National  Commission  in  the  case  of  George

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Thomas  and  ors.  Vs.  Ghaziabad  Development

Authority  and  Anr.,  [1999  (1)  CPC  183],

relating to payment of interest on deposited

amounts, is distinguishable on facts.  If the

facts, which are peculiar to this case, are

taken into consideration, the retention of the

earnest money by PUDA cannot be brought within

the ambit of the two aforesaid decisions.  The

retention of the amount in this particular case

was  pursuant  to  a  policy  which  allowed  the

depositors,  who  had  not  withdrawn  their

deposit, to participate in a subsequent draw of

lots without having to pay anything more than

what had been deposited by them, even though

the amount of deposit may have gone up several

times.   

20. In our view, the single most important aspect

of this case is that on the failure of the

respondents to ask for refund of the deposited

amount within a reasonable time, the same was

not refunded to them by PUDA.  Not having asked

for such refund, the respondents cannot also

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take  advantage  of  their  lapse.   If  the

respondents had succeeded in the second draw of

lots, this question, which has been raised on

their behalf before the Consumer Forum might

never have arisen.  In our view, it will be

inequitable to saddle the appellants only with

the responsibility of non-refund of the earnest

money between 10th March 1989 and 19th January,

1997.   

21. We, therefore, allow the appeals in part and

direct that the rate of interest payable by the

appellant, as directed by the District Forum

and upheld by the State Commission, at the rate

of 18% per annum from the date of deposit till

the date of actual payment shall stand reduced

to 10% for the period in question.  The cost of

litigation  granted  by  the  District  Forum  is

also set aside.   

22. There will be no order as to costs.

..................J.    

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(Altamas Kabir)

..................J. (Mukundakam Sharma)

New Delhi,

Dated:July 14,2008

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