Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1994 OF 2006

U.T. Chandigarh Administration & anr. ……. Appellants

Vs.

Amarjeet Singh & Ors. ….… Respondents  

and Civil Appeal No. 1995 of 2006,  

CA No. 1633/2009 @ SLP [C] No.25250/2007;

CA  No. 1634/2009 @ SLP [C] No.4518 of 2008,

CA  No. 1635/2009 @ SLP [C] No.4519 of 2008,

CA  No. 1636/2009 @ SLP [C] No.4520 of 2008,

CA  No. 1637/2009 @ SLP [C] No.4523 of 2008,

CA  No. 1638/2009 @ SLP [C] No.4525 of 2008,

CA  No. 1639/2009 @ SLP [C] No.6362 of 2008,

CA  No. 1640/2009 @ SLP [C] No. 6363 of 2008,  

CA  No. 1641/2009 @ SLP [C] No.6364 of 2008,  

CA  No. 1642/2009 @ SLP [C] No.6365 of 2008,  

CA  No. 1643/2009 @ SLP [C] No.6366 of 2008,  

CA  No. 1644/2009 @ SLP [C] No.6367 of 2008,  

CA  No. 1645/2009 @ SLP [C] No.6368 of 2008,  

CA  No. 1646/2009 @ SLP [C] No.6369 of 2008,

CA  No. 1647/2009 @ SLP [C] No. 6372 of 2008,  

CA  No. 1648/2009 @ SLP [C] No.6373 of 2008,

CA  No. 1649/2009 @ SLP [C] No.6374 of 2008,

CA  No. 1650/2009 @ SLP [C] No.6375 of 2008,  

CA  No. 1651/2009 @ SLP [C] No.6376 of 2008,

CA  No. 1652/2009 @ SLP [C] No.6377 of 2008,

CA  No. 1653/2009 @ SLP [C] No.6378 of 2008,

CA  No. 1654/2009 @ SLP [C] No.6379 of 2008,

CA  No. 1655/2009 @ SLP [C] No.6380 of 2008,  

CA  No. 1656/2009 @ SLP [C] No.6381 of 2008,

CA  No. 1657/2009 @ SLP [C] No.6382 of 2008,

CA  No. 1658/2009 @ SLP [C] No.6383 of 2008,  

CA  No. 1659/2009 @ SLP [C] No.6384 of 2008,

CA  No. 1660/2009 @ SLP [C] No.6385 of 2008,

CA  No. 1661/2009 @ SLP [C] No.15831 of 2008, and

CA  No. 1662/2009 @ SLP [C] No.15859 of 2008.

With

CA Nos.1674-1686/2009 [@ SLP(C) Nos.3271 to 3283 of 2008].

J U D G M E N T

R.V. RAVEENDRAN, J.

Leave granted in the special leave petitions. These appeals are filed by

Union Territory of Chandigarh (for short ‘UT Chandigarh’). C.A. Nos.1994

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of 2006 and 1995 of 2006 are filed against a common order dated 21.2.2005

passed by the National Consumer Disputes Redressal Commission (“National

Commission” for short).  Other appeals  are filed against  the common order

dated  21.2.2007 passed  by the  National  Commission  following  the  earlier

order dated 21.2.2005. By these orders, the lease premium instalments have

been rescheduled and certain reliefs have been granted in regard to interest, to

the  lessees  –  respondents  (who  had  secured  leasehold  interest  in  sites

belonging to UT Chandigarh in public auctions held by it).  

FACTS OF THE CASE

2. As the facts are similar, we will refer to the facts of only one case (CA

No.1994/2006  arising  from  FA  No.499/2003  on  the  file  of  the  National

Commission). The Estate Officer, Union Territory Chandigarh Administration

issued an advertisement notifying the auction of 74 residential sites and 71

commercial  sites  in  different  sectors  of  Chandigarh,  on  leasehold  basis

subject to the General Terms and Conditions regarding auction.  The relevant

terms were :-

(i) The auction was for grant of a lease of sites for 99 years. The auction

was governed by the provisions of the Capital  of Punjab (Development &

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Regulation)  Act,  1952  (‘Development  Act’  for  short)  and  Chandigarh

Leasehold Sites & Building Rules, 1973 (‘Leasehold Rules’ for short).

(ii) In addition to the premium for lease (to be offered by bids), the lessee

had to pay annual rent at the rate of 2.5% of the premium for the first  33

years, liable to be raised to 3.375% of the premium for the next 33 years and

5% of the premium for the remaining 33 years;

(iii) 25% of the bid amount had to be paid by demand draft or cash at the

fall of the hammer. The remaining 75% premium could be paid either in a

lump sum with 30 days of the auction without any interest, or at the option of

the lessee, in three equated annual instalments along with interest at 10% per

annum, the first instalment becoming due on the expiry of one year from the

date of auction.  

(iv) If the instalments of the lease of premium or the ground rent were not

paid on the due dates, interest at the rate of 24% per annum should be paid

from the due date to date of payment.

(v) The successful bidder should complete the construction of the building

on the plot within three years from the date of auction in accordance with the

Punjab Capital (Development & Regulation) Building Rules, 1952 (‘Building

Rules’ for short)

(vi) The government would not be responsible for leveling of uneven sites.

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(vii) In the event of default, breach or non compliance of any of the terms

and  conditions  of  lease,  the  lease  was  liable  to  be  cancelled  and  the

site/building  resumed  and  the  amount  paid  to  government  towards

premium/rent forfeited either wholly or in part.  

(viii) The lessee was liable to pay all taxes and fees as may be levied by the

Chandigarh  Administration  in  respect  of  the  site  and  the  building  to  be

constructed thereon.

3. Respondents  1  to  4  were  the  successful  bidders  in  regard  to  plot

No.173 in Sector No.39C & D at the auction held on 18.12.1996. The lease

premium bid offered by them was Rs.20,45,000. The acceptance of the bid

cum confirmation of the lease of the plot was communicated to respondents 1

to  4  by  letter  dated  19.5.1997  (for  short  ‘letter  of  allotment’)  enclosing

therewith  a  letter  offering  possession  of  the  leased  site.  The said  letter  of

allotment  acknowledged  the  receipt  of  Rs.511,250  towards  25%  of  the

premium  and  permitted  the  respondents  to  pay  the  balance  75%  of  the

premium with 10% interest thereon in 3 equated instalments of Rs.6,16,736/-

on 18.12.1997, 18.12.1998 and 18.12.1999. It also required the respondents

to pay annual ground rent of Rs.51125/- during the first 33 years of lease. The

letter of allotment set out and reiterated the terms and conditions of lease and

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required the respondents to enter into a lease deed within six months and take

possession of the site before the lease deed is executed.

4. The  respondents  filed  a  complaint  before  the  Consumer  Disputes

Redressal  Commission,  Union  Territory,  Chandigarh  (for  short  ‘UT

Commission’) under the Consumer Protection Act, 1986 (‘Act’ for short) in

the year 1999.  In the said complaint they alleged that in addition to the initial

payment  of  Rs.511250/-  towards  the  lease  premium,  they  had  paid

Rs.616,736/-  plus  Rs.51,125/-  on  9.1.1998,  Rs.168,000/-  on  4.3.1999  and

Rs.200,000/- on 12.5.1999. They alleged that  the appellant did not provide

any amenities  in regard to the site,  and as a result  they had suffered huge

losses.  They  contended  that  until  the  basic  amenities  were  provided,  the

appellants were not legally entitled to claim the balance of premium or the

annual rent. They sought the following directions to the appellants :

(i) Not to recover the balance amount of premium or the interest on the premium or the ground rent until the basic amenities (approach road, sewerage,  ground water,  street  light,  electricity,  parking space)  were provided.

(ii) To  provide  the  basic  amenities  so  as  to  enable  them  to  raise  a construction on the site.

(iii) To  pay compensation  of  Rs.10  lacs  for  harassment  and  blocking  of various payments made by them.         

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(iv) To pay interest at the rate of 18% per annum on the amounts paid by them,  from  the  date  of  payment  till  all  the  basic  amenities  were provided.

5. The appellants filed a reply resisting the complaint. It was submitted

that  the  respondents,  having  accepted  the  terms  and  conditions  of  lease

contained in the conditions of auction and the letter of allotment were not

entitled to wriggle out of the contract terms or refuse to pay the balance. It

was also contended that the respondents were liable to pay the 75% balance

premium in three annual instalments and in addition pay interest @ 24% per

annum on the delayed instalments. The appellants submitted that they had not

made  any  representation  to  the  public  in  general  or  the  respondents  in

particular  that  the  plots  auctioned  were  ‘fully  developed’  plots  or  that  the

plots are situated in fully developed areas; nor was payment of premium or

rent subject  to Chandigarh Administration providing any ‘basic amenities’.

Therefore, the respondents could not link the issue of payment of instalments

or ground rent with the issue of basic amenities. It was also submitted neither

the terms of lease nor the provisions relating to auction of leasehold rights in

the Development Act and the Leasehold Rues, cast any obligation upon the

appellants  to  provide  the  basic  amenities  required  by the  respondents  and

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ensure that the site auctioned was situated in a fully developed area; and that

the auction was on ”as is where is” basis and the bidders were fully aware of

the situation and condition of the site for which they were bidding, as also the

terms and conditions subject to which the auction was held.  The appellants

also contended that the complaint was not maintainable.

6. The  U.T.  Commission  allowed  the  complaint  by  the  respondents,

alongwith other similar complaints, by a common order dated 31.3.2003 with

the following directions :  

(i) The  date  of  auction  for  the  purpose  of  payment  of  price  shall  be deemed to be date on which plinth  level  and all  the basic amenities demanded in the complaint cases are actually provided.

(ii) An  officer  of  the  rank  of  Chief  Engineer  (or  next  rank)  of  UT Chandigarh  shall  certify  that  the  plinth  level  as  well  as  other  basic requirements/amenities  were  provided.  The  date  of  such  certificate shall be considered to be the date of auction.

(iii) The  instalments  shall  be  rescheduled  accordingly and the  remaining price of the plots shall be deposited after rescheduling the instalments without any change in the bid price offered.

(iv) The lease rent shall be payable from the date of certificate of the Chief Engineer mentioned above.

(v) Interest on the amount due by the lessee shall be payable only from the date the aforesaid certificate is issued.  

(vi) The amount deposited by the complainants shall earn interest @ 18% per annum till the essential requirements were provided.  

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[Note:  Providing  of  “plinth  level”  directed  by UT Commission  apparently refers to filling up of low lying sites so as to bring them to the road level.]  

7. Feeling aggrieved, the appellants filed an appeal before the National

Commission.  The  National  Commission  allowed  the  appeal  in  part  by  a

common  order  dated  21.2.2005,  and  modified  and  restricted  the  reliefs

granted by  the U.T.Commission as follows :

(1) The  Chandigarh  Administration  shall  reschedule  the  recovery  of  three instalments and recover the same on (i) 1.5.2005, (ii) 1.5.2006 and (iii) 1.5.2007.

(2) Complainants shall pay interest @ 10% on the instalment amounts from the date of  taking possession of the plot.  This  would be in conformity with condition No.5 of the allotment letter which provides that balance of 75% of the premium is to be paid with 10% interest.

(3) The  complainants  shall  also  pay the  ground rent  as  per  the  prevailing rules.

However, the National Commission made it clear that:

(a) No penalty shall be levied for delayed payment of instalments or ground rent as the complaints were pending with the State Commission which had ultimately granted relief to the complainants;

(b) In respect of the premium instalments payable on 1st May, 2005, 2006 and 2007, complainants shall pay interest @ 10% and in case of any default in payment of instalments as above, it  would be open to the appellants to recover interest as per the rules.

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8. The  facts  of  the  other  appeals  are  also  similar.  Only  the  plot

numbers/dates/amounts  vary.  CA  No.1995/2006  arises  out  of  FA

No.500/2003 disposed by the said common order dated 21.2.2005. All other

appeals  arise  from  a  common  order  dated  21.2.2007  of  the  National

Commission which was passed in terms of the earlier order dated 21.2.2005,

the  only  change  being  to  alter  the  dates  of  rescheduled  instalments

as   1.5.2007,  1.5.2008  and  1.5.2009.  The  orders  dated  21.2.2005  and

21.2.2007 of the National Commission are challenged in these appeals.   

GROUNDS OF CHALLENGE

9. The appellants have urged the following common contentions in these

appeals :

(i)  When the auction of sites  (for  grant of a lease for 99 years)  was in

exercise  of  the power  of  the government  (UT Chandigarh Administration)

under  the  provisions  of  the  Development  Act  in  accordance  with  the

Leasehold  Rules,  it  involves  neither  sale  of  goods  nor  rendering  of  any

service.  The act of leasing plots by auction by the appellants therefore did

not result in the successful bidder becoming a ‘consumer’ or the appellants

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becoming  ‘service  providers’.  In  the  absence  of  hiring  or  availing  of  any

service,  the  question  of  deficiency in  service or  unfair  or  restrictive  trade

practice with reference to a service, did not arise and the complaint under the

Act was not maintainable.  

(ii) There was no obligation on the part of the appellants, either statutory or

contractual,  to  provide  the  ‘basic  amenities’  demanded by the respondents

with reference to  the lease of  sites by public auction.  The payment of the

premium (which was permitted to be paid in instalments on the request of the

successful  bidder)  and  the  annual  rent  was  not  conditional  upon  the  UT

Chandigarh providing any basic amenities. Payment of the amounts due could

not be postponed on the ground of absence of amenities. Nor could payment

of  default  interest  be  avoided,  once  there  was  default.  Therefore,  even

assuming that the complaint was maintainable, the National Commission was

not justified in interfering with the terms of the contract of lease and giving

relief in regard to interest, which was legally due.

Re : first contention  

10. A  ‘complaint’  is  maintainable  before  a  consumer  forum  under  the

Consumer Protection  Act,  1986,  by a ‘complainant’  (’consumer’ or  others

11

specified) against a ‘trader’ or ‘service provider’.  The terms ‘complainant’

‘complaint’ ‘consumer’ ‘trader’ and ‘service’ are defined in clauses (b),(c),

(d),(q) and (o) of Section 2 of the Act.  Therefore, a consumer forum will

have jurisdiction only when : (i) the complainant is a ‘consumer’ as defined in

clause (d) or a person specified in clause (b) of section 2 of the Act; (ii) the

respondent is a ‘trader’ as defined in clause (q) or a provider of ‘service’ as

defined in clause (o) of section 2 of the Act; and (iii) the ‘complaint’ relates

to any of the matters specified in clause (c) of section 2, for obtaining any

relief provided by order under the Act.  It therefore follows that where the

complainant is not a ‘consumer’ (or a person specified in clause (b) of section

2), or where the respondent is not a ‘trader’ or ’service provider’ or where the

complaint does not relate to matters enumerated in clause (c) of Section 2 of

the Act, the consumer forum will have no jurisdiction either to entertain any

complaint or grant any relief under the Act.

11. The respondents  relied upon the decisions  in  Lucknow Development

Authority  v. M.K. Gupta - 1994 (1) SCC 243,  Sector - 6, Bahadurgarh Plot

Holders  Association v.  State  of  Haryana -  1996 (1) SCC 485,  Ghaziabad

Development  Authority  v.  Balbir  Singh -  2004 (5) SCC 65 and  Municipal

Corporation, Chandigarh & Ors. v. Shanti Kunj Investment (P) Ltd. and Ors.

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- 2006 (4) SCC 109, to contend that the complaints were maintainable and

relief sought could be granted.  We may straight away note that the decisions

in  Bahadurgarh and  Shantikunj will not be of any assistance to decide the

issue of maintainability, as those cases did not relates to complaints under the

Consumer Protection Act, but arose out of writ petitions.

11.1 In Lucknow Development Authority v. M.K.Gupta [1994 (1) SCC 243]

this Court held that if the nature of duty or function performed was a service

as defined under the Act,  then  the provider  of  the service,  irrespective of

whether  it  is  a  private  body  or  statutory  or  a  public  authority,  would  be

amenable to the provisions of the Act.  This Court held :-

“As pointed out earlier the entire purpose of widening the definition (of ‘service’ under section 2(o) of the Consumer Protection Act) is to include in  it  not  only day to  day buying  and  selling  activity undertaken  by a common man but even such activities which are otherwise not commercial in nature yet they partake of a character in which some benefit is conferred on  the  consumer.  Construction  of  a  house  or  flat  is  for  the  benefit  of person for whom it is constructed. He may do it himself or hire services of a builder  or  contractor.  The latter  being for  consideration is  service as defined in the Act. Similarly when a statutory authority develops land or allots a site or constructs a house for the benefit of common man it is as much service as by a builder or contractor. The one is contractual service and other statutory service. If the service is defective or it is not what was represented then it would be unfair trade practice as defined in the Act. Any defect in construction activity would be denial of comfort and service to  a  consumer.  When  possession  of  property  is  not  delivered  within stipulated period the delay so caused is denial of service. Such disputes or claims are not in respect of immovable property as argued but deficiency in  rendering  of  service  of  particular  standard,  quality  or  grade.  Such deficiencies or omissions are defined in sub-clause (ii) or clause (r) of Section 2 as unfair trade practice. xxxxx Therefore  if  such  authority undertakes to construct building or allot houses or building sites to citizens

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of the State either as amenity or as benefit then it amounts to rendering of service and will be covered in the expression ‘service made available to potential users’. A person who applies for allotment of a building site or for  a  flat  constructed  by  the  development  authority  or  enters  into  an agreement with a builder or a contractor is a potential user and nature of transaction is  covered in the  expression ‘service or  any description’.  It further indicates that the definition is not exhaustive. The inclusive clause succeeded in widening its  scope  but  not  exhausting the services  which could be covered in earlier part. So any service except when it is free of charge or under a constraint of personal service is included in it.”  

(emphasis supplied).

11.2 In Ghaziabad Development Authority v. Balbir Singh  [2004(5) SCC

65] this Court held :-

“Thus the law is that the Consumer Protection Act, 1986 has a wide reach and the Commission has jurisdiction even in cases of service rendered by statutory  and  public  authorities.  Such  authorities  become  liable  to compensate for misfeasance in public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen. The Commission/Forum must determine that such sufferance is due to mala fide or capricious or oppressive act. It can then determine the amount for which the authority is liable to compensate the consumer for his sufferance due to misfeasance in public office by the officers. Such compensation is for vindicating the strength of the law. It acts as a check on arbitrary and capricious exercise of power. It helps in curing social evil. It will hopefully result in improving the work culture and in changing the outlook of the officer/public servant. No authority can arrogate to itself the power  to  act  in  a  manner  which  is  arbitrary.  Matters  which  require immediate  attention should not  be allowed to linger on.  The consumer must  not  be  made  to  run  from  pillar  to  post.  Where  there  has  been capricious or arbitrary or negligent exercise or non-exercise of power by an  officer  of  the  authority,  the  Commission/Forum  has  a  statutory obligation to award compensation.”

12. The  decisions  in  Lucknow  Development  Authority  and Ghaziabad

Develoopment  Authority  make  it  clear  that where a  public  development

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authority having invited applications for allotment of sites in a lay out to be

formed  or  for  houses  to  be  constructed  and  delivered,  fails  to  deliver

possession  by  forming  the  lay  out  of  sites  or  by  constructing  the  houses

within the stipulated period, the delay may amount to a deficiency in service

by treating the development authority as a service provider and the allottee as

the consumer. But where existing sites are put up for sale or lease by public

auction by the owner, and the sale/lease is confirmed in favour of the highest

bidder, the resultant contract relates to sale or lease of immovable property.

There is no hiring or availing of services by the person bidding at the auction.

Nor is the seller or lessor, a trader who sells or distributes ‘goods’. The sale

price  or  lease  premium  paid  by  the  successful  bidder  of  a  site,  is  the

consideration for the sale or lease, and not consideration for any service or for

provision of any amenity or for sale of any goods.   

13. In Lucknow Development Authority, it was held  that where a developer

carries  on  the  activity of development of land and invites  applications  for

allotment of sites in a developed layout, it will amount to ‘service’, that when

possession of the allotted site is not delivered within the stipulated period, the

delay may amount to a deficiency or denial of service, and that any claim in

regard to such delay is not in regard to the immovable property but in regard

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to  the  deficiency  in  rendering  service  of  a  particular  standard,  quality  or

grade. The activity of a developer, that is development of land into layout of

sites,  inviting applications for allotment by assuring formation of a lay out

with amenities and delivery of the allotted sites within a stipulated time at a

particular  price,  is  completely  different  from the  auction  of  existing  sites

either  on  sale  or  lease.  In  a  scheme  for  development  and  allotment,  the

allottee has no choice of the site allotted. He has no choice in regard to the

price to  be paid.  The development  authority decides  which  site  should  be

allotted  to  him.  The  development  authority  fixes  the  uniform  price  with

reference to the size of plots.  In most development schemes, the applications

are invited and allotments are made long before the actual development of the

lay  out  or  formation  of  sites.   Further  the  development  scheme casts  an

obligation  on  the  development  authority  to  provide  specified  amenities.

Alternatively  the  developer  represents  that  he  would  provide  certain

amenities, in the Brochure or advertisement.  In a public auction of sites, the

position  is  completely  different.  A person  interested  can  inspect  the  sites

offered and choose the site which he wants to acquire and participate in the

auction only in regard to such site.  Before bidding in the auction, he knows

or is in a position to ascertain, the condition and situation of the site.  He

knows about the existence or lack of amenities. The auction is on ‘as is where

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is  basis’. With such knowledge, he participates  in the auction and offers a

particular bid. There is no compulsion that he should offer a particular price.

When  the  sites  auctioned  are  existing  sites,  without  any

assurance/representation  relating  to  amenities,  there  is  no  question  of

deficiency of service or denial of service. Where the bidder has a choice and

option in regard to the site and price and when there is no assurance of any

facility or amenity, the question of the owner of the site becoming a service

provider,  does not  arise even by applying the tests  laid down in  Lucknow

Development Authority or Balbir Singh.  

14.  Where  there  is  a  public  auction  without  assuring  any  specific  or

particular amenities, and the prospective purchaser/lessee participates in the

auction  after  having  an  opportunity  of  examining  the  site,  the  bid  in  the

auction is made keeping in view the existing situation, position and condition

of the site. If all amenities are available, he would offer a higher amount. If

there are no amenities, or if the site suffers from any disadvantages, he would

offer a lesser amount, or may not participate in the auction. Once with open

eyes, a person participates in an auction, he cannot thereafter be heard to say

that  he  would  not  pay  the  balance  of  the  price/premium or  the  stipulated

interest on the delayed payment, or the ground rent, on the ground that the

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site suffers from certain disadvantages or on the ground that amenities are not

provided.  With reference to a public auction of existing sites (as contrasted

from sites to be ‘formed’), the purchaser/lessee is not a consumer, the owner

is not a ‘trader’ or ‘service provider’ and the grievance does not relate to any

matter in regard which a complaint can be filed.  Therefore, any grievance by

the purchaser/lessee will not give rise to a complaint or consumer dispute and

the fora under the Act will  not have jurisdiction to entertain or decide any

complaint  by  the  auction  purchaser/lessee  against  the  owner  holding  the

auction of sites.  

Re : Second Contention

15. The complaint  by the respondents  proceeded on the assumption that

there was an obligation on the part of the appellants to provide amenities in

the nature of approach road, water supply lines, drainage system, rainwater

drainage and electricity and that unless such amenities were provided, they

were not liable to pay the premium or interest on the premium or the ground

rent. As noticed above, neither the terms and conditions of auction, nor the

advertisement relating to the auction, nor the letter of allotment contained any

assurance regarding provisions of any such amenities with reference to the

sites put up for auction. To get over the absence of such term or assurance,

the respondents relied upon the definitions of the words ‘site’ and ‘amenity’

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in the Development Act and the provisions of the Leasehold Rules to contend

that there was a statutory obligation to provide the amenities and failure to

provide  such amenities  gave  a  cause  of  action  to  approach the  Consumer

Forum with a complaint against the appellants and also withhold payment of

the premium instalments and ground rent. On the other hand, the appellants

contend that they had no obligation, either contractual or statutory, to provide

amenities of any nature, with reference to the auction of the leasehold rights

of sites and the lack of amenities or alleged non-provision of amenities cannot

be a ground for withholding the premium and rent.  

16. In view of the rival contentions, it  becomes necessary to refer to the

relevant provisions of the Development Act and the Leasehold Rules.  

16.1) The Development Act re-enacts and modifies the law in relation to the

development  and regulation  of  new capital  of  Punjab.  Section  2(j)  defines

‘site’ as meaning ‘any land’ which is transferred by the Central Government

under  section  3.  Section 3 relates  to  the  power  of  Central  Government  in

respect  of  transfer  of  land  and  buildings  in  Chandigarh.  Sub-section  (1)

thereof provides that subject to the provisions of the said section, the central

government  may  sell,  lease  or  otherwise  transfer,  whether  by  auction,

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allotment or otherwise, any land or building belonging to the government in

Chandigarh on such terms and conditions as it may subject to any rules that

may be  made under  the  Act,  think  fit  to  impose.  Sub-section  (2)  thereof,

provides that the consideration for any transfer under sub-section (1) shall be

paid to the central government in such a manner and in such instalments and

at such rate of interest as may be prescribed.  

16.2) The term ‘amenity’ is defined in section 2(b) of the Development Act

as follows :

“2(b). ‘amenity’ includes  roads,  water-supply,  street  lighting,  drainage, sewerage, public building, horticulture, landscaping and any other public utility service provided at Chandigarh”.

Section  4  relates  to  power  to  issue  directions  in  respect  of  erection  of

building. Section 5 relates to bar to erection of buildings in contravention of

building rules. The term ‘amenity’ is significantly not used in section 3 which

relates  to  transfer  of  land  by  sale  or  lease  by  the  government.  The  term

‘amenity’ is referred only in sections 6 and 7 which are extracted below :  

“6. Power to  require proper maintenance of site or building.  –  If it appears to the Chief Administrator that the condition or use of any site or building is prejudicially affecting the proper planning of, or the amenities in, any part of Chandigarh or the interests of the general public there, he may serve on the transferee or occupier of that site or building a notice requiring  him  to  take  such  steps  and  within  such  period  as  may  be specified in the notice and thereafter to maintain it in such a manner as may be specified therein.  

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7. Levy  of  fee  or  tax  for  amenities.  –  (1)  For  the  purposes  of providing maintaining or continuing any amenity at Chandigarh the central government  may levy such  fees  or  taxes  as  it  may consider  necessary (which shall be in addition to any free or tax for the time being leviable under any other law) in respect of any site or building on the transferee or occupier thereof.  

(2) If the central government considers it necessary or expedient so to do having regard to the fact that the transferee or occupier is a religious or charitable institution or that he does not enjoy the amenity for which any fee or tax  is  levied,  the central  government may, by general  or special order, exempt wholly or partly any class of such transferees or occupiers from the payment of fees or taxes  levied under sub-section (1).”

Neither  Sections  6 and 7 nor any other provision of the Development Act

casts any obligation on the central government to provide amenities to plots

sold/leased  by  public  auction.  Therefore  the  assumption  that  there  is  a

statutory  obligation  on  the  part  of  the  Central  Government  to  provide

amenities, because the word ‘amenity’ is defined in the Act is erroneous and

baseless. As noticed above, the word ‘amenity’ is used in the context of two

specific matters. The first is that the transferee/occupier of a site should not

use  the  site  or  leave  it  in  a  condition  that  it  will  prejudicially  affect  the

amenities  in  any  part  of  Chandigarh  (vide  section  6).  The  second  is  that

central government can levy fees/taxes in respect of any site/building, on the

transferee/occupier for the purpose of providing, maintaining or continuing

any  amenity  at  Chandigarh.  Thus  definition  of  the  ‘amenity’  in  the

Development Act, does not in any manner cast any obligation on Chandigarh

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administration with reference to  the  auction  of  leasehold rights  relating  to

sites belonging to central government.  

16.3) Section 22 of the Development Act empowers the Central Government

to  make  rules  for  carrying  out  the  purposes  of  the  Act,  in  particular  and

among others : (a) the terms and conditions on which any land or building

may be transferred by the (central government) under this Act; (b) the manner

in which consideration money for any transfer may be paid; (c) the rate of

interest payable, and the procedure for payment of instalments, interest, fees,

rents or other dues payable under this Act; (d) the terms and conditions under

which the transfer of any right in any site or building may be permitted; (e)

erection of any building or the use of any site; (f) levy of fees or taxes under

Section 7 of the Act.

16.4) The  Leasehold  Rules  were  made  in  1973  in  regard  to  lease  of

properties by UT Chandigarh. We extract below the relevant rules :-

“3. (2). ‘premium’ means the price paid or promised for the transfer of a right to enjoy immovable property under these Rules.”  

“4.  The  Chandigarh  Administration  may demise  sites  and  buildings  at Chandigarh on lease for 99 years. Such leases may be given by allotment or by auction in accordance with these Rules.

x x x x x x

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6. Commencement and period of lease. – The lease shall commence from the date of allotment or auction as the case may be, and shall  be for a period of 99 years. After the expiry of said period of 99 years the lease may be renewed for such further period and on such terms and conditions as the Government may decide.   

x x x x x x

8. Lease by allotment, Procedure for : xxx (not relevant) x  x  x

9. Lease by auction, procedure for.—In case of auction, at least 25 per cent of the bid accepted by the auctioning officer shall be paid on the spot by the intending lessee in the prescribed mode of payment in accordance with Rule 12:

Provided that the Estate Officer may, in his absolute discretion, allow the successful bidder to deposit in the prescribed mode of payment not less than 10 per cent of the bid on the condition that the difference between the amount deposited and 25 per cent of the bid shall be deposited in the same manner within 30 days of auction.

9A Extension of period : xxx (not relevant) xxx

10.  Delivery of possession.—Actual possession of the site/building shall be delivered to the lessee on payment of 25 per cent of the premium in accordance with Rule 8 or Rule 9 as the case may be:

Provided that no ground rent payable under Rule 13 and interest on the instalments of premium payable under sub-rule (2) of Rule 12 shall  be paid  by  the  lessee  till  the  actual  and  physical  possession  of  the site/building is delivered or offered to be delivered to him, whichever is earlier.

11. Premium.—(1) In case of allotment, the premium shall be such amount as may be determined by the Chandigarh Administration.

(2) In case of auction, the premium shall be the bid accepted by the Estate Officer, as a result of bidding in open auction.

12.  Payment  of  premium  and  consequences  of  non-payment  or  late payment.—(1) In addition to payment of 25 per cent premium under Rule 8 or 9 as the case may be, the remaining 75 per cent premium may be paid in lump sum within 30 days from the date of allotment/auction without any interest.   

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(2) If payment is not made in accordance with sub-rule (1) of this rule, the balance of the 75 per cent premium shall be paid in three annual equated instalments  or  more  as  the  Chief  Administrator  may  in  exceptional circumstances of a case fix with prior approval of the Chief Commissioner along with interest at the rate of 10 per cent per annum or at such higher rate  of  interest  as  may  be  fixed  by  the  Chief  Administrator  by  a notification in the Official Gazette before the commencement of the lease. The first instalment shall become payable after one year from the date of allotment/auction:   

(3) x x x  (Not relevant) x x x

(3-A) In case any equated instalment or ground rent or part thereof is not paid by the lessee by the date on which it became payable he shall be liable to pay in respect of that instalment or ground rent or part thereof as the case may be,  interest  calculated at  the rate of twenty-four per cent  per annum from the  date  on  which  the  instalment  or  ground  rent  became payable till such date it is actually paid.  

13. Rent and consequences of non-payment.—In addition to the premium, whether in respect of site or building, the lessee shall pay rent as under --

(i) Annual rent shall be 2 ½ per cent of the premium for the first 33 years which may be enhanced by the Chandigarh Administration to 3 ¾ per cent of the premium for the next 33 years and to 5 per cent of the premium for the remaining period of the lease.  

(ii) Rent shall be payable annually on the due date without any demand from the Estate Officer:  

Provided  that  the  Estate  Officer  may  for  good  and  sufficient  reasons extend  the time for  payment  of rent  upto six  months  on the whole  on further payment of 6 per cent per annum interest from the due date upto the date of actual payment.

(iii) If rent is not paid by the due date, the lessee shall be liable to pay a penalty not  exceeding  100 per  cent  of  the  amount  due  which  may be imposed and recovered in the manner laid down in section 8 of the Capital of Punjab (Development and Regulation) Act, 1952, as amended by Act No.17 of 1973.     14.  Execution of lease deed.—(1) After payment of 25 per cent premium the lessee shall execute a lease deed in Form B, B-I, B-II or C, as the case may be, in such manner as may be directed by the Estate Officer within six months of the date of allotment/auction or within such further period as the Estate Officer may, for good and sufficient reasons, allow.

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17. The  National  Commission  has  proceeded  on erroneous  and baseless

assumptions  that  there  is  no  obligation  to  pay  the  instalments  until  the

amenities  were  provided  and  consequently  the  instalments  could  be

rescheduled so as to begin after the amenities were provided and that interest

would  start  to  run  only  when the  lessee  takes  possession.  In  view of  the

conflicting views of the High Court  as  to whether  instalments  are payable

only  after  the  government  provides  the  basic  amenities,  the  National

Commission circumvented the issue.  It held that as the appellant herein had

however provided all  the basic facilities by 1999 and the matter  had been

pending thereafter  before the Consumer fora,  the three annual   instalments

would  get  postponed  and  commence  only  after   its  decision,  that  is  from

1.5.2005,  instead  of  the  instalment  schedule  specified  by  the  appellants

(which commenced in 1997).

18. The  conflict  referred  to  by  the  National  Commission  was  with

reference to the decisions of the High Court in Shanti Kunj Investments Pvt.

Ltd.  v.  U.T.  Administration  Chandigarh  reported  in  AIR  2001  P&H 309

(CWP No. 959/1999 decided on 2.2.2001) and in  DLJ Builders (P) Ltd. v.

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Advisor to the Administrator Chandigarh Administration (CWP No. 13695 of

2001 dated 18.2.2002).  

18.1) Shantikunj Investments   related to an auction of leasehold rights of a

site by the UT Chandigarh.  In that case, the lessee found large number of

jhuggis, adjacent to the plot which were not removed inspite of his repeated

requests.  He also found no amenities  such as road, water,  landscaping etc.

Therefore the lessee filed a writ petition before the High Court seeking relief.

The High Court declared that the UT Chandigarh having  failed to provide the

basic amenities, its order of resumption and forfeiture could not be sustained

and therefore liable to be set aside. The High Court further directed that all

amenities  should be provided within three months  and no interest  shall  be

charged from the allottees if they pay the entire outstanding amount within

three months from the date of providing amenities.   

18.2) On the other hand, in its subsequent decision in DLG Builders Pvt. Ltd.

v.  Advisor to the Administratotr, Chandigarh Admn. (CWP No. 13695/2001

dated 18.2.2002) the High Court had held :-

“In our opinion, the judgment in M/s. Shanti Kunj Investment Pvt. Ltd.’s case (supra) has to be read in the light of the peculiar facts brought before the court and the same cannot be read as laying down the proposition that the allottee is not required to pay the insalments of premium with interest and ground rent in accordance with the terms and conditions of allotment and  Rule  12  of  the  Rules  till  each  and  every  amenity  enumerated  in Section  2(1)  is  made  available  at  the  site.  The  obligation  of  the Administration  to  provide  approach  road,  water  supply,  electricity,

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sewerage, storm water drainage can be read as implicit in the scheme of the Act and the Rules, but it cannot be said that the allottee is entitled to withhold the payment of instalments on the ground of lack of particular amenity  at  the  site.  If  the  basic  amenities,  like  water,  electricity  and approach road are not available at the site and on that account it is not possible  to  construct  the  building,  the  allottee  can  represent  to  the Administration that he may not be burdened with the liability of ground rent and may not be penalized for non construction within the specified time. After completion of building, he can represent for waiver of ground rent in case facility of sewerage has not been provided. However, after taking possession of the site and constructing the building, he cannot avoid his obligation to pay the balance of the premium along with interest and ground  rent  in  accordance  with  the  conditions  of  allotment  and  the provisions of Rule 12 of the Rules on the pretext that land scaping has not been done or pavement has not been tiled  or the particular public utility service  has  not  been  provided.  In  our  considered  view,  the  allottee  is bound to pay the balance premium and other charges in accordance with the conditions of allotment.”

18.3) The  decision  of  the  High  Court  in  Shantkunj Investments was

challenged by the Chandigarh Administration and Municipal Corporation of

Chandigarh. The decision in  DLG Builders was challenged by the allottees.

They were  disposed  of  by this  Court  by a  common judgment  reported  in

Municipal Corporation, Chandigarh v. Shantikunj Investments Pvt. Ltd. 2006

(4) SCC 109. This Court noted that the conflict between the two decisions of

the High Court were in regard to the question  whether providing of amenities

as defined in Section 2(b) of the Development Act was a condition precedent

for  payment  of  instalments  and  charging  interest.   After  examining  the

provisions  of  the  Act  and  the  relevant  rules,  this  Court  rejected  the

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contentions of the lessees and held that the High Court’s view in Shantikunj

could not be sustained. This Court held :-

“On a plain reading of the definition "amenities" read with Rule 11(2) and Rule 12, it cannot be construed to mean that the allottees could take upon themselves not to pay the lease amount and take recourse to say that since all  the  facilities  were  not  provided,  therefore,  they  are  not  under  any obligation to pay the installment, interest and penalty, if any, as provided under  the  Act  and  the  Rules.  …...  It  has  never  been  the  condition precedent.  It  is  true  that  in  order  to  fully  enjoy the  allotment,  proper linkage is necessary. But to say that this is a condition precedent, that is not the correct approach in the matter. …... It is true the word, "enjoy" appearing in the definition of the word "premium" in Rule  3(2)  of the Rules, means the price paid or promised for the transfer of a right to enjoy immovable  property  under  the  Rules.  It  was  very  seriously  contended before us that the word, enjoy immovable property necessarily means that the  Administration  should provide  all  the  basic  amenities  as  appearing under Section 2(b) of the Act for enjoying that allotment. The expression "premium"  appearing  in  the  present  context  does  not  mean  that  the allottees/  lessees  cannot  enjoy  the  immovable  property  without  those amenities being provided. The word "enjoy" here in the present context means that the allottees have a right to use the immovable property which has been leased out to them on payment of premium i.e. the price….. It is the common experience that for full development of an area it takes years. It is not possible in every case that the whole area is developed first and allotment is served on a platter. Allotment of the plot was made on an as- is-where-is basis and the Administration promised that the basic amenities will  be provided in due course of time.  It cannot be made a  condition precedent. This has never been a condition of the auction or of the lease. As per the terms of allotment upon payment of the 25 per cent, possession will be handed over and rest of the 75 per cent of the leased amount to be paid in a staggered manner i.e. in three annual equated installments along with interest at the rate of 10 per cent. If someone wants to deposit the whole of the 75 per cent of the amount he can do so. In that case, he will not be required to pay any interest. But if a party wants to make payment within a period of three years then he is under the obligation to pay 10 per cent interest on the amount of installment. This is the obligation on the part of the allottee as per the condition of lease and he cannot get out of it by saying that the basic amenities have not been provided for enjoying the allotted land, therefore he is not liable to pay the interest”.

We  asked  the  learned  counsel  for  the  parties  to  tell  us  which  is  the obligation of the lessor in the lease deed which says that  they will  not charge interest on the installments before providing the amenities.  There

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is neither any condition in the lease nor any obligation under the auction. If the parties have given their bids an with their eyes wide open, they have to blame themselves.  It cannot be enforced by any mandamus as there is no obligation contained in the lease deed or in the auction-notice.”

Therefore, it is evident that a lessee/successful bidder cannot seek reschduling

of  the  instalments  of  premium or  postponement  of  accrual  of  the  interest

payable as per rules.   

19. The equated instalment includes interest only upto the dates stipulated

as due dates. When the instalments are not paid on the due dates, the lessees

become liable to pay penal interest at 24% per annum from the due date to

date  of  actual  payment  (vide  clause  4  of  General  Term & Conditions  of

Auction and clause 5 of Letter of allotment and Rule 12(3A) of the Leasehold

Rules).  We may also refer to two decisions of this Court in the context of

interest.  

20. In Sector-6, Bahadurgarh Plot Holders’ Association (supra), the issue

that  arose  for  determination  was  whether  the  allottee  could  refuse  to  pay

interest  on the instalments of the price on the ground that the site  had not

been fully developed by providing all the modern amenities as assured.  The

issue did not arise in a complaint under the Consumer Protection Act, but in a

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writ  petition filed by the allottees challenging the charging of interest  and

requiring the authority to complete the development.  The allottees contended

that what was offered was allotment of developed sites and not undeveloped

sites;  that they were informed that “all modern amenities  like underground

sewerage, storm water drainage, roads, electricity, supply of potable water”

will be provided;  that as the sites were not developed fully and as possession

of “developed sites” was yet to be given,  the state government  could not

charge  interest.  The  state  government,  on  the  other  hand,  contended  that

charging of interest was not correlated to the delivery of possession under the

Punjab Urban Estates Sale of Rights Rules, 1965 and having regard to Rule

12(2) of the Rules,  interest accrued from the date of issue of an allotment

order.   Interpreting  the said provisions,  this  Court  held  that  while  interest

could not be demanded till possession was offered, it was not necessary that

such offer should be of fully developed plots.  This Court  held :-

“As  the  offer  had  stated  that  modern  amenities  noted  above  “will  be provided”,  it  cannot  be  held  that  till  the  amenities  as  mentioned have become fully functional, the offer is incomplete. It is for this reason that the fact that full development has not yet taken place, even if that be the position as contended by Shri Bhandare, cannot be a ground to hold that interest has not become payable. It is true that the applicants were given to understand that the amenities noted above would become available (and within reasonable time), the fact that the same did not become available to the  desired  extent  could  not  be  a  ground  not  to  accept  delivery  of possession.  From the  order  of  the  High  Court  which  we  have  quoted above, we find that the offer of possession of the undeveloped plot was not accepted by the counsel of the appellant. That order being of 17-10-1980, we are of the view that interest did become payable from that date.  The fact that the plot has not yet been fully developed, as is the case of the appellant, has, therefore, no significance insofar as charging of interest is

30

concerned. We are  not  in  a  position  to  accept  the  submission  of  Shri Bhandare that equity would not demand charging of interest, even though the plots are yet to be fully developed. When parties enter into contract, they are to abide by the terms and conditions of the same, unless the same be inequitable. In the present case, question of equity does not really arise inasmuch as the condition relating to interest  is  founded on a statutory rule, vires of which has not been challenged.”

(emphasis supplied)      

If interest could not be denied to the state government even where there was

an assurance of all “modern amenities”, it is needless to say that the claim of

the government will be much more stronger, when there is no assurance at all,

as in this case.   

21. In regard to default interest, we may refer to the following observations

of this Court in  Secretary, Bhubaneswar Development Authority  v.  Susanta

Kumar Mishra (C.A.No. 605/2009 decided on 30.1.2009)

“Each  equated  instalment  would  then  have  a  principal  component  and interest component. As the equated instalments would include interest on the principal only up to the due date of instalment, whenever there is a default, there can be no dispute that the ‘principal’ part of the instalment could be subjected to interest from the date of default to date of payment. It  is  no  doubt  true  that  when  the  defaulted  instalment  in  entirety  is subjected to interest, the ‘interest’ component of the defaulted instalment is also subjected to interest. To that limited extent, there may be charging of interest upon interest. Charging of such interest, on the interest part of the instalment, on default in payment of the instalment, at a reasonable rate from the  date  of  default,  cannot  be  termed  as  charging  of  compound interest in regard to the entire dues. It is only a provision to ensure that the dues (instalments) are paid promptly and avoid misuse of the concession given  by permitting  payment  in  instalments.  But  for  such  a  provision, lessees/allottees who have already been given possession, will be tempted to  delay payments,  thereby leading  to  continuous  defaults.  A  statutory development authority, working on no profit no loss basis, can ill afford to permit such continuous defaults by lessees/allottees, which will paralyse

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their very functioning, thereby affecting future developmental activities for the benefit of other members of the general public. Therefore a provision for interest as contained in clause 6 of the lease-cum-sale agreement is neither inequitable nor in terrorem. Where the basic rate of interest is itself very high,  or  where  interest  is  charged  on  the  entire  price  instead  of charging interest on the reducing balance, when working out the equated instalments, or where the rate of interest on default is punitively excessive, the  position  may  be  different.  But  no  such  case  is  made  out  by  the respondent.”

22. In this case, having regard to the provisions in the leasehold Rules and

contractual terms (as contained in the General terms and conditions of auction

lease and the letter  of  confirmation of  lease cum offer  of  possession),  the

following position is evident :

(i) Interest at 10% per annum is payable from the date of auction till date of payment on the balance of premium (if the lessee chooses to pay the 75% of premium in instalments).

(ii) Payment  of  interest  has  nothing  to  do  with  provision  of amenities.

(iii) If the premium interest  on ground rent  is  not paid  on the due date, then interest will be payable at 24% P.A. from the date of default (due date) to date of payment.

(iv) The  lessee  will  not  be  liable  to  pay  interest  on  the  premium instalments or the rent, till the actual and physical possession of the  site  is  delivered  or  offered  to  be  delivered  to  the  lessee (whichever date is earlier).  

23. The  lessees-respondents,  however,  placed  strong  reliance  on  the

following observations and directions in para 38 of the decision of this Court

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in  Shantikunj (supra)  to  contend  that  commencement  of  interest  could  be

postponed :-

“We make it clear that though it was not a condition precedent but there is obligation on the part of the Administration to provide necessary facilities for full enjoyment of the same by the allottees. We therefore, remit the matter to the High Court for a very limited purpose to see that in cases where facilities like kutcha road, drainage, drinking water, sewerage, street lighting have not been provided, then in that case, the High Court  may grant the allottees some proportionate relief. Therefore, we direct that all these cases be remitted to the High Court and the High Court may consider that  in  case  where   kutcha  road,  drainage,  sewerage,  drinking  water, facilities have not been provided, no relief shall be granted but in case any of the facilities had not been provided, then the High Court may examine the  same  and  consider  grant  of  proportionate  relief  in  the  matter  of payment of penalty under Rule 12(3) and interest for delay in payment of equated instalment or ground rent or part thereof under Rule 12(3-A) only. We repeat again that in case the above facilities had not been granted then in that case consider grant of proportionate relief and if the facilities have been provided then it will not be open on the part of the allottees to deny payment  of  interest  and  penalty.  So  far  as  payment  of  instalment  is concerned, this  is  a part  of the contract  and therefore,  the allottees are under  obligation  to  pay the  same.  However,  so  far  as  the  question  of payment of penalty and penal interest is concerned, that shall depend on the facts of each case to be examined by the High Court. The High Court shall  examine each individual  case and consider  grant  of  proportionate relief.”        

The above observations and directions were apparently on the special facts

and circumstances of that case.  As noticed above, in Shantikunj, the auction

was of the year 1989. The Lessee had approached the High Court in its writ

jurisdiction in the year 1999 seeking amenities. Even in 2006 when this Court

heard the matter, it was alleged that the amenities had not been provided. It is

in  those  peculiar  facts  that  this  Court  obviously  thought  fit  to  give  some

reliefs  with  reference  to  penal  interest  wherever  amenities  had  not  been

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provided at  all  even after  17 years.  In  fact,  this  court  made it  clear  while

remanding to High Court that wherever facilities/amenities had been provided

before the date of the judgment (28.2.2006), the lessees will not be entitled to

any reliefs and where the facilities/amenities  had not been granted even in

2006,  the  High  Court  may  consider  giving  some  relief  by  proportionate

reduction in penal interest. This direction was apparently on the assumption

that in case of penalty, the court can grant relief in writ jurisdictions.  

24. But the facts of this case are completely different. The auction sale was

in  December  1996.  The  National  Commission  has  recorded  a  finding  that

almost all the facilities/amenities had provided in the year 1999, that is within

about  two  years.  Therefore,  the  observations  of  this  court  in  para  38  of

Shantikunj will have no applications to these cases, particularly as they were

made in the context of a writ proceeding, whereas we are concerned with a

proceedings under Consumer Protection Act. We may also refer to another

aspect.  Section 7 of the Act empowers the Central Government to levy such

fees and taxes as it may consider necessary (which shall be in addition to any

fee or tax for the time being leviable under any other law) in respect of any

site or building on the transferee or the occupier thereof, for the purpose of

providing,  maintaining  or  continuing  any  amenity  at  Chandigarh.  This

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provision clearly demonstrates that the providing amenities is not linked to

auction of plots on lease basis and the premium paid is not for providing any

amenity. The Central Government is required to provide amenities by levying

fees and taxes in respect of sites/plots on the transferees/ occupiers thereof.

Therefore, it is doubtful whether any proportionate reduction in penal/default

interest could be made on the ground of non-provision of amenities.  Be that

as it may.  As we have already held that para 38 will not apply, we do not

propose examine that aspect any further in these cases.

25. The respondents lastly contended that the rate of default interest was

only 12% per annum under Rule 12(3A) of the Leasehold Rules as on the

date  of  the  auction  and  therefore  clause  (4)  of   the  General  Terms  &

Conditions  of  Sale  and clause  (5)  of  the  letter  of  allotment,  providing  for

payment of default interest @ 24% per annum was illegal and unauthorized.

This  contention  is  urged  for  the  first  time  in  this  court.  The  appellants

countered by contending that the Administrator had by notification, fixed the

default  interest at 24% per annum. Suffice it to say that the rate of default

interest mentioned in           Rule 12(3A) as on the date of auction, would

alone apply. If Rule 12(3A) was not amended increasing the rate of default

interest from 12% P.A. to 24% per annum as on the date of auction, then the

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rate of interest stipulated in          Rule 12(3A) as it stood on the date of

auction will apply. The appellants could not charge default interest at a rate

higher than what was provided in the said rule. If any higher rate has been

charged by way of default  interest and it  is not corrected, it  is open to the

lessees to seek relief in accordance with law.    

26. We may note that the appellants raised one more contention that the

complaints  were  not  maintainable  against  the  government  can  never  be

considered as a ‘service provider’ under the  Act.  As such a contention was

not raised either before the UT Commission or National Commission, we do

not propose to examine the said contention in these appeals.

27. The  appellants  thus  succeed  on  both  grounds.  We,  therefore,  allow

these appeals by UT Chandigarh and set aside the orders dated 21.2.2005 and

21.2.2007 of the  National Commission in the matters which are the subject

matter  of  these appeals  and dismiss  the respective  complaints  filed by the

respondents as not maintainable.

CA Nos.1674-1686 of 2009 [@ SLP [C] Nos.3271-3283 of 2008]

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28. Leave  granted.  The  lessees-complainants  have  filed  these  appeals

against  the  common  order  dated  21.2.2007  of  the  National  Commission

seeking further relief. They contend that the National Commission ought to

have  further  directed  the  UT  Chandigarh  not  to  charge  interest  on  the

premium instalments nor claim the ground rent until the basic amenities were

provided. They also contend that as the basic amenities were not provided on

the date of delivery of possession of the sites, but were provided only in 1999,

their liability to pay ground rent and interest on premium instalments would

start only with effect from 25.10.1999.  

29. We have considered and rejected these contentions while dealing with

the appeals by UT Chandigarh. In view of the dismissal of their complaints,

these appeals do not survive and are dismissed.

__________________J [R. V. Raveendran]

__________________J [Markandey Katju]

New Delhi; March 17, 2009

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