NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
(From the order dated 21.9.2005 in Appeal No.A-442/2005
of the State Commission,
Mrs. Jyoti Sethi
Both resident of
Flat No.F-4, Amrapali,
36/73, Punjabi Bagh (West)
New Delhi-110 026
Petitioners
Vs.
Senior Citizen Home Complex
Welfare Society (Regd.),
through its
Secretary having office at
S-440, Ground Floor,
Greater Kailash-II,
New Delhi-110 048.
BEFORE :
HONBLE MR.JUSTICE M.B.
SHAH, PRESIDENT
For the Petitioner : Mr. V.K.
Sharma, Advocate
For the respondents: Mr.
S. Rohit Kumar, Advocate
O R D E R
M.B.SHAH,
J. PRESIDENT.
Petitioner
filed Case NO. 1183 of 2003 before the District Forum-II, Delhi, against
Respondent, contending that the Complainants were senior citizens and the
society floated by the Opposite Party at Greater Noida
was exclusively for senior citizens. Complainants applied for a two bed room
flat and paid Rs.70,000/- towards registration
money on 17.12.1997. Membership was
assigned to the Complainants. An agreement dated 3.1.1998 was executed between
the parties. The price of the two bed room flat was fixed by the society at
Rs.8.20 lakhs and the payment was to be made in ten equal instalments of Rs.70,000/- each linked with the progress of the construction.
The final instalment of Rs.50,000/- was to be made at
the time of completion of the conveyance deed. The society was to complete the
construction of the flat within a period of two-and-half years from the date of
registration, i.e. to say construction was to be completed on or before
It
is contended that for reasons best known to the society, after collecting the 5th
instalment (instalments were regularly paid by the Complainants), the society
suddenly stopped sending any information or progress report, and the society
acknowledged their failure in their letter dated 18.7.2000, but demanded the
payment of 6th, 7th and the 8th instalment on
verbal assurance that the progress report would soon follow. But the assurance
was not kept. By that time, the
Complainants had paid to the society the total sum of Rs.6.30 lakhs.
It
is the say of the Complainants that even after 6 years of registration, the
Opposite Party has
not allotted any flat to them and when they visited the site in
August/September, 2002, they found that two blocks were constructed and the
Complainants were ignored at the time of draw of lots. Construction with regard
to the other blocks was not in sight. Therefore, they sent a letter dated
9.9.1992. And, thereafter, on persistent follow up, the society merely kept on
assuring that they were finding a suitable flat for allotment to the Complainants.
Complainants also found that the society has handed over flats to some other
applicants ignoring
their membership number.
Hence,
reluctantly, by letter dated 18.8.2003, they sought refund of the amount with
interest and in the alternative immediate allotment and possession of the flat.
And, that was not done, the aforesaid complaint was filed.
On
the basis of the said facts and the deficiency found by it, the District Forum
directed the Opposite Party
to refund the amount deposited by the Complainants with interest
at the rate of 18% p.a. from the respective dates of deposit till the payment.
The District Forum specifically noted that interest at the rate of 18% was
awarded because agreement between the parties allows the Opposite Party to charge
interest at the said rate on delayed payments; and, that the Complainants who
are senior citizens have booked the flat in question in hope of getting shelter
in their old age. Hence, in addition to interest the District Forum directed
the Opposite Party to pay Rs.25,000/- as compensation
and Rs.5,000/- as cost of litigation.
Against
that order the society preferred Appeal No.A-442 of 2005. Without issuing any notice to the Petitioner,
by order dated 21st September, 2005, the State Commission partly
allowed the appeal by directing that the society shall refund the amount of
Rs.6.30 lakhs to the Petitioner without interest, but maintained the order of
compensation of Rs.25,000/- and Rs.5,000/- for the
cost of litigation, by observing that once the compensation is awarded,
interest cannot be awarded.
The
State Commission referred to Section 14 of the Consumer Protection Act, 1986,
which empowers the District Forum only to pay such amount as may be awarded as
compensation to the consumer for any loss or injury suffered by the consumer,
but not to award any interest.
Award of Interest:
In our
view, the finding recorded by the State Commission is, on the face of it,
erroneous. No doubt, Section 14 provides for payment of compensation. However,
for measuring the compensation, rate of interest can be taken into
consideration. In case of refund of money, interest,
prevailing in the market, can be a
reasonable basis for assessing the loss suffered by the
complainants. In some quarters, there
is some misunderstanding with regard to award of interest. Sec.14 which
provides for adequate compensation would certainly mean that the Complainant
who are deprived of the benefit which they were
entitled for years together, they should be adequately compensated. Measure for
adequate compensation can be a lump sum amount, may be a reasonable rate of
interest by way of damages, say, in the case of not delivering possession of
the house/flat, loss of prevailing rent could be the criteria for determining
compensation. In such cases, rate of interest would be only a measure of
compensation and this is required to be properly appreciated.
In the case of
Sovintorg India Ltd. vs. State Bank of India, New Delhi - (1999) 6 SCC 406 a contention was raised that there was no
contract between the parties regarding
payment of interest on delayed deposit or on account of delay on the part of
the Opposite Party to render service. In such set of circumstances, it was held
that interest cannot be claimed under Section 34 of the Civil Procedure Code as
its provisions have not been specifically made applicable to the proceedings
under the Act. The
Thereafter, in the case of Ghaziabad Development Authority vs. Balbir Singh (2004) 5 SCC 65 interest was awarded by the Consumer Fora by way of
compensation/damages. In that case the Court observed that while awarding
interest .. it must be shown that there is relationship between the amount
awarded and the default/unjustifiable
delay/harassment. It is thus necessary
that there be separate awards under each such head with reasons why such award
is justified. However, the principle that interest must be granted at the current rate of
interest is only applicable where the
proceedings are for recovery of debt or
damages. They apply where a refund of
amount is being claimed and the direction is to refund amounts with interest. The principles which govern the grant of
interest do not apply to
grant of compensation.
For this reason also it becomes necessary to consider facts and
thereafter award damages/compensation under various heads.
Hence, in our view, the order passed by the
District Forum directing
the Respondent to refund the amount with interest can be said to be justified because
interest would properly measure
loss/damages suffered by the Complainants. Loss can be on the basis of the fact that
Complainants were required to deposit
Rs.6,30,000/- with the Opposite Party.
Not only the Complainants have lost the interest on the said
amount but have also lost the chances of
having the premises at the rate which was prevailing in 1997 or 1998. It is
known fact that market price of the premises is increasing year after
year. This compensation can be looked at
from another angle by considering the fact that if the possession of the flat was
delivered, complainants would have saved
the rent which they were paying or they
would have earned the rent if they had
let out the premises.
Complainants have produced a chart indicating that if
the amount is refunded along with
interest @ 18/% per annum they
are entitled to recover more than
Rs.7 lakhs from the Respondent-Society.
As against this, the learned counsel appearing on behalf of the Respondent submitted that in any set of
circumstances rate of interest should not exceed 9% to 10% per annum.
Considering the facts of the present case,
particularly the
senior citizens have lost
the opportunity of having a flat in the
area of their choice and the fact that
there is all over increase in the market price of the flats/premises, we direct that the
Respondent-Society shall refund the amount deposited by the complainants with
interest @ 12% per annum instead of 18% per annum as directed by the District
Forum.
In
the result, the orders passed by the District Forum and the State Commission
are modified accordingly. The
Respondent is directed
to refund the amount of Rs.6,30,000/- with interest @ 12% per
annum from the respective dates of deposits till payment within a period of eight weeks
from the date of the Order. Respondent
shall also pay Rs.25,000/- as litigation cost to the complainant. The amount already paid by the respondent shall be
adjusted. This Revision Petition is
disposed of accordingly.
Sd/-
J.
(M.B.
SHAH)
PRESIDENT
Sd/-
(P. D.
SHENOY)
MEMBER