REVISION  PETITION NO.   3129   OF   2005

(From the order dated  21.9.2005  in Appeal No.A-442/2005

 of the State Commission, Delhi)


Shri J.L. Sethi

Mrs. Jyoti Sethi

Both resident of

Flat No.F-4, Amrapali,

36/73, Punjabi Bagh (West)

New Delhi-110 026                                        …  Petitioners




Senior Citizen Home Complex

Welfare Society (Regd.), through its

Secretary having office at

S-440, Ground Floor,

Greater Kailash-II,

New Delhi-110 048.




                   DR. P.D. SHENOY, MEMBER


For the  Petitioner     :           Mr. V.K. Sharma, Advocate


For the respondents:            Mr. S. Rohit  Kumar, Advocate


DATED  THE   21st    AUGUST, 2006







                    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 17th June, 2000. 

                   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 Apex Court held that the general provision of Section 34 being based upon justice, equity and good conscience would authorise the Redressal Forums and Commissions to also grant interest appropriately under the circumstances of each case.  Interest may also be awarded in lieu of compensation or damages in appropriate cases.   The interest can also be  granted on equitable grounds.  The Court referred to  the cases of Satinder Singh vs. Umrao Singh – AIR 1961 SC 908  and  Laxmichand vs. Indore Improvement Trust, (1975) 1 SCC 565.


                   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.