NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
REVISION PETITION NO.1197 OF 1998
(From the order dated 25.5.98 in First Appeal No. 24/98 & 58 other appeals
of the State Commission, Haryana)
Haryana Urban Development Authority .. Petitioner
Darsh Kumar .. Respondent
REVISION PETITION NO. 856 OF 1997
(From the order dated 31.3.1997 in First Appeal No. 58/96
of the State Commission, Haryana)
Haryana Urban Development Authority .. Petitioner
Saroj Bala .. Respondent
REVISION PETITION NO. 1303 OF 1999
(From the order dated 23.4.1999 in A. No. 527/SC/99
of the State Commission, Uttar Pradesh)
Ghaziabad Development Authority .. Petitioner
Pawan Kumar Verma .. Respondent
REVISION PETITION NO. 703 OF 2001
(From the order dated 3.10.2000 in Appeal No.1600/SC/97
of the State Commission, Uttar Paradesh)
Ghaziabad Development Authority .. Petitioner
Balbir Singh .. Respondent
A N D
REVISION PETITION NO. 1274 OF 1998
(From the order dated 3.10.2000 in C.A. No.63 & 64/94
of the State Commission, Himachal Pradesh Paradesh)
Himachal Pradesh Nagar Vikas Pradhikaran
Through its Chief Administrator .. Petitioner
Ex. Captain S.P. Moudgil .. Respondent
HON’BLE MR. JUSTICE D.P. WADHWA,
HON’BLE MR. JUSTICE C.L. CHAUDHRY, MEMBER
HON’BLE MR. JUSTICE J.K. MEHRA, MEMBER.
MRS. RAJYALAKSHMI RAO, MEMBER.
MR. B.K. TAIMNI, MEMBER
For the Petitioner in R.P. No.1197/98: Mr. Ajay Siwach,
For the Petitioner in RP No.856/97 : Mr. Sandeep Srivastava and
Mr. Pankaj Makhuja, Advocates
For the respondent in RP No. 1197/98: N E M O
For the respondent in RP 856/97 : In person
For the petitioner in RP1303/99 : Mr. Rakesh U. Upadhyay,
For the petitioner in RP 703/2001 : Mr. Sudhir Kulshreshtha,
For the respondent in RP1303/99 : Mr. Beqrar, Advocate
for the respondent in RP 703/2001 : Mr. Arvind Garg,
For the petitioner in RP 1274/98 : Mr. H.S. Puri and
Mr. Ujjwal Bannerjee, Advocates
For the Respondent in RP 1274/98 : N E M O
Dated the 31st August, 2001
PER JUSTICE D.P. WADHWA, PRESIDENT.
The question which was before the State Commission and now before us for decision is:
“If HUDA (Haryana Urban Development Authority, GDA (Ghaziabad Development Authority) or any other Urban Development Authority is required to pay interest as a result of non or delayed allotment of plot (s) or flat(s) or house(s) on the amounts deposited by the allottee at the time of original allotment of the plot/flat/house, then at what rate and upto what period interest would be payable on account of undue delay in the allotment and delivery of possession of the plot/flat/house?
To consider this question, this Commission heard the parties in five cases:
(i) In the case of Darsh Kumar, respondent- complainant (Revision Petition No.1197/98), was allotted on 21.2.1990 by HUDA residential plot bearing No.192 valuing Rs.1,99,400/- in Police Lines Area, Hissar in the State of Haryana. Respondent immediately paid a sum of Rs.19,940/- being 10% of the cost of the plot and remaining 15% of the amount was paid by him on 22.3.1990. Thereafter Respondent deposited the instalments as required under the letter of allotment. Under the terms thereof, he was to be given possession within 30 days from the date of payment by him of 25% of the amount. No such possession was given to him though he had paid even the full price of the plot. Complaining deficiency in service he, therefore, sought interest @ 18% per annum on the amount so paid by him. It was contended by HUDA that possession of the plot could be given only after the area had been developed. 25% of the amount was deposited by the respondent by 22.3. 1990. He was to be given possession within 30 days from that date. District Forum on a complaint filed by respondent held that
one year period was reasonable after the date of deposit of 25% of amount for HUDA to deliver possession. It, therefore, directed that respondent be paid interest @ 18% per annum on the entire amount deposited by him w.e.f. 22.3.1991 till the date of offer of possession of the plot on 26.9.94 to the allottee. Order of the District Forum was challanged by HUDA before the Haryana State Commission which upheld the order of the District Forum.
(ii) In the case of Saroj Bala (Revision Petition No.856/97), the plot measuring 420 sq. meters in Sector 21 at Panchkula was allotted on 21.7.1987 at the price of Rs.1,30,515/- . In 1992 the price of the plot was enhanced to Rs.1,60,004.40. Saroj Bala paid each and every instalment including the enhanced price charged from her by 28.6.1993. She was given possession of the plot only on 27.11.1996. It was contended by HUDA that possession could not be handed over to Saroj Bala as there was encroachment on the plot by jhuggi dwellers. Complaining deficiency in service, Saroj
Bala claimed for escalated price in the construction amounting to Rs.2,13,000/-, interest @ 18% per annum on the amount of Rs.1,60,000/- amounting to Rs.43,200/-, loss of rent @ 1,000/- per month amounting to Rs.20,000/- and Rs.1,50,000/- on account of mental harassment, all totalling Rs.4,26,200/-. District Forum allowed the complaint and directed payment of interest @ 18% per annum on the amount deposited w.e.f. 1.11.1992 till the date of delivery of possession of the plot to Saroj Bala, Rs.2,00,000/- on account of escalation in the cost of construction of house and Rs.50,000/- towards mental torture and physical harassment caused to her. Claim of Rs.20,000/- on account of rent was, however, declined on the ground that interest had been allowed on the amount paid by the complainant. On appeal filed by HUDA, State Commission observed that it could not be doubted that cost of construction had arisen considerably during the last 10 years, but that the interest @ 18% per annum on the amount paid by the complainant was sufficient compensation for the same. State Commission therefore, while allowing the interest @ 18% per annum directed that the amount of Rs.2,00,000/- awarded by District forum on account of escalation be deleted. State Commission reduced the award of compensation of Rs.50,000/- to Rs. 25,000/-.
(iii) In the case of Ghaziabad Development Authority vs. Balbir Singh - Revision Petition No.703/2001, respondent/complainant was on 10.2.1989 allotted a plot measuring 200 sq. mt. under Govindpuram Scheme. Respondent/complainant deposited full amount from time to time as demanded by petitioner - Ghaziabad Development Authority (for short ‘GDA’). Petitioner-GDA informed the respondent on 4.1.94 that he had been allotted a plot bearing No.D-594. This was followed by another letter dated 4.2.95 informing the respondent that due to some reason possession of the allotted plot could not be given and he was allotted plot no.C-148 instead which the respondent/complainant did not like. After some correspondence between the parties respondent/complainant was allotted plot No.D-494, but an amount of Rs.5000/- was demanded by way of ‘Cheque Fee’ which was also deposited. Possession of the plot was given on 14.8.96 only after respondent/complainant moved the District Forum complaining deficiency in service in not handing over the plot . District Forum awarded interest @ 18% for the period 1.4.94 to 14.8.96, directed refund of Rs.5000/- charged as ‘cheque fee’ and thus allowed the complaint with cost of Rs.2000/-. In appeal, the Uttar Pradesh State Commission dismissed the appeal and confirmed the order of District Forum. Against this, revision petition has been filed on which notice was issued limited to the point of rate of interest awarded by both the lower fora.
(iv) In GDA vs. Pawan Kumar Verma (Revision Petition No. 1303/1999) respondent/complainant Pawan Verma applied for a plot in Govindpuram Scheme and got a reservation letter on 10.2.1990 and was promised possession in the year 1991. Respondent/complainant deposited full cost of the plot by 7.1.92 but then not finding himself anywhere near getting the possession, moved the District Forum, where during the pendency of the proceedings before the District Forum, respondent/complainant got the possession of the plot only on 21.4.1997. District Forum directed payment of interest @ 15% from 7.1.1993 till the date of giving possession, on the amount deposited by the respondent/complainant with the petitioner-GDA and cost of Rs.1000/-. Against this an appeal was filed by the petitioner-GDA which was dismissed. It is against this order that revision petition has been filed before this Commission.
(v) In the Revision Petition filed by the Himachal Pradesh Nagar Vikas Pradhikaran (HPUDA) (RP 1274/98) against the order passed in appeal by Himachal Pradesh State Commission there is also challenge to award of interest @ 18% per annum. In this case are that the respondent-complainant had booked for a Type-A house under a Self Financing Scheme floated by Shimla Development Authority, a predecessor of H.P. Urban Development Authority, in February, 1986. Likely date of completion of the houses was end December, 1988. Cost of the house was fixed at Rs.1,44,000/- which the respondent/complainant paid by 9th December, 1988 in instalments, some of them even along with interest @ 18% per annum on account of delay in payment. It would appear that even after the expiry of three years complainant was not given possession or the house. He approached the Shimal Development Authority predecessor of HPUAD and was informed on 14.7.1993 of price escalation to Rs.2,56,304/- . It was further informed on 9.9.93 of the escalation in the price of the house to Rs.2,87,180/-. Complaining deficiency of service, complainant approached the District Forum. He prayed that he may be given possession of the house and that HPUDA be directed to refund Rs.1,29,000/- which was the interest charged by it on delayed instalment @ 18% per annum. Complainant wanted refund of this amount with interest at the same rate of 18% per annum. Complainant said that he was ready to pay Rs.30,876/- being the cost of enhanced compensation of land which was paid by HPUAD. His prayer was that this amount might be adjusted from the amount to be refunded to him. District Forum did not go into the pricing of the cost of the house but directed payment of interest @ 18% per annum on the amount deposited by the complainant from the dates of respective deposits upto 14.7.93 when letter of possession was issued to the complainant. HPUDA filed appeal against the order of the District Forum to the State Commission which was partially accepted. State Commission reduced the period for which interest was payable but maintained the award of interest @ 18% per annum. Aggrieved, HPUDA has filed this petition.
Appearing on behalf of HUDA, learned counsel Mr. Bana and others brought to our notice three orders of the Supreme Court and one order of this Commission in support of the fact that rate of interest of 18% granted by the State Commission could not be sustained before us. He drew our attention to the case of HUDA vs. M.S. Lamba (SLP (Civil) No. 14871 of 1994 ) decided by the Supreme Court on 7.11.96 wherein rate of interest granted @ 18% was reduced to 12% on the amount deposited by Lamba -the respondent. He also referred to another order of the Supreme Court in the case of HUDA & Anr. vs. R.K. Goel (SLP (Civil) No.3324/97) decided on 24.10.97 wherein the rate of interest was reduced from 18% to 10%. Mr. Bana then referred to an order of this Commission in HUDA Vs. Krishan Lal Kalra decided on 3.11.98 where the interest in similar cases was reduced from 15% to 12% and finally reference was made to the order of Supreme Court passed in GDA vs. Union of India (2000) 6 SCC 113 wherein rate of interest payable in such cases was fixed at 12%. It was submitted that at times delay in giving possession was beyond the control of HUDA and grant of interest at a higher rate will be detrimental to the interest of a public body like HUDA which is engaged in developing urban areas at no profit-no-loss basis. It was thus submitted that the rate of interest needed to be kept @ 10% as per policy of HUDA.
In GDA vs. Balbir Singh (Revision Petition No.703/2001), Mr. Kulshreshta appearing for GDA submitted that GDA was engaged in construction and development activities in Ghaziabad (in the State of Uttar Pradesh) and itself was borrowing @ 16% per annum from various financial institutions for the purpose. According to him GDA works at ‘no profit-no loss basis’. His argument was that for the purpose of finding out the starting point for any scheme in the Brochure it should be read as a whole. We are concerned here with the Brochure relating to Govindpuram Scheme. Mr. Kulshreshtha said that the reasoning of the State Commission to award interest @ 18% just because GDA’s penal rate of interest is 18% was not correct and distinguishing the instant case from G.DA vs. Union of India (2000) 6 SCC 113 or Sovintorg (India) Ltd. Vs. State Bank of India, New Delhi - (1999) 6 SCC 406 was not correct. He said the case of GDA Vs. Union of India (2000) SCC 113 was a complete answer as regards the contract between the GDA and allottees and equity demands that rate of interest to be given to allottees be kept @ 12%. He also cited the case of Smt. Kausnuma Begum and Others Vs. National Insurance Company 2000 (1) SCALE page 1 wherein Supreme Court found grant of simple interest @ 12% as reasonable. Then submission of Mr. Kulshreshtha was that as a result of stay granted by Allahabad High Court on new construction in Govindpuram Scheme for the period 24.4.91 to 16.12.93 no interest should be payable for this period as no construction activity could be undertaken in the light of the stay granted by the High court. He said delay occurring on this was for reasons beyond the controL of GDA.
In GDA Vs. Pawan Kumar Verma (RP No.1303/1999), Mr. R.U. Upadhyay, also counsel for the GDA, while supporting all the points advanced by Mr. Kulshreshtha, further added that the Supreme Court in Prashant Kumar Shau Vs. GDA - JT 2000 (4) SC 607 had held that where an allottee defaulted in payment of instalments, GDA could not be held responsible for any deficiency. He also argued that where allottee was requested by GDA to take possession and the allottee with the sole motive of earning interest was evading taking possession, no interest should be granted in such a case. He then said that where allottee surrenders a plot, he should not be given any interest on the refunded amount after deduction as per provision in Brochure (Govindpuram Scheme) . We, however, need not consider these submissions as there are no such findings either by the District Forum or State Commission in favour of GDA. It is then the case of Mr. Upadhyay that State Commission’s rationale of imposing 18% rate of interest on the basis that GDA also charges 18% rate of interest was not sustainable on facts. In Hire Purchase Scheme rate of interest levied was 15% and it was only if the instalments were delayed that the allottee was charged addition 3% for that instalment amount during the period of delay. He argued that the Supreme Court in most recent judgement in the case of Smt. Kaushnuma Begum Vs. National Insurance Co. reported in 2001 (1) SCALE page 1 held that instead interest @ 12% , courts shall award interest @ 9%. It was submitted that for GDA it was not a commercial transaction and as per Section 34 of Code of Civil Procedure, maximum interest payable by GDA should be 6% per annum. He reiterated that lead case was GDA Vs. Union of India where rate of interest awarded was 12% and was considered to be equitable and reasonable and if rate of interest of 18% awarded by the State Commission is upheld, the same shall adversely affect public interest in general.
In H.P. Nagar Vikas Pradhikaran Vs. Ex. Captain S.P. Moudgil (Revision Petition No.1274/98) it was submitted by learned counsel for the petitioner Mr. H.S. Puri and others, that it was true that in spite of clear mention of delivery of possession by December, 1988, possession of the house could be given only in 1993 as the project could only be completed by December, 1992 on account of delayed receipt of instalments, litigation by the land owners land acquisition proceedings, labour disputes, disputes with the contractors and unexpected weather conditions. It was a Self-Financing Scheme and if there was delay in delivery of possession, contribution of the complainant(s) was not little. Had they been paying the instalments in time, Scheme could have been completed much earlier. Question of payment of interest in the case does not arise as no such clause exists in the Brochure of the Scheme, so the argument proceeds. Escalation of cost was said to be justified. Finally, it was argued that if any interest has to be awarded, then it should be limited to 12% as laid down by the Supreme Court in GDA vs. Union of India (2000) 6 SCC 113.
On behalf of the respondens/complainants it was submitted by learned counsel Mr. Garg and Mr. Beqrar and others that there were numerous cases in which the Supreme Court had upheld the grant of interest @ 18% . They referred to cases of HUDA Vs. Rajnish Chander Sharda, ( Civil Appeal no.5970 of 1995) wherein award of interest @ 18% by this Commission against HUDA was upheld and GDA Vs. Dhanesh Chand Goel, (SLP (Civil) No.11315/2000) wherein the Supreme Court while confirming grant of interest @ 18% by MRTP Commission against GDA observed that on the given facts award of interest @ 18% was reasonable one. Their main contention was that the Urban Development Authorities like HUDA, GDA and others keep money with them for a period which is much after the expiry of promised period of handing over of the possession. Parties have borrowed money at much higher rates in the expectation that they will have a shelter over their head but at times possession in some cases comes too late, that by that time some allottees die and some even superannuate who then start living in a hired accommodation causing them lot of mental and physical harassment and agony. Cost of construction also keeps going upwards. Urban authorities keep raising the prices upwards thus doubly jeopardizing the interest of the allottees. They not only have to pay higher price in the case of plot but also spend more to complete the house. If GDA can charge interest @ 18% for delayed payment, it should also be directed to pay interest @ 18% interest for money lying with them. It was submitted that the order passed in Rajnish Chnder Sharda case should be made applicable mutis mutandis in all cases of delayed delivery of possession either of plot or flat/house i.e. not only granting interest @ 18% but also awarding compensation to cover increased cost of house building in appropriate case and that heavy costs should be awarded to the respondents/complainants in order to discourage HUDA/GDA and others from dragging the consumers/allottees to protracted litigation.
On behalf of the respondent(s) in Himachal Pradesh Nagar Vikas Pradhikaran Vs. Captain S.P. Moudgil (RP 1274/98) it was submitted that there was inordinate delay in handing over the possession in this case. Against promised delivery of possession by December, 1988, possession was given in July 1993. In spite of instalments paid, some of them with penal interst @ 18%, it did not behove of H.P. Nagar Vikas Pradhikaran to sit over his money. Internal disputes of the Authority are its internal problem and of no concern of the allottee. It is presumed that with past experience of the Authority all these points would have been factored into, while determining the date of handing over the possession. The argument of the Pradhikaran that since there was no clause of payment of interest to be paid by it in the Brochure, is not maintainable in view the decision of the Supreme Court in the case of GDA vs. Union of India wherein it was held that even when there is no mention of such a clause, interest need to be paid by the Public Authority such as GDA (in the instance case HPUDA). Supreme Court and National Commission have granted 18% rate of interest in several cases. Thus in order to cover the cost escalation complainant need to be paid interest at a rate which neutralises cost escalation. In the instant case, cost of the houses were almost doubled and it is admitted that this fact cannot be gone into, but the law of the land permits the allottee to be compensated by way of interest at a level which compensates him and helps in meeting the ever escalating costs. 12% rate of interest granted by Supreme Court in GDA vs. Union of India was not final in that, it left this to be determined on the facts of circumstances of each case. This, it was submitted, was a fit case where both the District Forum and the State Commission rightly awarded an amount equivalent to 18% rate of interest on the amount deposited by the complainant, by way of compensation.
Before going into merits of the cases, a peep into the perspective shall be
in order. First we take the case of HUDA.
Haryana Urban Development Authority (for short ‘HUDA’) has been constituted under the Haryana Urban Development Authority Act, 1977. HUDA has been established for undertaking urban development in the State of Haryana and other connected matters. Statement of objects and reasons for enacting the Act, makes it amply clear that HUDA was constituted for ensuring speedy and economic development of urban areas in the State of Haryana.
Regulation 3 provides for mode of disposal of land or building of the HUDA. Under Regulation 4, a tentative price/premium for the disposal of land or building by HUDA shall be such as may be determined by HUDA taking into consideration the cost of land, estimated cost of development, cost of building and other direct and indirect charges, as may be determined by HUDA from time to time. Procedure has been prescribed for sale or lease of land or building by allotment or by auction.
Regulation 12 provides that in case price or any instalment thereof is not paid by the transferee within 30 days from the date it falls due, the Estate Officer shall proceed against such transferee in accordance with the provisions of Section 17 of the Act. Section 17 provides for resumption and forfeiture for breach of conditions of transfer. We quote this Section:
“17. Resumption and forfeiture for breach of conditions of transfer- (1) where any transferee makes default in the payment of any consideration money, or any instalment on account of the sale of any land or building, or both, under section 15, the Estate Officer may, by notice in writing, call upon the transferee to show cause within a period of thirty days, why a penalty which shall not exceed ten percent of the amount due from the transferee, be not imposed upon him.
(2) After considering the cause, if any, shown by the transferee and after giving him a reasonable opportunity of being heard in the matter, the Estate officer may, for reasons to be recorded in writing, make an order imposing the penalty and direct that the amount of money due along with the penalty shall be paid by the transferee within such period as may be specified in the order.
(3) If the transferee fails to pay the amount due together with the penalty in accordance with the order made under sub-section (2), or commits a breach of any other condition of sale, the Estate officer may, by notice in writing , call upon the transferee to show cause within a period of thirty days, why an order of resumption of the land or building, or both, as the case may be, and forfeiture of the whole, or any part of the money, if any, paid in respect thereof which in no case shall exceed ten per cent of the total amount of the consideration money, interest and other dues payable in respect of the sale of the land or building or both should not be made”.
Under Regulation 13 possession of the land shall be delivered to the transferee as soon as the development work in the area where the land is situated are complete. However, in case of sale/lease of undeveloped land/building , possession thereof shall be delivered within 90 days of the date of allotment.
Regulation 14 provides for surrender of land by the transferee. Regulation 16 prohibits the use of land or building for a purpose other than that for which it had been allotted to him. Under Regulation 17 transferee shall complete the building within a period of two years from the date of offer of possession of the land. This time limit may be extended by the Estate Officer, if he is satisfied that failure to complete the building, was due to causes beyond the control of the transferee.
We may also note that under Section 14 of the Act, State Government may, at the request of HUDA, when any land is required for the purposes of this Act, proceed to acquire it under the provisions of the land Acquisition Act, 1894 (as amended from time to time) and on payment by the HUDA of the compensation awarded under that Act and of any other charges incurred in acquiring the land, the land shall vest with HUDA.
Section 15 authorises HUDA to dispose of the land. This Section again we quote:
“15. Disposal of land. - (1) subject to any directions given by the State Government under this Act and the provisions of sub-section (5), the Authority may dispose of -
(a) any land acquired by it or transferred to it by the State Government without undertaking or carrying out any development thereon; or
(b) any such land after undertaking or carrying out such development as it thinks fit, to such persons, in such manner and subject to such terms and conditions, as it considers expedient for securing development.
(2) Nothing in this Act shall be construed as enabling the authority to dispose of land by way of gift, but subject to this condition, reference in this Act to the disposal of the land shall be construed as reference to the disposal thereof in any manner, whether by way of sale, exchange or lease or by the creation of any easement right or privilege or otherwise.
(3) Subject to the provisions hereinbefore, contained, the Authority may sell lease, or otherwise transfer whether by auction, allotment or otherwise, any land or building belonging to it on such terms and conditions as it may, by regulations, provide.
GDA also was created under U.P. Urban Planning and Development Act and GDA has taken up the work of construction and development of area vested in them in a phased manner borrowing funds from financial institutions. GDA works on no profit - no loss basis for the welfare of the public at large. Terms and Conditions of plots plots/flats/houses are given in the Brochure issued in respect of each Scheme floated by them.
If we examine the Govindpuram Scheme (Plots/ Houses Scheme: Code 537, 538 and 539) it appears to be a self contained scheme. Conditions are stringent. There is no scope for any negotiation by the prospective allottee. He is to sign on the dotted lines. Scheme therefore, has to be construed liberally in favour of the allottee.
Under clause 3.30, approximate cost of each plot/house is given in column 5 of table 1. The cost of the ground floor house on the corner plot will be 10% extra of the premium of land. It is mentioned in the note under this clause that cost of the unit will be decided finally basing on the index of State planning Institute. There is thus enough safeguard that cost cannot be arbitrarily increased of the plot or the house.
Plots/houses are being constructed under lump sum self financing plan and hire purchase plan. An applicant has to pay registration amount along with the application. He has also to pay registration fee along with the application. Then within 30 days from the date of reservation letter applicant has to pay reservation amount. Balance cost of the plot/house is payable in yearly instalments. All the payments are mentioned in the table-1 annexed to the scheme. No interest is payable on instalments under self-financing scheme and 15% interest is payable on instalments under hire purchase scheme. If the amount payable is not paid within the prescribed time limit, penal interest @ 18% per annum shall be payable along with the payable amounts. Grace period of one month is given for payment of reservation amount/instalments after the due date. However, if any previous amount of the instalment stands unpaid on the due date, no grace period is admissible on the current instalment. In case payment is made after the grace period, penal interest is payable from the original due date of payment. Penal interest will be payable for a period of maximum three months.
Then come clause 3.66 which says if the payment is not made within three months after its due date along with penal interest, the allotment shall be treated as cancelled without notice.
Clause 4 of the scheme provides the eligibility conditions. One of such condition is that the applicant must not own any residential house or plot in full or in part on lease hold or free hold basis in Ghaziabad. Either in his/her own name or in the name of his/her, wife/husband or in the name of his/her minor or dependent children. Only one house/plot is to be allotted to the applicant in his/her name or in the name of any dependent members of the family.
Clause 4.6 provides that income limits are applicable in these schemes. As to what income means, it has been defined. Clause 6 provides for quota of reservation
in various categories. Last date for making application is 31.10.1988. Procedure is prescribed as to how draw is to be made and how amount is to be returned to unsuccessful applicants.
Clause 15 says that the plots/houses are expected to be completed within two years. Houses cannot be used for other than residential purposes by the by the allottee or his tenant. If any change of use for commercial or other purposes is desired, special permission is to be obtained from the Vice Chairman, GDA.
Clause 11 provides that if it is found that the applicant has given false information or suppressed any material fact, the reservation will be liable to be cancelled without making any reference to the applicant and he/she will be debarred from participating in future draws. Further 25% of registration amount shall be forfeited.
All public Urban Development Authorities follow somewhat the same scheme for allotment of plots/flats/houses and as it is seen from the Govindpuram Scheme of GDA it is heavily loaded in favour of GDA.
Question of award of interest was considered by this Commission in the case of Punjab Urban Planning & Development Authority Vs. Dr. Dalbir Kaur Dhillon (First Appeal No.157 of 1999) decided on 1.8.2001. In that case there was delay of considerable years in the allotment of land to the respondent- complainant. There was certainly deficiency in service in depriving the complainant of the land for all these years with the result that the complainant could not construct her house for her own residence and meanwhile cost of construction escalated. Complainant led evidence to show that there would be difference in the cost of construction amounting to Rs.9.00 lakhs if she had constructed the house when the land was originally allotted to her. No evidence in rebuttal was led by Punjab Urban Planning & Development Authority. This Commission, therefore, awarded the amount of difference of cost in construction. No interest was, however, awarded which was allowed by the State commission @ 18% per annum on the amount of cost of the plot. This Commission observed as under:
“When court is giving escalated price for the construction, it does not seem appropriate to give interest on the amounts paid towards purchase price of the plot to bring the value of the plot at the market rate on the date of possession. It has also to be kept in mind that there has been manifold increase in the price of the land”.
This Commission, however, allowed compensation for the expenses incurred by the complainant in seeking possession of the land. It was pointed out that award of interest at a particular rate should be such as to compensate the allottee if he(she) is deprived of the allotted piece of land and is to go elsewhere in the same or nearby area to buy a plot of land of the same measurement.
It will thus be seen that this Commission did not award interest @ 18% per annum merely on the deposit made but took into account the cost escalation for construction of the house because of delayed possession.
We may now consider some of the decisions on the question of rate of interest for the period for which it should be payable as set out in the beginning of this order.
In Lucknow Development Authority Vs. M.K. Gupta - (1994) 1 SCC 243 [two Judges Bench decision). Supreme court examined right and power of the National Commission to award exemplary damages and accountability of statutory
authorities. Supreme court considered various aspect of the Act and then said that after having examined the wide reach of the Act and jurisdiction of the National Commission to entertain complaint, the Commission or Forum under the Act was entitled to award not only value of the goods or services but also to compensate a consumer for injustice suffered by him. In the case before it, Supreme Court approved of the order of the Commission, held that “the action of the appellant amounted to harassment, mental torture and agony of the respondent”, therefore, it directed the appellant to pay a sum of Rs.10,000/-. In the other case that was before it Supreme Court approved order of this Commission directing the Bangalore Development Authority to pay Rs.2,446/- to the consumer “for the expenses incurred by him in getting the lease -cum-sale agreement registered as it was additional expenditure for alternative site to him. No misfeasance was found”. The moment the Authority came to know of the mistake committed by it, it took immediate action by allotting alternative site to the respondent, which was compensation for exact loss suffered by the respondent. Then the court examined question as to who was to bear the loss whether the instrumentality of the State or its functionary. Supreme Court said :
“When the Court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payer’s money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of the course should be recorded carefully or material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible
for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries”.
In the case of Ghaziabad Development authority Vs. Union of India & Anr. (2000) 3 Comp LJ 402 (SC) there was challenge to the order passed by the MRTP Commission where it was concerned with the delay in allotment of plot of land. Three questions arose before the Supreme Court:
(i) Whether compensation can be awarded for ‘mental agony’ suffered by the claimants?
(ii) Whether in the absence of any contract or promise held out by the Ghaziabad Development Authority any amount by way of interest can be directed to be paid on the amount found due and payable by the Authority to the claimants.
(iii) If so, the rate at which the interest can be ordered to be paid?
In distinguishing the decision in the case of Lucknow Development Authority Vs. M.K. Gupta (2 Judges Bench) the Court observed as under:
“The judgement clearly showed the liability having been fixed not within the realm of the law of contracts, but under the principles of administrative law. We do not find any such case having been pleaded much less made out before the MRTP Commission. Indeed no such finding have been arrived at by the MRTP Commission as was reached by the Supreme court in this case”.
Supreme Court therefore, deleted the compensation of Rs.50,000/- for mental agony suffered by the claimant which was awarded by the MRTP Commission. On
interest the Supreme Court said the interest could be awarded in appropriate case. It referred to another case of Sovintorg (India) Ltd. Vs. State Bank of India, New Delhi - (1999) 6 SCC 406 where the rate of interest at 15% per annum was considered adequate to serve the ends of justice, the National Commission having awarded interest @ 12% per annum. It said that the Bench in that case was apparently influenced by the fact that the claimant had suffered winding up proceedings under the Companies Act and the defendant must be made to share part of the blame. It further said in the case before it, parties had not rendered any evidence enabling formation of opinion on the rate of interest which could be considered ideal to be adopted and that rate of interest awarded should neither be too high nor too low. Court therefore, in its opinion thought that awarding interest @ 12% per annum would be just and proper and will meet the ends of justice. The Court also observed that broadly the principle underlying assessment of damages is to put the aggrieved party monetarily in the same position as far as possible in which it would have been if the contract would have been performed. No doubt the purpose of an award of damages for breach of contract is , so far as money payment can do this, to place the consumer in the position he would have been, had the contract been performed according to his expectations. It also referred to decision of Court of Appeal stating that the Court of Appeal had refused to award damages for injured feeling to a wrongful dismissed employee and confirmed that damages for anguish and vexation caused by breach of contract cannot be awarded in an ordinary commercial transaction. We may, however, add in Barnstein Vs. Pamson Motors (Golden Greaves ) Ltd. - (1987) 2 ALL ER 220, it was held that physical inconvenience and distress resulting from the purchase of a car which breaks down shortly after purchase and the cost of hiring a replacement while the car is being repaired may all be regarded as losses which arise naturally from the retailers breach of the implied conditions of satisfactory quality.
In the case of Rajnish Chander Sharda Vs. Haryana Urban Development Authority - II (1995) 70 (NC), National Commission directed that HUDA should allot and give possession of the plot of 250 Sq. yards to the complainant in the same sector or neighbouring sector which had been reasonably developed and where the complainant could undertake construction without delay. It said that HUDA shall not be entitled to any extra price for the allotment of the plot which would be in lieu of what had been allotted to him earlier National Commission further said that HUDA should pay compensation for escalation in the cost of construction from 1982 to 1994 in accordance with the construction done under “Unified Building By Laws National Capital Territory of Delhi”. In this case Rajnish Chander Sharda was allotted 250 sq. yards plot on 10.5.79 by HUDA in a particular sector. When the complainant asked for possession of the plot in 1982 so as to construct a house thereon he was given possession certificate. He approached the contractor and architect for the purpose of construction of a house but when he asked HUDA for actual physical possession it was discovered that a factory existed on the plot. He was told that factory will be removed by December, 1982. However, subsequently he was advised to ask for an alternative plot as the plot allotted to him could not be vacated. Complainant reported these facts to the Executive Officer in September, 1983, no alternative allotment was made. On the other hand, HUDA asked him in 1986 a sum of Rs.3,455/- towards enhancement of the compensation for the acquisition of the said plot whose possession could not be given to him because of the factory thereon. After a lapse of 11 years HUDA on 18.5.90 allotted a plot in another sector to the complainant. This was done unilaterally without the consent of the complainant. Though the allotment was made in 1990 possession could be offered to the complainant on 26.4.1993. But then again the area was surrounded by factory. Complainant asked for an alternative plot in another sector. Instead of replying to his request, HUDA issued a possession certificate on 25.8.1993. When the complainant contacted architect for getting the house plan sanctioned it was told by HUDA that the plot belonged to another person and was not available for allotment, building plan therefore, could not be approved. In sheer exasperation complainant came before the National Commission in October, 1993. He claimed damages for increase in the cost of construction from 1982 to November 1993, compensation for mental agony and physical torture , rent for accommodation for his family members from 1982 @ Rs.1600/- per month, expenditure on journeys undertaken and correspondence with HUDA and payment of fees to the architect and contractor; after considering the matter in depth National Commission gave the award as under:
“We direct that HUDA should pay compensation for escalation in the cost of construction from 1982 to 1994 in accordance with construction done under : “UNIFIED BUILDING BY LAWS NATIONAL CAPITAL TERRITORY OF DELHI”. Though the complainant can construct three and a half storeys including basement, the maximum ground coverage (viz.60%) and the F.A.R. (Floor Area Ratio viz. 160) has to be limited to as laid down in the Bye Laws, 1992. The expenditure incurred on provision of services (Electrical, Sanitary, Water supply etc.) over and above the bare cost of the construction has also to be added in arriving at the cost of construction in 1982 and 1994. The escalation in the cost of construction of a house should be worked out on the basis of the cost of construction index of the C.P.W.D. in 1984 and 1994. The compensation for escalation should, therefore, be got determined through the good offices of the C.P.W.D.
Rs.11,00,000/- claimed for mental agony, torture due to mismanagement of HUDA etc. at the rate of Rs.1 lakh per year. This is exorbitant. We consider it reasonable to allow a compensation of Rs.2 lakhs.
Rs. 2 lakhs claimed by way of rent from 1982 onwards at the rate of Rs.1,600/- per month for having to live in a rented accommodation. Instead we direct that complainant shall be paid interest @ 18% p.a. on the amount deposited from time to time by the complainant from 1979 onwards till a anew plot is allottted and possession given.
Rs.50,000/- claimed as expenditure for chasing the case with HUDA for a period of 14 years. This is reasonable and is allowed.
Rs.7,800/- claimed as payments made to the Architect and contractors etc. This appears reasonable and is allowed”.
Against this order HUDA went in appeal before the Supreme Court ( Civil Appeal No.5970 of 1995 - Haryana Urban Development Authority Vs. Rajnish Chander Sharda, decided on January 12, 2000 by three Judges Bench). The Bench upheld the order of the National Commission and held as under:
“There is no merit in this appeal. Considering what has been stated by the appellant in its own written statement filed before the National Consumer Disputes Redressal Commission, we express our surprise that it should have filed this appeal at all. Learned counsel for the appellant now desires to confine the appeal only to the interest that has accumulated because of the stay order that was passed at the appellants’s instance by this Court. In the order of the National Commission it is stated that the respondent had claimed compensation for having being compelled to live in rented accommodation from 1982 till 1994 at the rate of Rs.1600/- per month. Instead of making that award, the National Commission directed the appellant to pay interest at the rate of 18% per annum on the amount that had been deposited by the respondent form time to time from 1979 onwards till a new plot could be allotted to him and possession thereof could be delivered. Given the facts, we see no justification in interfering with that direction and, consequent upon the dismissal of the appeal and the vacation of the stay order, that direction must now be fully complied with.
The appeal is dismissed with costs”.
Decision of the two Judges Bench decision in the case of GDA vs. Union of India - 2000 (6) SCC 113 was referred to in the case of Ghaziabad Development Authority Vs. Dhanesh Chand Goel (Special Leave to Appeal (Civil) No.11315/2000, decided on 12.1.2001 - arising from the order of the MRTP Commission dated 22.2.2000) where a three Judges Bench of the Supreme Court held that award of 18% interest per annum could also be given on equitable grounds, where the facts were that GDA started a scheme for allotment of houses in Govindpuram Housing Scheme (Code 538). Shri Dhanesh Chand Goel applied for an allotment of LIG (double storey) Ashray Ground in that scheme. He paid Rs.11,010/- towards registration amount on 31.10.1988. GDA, vide letter dated 29th March, 1989, conveyed reservation of one LIG double storey at the estimated cost of Rs.1,10,000/-. Shri Goel paid the balance amount on various
dates i.e. on 25.5.1989 (Rs.11,000/-); 27.10.1989 (Rs.22,000/-); 24.4.1990 (Rs.22,000/); 15.10.1999 (Rs. 22,000/-) and 26.4.1991 (Rs.22,000/-). Shri Goel was intimated on 16th November, 1993 that he has been allotted House No.F/181. This was as per the draw held on 20th October, 1993. He was also informed about the increase in the cost of the house from 1,10,000/- to Rs.1,80,000/- vide letter dated 6th March, 1996 of GDA. Shri Goel did not make the payment and as such possession of the house was not given to him. Shri Goel complained that GDA was indulging in the restrictive trade practices in so far as additional demand has been imposed on him by manipulating the conditions of delivery of the house. On notice being issued, GDA took up the stand that there was some dispute in regard to the aforesaid scheme and the Hon’ble Allahabad High Court stayed the proceedings in the case of Satya Prakash & Ors. Orders of the High Court of Allahabad is dated 24th April, 1991. This case in the High Court of Allahabad was dismissed and special leave petition in the Supreme Court also met the same fate. GDA then says that ‘F’ block was then allotted to Shanti Suraksha Bal and as such he could not be given possession of the allotted house. He was told so on 24.2.1996. He was asked to give option for allotment in some other scheme and at different place. Shri Goel did not exercise option nor make the payment as determined. The allegation of Shri Goel that GDA was indulging in the restrictive trade practices was denied. MRTP Commission strongly commented on the conduct of the GDA. It was noted that the stay granted by the Allahabad High Court remained operational till 16.3.1993 and even Special Leave petition in the supreme Court was dismissed on 12.4.1996. The whole of the ‘F’ Block in which Goel was allotted house No. F-181 came to be allotted to the Shanti Suraksha Bal. Not only Goel was deprived of the allotted house but he was also slapped
with additional cost for allotment of flat in a different scheme and at a different place, for which Goel had never given an option. MRTP Commission held that by not handing over the house to Shri Goel, as he was entitled to, he has suffered a pecuniary loss not only in terms of payment made but also in terms of return which he could have been earned on the amount deposited by him with GDA. MRTP Commission directed the GDA to refund the amount of Rs.1,10,000/- along with interest @ 18% per annum to Mr. Goel from the dates of payments of instalments till the dates of refund of the total amount in question. Shri Goel was also awarded a sum of Rs.10,000/- towards harassment and litigation costs. As regards the claim of Shri Goel for rent which he paid, MRTP Commission said that costs awarded covers the same. Petition of Shri Goel was thus allowed. The Supreme court observed as under:
“The judgement in Ghaziabad Development Authority vs. Union of India (2000(6) S.C.C. 113) only opines that interest on equitable grounds can be awarded in appropriate cases. Given the facts recorded in the order under challenge, the rate of eighteen per cent per annum is an award at a reasonable rate.
The special leave petition is dismissed”.
From the decisions in the cases of Dhanesh Chand Goel and Rajnish Chander Sharda which had been affirmed by three Judges Bench of the Supreme Court it can be concluded that award of interest @ 18% per annum on the amount deposited by an allottee where there is delay in handing over the possession is reasonable and could be awarded on equitable grounds.
It is necessary here to meet the point raised by the learned counsel for the petitioners drawing our attention to certain judgements of the Supreme Court. In Smt. Kaushnuma Begum & Others Vs. National Insurance Co. - 2000 (1) SCALE page 1 rate of interest has been awarded at 9%. It is distinguishable from the bunch cases before us in the sense that the cited case relates to insurance Company where, what the person has deposited is a premium i.e.only a small portion of the amount covered as also the Government’s lien on those funds to be borrowed at a lower rate of interest where as in the instant cases money is that of individuals deposited by them from their own savings or from borrowings. Had they kept their money elsewhere, returns by way of compound interest would have been much higher. What they ask is interest on the money kept by the Urban Development Authorities. To this extent the two sets are distinguishable. Be that as it may, our hands get further strengthened by the most recent judgement of Supreme Court in which they upheld grant of interest @ 18% even in a case involving an Insurance Company as a party i.e. M/s. Jit Ram Shiv Kumar Vs. National Insurance Company 2001 (2) CPR 97 (SC).
There are stringent conditions while allotting a
plot. It is not disputed that an affidavit is to be filed that the allottee has no other residential plot or house either in
his/her name or in the name
of his/her spouse or minor
children. A person who
applies for allotment of plot is
stuck. He has no other place to go and
has to wait for
years for allotment of the plot so that he can build a house for his residence. Pschye of an individual is always to move from rental accommodation to his own house. Government policy also favours house ownership which has resulted in coming into being of building societies and also various Authorities constituted like HUDA. When an allottee gives an application that he needs a plot of land to build a house for his residence he is not guided by any commercial considerations. In most cases his income would be stationary while inflation rises over the years. Award of interest is to enable him to buy a plot elsewhere if a situation arises where he is to be deprived of the plot he applied for. A consumer is in axiomatic position inasmuch as he has to wait for allotment of plot and he cannot acquire any other plot of land on account of onerous conditions that he should not possess any other property at the time of allotment. Award of interest at a particular rate should be such as to compensate the allottee who is deprived of the land and has to go elsewhere in the same or nearby area to buy a plot of land of the same measurement.
In fact the allottee is in a catch-22 situation. He has deposited his savings with HUDA to buy a plot. He has legitimate expectations that a plot of land will be allotted to him within a reasonable period for him to build his own house for his family. He cannot go elsewhere since his money is blocked with HUDA. It would be too much to expect that an allottee can go for another piece of land elsewhere or buy house as he would have no extra money. Further by passage of time prices have rocketed. We take judicial notice of the escalation not only in the cost of land but also in cost of
construction. We do not think if the allottee has not specifically pleaded rise in cost of construction or cost of land, he is not entitled to damages on that account. A consumer who comes before a Consumer Forum is not well versed in the rule of pleadings as given in the Code of Civil Procedure when in fact the Act itself provides that provisions of the Code of Civil Procedure would not apply to the proceedings before the Consumer Forum. A Consumer Forum is to take a pragmatic view of the whole situation guided as it is by rules of natural justice only in the matters. When the hope and expectations of an allottee are violated there is a legal injury or loss suffered by him. We may refer to Black’s Law Dictionary to understand what the expressions ‘loss’ and ‘injury’ would mean. Injury is ‘any wrong or damage done to another, either in his person, rights, reputation or property; the invasion of any legally protected interest of another’. ‘Loss’: is generic and relative term. It signifies the act of losing or the thing lost; it is not a word of limited, hard and fast meaning and has been held synonymous with or equivalent to, ‘damage’, ‘damages’, ‘deprivation’, ‘detriment’, ‘injury’ and ‘privation.
Further when clause (i) of sub section (1) of Section 14 empowers the consumer fora to provide for adequate cost to parties, it is not necessarily confined to litigation cost only.
HUDA, GDA and other Urban Development Authorities, each one being an Authority constituted under the law and being an extended arm, of the State government a consumer has full faith that when he has applied for allotment of plot to build his house and the Authority agreed to do so, he will be able to get the plot fully developed within a reasonable period. He has no choice but to wait for a fully developed plot/flat be allotted to him for him to start construction. He is not in a bargaining position. He has to apply for allotment of plot/flat on dotted lines as required by HUDA/GDA. An allottee is not buying plot/flat for any speculative purpose. It is for him to build a house for residence of himself and his family. It is a well known fact that construction cost increases over the time. Why should allottee suffer for inaction on the part of HUDA and others in not developing a plot within a reasonable time after having received the amount as per its own requirement? Allottee has therefore to be compensated. Why HUDA is using his money and allottee is also deprived of earning interest on that? Rate of interest for delayed allotment of handing over possession of the plot of land is to be reasonable so as to properly compensate the allottee. Considering the decisions rendered by the Supreme court in the cases referred to above, we have already taken the view in the case of Punjab Urban Planning & Development Authority vs. Dr. Dalbir Kaur Dhillon (First Appeal No.157 of 1999) decided on 1.8.2001 that element of interest @ 18% per annum would take into account not only loss of interest but escalation in the cost of construction. There was certainly deficiency in service in depriving the complainant of the land for all these years with the result that the complainant could not construct her house for her own residence and meanwhile cost of construction escalated. We are thus of the opinion that in the circumstances of the cases before us award of interest @ 18% per annum is quite reasonable and equitable.
A point was also made by the learned counsel for GDA, Mr. Kulshreshtha that for grant of interest to the allottees in Govindpuram Scheme, the period of 24.4.1991 to 16.12.93 be exempted as there was stay granted by the High Court for taking up any new construction. On the other hand, it was argued by the learned counsel for the respondents that stay granted by the High Court was restrictive i.e. stay was to be operative only on taking up new construction, hence no blank exemption from payment as prayed by the petitioner be granted. We have examined this point at some length in the case of GDA Vs. Engineers India Ltd. ( Original Petition No. 34/96)) wherein we had held that it is true that stay was only on new constructions but the plea taken by GDA also cannot be brushed aside in the sense that, if the area covered by the stay order comprised of areas for common facilities like roads, sewerage line, water pipelines, electric poles etc., area could not be handed over as it could not be said to be developed. There is some merit in the argument. If we were to send the cases back to the District forum, it can only start fresh set of litigation which in our view must end and consumer should finally get some relief. Hence, we are inclined to agree with the prayer made by the learned counsel for the petitioner that the period be exempted en-block for purposes of calculation of interest to be given to the allottees.
We are of view that award of interest @ 18% per annum is quite equitable as it will take into consideration the escalation of cost of construction as well.
If the stories of woes of the common man are to be scripted by the one who shouts from the house top of his love for the common man, then in the instant case the only factor begging question is the truth. Contradiction is perhaps inherent in the system like this. This may be an window of opportunity to introduce an element of propriety on the part of Urban Development Authorities while dealing with common man.
Subject to the modification that interest @ 18% per annum would be allowable after two years from the date of respective deposits of the amounts, we uphold
the orders of the State Commission and dismiss these revision petitions. We also like to make it clear that for calculating the period of interest in the case of allottees in Govindpuram Scheme of GDA, interest shall not be payable for the period from 24.4.91 to 16.12.93 i.e. the period of stay granted by Allahabad High Court and as indicated above. There shall be no order as to costs in the circumstances of the cases.
( B.K. TAIMNI)