GHAZIABAD DEVELOPMENT AUTHORITY vs K. MAHADEVAN

THIS is an appeal against the judgment and order dated 18.11.1997 passed by District Consumer Forum, Ghaziabad in Complaint Case No. 453 of 1996.

THE facts of the case stated in brief are that the complainant booked an HIG house in hire purchase scheme in Shastri Nagar on 14.1.1988, by depositing Rs. 19,000/-. THEreafter he deposited a further sum of Rs. 2,520/- as difference money for a house in Govindpuram HIG scheme. THE cost of this house was indicated as Rs. 2,15,000/- in the brochure. He deposited the reservation amount on 28.2.1989 and also deposited various other instalments in time but when the complainant visited the spot on 28.5.1993 and 22.12.1993 he found that the development work was not complete and the facilities were not provided. THE final costing of the house was done at Rs. 2,78,162/- and a sum of Rs. 80,662/- was indicated to be deposited before possession. In all a sum of Rs. 90,000/- was asked to be deposited by the complainant. THE complainant deposited this money along with penal interest of Rs. 1,181/-. It was indicated that the possession of the house shall be given in 1991 but even upto the date of complaint, the possession was not delivered. There is lot of deficiency in the house. The complainant got the house inspected by Sri Mahendra Pal Agarwal, registered Valuer, who in his report has mentioned that a sum of Rs. 81,000/- shall be required for repairing of the house. The complainant has prayed by filing this complaint that all the deficiencies in the house be got removed and he should be allowed Rs. 2,000/- per month from the opposite party which he has spent on rent. A sum of Rs. 21,000/- has beer, claimed on account of mental tension and and cost.

The opposite party, Ghaziabad Development Authority, in its written version has alleged that the letter of possession was issued on 25.10.1993 but the complainant has not taken possession knowingly. Therefore, he is not entitled for any interest. There was also an order of the Hon''ble High Court staying proceedings from 24.4.1991 to 16.12.1993. Hence the possession could not be delivered in time.

THE learned District Forum, after considering the case of the parties, came to the conclusion there was deficiency of service on behalf of opposite party and directed Ghaziabad Development Authority to deliver fully developed and completed house to the complainant within two months from the date of the order and to pay interest on amounts deposited upto 13.12.1993 from 1.1.1994 till the date of payment at the rate of 18% per annum. A sum of Rs. 3,000/- as cost and compensation was also awarded to the complainant If the amount is not paid within a period of two months, then interest payable shall be at the rate of 21% per annum. It was further provided that if any amount is due from the complainant, then the same shall be deducted from the payment payable to him. Aggrieved against the order of the learned District Forum, Ghaziabad Development Authority has come in appeal and has challenged the correctness of the order passed by the District Forum.

WE have heard the learned Counsel for the appellant without issuing notice to the respondent. Learned Counsel for the appellant has argued that the interest awarded is very much on the higher side. The learned Counsel for the appellant has argued that interest at the rate of 6% per annum should only be awarded while the learned Counsel for the complainant has argued that interest at the rate of 18% per annum be awarded. Learned Counsel for the complainant/ respondent has placed reliance on the case of Dr. Ramesh Chandra Ramaniklal Shah & Ors. v. Lata Construction Company & Ors., I (1996) CPJ 81 (NC), decided by the National Commission. In that case the possession was not delivered within the time given in the agreement. When the house was not delivered in time the National Commission found that there was a deficiency in service on behalf of M/s. Lata Construction Company and awarded interest at the rate of 18% per annum. Similarly the National Commission in the case of George Thomas & Ors. v. Ghaziabad Development Authority, I (1999) CPJ 18 (NC), has held that the possession was not given to the allottee as per the scheme. The option was given by the Ghaziabad Development Authority to the complainant for taking another plot but the complainant did not agree to this proposition. On the basis of these facts, the National Commission held that there was deficiency in service on behalf of the Ghaziabad Development Authority and allowed interest at the rate of 18% per annum because Ghaziabad Development Authority recovers interest at the rate of 18% per annum on defaults on the amounts payable to it. Thus this case law also shows that the interest at the rate of 18% per annum is payable by the Development Authorities.

THE learned Counsel for the opposite party has also placed reliance on the case of Surendra Kaur v. Government of Punjab & Ors., (1998) 9 Supreme Court Cases 592. THE Hon''ble Supreme Court has allowed interest at the rate of 18% per annum.

WHEN the delay is on the part of the Development Authority, it is liable to pay interest to the complainant for the period during which the amount remained deposited with it. The learned District Forum has awarded interest at the rate of 18% per annum from the respective dates of deposits till the date of payment. Learned Counsel for the appellant has argued that the interest awarded at the rate of 18% per annum is on the higher side and has placed reliance on the case of Ghaziabad Development Authority v. Union of India & Anr., II (2000) CPJ 1 (SC)=IV (2000) SLT 654=2000 CTJ 205. In this case the Hon''ble Supreme Court has held as under : "WHEN a Development Authority announces a scheme for allotment of plots, the brochure issued by it for public members of public may make applications for availing benefit of the scheme. Such applications are offers. Some of the offers having been accepted subject to rules of priority or preferences laid down by the Authority result into a contract between the application and the Authority. The legal relationship governing the performance and consequences flowing from breach would be worked out under the provisions of the Contract Act and the Specific Relief Act except to the extent governed by the law applicable to the Authority floating the scheme. In case of breach of contract, damages may be claimed by one party from the other who had broken its contract obligation in some way or the other. The damages may be liquidated or unliquidated. Liquidated damages are such damages as have been agreed upon and fixed by the parties in anticipation of the breach. Unliquidated damages are such damages as are required to be assessed. 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. Here the ride as to remoteness of damages comes into play. Such loss may be compensated as the parties would have been contemplated at the time of entering into the contract. The party held liable to compensation shall be obliged to compensate for such losses as directly flow its breach."

The Supreme Court goes to say that "the ordinary heads of damages allowable in contracts for sale of land are settled. A vendor who breaks the contract by failing to convey the land to the purchaser is liable to damages for the purchaser''s loss of bargain by paying the market value of the property at the fixed time for completion less the contract price. The purchaser may claim the loss of profit he intended to make from a particular use of the land if the vendor had actual or imputed knowledge thereof. For delay in performance the normal nature of damages is the value of the use of the land for the period of delay, viz. usually its rental value."

On the question of interest which is to be awarded, the Hon''ble Supreme Court has held that the terms of the brochure issued by the Authority are relevant in a particular case. The Hon''ble Supreme Court has distinguished the case of Sovintorg (India) Limited v. State Bank of India, New Delhi, II (1999) CPJ 4 (SC)=VI (1999) SLT 545=(1999) 6 SCC 406, in which the rate of interest was enhanced to 15% per annum. It was observed as under : "However, in the case before us, the parties have not tendered any evidence enabling formation of opinion on the rate of interest which can be considered ideal to be adopted. The rate of interest awarded in equity should neither be too high or too low. In our opinion awarding interest at the rate of 12 per cent per annum would be just and proper and meet the ends of justice in the cases under consideration. The provision contained in the brochure issued by the Development Authority that it shall not be liable to pay any interest in the event of an occasion arising for return of the amount should be held to be applicable only to such cases in which the claimant is itself responsible for creating circumstances providing occasion for the refund. In the cases under appeal the fault has been found with the Authority. The Authority does not, therefore, have any justification for resisting refund of the claimants'' amount with interest."

THE rate of interest allowed by the Hon''ble Supreme Court was only 12% per annum. That was the interest on the basis of the facts which were placed before the Hon''ble Supreme Court. THE Court itself has observed that in that case which was before it, the parties have not tendered any evidence enabling formation of any opinion on the rate of interest which can be considered ideal to be adopted. Thus the case which was decided by the Hon''ble Supreme Court was on facts of that particular case in which the parties did not lead any evidence. THE Hon''ble Supreme Court observed that it may come to a definite conclusion on the rate of interest on the basis of peculiar facts of the case. The facts of the present case are different from the facts of the case decided by Hon''ble Supreme Court Here in the brochure issued by the Development Authority, provision is there that if the amount is not paid in accordance with the schedule mentioned in the brochure, then the interest for the delayed period shall be charged at the rate of 18% per annum. Thus when the Development Authority is charging interest at the rate of 18% per annum if any delay is made in the payment of instalments, then the same applies to it also. When the Development Authority has made provision for charging penal interest at the rate of 18% per annum on delayed payments, then on principles of equity and law, it is bound to pay interest at the same rate. In case of George Thomas & Ors. v. Ghaziabad Development Authority (supra). The National Commission has held that the interest payable shall be 18% per annum because the Development Authority is charging the same rate of interest from the allottees in case they fail to pay instalment in time. The rate of interest payable to the allottees who had deposited the amount for taking the flat from the Development Authority came before a Full Bench of Allahabad High Court in the case of Smt. Vrinda Gujrati & Ors. v. Bareilly Development Authority & Ors., 1996 (II) Allahabad Rent Cases 383. In pages 22 and 23 of the judgment, the Hon''ble High Court has held that the persons who have applied for taking a flat, there is a statutory obligation cast upon the authorities to complete the same within the time schedule mentioned in the offer and if they fail to discharge the same, the affected allottees are entitled for the interest for the delayed delivery of possession, as the allottees have parted with the money which was earning interest. It was also held that the petitioners are entitled to get interest at the rate of 18% per annum for the delayed delivery of possession on the amount deposited by him till the actual date of delivery of possession. Therefore, keeping in view the facts of the case and law applicable to it as laid down by Hon''ble Supreme Court, it is held that in the present case the rate of interest payable shall be at the rate of 18% per annum.

RECENTLY the Hon''ble Supreme Court had an occasion to consider the question of interest in the case of Haryana Urban Development Authority v. Rajnish Chander Sharde, III (2000) CPJ 8 (SC)=VII (2000) SLT 142=JT 2000 (8) SC 154. The short order of the Hon''ble Supreme Court is being reproduced. "There is no merit in this appeal considering what has been stated by the appellant in its own written statement fixed before the National Commission 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 appellant''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. 1,600/- 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 amounts that had been deposited by the respondent from 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."

In a recent case the Hon''ble Supreme Court in the case of Haryana Urban Development Authority v. Rajnish Chandra Sharde, III (2000) CPJ 8 (SC)=VII (2000) SLT 142, has upheld the interest awarded at the rate of 18% per annum. Thus the appeal is liable to be allowed in part to the extent that the rate of interest is reduced to 18% from 21 % per annum. ORDER The appeal is allowed and the interest is reduced to 18% per annum from 21% per annum. With this modification the rest portion of the judgment and order are confirmed. Let compliance of the order be made within a period of two months from the date of this order. Let copy as per rules be made available to the parties. Appeal partly allowed.