GHAZIABAD DEVELOPMENT AUTHORITY vs NARENDRA KUMAR MITTAL

MR. Justice K.C. Bhargava, President- Both these appeals have been .filed against the same judgment and order dated 23.12.1996 passed by District Consumer Forum, Ghaziabad in Complaint Case No. 1436 of 1993.

THE facts of the case stated in brief are that the complainant applied for a house in Govindpuram Housing Scheme in the year 1998, the cost of which was indicated as Rs. 70,000/-. A house was reserved for the complainant. THE complainant paid the entire amount within the stipulated time as demanded by the Ghaziabad Development Authority. Even till the date of filing of complaint in the year 1993 the houses were not ready. Hence the complainant has applied for refund of the amount alongwith 24% per annum interest. He has also prayed for Rs. 10,000/- as compensation for mental torture and Rs. 2,000/- as cost, besides Rs. 21,700/- as economic loss. The opposite party has alleged in the written version that on account of the stay order of the Hon''ble High Court, there was delay in construction of the houses. This fact was beyond the control of Ghaziabad Development Authority. The complainant is not entitled for any compensation or interest.

The parties filed evidence before the learned District Forum, who after considering the case, directed for refund of the amount along with interest at the rate of 14% per annum. It also awarded a sum of Rs. 2,500/- as compensation and Rs. 1,000/- as cost. The interest was to be paid from the date of deposit till 24.4.1991 and from 17.12.1993 to the date of refund.

AGGRIEVED against the order of the learned District Forum, both the parties have come in appeal and have challenged the correctness of the order passed by the Forum. We have heard the learned Counsel for the parties. Learned Counsel for the complainant has argued that no interest from 24.4.1991 to 16.12.1993 has been allowed on the ground that there was stay order by the Hon''ble High Court and there was no activity regarding construction on the disputed plot. On the other hand learned Counsel for the Development Authority has argued that no interest is payable during the period of stay.

LEARNED Counsel for the appellant, Ghaziabad Development Authority, has argued that on account of the stay order of the Hon''ble High Court the work of development was affected. This argument of the learned Counsel is not factually correct. In the writ petitions which was filed before the Hon''ble High Court, the order passed by the Hon''ble High Court is as under : "List this petition on 30.4.1991. Meanwhile respondent shall not raise any constructions on the land in question if constructions have not already commenced." It is an admitted fact that the Ghaziabad Development Authority had started constructions over the land in dispute before the stay order was passed. Therefore, in terms of this stay order the construction which has already been started by the Ghaziabad Development Authority were not affected and the work continued. The stay order only applies to those lands over which the construction has not already commenced. Moreover, there is no plea of the Ghaziabad Development Authority that the construction has not been started. Therefore, this argument of the learned Counsel for the Ghaziabad Development Authority cannot be accepted. 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 can 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 information is an invitation to offer. Several 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 applicants 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 rule 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 inequity 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 docs 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 was 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 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 below : "There is no merit in this appeal considering what has been stated by the appellant in its own written statement fixed 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 appellant''s instance by this Court. In the order of the National Commission it is stated that the respondent had claimed compensation for having been 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."

The Appeal No. 299/SC/1996 is liable to be dismissed while Appeal No. 1570/SC/1996 is liable to be allowed and the interest shall be payable with effect from the date of deposit till the date of payment at the rate of 18% per annum. The rest of the judgment and order of the learned District Forum shall remain intact. ORDER Appeal No. 288/SC/1996 is dismissed and Appeal No. 1570/SC/1996 is partly allowed to the extent that the interest shall be payable from the date of deposit till the date of payment at the rate of 18% per annum. With this modification the rest portion of the judgment and order of the learned District Forum are confirmed. There will be no order as to the costs. 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. Ordered accordingly.