HARYANA URBAN DEVELOPMENT AUTHORITY vs ANTANT BIR SINGH

THIS is a Revision Petition against the order of 8th September, 1993 passed by the State Consumer Disputes Redressal Commission, Haryana at Chandigarh in First Appeal No. 251 of 1993. The issue to be considered has been framed in the opening paragraph of the order of the State Commission: "Whether the Haryana Urban Development Authority can levy interest on the instalments due from the consumer-allottees only from the date of the order of possession or otherwise?"

THE facts are that the respondent Shri Anant Bir Singh was allotted a residential plot for Rs. 1,01,540,40 in Sector 4 of Mansa Devi Complex at Panchkula in August, 1984. After adjusting the amount deposited by way of earnest money amounting to Rs. 27,627.60 the balance amount payable was Rs. 82,882.80. This was payable either in lumpsum, without any interest, within 60 days from the date of allotment, or in six half-yearly annual instalments alongwith interest on the balance price at 10% on the remaining amount. This interest was to accrue from the date of offer of possession. The price determined at the time of allotment was tentative and subject to the determination of final price at the time of grant of possession.

IT was further stipulated as under in the letter of allotment: Clause No. 10: "In case the instalment due (Under clause 6 that is either in lumpsum or in six half yearly instalments) is not paid by the 10th of the month falling in which it falls due or in case the additional price is not paid within the time, the Estate Officer can proceed to take action for imposition of penalty and resumption of plot."

Clause 16 of the letter of allotment empowers the Estate Officer to impose penalty for default of payment of the amount due either in lumpsum or in instalment as stated above.

IN addition to the penalty leviable Under Clause 16, the Estate Officer is entitled to resume and forfeit the plot for breach of conditions of transfer including default in payment of the consideration or any instalment payable by way of consideration under Clause 17. It would be evident from above that under the scheme for the allotment of plots embodied in the rules of allotment, payment of the amount due by way of consideration can be made in two ways only: (a) by making payment in lumpsum or by (b) by making payment in instalments. Where the payment of the consideration stipulated in the letter of allotment is staggered in instalments, interest is payable on the balance of amount due from time to time. Only the recovery of this interest is to be made at the time of grant of possession of the plot.

PENAL interest however, is also recoverable in case there is default in payment either of the amount in lumpsum or by way of the stipulated instalments on the due dates. While the amounts payable by way of instalments under Clause 6 are in the nature of deferred payment of the consideration and interest on these instalments is in the nature of interest on credit allowed to the purchasers, and not on arrears, it is totally different from the penal interest which is leviable and recoverable by the HUDA from the allottees who commit default in making payment as stipulated in the letter of allotment i.e. either in lumpsum or in six half yearly instalments on the stipulated dates: it is penal interest on arrears. In other words, penal interest becomes leviable on arrears when the allottees fail to make payment on the stipulated dates as per clause 6. This interest is really not of the nature of interest but in the nature of penalty which can be imposed under Section 16 for default or under Section 17 in the case of resumption and forfeiture. The penalty, however, is expressed in terms of interest on the amounts in default or in arrears. In other words, we have to distinguish between the interest on deferred payment of the consideration and interest by way of penalty on arrears. The latter is not governed by Clause 6 of the terms of allotment. There is logic in the levy by way of penal interest. As contended by the revision petitioner, it will be unfair to place allottees who make payment of all the instalments on the due or appointed dates on the same footing as the persons who default in making payment of the instalments on time. Evidently, the State Commission has overlooked this distinction in lie penalty claimed from the allottees and ex-pressed in terms of interest on the amount due on the arrears of instalments.

In this particular case there was default on the part of the respondent complainant in depositing the instalments due on the stipulated date.

EVIDENTLY , the State Commission failed to notice this distinction between interest on deferred payment and the penalty on arrears which has been levied by the revision petitioner HUDA strictly in terms of the letter of allotment. There has been no deficiency of service. There has thus been erroneous exercise of jurisdiction by the State Commission resulting in material irregularity. The Revision Petition is therefore, allowed and the order of the State Commission is set aside. There is no order as to costs.