JAYA NARSIMHAN vs DELHI DEVELOPMENT AUTHORITY

THE main question posed before us is whether the interest allowed @ 7% per annum on the delayed construction of a flat is justified in the face of interest charged @ 18% per annum on delayed payment by the allottees. This can be best appreciated in the backdrop of the facts of the present case. Pursuant to 5th Self Financing Housing Registration Scheme, 1982 announced by the respondent i.e., Delhi Development Authority, the applicant applied for registration for a category-II flat consisting of two bed rooms, a living room, kitchen, toilet etc. This was vide Application No. 35169 dated 13.8.1982. THE applicant deposited a sum of Rs. 10,000.00 towards registration amount on 13.8.1982. THE draw was held on 14.12.1983 and it was allotted a flat in category-II in Third Pocket-A-Sec-A, Vasant Kunj. THE intimation was given on 15.1.1984. THE applicant paid an amount of Rs. 1,44,588.40 in four equal instalments on 30.12.1982 whereafter on communication of a further demand of Rs. 34,499.25 (the revised cost at Rs. 1,82,100/-), the same was paid on 13.5.1988. THE possession of the flat was, however, given on 3.9.1990. For the delay in handing over the possession of the flat beyond 2 years i.e., the time for completion of flat, the applicant seeks compensation in the form of interest @ 18% per annum for delay in construction of the flat.

THE respondent has filed reply wherein it is specifically averred in paragraph No. 6 that there were a large number of flats which were being constructed under the 5th Self Financing Scheme and the work was got executed through different agencies/contractors. THE respondent Authority made its best efforts to ensure that all the work is executed as per the expected time schedule. However, there were certain delays in construction of certain flats on account of the contractors for that particular pocket/area not executing the work in time. THE respondent''s delay being not for malafide reasons, no interest is contended to be payable. On completion of the pleadings, the following issues were framed : (i) Whether the respondent has been indulging in unfair trade practices as alleged in the compensation application ? (ii) Whether any loss or damage has been caused to the applicant as a result of these alleged unfair trade practices ? (iii) Relief, if any.

Evidence in the form of affidavit/counter affidavit of the parties was filed. The main contention of the applicant is that having charged interest @ 18% on the delayed payment of instalments, respondent by paying 7% on the delay in handing over the possession beyond 2 years, has indulged in unfair trade practices within the meaning of Section 36A of the Act. Admittedly, both the parties have subjected themselves to terms and conditions of the agreement as accompanied with the Fifth Self Financing Housing Registration Scheme, 1982. As held by their Lordships of the Hon''ble Supreme Court in the case of Bareilly Development Authority & Anr. v. Ajay Pal Singh & Ors., reported in AIR 1989 Supreme Court 1076, when the contract entered into by the State is non-statutory and purely contractual the relations are no longer governed by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter-se. In this sphere, the parties can only claim rights conferred upon them by the contract in the absence of any statutory obligations on the part of the Authority in the said contractual field.

In the present case, the Delhi Development Authority undertook to construct the houses for the public and issued an advertisement offering the same on the terms and conditions as detailed in the Scheme. In addition to the eligibility criteria, the mode of payment was also specified for the allottees, who were successful in the draw of lots. The payments were to be made in instalments as per Clause 9 and the normal period of completion of flat was specified to be about 2 years. It was also provided in Clause 10 that interest @ 7% on the amount deposited will be payable for the period beyond two and half years to the date of the issue of possession letter if the construction of the houses is not completed by then. Clause 12 on the other hand provides that if the applicant does not pay the instalments, the interest @ 18% would be charged.

IT is not denied that the interest @ 7% has been paid to the applicant. The averment in the reply of the respondent that the deferment interest amounting to Rs. 3,611.20 has also been paid, has not been denied by the applicant. Regarding the payment of interest as demanded, we may refer to the decision of the Hon''ble Supreme Court in the case of Ghaziabad Development Authority v. Union of India & Anr., reported in II (2000) CPJ 1 (SC)=IV (2000) SLT 654=JT 2000 (7) SC 256, wherein in the context of awarding of interest in such cases they have so observed : "There was no contract between the parties regarding payment of interest on delayed deposit or on account of delay on the part of the opposite party to render the services. Interest cannot be claimed under Section 34 of the Civil Procedure Code as its provisions have not been specifically made applicable to the proceedings under the Act. We, however, find that the general provision of Section 34 being based upon justice, equity and good conscience would authorize the Redressal Forums and Commissions to also grant interest appropriately under the circumstances of each case. Interest may also be awarded in lieu of compensation or damages in appropriate cases. The interest can also be awarded on equitable grounds."

"The State Commission as well as the National Commission were, therefore, justified in awarding the interest to the appellant but in the circumstances of the case we feel that grant of interest at the rate of 12 per cent was inadequate as admittedly the appellant was deprived of the user of a sum of Rs. one lakh for over a period of seven years. During the aforesaid period, the appellant had to suffer the winding-up proceedings under the Companies Act, allegedly on the ground of financial crunch. We are of the opinion that awarding interest at the rate of 15 per cent per annum would have served the ends of justice."

Examining in the light of the above, in the case of the applicant we have not been shown that the circumstances explained by the respondent Authority under which the delay occurred did not exist and for that matter there is malafide on the part of the Authority having not completed the construction. It is a known fact that the respondent Authority provides the houses to the public at subsidised rates and carries out the construction on the strength of the amounts received from the allottees as well as from the loans raised from the financial institutions.

IN that view of the matter, no malafide or manipulation of services could be attributed to such public Authority and this has been so held by their Lordships of the Hon''ble Supreme Court in the case of Rajasthan Housing Board v. Smt. Parwati Devi, reported in III (2000) CPJ 9 (SC)=VII (2000) SLT 50=2000 CTJ 165 (SC) (MRTP), the relevant portion is reproduced as under : "9....the main ingredient which requires that a trade practice which has or may have the effect of preventing, distorting or restricting competition in any manner would be restrictive trade practice and in particular which inter alia, tends to bring about manipulation of services in such manner as to impose on the consumers unjustified costs."

It is true that in suitable cases the interest @ 12% has been held to be payable. However, this does not appear to be so in case of the applicant. The information about possession of flat to be handed over was given somewhere in the year 1989 while the last instalment towards the final cost was paid in 1988. The possession on the other hand was handed over in 1990 i.e., within two years, which is not such an unreasonable delay to call for payment of interest as demanded by the applicant. This is more so when after taking over the possession of the house as well the interest paid by the respondent, the applicant has filed an application for payment of remaining interest. No protest was made at the time when the house was taken over or the interest was received. In fact taken from the date the possession of house was taken by the applicant, the application appears to be time barred having been filed in 1997. This is in view of the decision of the Hon''ble Supreme Court in the case of Corporation Bank & Anr. v. Naveen J. Shah, reported in I (2000) CPJ 13 (SC)=II (2000) SLT 140=2000 CTJ 81 (SC). In view of the above, the prayer of the applicant for payment of interest @ 18% is not allowed and the compensation application stands dismissed with no order as to the costs. We may however make it clear that the same is confined to the facts of the case. C.A. dismissed.