R.K.ARORA vs Meerut Development Authority

BOTH these appeals have been filed against the judgment and order dated 3.11.1998 passed by District Consumer Forum, Meerut in Complaint Case No. 855/1997. Hence both the appeals are being taken up together and disposed off by a common judgment.

THE facts of the case stated in brief are that the complainant booked one plot in Shatabdi Nagar Scheme on 12.12.1989 after depositing a sum of Rs. 15,000/-. By letter dated 8.3.1990 the complainant was informed that one plot has been reserved for him. THE complainant, on the request of the Meerut Development Authority, deposited a sum of Rs. 30,000/- on 19.3.1990. By letter dated zzz20.3.1991 the complainant was informed that the possession of the plot shall be given to him by 1992. THE complainant had deposited the entire amount demanded by the Meerut Development Authority in eight six-monthly instalments. Thus in this way the complainant had deposited a sum of Rs. 1,06,875/-. THEreafter the cost of the plot was increased at the rate of Rs. 600/- per sq. mt. and a sum of Rs. 65,928/- was demanded as increased cost. THE complainant deposited this amount also in instalments as demanded. Even after depositing this amount also, the complainant has not been given possession of the plot in question. The complainant issued a letter dated 21.6.1997 for handing over possession of the plot in question, but nothing was done. According to the complainant even upto the time of presenting this complaint, the plot has not been developed and not even demarcated. The complainant has, therefore, applied for refund of the entire amount deposited by him amounting to Rs. 1,91,259/- alongwith interest. He has also demanded a sum of Rs. 1,00,000/- as compensation and Rs. 5,000/- as expenses.

The opposite party in the written version has alleged that the development work could not be completed in Sector VII of Shatabdi Nagar Scheme. The complainant was informed to contact the officials in the office so that the problem may be solved and he may be given a plot in a development sector. The complainant did not give his consent. It is not possible to give 18% interest on the deposited amount and it can only be refunded after making usual deductions.

THE learned District Forum after considering the case of the parties came to the conclusion that the deficiency lies with the Meerut Development Authority and it directed for refund of the entire deposited amount along with 15% per annum interest. Aggrieved against this order of the learned District Forum, both the parties have come in appeal and have challenged the correctness of the order passed by the District Forum.

WE have heard the learned Counsel for the parties and have perused the evidence on record. Learned Counsel for the Meerut Development Authority has argued that there was no deficiency on behalf of the Meerut Development Authority. Hence the amount should have been ordered to be refunded with 6% per annum interest. According to learned Counsel the interest should have been awarded only upto 31.12.1995 and not till date of payment. On the other hand learned Counsel for the complainant has argued that the rate of interest awarded @ 15% per annum is very much on the lower side and interest @ 18% per annum should be awarded. Now we take the first issue raised by the learned Counsel for Meerut Development Authority about the deficiency in service. It is an admitted fact that Sector VII of the Shatabdi Nagar was not developed. According to the terms of the brochure, the scheme was floated for development of plot in Sector VII by the Meerut Development Authority. The possession was to be delivered in the year 1992. Even upto the date of filing of the complaint in the year 1997, i.e. after a lapse of five years of the intended date of delivery of possession, the development work was not completed. Thus the deficiency of service is on behalf of the Meerut Development Authority because it was bound to hand over possession of a developed plot by the end of 1992. It could not even complete the development work and was not in a position to hand over possession of the plot even upto 1997. This could only be termed as gross deficiency on behalf of Meerut Development Authority. Thus the learned District Forum was perfectly right in coming to the conclusion that the Meerut Development Authority was deficient in service. Now the question of payment of interest is to be considered. According to learned Counsel for the Meerut Development Authority the interest should be awarded upto 31.12.1995 because it had offered the complainant to come to the office for some settlement. He has also argued that an alternative plot was to be offered to the complainant. When the complainant did not avail of that opportunity, therefore, he cannot get that interest after this offer was made. We are not impressed with this argument. The complainant had applied for a plot which was later on allotted in Sector 7 of Shatabdi Nagar Scheme. The complainant could not have been compelled to take an alternative plot. If the complainant did not accept this offer, then it was the duty of Meerut Development Authority to have refunded the entire amount deposited by the complainant with interest. This was not done by the M.D.A. and hence it is guilty of with-holding the amount with it. Therefore, M.D.A. has to pay interest to the complainant upto the date of payment of the amount.

NOW the question of interest is to be taken up.

THE learned Counsel for the appellant Meerut Development Authority 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/appellant 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 Authority. The learned Counsel for the complainant-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 15% per annum from the respective dates of deposits till the date of payment. Learned Counsel for the appellant M.D.A. has argued that the interest awarded at the rate of 15% 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 applicant 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 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)=VIII (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 own 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."

Thus on the basis of above discussion, the Appeal No. 3090/SC/1998 filed by Meerut Development Authority is liable to be dismissed and Appeal No. 2841/SC/1998 filed by the complainant is liable to be allowed. Order Appeal No. 3090/1998 is dismissed. Appeal No. 2841/1998 is allowed and the rate of interest is awarded at the rate of 18% per annum. This rate of interest shall be payable by Meerut Development Authority to the complainant from the date of deposits till the date of payment. This judgment shall be kept in the file of Appeal No. 2841/SC/1998 and a certified copy of it shall be placed on the record of Appeal No. 3090/1998 which shall also be governed by this judgment and order. 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.