In these appeals by special leave, the appellants have essentially questioned a part of the common judgment and order dated 31.03.2022, as passed by the National Consumer Disputes Redressal Commission, New Delhi in Revision Petition Nos. The District Forum, in its order dated 20.12.2013, dismissed the complaints so filed by the present respondent on various 3 grounds including that she had tried to avail of the services of the builder for commercial purposes by booking three flats and thus, did not fall within the category of “consumer”, as defined under Section 2(d) of the Consumer Protection Act, 1986. 1,48,52,000/- had been deposited by the appellants pursuant to an order earlier passed by the National Commission and, in the totality of circumstances, execution of the orders impugned was stayed subject to the condition of the petitioners-appellants depositing a further sum of Rs. The order dated 09.05.2022 reads as under: – “Having heard learned senio r counsel for the respective parties preliminarily and having examined the material placed on record, in our view, only the question of awarding compound interest at the rate of 14% on the refund of deposited amount is required to be considered in this matter.
This deposit by the petitioners and withdrawal by the respondent shall remain subject to the final order to be passed in these petitions. The relevant factual and background aspects, to the extent relevant for the short question involved in the matter could be noticed as follows: 6 5.1. It was also stated that she could make further payment towards the remaining instalments but was having legal right to know as to when the construction would be completed and the possession would be handed over; and without disclosing such essential facts, retaining the deposited money amounted to deficiency in service in terms of Section 2 of the Act of 1986. 6) That without prejudice to the above, my client is ready to make the payment of balance instalments as per the statement of account subject to the undertaking of proposed completion of the said flat and further production of written progress certificate from the architect concerned of yours because my clientess shall not be kept in dark for period not known to her within which she is going to take possession of the flat. In light of the above facts and circumstances, I do hereby call upon you which I hereby do and call upon you, to furnish or produce a written undertaking supported by a progress/completion certificate from your concerned architect within which the said flats shall be completed, within a period of 15 days from the date of the present legal notice, failing which I have clear instructions from my said clientess to invoke the proper forum under the relevant provisions of law against you.
As in 2002 a sum of Rs 8,22,682.00 (Rupees Eight Lacs Twenty Two Thousand Six Hundred Two only) was due from your Client and against which your Client sent in early Feb. All the other contents of your notice are incorrect and are denied and my clients are along with this reply enclosing their Cheque No 357757 dated 07 November 2005 of Citibank NA New Delhi for a sum of Rs 10,68,031.00 (Rupees Ten Lakhs Sixty Eight Thousand Thirty One) only in favour of your client towards refund of the amounts due to them under the Letter of Provisional Allotment. Where the property is situated is required to be registered upon payments being made by your client and since your client did not comply with the terms or the Provisional Booking no such Agreement came into being and the client of your client after 3 years of the date when at least they admit to have become aware of the cancellation is also barred by time. On 30.11.2005, a rejoinder was sent on behalf of the respondent to the reply aforesaid, while returning the cheque and while objecting to the conduct of the appellants, in the following words: – “I would like to bring to you r notice that your client wrote letter dated 26.11.2001 in respect of flat No.(1) C-601 to my clientess whereby accepted receipt of Rs.4,43,501/- out of total amount of Rs.7,08,458/-, (2) C-602, receipt of Rs.4,46,912/- out of total amount of Rs.7,17,114.40 and (3) C-603, receipt of Rs.4,44,625/- out of total amount of Rs.7,32,147.50 and demanded balance amounts of Rs.2,64,957/-, Rs.2,70,202.40 and Rs.2,87,522.50 respectively.
I, therefore, through this rejoinder call upon you to advise your client to immediately hand over the physical possession of the above said flats failing which my clientess shall be constrained to initiate legal proceedings both civil and criminal before competent court of law/forum and in that event your client shall be liable for its cost, risk and consequences.” 14,00,000/- (Fourteen lakh rupees only) as damages for the loss of rent and mental agony and also direct the respondent to pay interest on 4,43,500/- @ of 18% per annum for 16 years i.e. The Complainant also filed two more complaints here alongwith this complaint therefore as rightly objected by the OP that all such activities of the Complainant were made with a view to earn profit by investing her money in real estate.
The State Commission, however, did not agree with the reasoning of the District Forum and held that the complaints made by the respondent were maintainable in law. The complainant having opted for the construction linked plan had to pay the balance amount on the delivery of the possession of the flats. Finally the objection of the OP to the effect that the complainant was defaulter in making the payment cannot sustain since the complainant had opted for consideration linked plan and she had to make the payment beyond 60% on completion of the construction and thus this objection is also overruled.
The State Commission also observed that in such case (only of refund of money), the complainant would suffer substantial loss on account of payment of interest on the loans raised; depreciation in the money value; and escalation in the cost of construction etc. Balbir Singh – (2004) 5 SCC 65, while observing that the power and duty to award compensation does not mean that irrespective of facts of the case, compensation can be awarded in all matters on a uniform basis, the Hon’ble Supreme Court gave certain instances and indicated the factors, which could be kept in view while determining adequate compensation.
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But in cases where monies are being simply refunded, then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. Thereafter, the State Commission referred to the contentions 15 urged on behalf of the complainant on the point of compensation based on the decision of COMPAT in the case of Dr.
She did not despite further instalments because the respondents did not complete the construction within the stipulated time. The respondent has unscrupulously deprived the appellant of the due benefit of escalation in property prices since 1989 till date and 16 therefore, in order to put the appellant in the same place and deny the benefit of his own illegality to the respondent this Hon’ble Court ought to compensate the ap pellant in terms of the prevailing market value of the property in question. Manjeet Kaur Monga
but then, placed two more passages as if being the part of extractions, though the said two passages had obviously been the part of submissions of the complainant where for the first time, the claim of compound interest @ 15% p.a. Manjeet Kaur Monga ; and when the units in question had already been sold, found it just and proper to direct the present appellants to refund the deposited amount together with compound interest @ 14% from the date of deposit. In the revision petitions preferred by the appellants against the judgment and order dated 12.03.2020 so passed by the State Commission, the National Commission, after rejecting other contentions of the appellants, found that the facts of Dr. Manjeet Kaur Monga ’s case (supra) was passed under a repealed Act and therefore is not applicable in this case, has no force and that the argument is totally misconceived and misdirected. In the present case, on the identical facts there is a judgment of Hon’ble Supreme Court, although the remedy had been sought in that case under a different provision of the Act, however, the findings are on the identical facts of the case and so the order is binding on the Foras below….” Manjeet Kaur Monga’s case (supra) and therefore, it cannot be said that the findings of the State Commission are perverse or without jurisdiction. Learned senior counsel has submitted that wherever the legislature intended to confer the power to grant compound interest, an enabling provision has been incorporated in the statute. It has also been contended that in the absence of any agreement or any statutory provision or mercantile usage, interest payable could only be at the market rate and could never be compounded at whopping 14%. Shri Ram Trivedi : (2021) 5 SCC 273; Ireo Grace Realtech Pvt. :
(2020) 16 SCC 512 and DLF Home Panchkula Pvt Ltd and Ors. The learned counsel has particularly referred to the passage in the case of Ireo Grace Realtech (supra) wherein, the prayer for compound interest @ 20% was rejected, for having no nexus with the commercial realities of the prevailing market.
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Learned counsel would submit that in the face of such decisions, taking even the highest interest rate at 9% p.a., the total amount with interest payable to the respondent on 09.05.2022 (the date of issuance of notice by this Court) would be Rs. In this regard, it has also been argued that even with reference to the decision in Ghaziabad Development Authority (supra), the compensation to be awarded to the respondent cannot exceed the fair market value of the flats and as per the circle rates, it would be around Rs. The fourth limb of submissions, learned senior counsel for the appellants has argued that in the present case, the respondent had neither demanded nor prayed for the relief of compound interest in the complaints filed before the District Forum; and with reference to the decision of this Court in the case of Manohar Lal (D) by Lrs. Manjeet Kaur Monga (supra) in detail and has contended that therein, the only argument before this Court was as to whether the Tribunal under Section MRTP Act was required to determine the specific amount towards compensation as envisaged by Section 12-B thereof and the observations in paragraph 5 of the decision, this Court did not interfere with the award of compound interest in that context. Manjeet Kaur Monga ’s case (supra), this Court upheld the directions for refund with compound interest only until the date of refund post- cancellation, which came to Rs.31,87,131/- and which, at the relevant time, was also the approximate market value of the said flat. Learned counsel would submit that awarding of compound interest without taking note of the facts of refund cheque issued by the appellants remains wholly unjustified.
Learned counsel would submit that the appellants have failed to bring on record any cancellation letter pertaining to the said 3 flats and on the 26 contrary, they have made inconsistent statements about the date of cancellation while sometimes alleging that cancellation was in the year 2002 whereas stating before the National Commission that the cancellation was on 25.04.2005. Learned counsel has further submitted that while both, the respondent and the said Dr. Manjit Kaur Monga, were duped by the appellants and resultantly both sought possession of their respective flats, the respondent invoked jurisdiction under the Act of 1986 whereas the said complainant approached COMPAT under the MRTP Act. Monga ’s case, this Court has affirmed the measure of compensation for an identically placed complainant by refund of deposit together with 15% p.a.
Manjit Kaur Monga’s case, the deposits were retained by the appellants for about 12 to 15 years whereas in the case of the respondent, the deposits were illegally retained and utilized by the appellants for 29 to 34 years. In regard to the principles surrounding and governing the award of compound interest, learned senior counsel has also made elaborate reference to the decision of this Court in the case of Indian Council for Enviro-Legal Action v. Learned counsel has underscored the submission that in case compensation is awarded in addition to the possession of the property itself, the consumer is not deprived of the escalation in property prices and thus, an award in terms of simple interest may be suitable, on the given set of facts. Learned counsel has submitted that in the present case, the appellants have illegally retained and utilized the payments made by the respondents for a period of 29-34 years and made huge profits thereupon in real-estate projects. In 1989, the circle rate for real estate in Sector 4, Vaishali, Ghaziabad was Rs. To arrive at a more accurate present value of the 3 flats, the respondent has bifurcated the admitted purchase price in 1989 into land and building components, in terms of the allotment letter and thereafter, the building component is escalated in terms of the CPWD cost index and the land component is escalated in terms of the increase in circle rate for land. Thus, the respondent has rightly placed on record the present cost of alternative 3 flats at about Rs 6.48 crore and has computed the loss of rent for 31 years at Rs 1.94 crore. (Mrs.)
Manjeet Kaur Monga (supra), it has also been submitted that the appellants rather conceded before this Court that in case money was lying in their account, they would be liable to pay compound interest @ 15% p.a. Kunal Saha : (2014) 1 SCC 384 that while awarding just compensation, merely the form of claim made by the complainant may not be considered decisive. Learned counsel has also submitted that the judicial precedents of English Courts cannot be applied to the present case, in view of specific law in India that 35 compound interest would be operated only if the statute or the contract provides for the same; and there being no such prescription in the statute or in the contract, awarding of compound interest cannot be said to be justified. While dealing with these submissions, we may observe at the outset that neither the submissions on behalf of the appellants about want of pleading and prayer for compound interest nor the submissions on behalf of the respondent, about want of opposition before the State Commission by the present appellants, deserve much dilation. As noticed hereinbefore, the State Commission, while reproducing two passages from the decision of COMPAT, further reproduced a part of written submissions of the claimant-respondent claiming compound interest. Thus, the contentions as regards the matter of form and pleading are left 37 at that and without further discussion on the decision cited on behalf of the appellant in the case of Manohar Lal (supra) as also the decisions cited on behalf to the respondent in the cases of Transmission Corp. Reverting to the rival submissions concerning the question as to whether the Consumer Fora had been justified in awarding and approving compound interest at the rate of 14% and a vast variety of alternative methods for computing damages with reference to the loss said to have been suffered by the respondent and the punitive measures against the appellants, as noticed, strong reliance has been placed by the State Commission and the National Commission as also by the respondent on the decision in Dr. In the case of DLF Homes Panchkula Pvt Ltd (supra), the facts- sheet indicates the features of delay in delivery of possession and grant of compensation for such delay by way of interest as also a lump sum and therein, this Court observed that there cannot be multiple heads to grant damages and interest when the parties had agreed to payment of damages in a particular manner.
Once the parties agreed for a particular consequence of delay in handing over of possession then, there have to be exceptional and strong reasons for S /N to award compensation at more than the agreed rate. The case of Wing Commander Arifur Rahman Khan (supra) had been another one of delay in delivery of possession wherein this Court enunciated principles for awarding of compensation for such delay. Allowing the appeals in part, we set aside the impugned judgment and order of N dated 2-7- 2019 [ Rasheed Ahmad Usmani v.
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In that context, this Court held that such exit option would not disentitle the flat purchaser from claiming compensation.
The developer cannot assert that a buyer who continues to remain committed to the agreement for purchase of the flat must forsake recourse to a claim for compensation occasioned by the delay of the developer. In the case of Ireo Grace Realtech (supra), another 3-Judge Bench of this Court dealt with different categories of cases, some relating to delay in offering possession and some relating to such allottees who had been offered alternative units. It is an admitted position that occupation certificate for Towers A1, A2, A3, B7, C9 and C11, in which the allotments have been made for this category has not been issued by the Municipal Corporation.
Insofar as award of compensation by payment of interest is concerned, Clause 13.4 of the apartment buyer’s Agreement provides that the developer shall be liable to pay the allottee compensation calculated @ Rs 7.5 per square foot of the super area for every month of delay, after the end of the grace period. on the amount deposited by the apartment buyer cannot be accepted as being adequate compensation for the delay in the construction of the project. Subodh Pawar [IREO Grace Realtech (P) Ltd. The developer shall not deduct the earnest money of 20% from the principal amount, or any other amount as mentioned in Clause 21.3 of the Agreement, on account of the various defaults committed by the developer, including the delay of over 7 months in obtaining the fire NOC. Once N awarded interest for the delayed handing over of possession, there would be no justification to award an additional amount of Rs 2,00,000. (supra), another 3- Judge Bench of this Court dealt with a case where the developer did not offer possession within the period stipulated in the agreement and the 44 complainant sought refund of the total consideration of Rs. Recognizing the right of the Consumer for return of the amount with interest and compensation, the Commission passed an order directing the Developer as under: “The opposite party shall refund an amount of Rs.
Manjeet Kaur Monga’s case that has been the sheet anchor of the entire consideration of the State Commission as also the National Commission in awarding compensation in terms of compound interest. 5032-33 of 2016, who is the legal representative of the original complainant, is before us aggrieved by the order dated 3-8-2015 passed by the Competition Appellate Tribunal, New Delhi (for short “the Tribunal”) in Manjeet Kaur Monga v. the date on which the cancellation letter was issued, the respondents neither entered into any correspondence with the complainant nor apprised her about the progress made in the construction. Ved Prakash Aggarwal, (2008) 7 SCC 686], issue direction to the respondents to deliver physical possession of the flat, there is ample justification for awarding compensation by invoking Section 12-B of the Act and even otherwise, because the complainant and her legal representatives have been subjected to harassment for the period of more than 25 years. However, keeping in view the fact that the construction of the flat was delayed by more than one decade and the amount of instalments deposited by Smt Gursharan Kaur and the complainant totalling Rs 4,53,850 was retained by the respondents for a period ranging from 15 years to more than 12 years, I feel that ends of justice would be served by directing the respondents to pay compound interest @ 15% per annum to the legal representatives of the complainant. the date on which the allotment was cancelled, and ( iv ) The respondents shall pay Rs 4,53,850 and compound interest to the legal representatives of the complainant in terms of ( iii ) above within a period of three months from today. — (1) Where, as a result of the monopolistic or restrictive, or unfair trade practice, carried on by any undertaking or any person, any loss or damage is caused to the Central Government, or any State Government or any trader or class of traders or any consumer, such Government or, as the case may be, trader or class of traders or consumer may, without prejudice to the right of such Government, trader or class of traders or consumer to institute a suit for the recovery of any compensation for the loss or damage so caused, make an application to the Commission for an order for the recovery from that undertaking or owner thereof or, as the case may be, from such person, of such amount as the Commission may determine, as compensation for the loss or damage so caused. (3) The Commission may, after an inquiry made into the allegations made in the application filed under sub-section 49 (1), make an order directing the owner of the undertaking or other person to make payment, to the applicant, of the amount determined by it as realisable from the undertaking or the owner thereof, or, as the case may be, from the other person, as compensation for the loss or damage caused to the applicant by reason of any monopolistic or restrictive, or unfair trade practice carried on by such undertaking or other person. (4) Where a decree for the recovery of any amount as compensation for any loss or damage referred to in sub- section (1) has been passed by any court in favour of any person or persons referred to in sub-section (1), or, as the case may be, sub-section (2), the amount, if any, paid or recovered in pursuance of the order made by the Commission under sub-section (3) shall be set off against the amount payable under such decree and the decree shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, be executable for the balance, if any, left after such set off.” We do not think that there needs to be any elaborate consideration of the meaning of the word “compensation” in terms of the amount referred to under the section. In the instant case, the account-holder cancelled the pay order and requested for re-credit of the amount and, accordingly, it is seen that Citibank has re- credited the amount to the account only on 22-6-2016. The learned counsel appearing for Citibank, inviting our reference to the additional affidavit contended that it is a fact that the money from the current account of the builder has been deducted on 30-4-2005 and it has not been paid to the payee.
Suneja, 2015 SCC OnLine Comp AT 593] of the Tribunal that both the issues have not been gone into, apparently because these aspects have not been canvassed and obviously because Citibank was not before the Tribunal. Whether there should be any compensation and if so, what should be the amount payable after 30-4-2005 and whether Citibank is liable to pay any interest to the account-holder by the Tribunal. However, they embody a sound policy principle, that if the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it.
This court is also of the opinion that the complainant’s argument that on account of the omission of the developer, she was wronged, and was thus entitled to receive interest, cannot prevail. The respondent’s right to purchase must, therefore, prevail.” In the present case too, the complainant cannot claim interest from the developer, who had returned the Pay Order. Hence, a comparison of the provisions of Section 14(1)(d) of the Act of 1986 and Section 12-B(3) of MRTP Act, as regards powers of respective fora, shall be apposite and could be made as under:- 53 Section 14(1)(d) of the Consumer Protection Act, 1986 Section 12-B(3) of the MRTP Act To pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the Opposite Party. Manjeet Kaur Monga could be read as laying down a principle of universal applicability that in such matters of dealing in real estate, the question of compensation or damages could be determined invariably by awarding compound interest whenever the deposited money is to be returned by the builder or developer in case of default in carrying out its obligations under the agreement and in failing to deliver the property 54 envisaged by the agreement.
On the other hand, the builders, that is, the present appellants, contended that they could not be made liable to pay compound interest because even if the complainant was entitled to any compensation, it could only be that of the amount determined under Section 12-B MRTP Act. In this background and in regard to such contentions of the present appellants, this Court observed that there was no need for any interpretation of the meaning of the term “ compensation ” because once the amount of interest as ordered by COMPAT was calculated, that would be the compensation referred to under Section 12-B of the MRTP Act; and merely because liquidated amount was not stipulated or determined by COMPAT, it could not be said that the awarded amount was not that of compensation. Manjeet Kaur Monga by this Court, the question was not raised as to whether compound interest could be granted as a measure of compensation nor this Court decided so. The reasons for the decision or the ratio decidendi is not the final order containing the decision. In fact, in a judgment of this Court, though the ratio decidendi may point to a particular result, the decision (final order relating to relief) may be different and not a natural consequence of the ratio decidendi of the judgment. Monga ’s case, compound interest was indeed awarded against the very same builders in relation to the very same project. The submissions on behalf of the appellants that wherever the legislature considered it permissible to award compound interest it has provided so in the enactment, has its own limitations. Equally, when the matter is being considered for award of compensation and/or punitive damages, want of stipulation in the contract as regards award of compound or simple interest, cannot be decisive of the matter. Interest cannot be awarded by way of damages except in cases where money due is wrongfully withheld and there are equitable grounds therefor, for which a written demand is mandatory. In absence of any agreement or statutory provision or a mercantile usage, interest payable can be only at the market rate. In the case of Central Bank of India (supra), the Constitution Bench of this Court essentially dealt with the question as to the meaning to be assigned to the phrases “the principal sum adjudged” and “such principal sum”, as occurring in Section 34 of the Code of Civil Procedure, 1908.
Such observations, essentially relating to public law remedies under inherent powers of this Court, are difficult to be applied to the case of the present nature, essentially emanating from the allegations of breach of contract. In the point under consideration, which does not arise from a suit for recovery under the Code of Civil Procedure, the inherent powers in the court and the principles of justice and equity are each sufficient to enable an order directing payment of compound interest. But here interest has to be calculated on compound basis — and not simple — for the latter leaves much uncalled for benefits in the hands of the wrongdoer. Some of our statute law provide only for simple interest and not compound interest. The synthesis of the cited decisions aforesaid, for the present purpose, leads to the result that none of these decisions could be taken as guide for award of compound interest in an action before the Consumer Fora under the Act of 1986. In regard to such awarding of compensation and/or punitive damages, the forum concerned could take all the relevant factors into account and award such amount as deemed fit and necessary but ordinarily, in the matters of money refund, awarding of compound interest as a measure of punitive damages is not envisaged. We would hasten to observe that if at all by way of compensation, the Consumer Forum considers it proper to examine the time value for money, an in-depth and thorough analysis would be required while taking into account all the facts and the material surrounding factors, including those of realities as also uncertainties of market.
Various factors recounted on behalf of the respondent, including excessive 65 harassment and denial of the fruits of her investment could all lead to a reasonable amount of compensation but, there appears absolutely no reason that compound interest be allowed in this matter. Secondly, the said Consumer Fora have not returned cogent and convincing findings on the loss or injury of the respondent with reference to the relevant factors. Apart from other shortcomings as noticed above, the State Commission, even while awarding compound interest @ 14%, did not even take into account the 67 fact of attempted refund of money by the appellants by the cheque dated 08.11.2005 and did not specify the period of such operation of compounding of interest. In this view of the matter, even while disapproving the proposition of providing compound interest as such, we deem it appropriate to take into consideration, only for the purpose of the present case, the other requirements of balancing the equities. Even if the respondent was within her right to decline the offer, in our view, if at all compounding of interest was to be allowed, that could not have run beyond 08.11.2005, at least in regard to the said sum of Rs. The Consumer Fora have failed to consider that when the appellants had indeed offered to pay the money and sent the cheque on 08.11.2005, it would be bringing about negative imbalance if such an effort on the part of the appellants was to be ignored altogether and compounding of interest was continued beyond 08.11.2005. However, we would hasten to observe that the respondent is being allowed to retain the sum of money already received by her only because of peculiar circumstances of this case and else, this relaxation for the respondent is in no manner to be read as approval of the orders impugned or approval of the proposition of awarding compound interest in these matters.
Case Title: M/S SUNEJA TOWERS PRIVATE LIMITED Vs. ANITA MERCHANT (2023 INSC 391)
Case Number: C.A. No.-002892-002894 / 2023
