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2005 INSC 364
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Disposition
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  • Article 12 of the Constitution
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Cites
Cited by
Citation Codes
Neutral Citations
2005 INSC 364
Equivalent Citations
citation codes
Case Number
Disposition
Advocates
Judges
Acts
  • Article 12 of the Constitution
Smart Summary

Factual and Procedural Background

Two civil appeals were heard together. In the first, the appellant had applied in 1991 for a 90 sq m plot under the “Karpuripuram” self-financing scheme floated by the Ghaziabad Development Authority (GDA). After the appellant deposited the full price and interest in 1994, the scheme was cancelled and replaced by “Swarn Jayanti Puram.” The appellant approached consumer fora, all of which ordered a refund with 18 % interest. GDA’s revision before the National Consumer Disputes Redressal Commission was dismissed on 26-4-2002, and GDA appealed to the Supreme Court.

In the second appeal, the appellant had applied on 31-10-1988 for a 200 sq m plot under GDA’s “Govindpuram” scheme, paid the entire cost and interest by 1992, but never received possession. GDA cited a High Court stay order (24-4-1991 to 16-12-1993) as the cause of delay. The National Commission, by order dated 28-5-2002, directed refund with 18 % interest but excluded the stay-period for interest calculation. The allottee appealed to the Supreme Court seeking either the plot or an alternative allotment in addition to interest.

Legal Issues Presented

  1. Whether the National Commission was correct in upholding a refund with interest at 18 % per annum as compensation for cancellation or non-delivery of plots under GDA schemes.
  2. In the second appeal, whether an allottee who already received an order for refund with 18 % interest is additionally entitled to specific allotment of a plot in the original or a subsequent scheme.
  3. Whether interest should be denied for the period during which a High Court stay order prevented development works.

Arguments of the Parties

Appellants’ Arguments

  • The cancellation of “Karpuripuram” and introduction of “Swarn Jayanti Puram” was a fraudulent device to deprive genuine allottees of their rightful plots.
  • GDA earned wrongful gain at the expense of law-abiding citizens who had legitimate expectations of allotment.
  • (Second appeal) Merely awarding interest was inadequate; GDA should also be compelled to hand over the originally allotted plot or an equivalent plot in a later scheme at the original cost.

Respondent Authority’s Arguments

  • (Second appeal) Possession could not be delivered because a stay order of the Allahabad High Court (24-4-1991 to 16-12-1993) halted all development work.
  • Consequently, no interest is payable for the period during which the stay order was operative.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ghaziabad Development Authority v. Balbir Singh, (2004) 5 SCC 65 Refunds arising from cancelled housing schemes must carry interest at 18 % per annum by way of damages and compensation; interest may be withheld for periods when development was legally stayed. The Court held that the present appeals are “squarely covered” by Balbir Singh, confirmed 18 % interest on refunds, and accepted exclusion of interest for the High Court stay period in the second appeal.

Court's Reasoning and Analysis

The Court observed that the factual matrix in both appeals was identical to that examined in Balbir Singh. Relying directly on that precedent, it held that granting interest at 18 % per annum constituted just and fair compensation for the wrongful deprivation of plots. In the first appeal, this determination disposed of the matter entirely.

Regarding the second appeal, the Court rejected the appellant’s demand for both interest and a fresh allotment, stating that an allottee “is not permitted to say that he is entitled to the best of both the worlds.” It approved the National Commission’s exclusion of interest for the period covered by the Allahabad High Court’s interim stay, a finding already endorsed in paragraph 25 of Balbir Singh.

While dismissing the appeals, the Court expressly deprecated the conduct of GDA, reminding statutory authorities that, as “State” under Article 12, they must act to further public interest over private advantage.

Holding and Implications

Both civil appeals are dismissed; the orders directing refund with 18 % interest (subject to the stay-period exclusion in appeal No. 549 of 2003) stand affirmed; no costs were awarded.

Immediate consequence: the appellants receive monetary compensation but no plot allotment. The Court’s decision re-affirms the principle in Balbir Singh that consumer allottees are entitled to 18 % interest when housing authorities cancel schemes or fail to deliver possession. No new legal doctrine is announced, but the judgment reiterates judicial disapproval of arbitrary conduct by public development authorities.

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    Brij Pal Sharma v. Ghaziabad Development Authority .

    H.K Sema, J.—

    Civil appeal arising out of SLP (C) No. 22736 of 2002

    1. Leave granted.

    2. The challenge in this appeal is to the order dated 26-4-2002 passed by the National Consumer Disputes Redressal Commission (in short “the Commission”) in Revision Petition No. 1460 of 2000.

    3. Briefly stated, the facts are as follows:

    The respondent Authority, namely the Ghaziabad Development Authority, floated a scheme called Karpuripuram Scheme for allotment of housing plots under the self-financing scheme. Pursuant thereto, the appellant applied for a plot of land measuring an area of 90 sq m. This was sometime in the month of July 1991. On 30-7-1994, the appellant deposited a sum of Rs 96,968 as total and final payment (i.e Rs 81,020 as actual cost and Rs 15,948 as interest on delayed payment). The allotment of the plot was due sometime in 1997. However, the land in question could not be allotted to the appellant on the ground that Karpuripuram Scheme had been cancelled and a new scheme had been floated by the name of Swarn Jayanti Puram. Aggrieved thereby, the appellant filed complaint to the District Forum, State Commission and National Commission, which after considering the facts of the case, inter alia, directed refund of the amount along with interest @ 18% per annum.

    4. The grievance of the appellant is that in the guise of the cancellation of Karpuripuram Scheme another scheme was floated styled as Swarn Jayanti Puram over the same plot of land with a view to deprive the innocent citizens of their due share for allotment of plot in their favour for which they had deposited the amount and had legitimate expectations of getting plot of land in their favour. According to the appellant, a fraudulent practice has been played by the respondent upon the innocent law-abiding citizens, thereby earning wrongful gain at the cost of wrongful loss to the helpless and innocent citizens.

    5. In fact, in an identical case, cancellation of Karpuripuram Scheme had been considered by this Court in the case of Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 wherein this Court had deprecated the manner in which the statutory authority had dealt with the public interest as sought to be done in the present case. This Court in the facts and circumstances of that case had held that the grant of interest @ 18% per annum by way of damages and compensation was quite justified. In para 21 of Balbir Singh case (2004) 5 SCC 65 this Court held as under:

    “21. In a scheme known as ‘Karpuripuram Scheme’ plots were allotted, monies collected. However, thereafter the Scheme was cancelled. In some of the matters we have seen that the District Forum has recorded that the Authority could give no explanation as to why the Scheme was cancelled. Before us some sort of explanation is sought to be given. In our view, irrespective of whether there was genuine reason to cancel or not, the monies must be returned with interest at the rate of 18%. We say so because it is clear that even if the body has not already floated another scheme on the same land it is clear that the body is going to derive great profit from this land and therefore compensating the allottee with interest at 18% per annum is just and fair.”

    6. In our view, therefore, having regard the facts and circumstances of the case in hand are squarely covered by the decision of this Court in Balbir Singh (2004) 5 SCC 65. In this view of the matter, we are of the view that nothing remains to be considered further, though we deprecate the conduct of the Authority concerned, as already pointed out.

    7. For the reasons aforestated, the appeal stands dismissed with no order as to costs.

    Civil Appeal No. 549 of 2003

    8. This appeal is directed against the judgment and order dated 28-5-2002 passed by the National Consumer Disputes Redressal Commission (hereinafter “the Commission”) in Revision Petition No. 460 of 1999.

    9. Briefly stated, the facts are as follows:

    A scheme known as Govindpuram Scheme was floated by the Ghaziabad Development Authority (in short “GDA”) on 2-10-1988 for residential houses and plots. Pursuant thereto, the appellant applied for a plot on 31-10-1988 measuring 200 sq m and paid the registration amount of Rs 13,000 and costs Rs 1,27,000 on 31-10-1988. On 31-7-1989, GDA confirmed the allotment of plot measuring 200 sq m in favour of the appellant. GDA also directed the appellant to deposit the balance amount in six half-yearly instalments commencing from 5-8-1989 and ending on 30-3-1992 with interest @ 15% per annum in the self-financing scheme by way of the reservation letter. It is stated that the appellant had deposited the entire amount without any default. It is further stated that the total amount paid by the appellant comes to Rs 1,27,000 towards cost of the plot and Rs 23,100 as interest totalling to Rs 1,50,100. Despite assurances that the appellant will be intimated about the actual date of possession, no intimation was received by the appellant even up to 2002. It is stated that instead, the Vice-Chairman, GDA called a press conference on 10-9-1994 stating that the delivery of possession to allottees of Govindpuram Scheme would not be made, due to the reason that GDA was facing shortage of funds on account of which work of laying sewer lines, construction of roads and electrification work was incomplete.

    10. Per contra, it was contended on behalf of GDA that the possession of the plot in question could not be delivered to the allottee as the stay order granted by the Allahabad High Court on 24-4-1991 remained in force up to 16-12-1993 and that during the period the stay order was operative, the development and the construction work was stalled. In the given facts and circumstances of the case, the Commission awarded interest @ 18% per annum on the refunded amount by way of damages and compensation.

    11. The grievance of the appellant in this appeal is that the Commission has awarded interest @ 18% per annum only on the refunded amount but failed to direct GDA either to hand over the allotted plot or in alternate allot a plot in the subsequent scheme at the cost, to be charged from the appellant, who had applied for in the original Scheme. In our view, this contention is not tenable, as the appellant is not permitted to say that he is entitled to the best of both the worlds. The interest at the rate of 18% is granted by way of damages and compensation for non-allotment of plot of land.

    12. In the case of Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 facts of this case have also been considered elaborately by this Court (in para 12 at p. 82 SCC) justifying the grant of interest @ 18% per annum by way of damages and compensation.

    13. In the given facts and circumstances of the case, as recited above, we are clearly of the view that the grant of interest @ 18% per annum was justified in the present case also.

    14. In that view of the matter this case is also covered by the decision in Balbir Singh case (2004) 5 SCC 65.

    15. In this case also, admittedly, an interim order granted by the Allahabad High Court was in operation for the period from 24-4-1991 to 16-12-1993. The Commission held that no interest is payable for the aforesaid period basing on the report submitted by the Vice-Chairman of the Authority that the development/construction work was prevented by the said stay order and because of that the Authority could not deliver possession to anybody. We have accepted the said finding of the Commission in para 25 (at p. 86 SCC) of our judgment in Balbir Singh (2004) 5 SCC 65.

    16. In the given facts and circumstances of the case, as recited above, we are of the view that there is no merit in this appeal and it is accordingly dismissed with no order as to costs.

    17. We, however, clarify that dismissal of the appeal should not be construed as approval of the conduct of the statutory authority in the manner in which it is sought to be done. The statutory authority, like GDA, being the State within the ambit of Article 12 of the Constitution, is duty-bound to act in a manner, which would benefit the public interest, overlooking the private interest. It is trite law that when the private interest is pitted against the public interest, the later must prevail over the former. If such instances are brought to the notice of the Court in future, they would be examined on their own merits.

    Contempt Petition (Civil) No. 614 of 2004 in Civil Appeal No. 549 of 2003

    18. In view of our order in Civil Appeal No. 549 of 2003, the contempt petition does not survive and it is accordingly closed.

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    Comments

    Brij Pal Sharma v. Ghaziabad Development Authority .
    (Aug 18, 2005)