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008 INSC 1217
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Citation Codes
Neutral Citations
008 INSC 1217
Equivalent Citations
citation codes
Case Number
Disposition
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Smart Summary

Factual and Procedural Background

The Haryana Urban Development Authority (HUDA) allotted three plots in Hissar to different original allottees during 1986-1989. Each original allottee later requested transfer of the allotment to the present respondents—Raje Ram (1994), Atam Parkash (1997) and Sunil Kumar (1996). At the time of re-allotment HUDA imposed conditions such as payment of extension fees and notified price revisions.

Alleging non-delivery of possession, the respondents filed individual complaints before the District Consumer Disputes Redressal Forum in 1997. The District Forum awarded interest on the deposited amounts at rates ranging from 15% to 18% p.a. HUDA’s appeals to the State Commission yielded only partial relief—the interest rates were reduced but not eliminated. Revisions filed before the National Consumer Disputes Redressal Commission were summarily dismissed on the strength of its earlier decision in HUDA v. Darsh Kumar, leading HUDA to approach the Supreme Court by special leave.

Legal Issues Presented

  1. Whether HUDA was liable to pay any interest to the re-allottees for the period prior to delivery of possession.
  2. If interest was payable, whether the rates (12%–18% p.a.) awarded by the consumer fora were excessive.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
HUDA v. Darsh Kumar (2005) 9 SCC 449 Interest is generally not awardable where possession is ultimately delivered at the original price; compensation, not interest, may be appropriate in cases of harassment of original allottees. Relied upon to hold that interest was unwarranted because the respondents were re-allottees who accepted the delay and ultimately received possession at earlier prices.
GDA v. Balbir Singh (2004) 5 SCC 65 Parameters for awarding compensation/interest in housing-authority delays. Cited in support of limiting monetary relief where complainants are aware of existing delays at the time of allotment.
Bangalore Development Authority v. Syndicate Bank (2007) 6 SCC 711 Guidelines on consumer claims against development authorities regarding delay and interest. Used to reinforce that interest should not be granted automatically and must be justified by circumstances.

Court's Reasoning and Analysis

The Supreme Court noted that the respondents were not original allottees but re-allottees who willingly accepted the plots despite known delays and encumbrances. Consequently, they were in a different position from original allottees who had waited for many years and suffered mental agony.

Possession was eventually offered and taken in 1999, 2000 and 2002 respectively, and the respondents had not even paid the full price when they first approached the consumer fora. Relying on the principles laid down in Balbir Singh, Darsh Kumar and Syndicate Bank, the Court held that:

  • Time was not of the essence in the underlying contracts, and the original allottees had already accepted delay.
  • Since possession was delivered at the old price, the respondents benefited from price escalation and thus had no equitable claim to interest.
  • The consumer fora’s reliance on the National Commission’s earlier view in Darsh Kumar was misplaced because that judgment had itself been disapproved by the Supreme Court.

Accordingly, the award of interest by the District Forum, State Commission and National Commission was “neither warranted nor justified.”

Holding and Implications

Appeals Allowed; consumer complaints dismissed. All orders granting interest against HUDA are set aside.

Direct Effect: The respondents lose their entitlement to interest, and HUDA may recover the amounts (Rs 23,308 and Rs 70,572) already paid pursuant to the interim orders. The judgment does not establish new legal principles but reinforces existing precedent limiting interest awards when re-allottees voluntarily accept delayed possession.

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    Haryana Urban Development Authority v. Raje Ram .

    Order

    1. These appeals by special leave challenge three identical orders of the National Consumer Disputes Redressal Commission (“the National Commission”, for short).

    CA No. 2381 of 2003 (HUDA v. Raje Ram)

    2. Plot No. 545, Sector 14, Hissar was allotted to Madanlal on 12-12-1986. The allottee had deposited 25% of the cost of the plot. On 15-1-1993, the appellant notified the revision of price from Rs 224.90 to Rs 301.70 per square yard and gave an option to the allottee to either accept the revision or receive back the initial deposit with interest at 10% per annum. The allottee and the respondent sought transfer of allotment to the name of the respondent. The request was accepted and the appellant reallotted the plot to the respondent vide letter dated 15-3-1994 subject to payment of extension fee.

    3. Aggrieved by the non-delivery of possession of the allotted plot, the respondent approached the District Consumer Disputes Redressal Forum, Hissar in the year 1997. The appellant contested the claim on several grounds. The appellant also offered possession of the plot on 11-3-1998.

    4. The District Forum disposed of the complaint by order dated 15-4-1998 with a direction to the appellant to pay interest at the rate of 18% per annum to the respondent on the amounts deposited from the date of deposit till the date of offer of possession.

    5. The appellant challenged the award of interest by filing an appeal before the State Commission. The State Commission did not interfere with the award of interest, but reduced the rate of interest from 18% per annum to 15% per annum, by order dated 5-4-1999.

    CA No. 2382 of 2003 (HUDA v. Atam Parkash)

    6. Plot No. 53, Sector 13-P, Hissar was allotted to O.P Rathee on 8-4-1986 and the allotment was transferred to one Sheela Devi. Possession of the plot was offered to her on 19-9-1993.

    7. On the request of the said Sheela Devi, the appellant reallotted the plot to the respondent as per letter dated 16-6-1997 subject to payment of extension fee. Alleging that possession of the allotted plot was not delivered, the respondent approached the District Consumer Disputes Redressal Forum, Hissar, in the year 1997. The appellant contested the claim. By letter dated 3-11-1997, the appellant also informed the respondents that possession of the plot had already been offered to the earlier allottee in the year 1993.

    8. The District Forum by order dated 14-6-1999 directed the appellant to pay interest at the rate of 15% per annum to the respondent on the deposit amount commencing from the expiry of two years from the date of deposit till the date of fresh offer of possession. The District Forum also directed that the appellant shall not charge interest on delayed instalments.

    9. The appellant challenged the award of interest by filing an appeal before the State Commission. The State Commission reduced the interest from 15% per annum to 12% per annum by its order dated 16-5-2000. It may be mentioned that even before the State Commission decided the matter, the respondent took possession of the plot on 21-3-2000.

    CA No. 3413 of 2003 (HUDA v. Sunil Kumar)

    10. Plot No. 1051, Sector 14-P, Hissar was allotted to one Anjani Kumar on 21-3-1986. By letter dated 5-8-1989, the appellant offered to refund the deposit if he did not want to wait till the development was completed. In 1993, the appellant notified the revision of price which was not paid.

    11. The original allottee sought transfer of allotment to the name of the respondent and the appellant permitted the transfer on 9-7-1996 and reallotted the plot to the respondent by Reallotment Letter No. 14662 dated 21-8-1996 subject to payment of extension fee. Alleging non-delivery of possession of the allotted plot, the respondent filed Complaint No. 451 of 1997 before the District Consumer Disputes Redressal Forum, Hissar, seeking interest on the amounts deposited from the date of payment among other reliefs.

    12. The appellant contested the claim. The District Forum by order dated 15-4-1998 directed the appellant to pay interest at the rate of 18% per annum to the respondent on the amounts deposited from the expiry of two years from the date of deposit till the date of offer of possession.

    13. The appellant challenged the award of interest by filing an appeal before the State Commission. The appellant also offered possession of the plot on 25-11-1998. The State Commission reduced the interest from 18% per annum to 15% per annum from the date of reallotment till delivery of possession by order dated 10-5-1999.

    The common issue

    14. The appellants challenged the said orders of the State Commission contending that no interest was payable. The National Consumer Disputes Redressal Commission by its non-speaking orders dated 27-8-2002, 30-9-2002 and 27-8-2002, disposed of the said revisions filed by the Development Authority, in terms of its earlier decision in HUDA v. Darsh Kumar by merely observing that it had upheld the award of interest up to 18% per annum in similar circumstances. The National Commission did not refer to or consider the facts of these cases. The said orders are challenged in these appeals by special leave. The common issue in all these cases is whether interest could have been awarded against the appellant, and if so whether the rate of interest is excessive.

    15. The decision of the National Commission in Darsh Kumar, followed in the impugned orders, did not find favour of this Court in HUDA v. Darsh Kumar (2005) 9 SCC 449. This Court observed that where possession is given at the old rate, the party has got the benefit of escalation in price of land, and therefore, there cannot and should not be award of interest on the amounts paid by the allottee on the ground of delay in allotment. On the special facts of that case, this Court however awarded compensation for harassment/mental agony.

    16. The respondents in the three appeals are not the original allottees. They are reallottees to whom reallotment was made by the appellant in the years 1994, 1997 and 1996 respectively. They were aware, when the plots were reallotted to them, that there was delay (either in forming the layout itself or delay in delivering the allotted plot on account of encroachment, etc). In spite of it, they took reallotment. Their cases cannot be compared to the cases of the original allottees who were made to wait for a decade or more for delivery and thus put to mental agony and harassment. They were aware that time for performance was not stipulated as the essence of the contract and the original allottees had accepted the delay.

    17. The appellant offered possession to the respondents (the re-allottees) and they took possession of the respective plots on 27-6-2002, 21-3-2000, and 13-9-1999 respectively. They approached the District Forum in 1997, within a short period from the dates of reallotment in their favour. They had not paid the full price when they approached the District Forum.

    18. In the circumstances, having regard to the principles laid down by this Court in GDA v. Balbir Singh (2004) 5 SCC 65, Darsh Kumar (2005) 9 SCC 449 and Bangalore Development Authority v. Syndicate Bank (2007) 6 SCC 711 we are of the view that the award of interest was neither warranted nor justified.

    19. We accordingly allow these appeals and set aside the impugned orders of the District Forum, the State Commission and the National Commission awarding interest. The complaints stand dismissed.

    20. The appellant states that it had paid interest in pursuance of the State Commission's orders, as there was no order of stay, to the respondents in two of the appeals (Rs 23,308 was paid to the respondent in CA No. 2381 of 2003 on 14-10-1999 and Rs 70,572 was paid to the respondent in CA No. 3413 of 2003 on 13-7-1999). If so, the appellant is entitled to restitution and it can recover back the amounts paid to the respective respondents.

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    Comments

    Haryana Urban Development Authority v. Raje Ram .
    (Oct 23, 2008)