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Roochira Ceramics v. H.U.D.A And Others
Factual and Procedural Background
The appellant was allotted Industrial Plot No. 5-B, Sector 15-A, Faridabad by the Haryana Urban Development Authority (HUDA). Under the allotment terms, defaulted instalments carried interest at 10%. After the appellant defaulted, the Estate Officer, exercising power under Section 17(4) of the Haryana Urban Development Authority Act, 1977, resumed the plot and forfeited ₹1.90 lakhs already paid (order dated 07-04-1995). The appellant’s statutory appeal to the Administrator failed, prompting a writ petition before the Punjab & Haryana High Court. The High Court quashed the resumption and ordered restoration of the plot on payment with 10% interest.
HUDA’s civil appeal (C.A. No. 13187 of 1996) to the Supreme Court succeeded; the Supreme Court set aside the High Court’s judgment on 23-10-1996. A subsequent clarification order dated 04-12-1996 recorded that forfeiture would not take effect if the appellant paid “the entire arrears as demanded by HUDA within three months.”
Invoking the clarification, the Estate Officer demanded arrears with interest at 18%. The appellant paid under protest and again approached the High Court under Article 226, contending that only 10% interest was chargeable. The High Court dismissed the petition, leading to the present civil appeal before the Supreme Court.
Legal Issues Presented
- Whether, in light of earlier judicial determinations, HUDA was entitled to levy interest at 18% instead of the contractual rate of 10% on defaulted instalments after resumption proceedings were set aside conditionally.
Arguments of the Parties
Appellant's Arguments
- The consistent view of the Punjab & Haryana High Court, affirmed on occasion by the Supreme Court, limits HUDA to charging 10% interest where an allottee defaults on instalments.
- Specific reliance was placed on:
- CWP No. 12975 of 1994 (decided 25-07-1996) where the High Court fixed interest at 10%; HUDA’s SLP was dismissed on 09-12-1996.
- Harish Kumar Virja v. State of Haryana, CWP No. 16487 of 1991, holding likewise; no SLP was filed, so the decision attained finality.
- Because the appellant has already deposited interest at 18%, HUDA must refund the excess.
Respondent Authority's Position
- Counsel conceded that no special leave petition was filed against Harish Kumar Virja and acknowledged the prevailing 10% interest determination in that case.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Harish Kumar Virja v. State of Haryana, CWP No. 16487 of 1991 (P&H HC) | HUDA can charge only 10% interest on defaulted instalments; a higher rate is impermissible. | The Supreme Court treated the decision as final and binding because no SLP was filed, using it to cap recoverable interest at 10%. |
| Unnamed decision, CWP No. 12975 of 1994 (P&H HC, 25-07-1996), SLP dismissed 09-12-1996 | Reiterated the 10% interest ceiling for HUDA in default cases. | Considered as additional persuasive authority confirming the 10% rate. |
Court's Reasoning and Analysis
The Court noted that a line of Punjab & Haryana High Court judgments, most notably Harish Kumar Virja, definitively restricts HUDA to charging 10% interest when an allottee defaults. These judgments have either become final (no SLP filed) or have been affirmed by the Supreme Court through dismissal of special leave petitions, thereby lending them authoritative force.
Given the respondents’ concession that Harish Kumar Virja was never challenged before the Supreme Court, the Court found no justification for HUDA’s demand at 18%. Consequently, charging 18% contravened the settled legal position. As the appellant had already remitted interest at the higher rate, principles of legality and fairness mandated restitution of the excess interest.
Holding and Implications
The appeal is allowed. The judgment of the High Court is set aside. HUDA must refund, within three months of receiving a certified copy of the order, the difference between interest levied at 18% and the permissible 10%.
Implications: The decision upholds and reinforces prior determinations limiting HUDA to a 10% interest rate in default scenarios. It provides monetary relief to the appellant but does not create new substantive precedent; rather, it confirms the existing jurisprudential position on interest rates applicable to HUDA allottees.
Order
1. The appellant herein was allotted an industrial plot bearing No. 5-B situated in Sector 15-A at Faridabad by Haryana Urban Development Authority (hereinafter referred to as “the Authority”). The order of allotment indicated that in case of default of payment of instalments towards the final price, the interest at the rate of 10% shall be charged. It appears that the appellant committed default in payment of instalments, with the result that the Estate Officer, Faridabad by an order dated 7-4-1995 in exercise of power under Section 17(4) of the Haryana Urban Development Authority Act resumed the plot of land and also forfeited a sum of Rs 1.90 lakhs deposited by the appellant. The appellant aggrieved against the order of the Estate Officer preferred an appeal before the Administrator of the Authority. The said appeal was dismissed. Thereafter the appellant filed a petition under Article 226 of the Constitution of India before the High Court of Punjab and Haryana and prayed for quashing of the order passed by the Estate Officer and that of the Administrator rejecting his appeal. The High Court allowed the writ petition and directed the Authority to release the land in favour of the appellant on payment of the price and also the interest at the rate of 10%. The Authority aggrieved against the said judgment of the High Court filed CA No. 13187 of 1996 before this Court. This Court passed the following order:
“In the absence of any procedural irregularity, the High Court had no jurisdiction to interfere in the matter. The High Court also failed to notice that the respondent is guilty of not paying the instalments as undertaken by him. By interfering on the basis of unverified and unsubstantiated plea of financial stringency, the Court would be encouraging contumacious conduct and breach of undertaking.
The appeal is accordingly allowed. The judgment of the High Court is set aside. The writ petition filed by the respondent shall stand dismissed. No costs.”
2. After the aforesaid judgment was passed, the appellant filed an application for clarification of the order on the premise that while dictating the aforesaid order some observations made by the Court were not taken down by the Court Master. The Court after hearing both the sides ordered that the clarification be added in the penultimate paragraph of the order dated 23-10-1996. The clarificatory order reads as thus:
“Both the counsel state that there has been an omission in the order of this Court which was actually dictated in the Court on the day the SLP was disposed of. The direction does not find a place in the order as ultimately transcribed and issued. It is submitted that the direction given by this Court was that if the respondent pays the entire arrears as demanded by HUDA within a period of three months, the forfeiture effected by HUDA shall not take effect. The said sentence shall be added towards the end of the penultimate paragraph.
Ordered accordingly.”
3. Since the clarification order passed by this Court on 4-12-1996 did not find place in the earlier order, the Estate Officer of the Authority made a demand from the appellant at an enhanced rate of interest i.e 18%. The appellant deposited the money as demanded under protest. However, the appellant challenged the demand of interest at the rate of 18% by means of a petition under Article 226 of the Constitution. The case of the appellant was that the Authority is entitled to charge interest at the rate of 10%. However, the said petition was dismissed and against the said judgment the appellant has filed the present appeal.
4. Learned counsel, appearing for the appellant, urged that the consistent view of the High Court has been that where an allottee has committed default in payment of instalment, the Authority was made to charge interest at the rate of 10% and not 18%. It is also urged that the judgment of the High Court has been upheld by this Court. Learned counsel, appearing for the appellant referred the judgment of the High Court of Punjab and Haryana passed in CWP No. 12975 of 1994 decided on 25-7-1996 wherein the Division Bench of the High Court held that the Authority is entitled to charge interest at the rate of 10% and not 18% when there is default in payment of instalment. Special Leave Petition No. 23203 of 1996 preferred by the Authority against the said judgment was dismissed on 9-12-1996. The decision of the High Court of Punjab and Haryana in Harish Kumar Virja v. State of Haryana CWP No. 16487 of 1991 which was followed in other cases, laid down that the Authority in cases of default in payment of instalments is entitled to charge interest at the rate of 10%. Learned counsel, appearing for the respondents conceded that no special leave petition was filed against the said judgment and the said judgment has attained finality. In view of the aforesaid decision, we are of the view that the respondents were entitled to charge interest @ 10% only and not 18%. Since the appellant had deposited interest @ 18%, the Authority under law is required to refund the excess of the interest realised from the appellant. For the aforesaid reason, the judgment under appeal is set aside. The respondent Authority is directed to refund excess interest realised from the appellant within three months from the date of service of certified copy of this order.
5. The appeal is allowed. There shall be no order as to costs.
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