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Synopsis

The Supreme Court recently reduced the compensation awarded to a man for the delay in handing over possession of a flat under the Consumer Protection Act.

It said the Nagpur Housing and Area Development Board (NHADB) is an instrumentality of the State and that the delay, if any, cannot be attributed to any personal animosity of the officers manning the institution, as they had been discharging their statutory duties.

A bench of Justices J.K. Maheshwari and Aravind Kumar reduced the compensation amount from Rs 10 lakh to Rs 7.50 lakh to be paid to Manohar Burde, holding that it would meet the ends of justice in the peculiar facts and circumstances of the case.

The court also said that the interest at the rate of 9% per annum awarded on the payment made by the complainant was fair and reasonable, while the interest at the rate of 15% per annum, awarded by the high court, was excessive.

The bench partly allowed the appeal filed by the chief officer of the board, a Maharashtra Housing and Area Development Authority (MHADA) unit, against the Bombay High Court's order of January 29, 2024, which quashed an order by the National Consumer Disputes Redressal Commission (NCDRC) dated July 27, 2022.

While issuing notice on the present special leave petition by an order on February 19, 2024, the court took into record the submission by senior advocate Shyam Divan, appearing for the petitioners, that approximately 100 cases were pending against them, which could have an adverse impact if payments were allowed under the impugned order. Divan also submitted that the petitioners had already deposited the entire amount along with interest at the rate of 15% per annum, including Rs 10 lakh.

Solicitor General Tushar Mehta, appearing for the board, strenuously argued that the high court was not justified in exercising its supervisory jurisdiction under Article 227 of the Constitution to modify the well-reasoned findings of the NCDRC, which had balanced the scale by evaluating the evidence of the parties, including pleadings.

He contended that allowing the writ petition by granting enhanced interest at the rate of 15% per annum was not only exorbitant but also contrary to the principles of law enunciated by this court.

He further argued that since the petitioner had opted for a refund of the amount, at most, interest at a reasonable rate could have been awarded, as was done by the NCDRC. Awarding interest at the rate of 15% per annum on the payment made by the complainant, coupled with additional compensation of Rs 10 lakh, was unjustifiable.

The petitioner, appearing as a party in person, argued in support of the impugned order and contended that there had been repeated defaults on the part of the statutory authorities and an explicit deficiency of service on the part of the developer. Hence, interest at the rate of 15% per annum on account of inordinate delay was just and appropriate, warranting no interference under Article 136 of the Constitution.

Having heard the advocates appearing for the parties and upon perusal of the case papers, the bench said, "We are of the considered view that the NCDRC, having taken note of the relevant aspects, including the factum of delay and the fact that the petitioner had opted for a refund of the money deposited, rightly held that as a home buyer, the petitioner cannot be compelled to take possession of the flat after such a long time, and as such, ordered for the refund of the entire amount deposited with interest of 9% per annum."

The bench also placed reliance on the law laid down by the apex court in Bangalore Development Authority vs. Syndicate Bank (2007), wherein a coordinate bench of the court, dealing with the question of grant of relief to a consumer in cases of delay in the delivery of possession, held that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid with reasonable interest thereon from the date of payment till the date of refund.

The court noted that in the present case, the high court, by the impugned order, modified the finding of the NCDRC and awarded interest at the rate of 15% per annum, primarily relying upon the judgment of this court in Rohit Chaudhary and Another vs. Vipul Ltd. (2024), wherein the court, in order to balance the equities and compensate the loss caused to the purchaser/complainant who had booked an office premise for his use, directed the refund of the amount paid along with interest at the rate of 12% per annum from the date of complaint till the date of payment.

However, the issue in the instant case related to the allotment of a 3-BHK flat after payment of the sale consideration and the delay in its delivery, the bench pointed out.

"As such, the NCDRC, considering the entirety of the facts and circumstances of the case, had awarded interest at the rate of 9% per annum, which, in our view, was fair and reasonable. The interest at the rate of 15% per annum, awarded by the high court, is excessive," the bench said.

Therefore, the court set aside the impugned order by the high court and restored the order of July 27, 2022, passed by the NCDRC insofar as it related to the award of interest at the rate of 9% on the respective deposit till the date of actual payment.

Considering the peculiar facts and circumstances of the case, the court also decided to reduce the compensation payable from Rs 10 lakh to Rs 7.50 lakh.

Case Title: The Chief Officer, Nagpur Housing and Area Development Board (A MHADA Unit) And Others Vs Manohar Burde