2007 (2) TMI 329 - SC - Companies Law

Power to award compensation by MRTPC - Interest amount - Held that - Appeal allowed. The grant to interest of 12 per cent per annum is appropriate in the facts of this particular case. However, we are also of the opinion that since interest was not granted to the appellant along with the principal amount the respondent should then in addition to the interest at the rate of 12 per cent per annum also pay to appellant interest at the same rate on the aforesaid interest from the date of payment of instalments by the appellant to the respondent till the date of refund on this amount, and the entire amount mentioned above must be paid to the appellant within two months from the date of this judgment. There is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital.

Summary

Issues:
1. Interpretation of provisions under the Monopolies and Restrictive Trade Practices Act, 1969.
2. Deficiency of services by the respondent in relation to the housing scheme.
3. Determination of the appropriate rate of interest to be paid to the appellant.

Analysis:
1. The case involved an appeal against an order passed by the Monopolies and Restrictive Trade Practice Commission. The appellant applied for a flat under the "Indira Puram Housing Scheme" in 1994, paid the specified instalments, and opted for a different flat later. However, after several years of no communication from the respondent, the appellant sought a refund with interest due to unfair trade practices. The respondent defended by stating that full payment was not made, and the possession was not handed over. The Commission found a deficiency of services on the respondent's part due to unfulfilled promises and lack of effort in demanding the remaining amount or providing possession of the flat.

2. The Commission directed the respondent to pay 12% per annum interest on the instalments from payment dates till the refund date. The appellant appealed for a higher interest rate citing precedents. The Supreme Court held that the interest rate depends on the case's circumstances and facts. While agreeing with the 12% interest rate, the Court ordered the respondent to pay interest on the principal amount and the interest accrued, to be paid within two months. The Court clarified that interest is not a penalty but a normal accretion on capital, ensuring equity in financial transactions.

3. The judgment emphasized the importance of paying interest along with the principal amount to prevent unjust enrichment. The Court modified the previous judgment, stating that interest should be paid on both the principal and the interest accrued, emphasizing the equitable nature of interest payments. The appeal was disposed of with these observations, providing clarity on the calculation and payment of interest in such cases.