2004 (3) TMI 753 - SC - Indian Laws

Whether grant of interest at the rate of 18% per annum by the Consumer Forums in all cases is justifiable?

Issues Involved:
1. Justifiability of granting interest at the rate of 18% per annum by Consumer Forums in all cases.
2. Variation in facts and circumstances of individual cases.
3. Principles for awarding compensation under the Consumer Protection Act.
4. Determination of the rate of interest and compensation.
5. Date from which interest is payable.
6. Compliance with orders of the Forum in the absence of a stay from a higher forum.

Detailed Analysis:

1. Justifiability of Granting Interest at 18% per Annum:
The Supreme Court examined whether the Consumer Forums' practice of granting interest at 18% per annum in all cases is justifiable. The National Consumer Disputes Redressal Commission had consistently awarded this rate based on its judgment in the case of Haryana Urban Development Authority vs. Darsh Kumar, considering it a fair compensation for the escalation in construction costs and other factors.

2. Variation in Facts and Circumstances:
The Court noted that the facts of each case varied significantly. For instance, in some cases, the scheme was canceled after allotment, possession was refused, or possession was offered at a higher rate. In other instances, possession was delayed, construction was sub-standard, or extra amounts were demanded unjustifiably. The Court emphasized that a uniform interest rate of 18% per annum without considering the specific facts of each case is unsustainable.

3. Principles for Awarding Compensation:
The Court referred to the principles laid down in the case of Lucknow Development Authority vs. M.K. Gupta, which established that public authorities are liable to compensate for misfeasance in public office, including acts that are oppressive, capricious, arbitrary, or negligent. Compensation under the Consumer Protection Act is broad and includes recompense for physical, mental, or emotional suffering, insult, or injury.

4. Determination of Rate of Interest and Compensation:
The Court held that compensation must be based on a finding of loss or injury and should correlate with the amount of loss or injury suffered. It provided examples to illustrate that compensation should vary depending on whether possession is delivered or only monies are refunded. The Court criticized the National Commission's practice of awarding a flat rate of 18% per annum irrespective of the facts and emphasized the need for awards under different heads, such as loss of rent, cost of putting construction in good shape, or compensation for harassment.

5. Date from Which Interest is Payable:
The Court clarified that in cases of refund, interest is payable from the date the monies were deposited until they are returned or deposited in Court. In cases where compensation is directed, the Commission/Forum must specify a period for payment and direct that interest be paid if the payment is delayed, based on the current rate of interest.

6. Compliance with Orders in Absence of Stay:
The Court addressed complaints about non-payment of undisputed amounts by authorities. It clarified that filing an Appeal/Revision does not entitle the authority to withhold compliance with the Forum's order unless a stay is obtained from a higher forum. The higher forum should ensure compliance with the order before entertaining the Appeal/Revision.

Conclusion:
The Supreme Court concluded that the National Commission's practice of awarding a uniform interest rate of 18% per annum is unsustainable. Compensation must be awarded under different heads based on the specific facts of each case. The Court decided to take up each matter individually to determine whether the facts justified the awarded interest rate and compensation. It also emphasized the need for compliance with Forum orders in the absence of a stay from a higher forum.

← Previous Next →