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2022 (1) TMI 1343 - SC - Indian LawsUnfair trade practice - physical possession of the flat or an alternative flat of the same size and dimension - seeking to restrain the developer from alienating flat - whether the developer had indulged in unfair trade practice, whether they were prejudicial to the interest of the complainant and / or the public in general? - HELD THAT - From the impugned order, it is evident that the Tribunal accepted the explanation of Citibank that since the Pay Order in question had become stale, its proceeds / funds were moved to its Unclaimed Sundry Account , and did not attract any interest in terms of the RBI directions. The bank had also deposed that the Pay Order was cancelled on the request of the developer through its letter dated 26th May 2016 and that the funds were credited back to the account of the developer on 16th June 2016. It was further noticed that the amount for issuing the Pay Order was deducted from the current account of the developer. After noticing these facts, the Tribunal appears to have been swayed by the circumstance that the developer was held liable for unfair trade practice, and directed to pay compensation (in terms of the previous orders of the COMPAT) affirmed by this court, i.e., 15% compound interest on ₹ 4,53,750/-. The impugned order has not rested its findings on any principle of law, much less any statutory provision. The Tribunal appears to have been completely swayed by the complainant's plight. In doing so, it did not give due consideration to the fact that ₹ 4,53,750/- was debited from the account of the developer. The complainant, for reasons best known to her, filed the original Pay Order due to perhaps lack of proper advice or instruction. Apparently, no order contemporaneously was sought from the MRTP Commission, which would have protected the interests of the complainant with respect to the money received even while ensuring that her contentions on the merits with respect to entitlement towards the flat were preserved. Many avenues / alternatives were available. The provisions of Order XXI are applicable to decrees of civil court. However, they embody a sound policy principle, that if the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it. This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation to ensure that the amount payable is placed at the disposal of the person entitled to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or payment is complete. In the present case, the complainant was aware that the Pay Order had been tendered by the developer to her; nevertheless she filed the original Pay Order with her complaint, and did not seek any order from the MRTP Commission at the relevant time. The pleadings in the complaint did not disclose that the Pay Order was filed in the Commission, to enable the developer to respond appropriately. In these circumstances, the developer s argument that the rule embodied in Order XXI, Rule 4 CPC, is applicable, is merited. The developer cannot be fastened with any legal liability to pay interest on the sum of ₹ 4,53,750/- after 30th April 2005. This court is of the opinion that all courts and judicial forums should frame guidelines in cases where amounts are deposited with the office / registry of the court / tribunal, that such amounts should mandatorily be deposited in a bank or some financial institution, to ensure that no loss is caused in the future. Such guidelines should also cover situations where the concerned litigant merely files the instrument (Pay Order, Demand Draft, Banker s Cheque, etc.) without seeking any order, so as to avoid situations like the present case. These guidelines should be embodied in the form of appropriate rules, or regulations of each court, tribunal, commission, authority, agency, etc. exercising adjudicatory power. Appeal allowed.
Issues Involved:
- Unfair trade practice by the developer. - Liability of the developer for interest on refunded amount. - Compensation for delay in project completion. - Legal implications of returning the pay order. - Entitlement to interest on the refunded amount. Issue-wise Detailed Analysis: 1. Unfair Trade Practice by the Developer: The complainant alleged that the developer engaged in unfair trade practices by failing to complete the construction of the flat within the promised timeframe and subsequently canceling the allotment. The MRTP Commission and later the COMPAT found the developer guilty of unfair trade practices under Section 36-A (1) (i), (ii) & (ix) of the MRTP Act, concluding that the developer falsely represented the completion time of the project, which extended over a decade instead of the promised three years. 2. Liability of the Developer for Interest on Refunded Amount: The core issue revolved around the developer’s liability to pay interest on the amount of ?4,53,750/- refunded to the complainant. Initially, the developer issued a pay order dated 30th April 2005, which was returned by the complainant. The developer argued that once the pay order was issued and the amount was debited from its account, it had fulfilled its obligation. The Supreme Court, referencing Order XXI Rule 1(4) and (5) of the CPC, ruled that the developer could not be held liable for interest after 30th April 2005, as the payment was effectively made when the pay order was issued. 3. Compensation for Delay in Project Completion: The COMPAT awarded compensation to the complainant in the form of 15% compound interest per annum on the amount deposited from the date of each installment until 30th April 2005. This was upheld by the Supreme Court, which also directed the developer to pay the principal amount of ?4,53,750/- to the complainant’s legal representatives. 4. Legal Implications of Returning the Pay Order: The complainant returned the pay order issued by the developer, which was then deposited with the MRTP Commission. The Supreme Court noted that the complainant did not take steps to ensure the amount was placed in an interest-bearing account. The court emphasized that the developer’s liability ceased once the pay order was issued and debited from its account, and the complainant’s failure to secure an order for interest-bearing deposit meant no further interest was payable by the developer. 5. Entitlement to Interest on the Refunded Amount: The Supreme Court concluded that the complainant was not entitled to interest on the refunded amount after 30th April 2005. The court referenced the principle that once payment is made through a bank instrument, the liability for interest ceases. The Tribunal’s order directing the developer to pay further compensation in the form of compound interest was set aside, and the developer’s appeal was allowed. Conclusion: The Supreme Court allowed the developer’s appeal, setting aside the NCLAT’s order that directed further compensation in the form of compound interest. The complainant’s appeal for interest from 1993 to 2016 was dismissed. The court also suggested that judicial forums should frame guidelines to ensure amounts deposited with them are placed in interest-bearing accounts to avoid similar issues in the future.
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