2019 (5) TMI 2006 - SC - Indian Laws

Direction to hand over the physical possession of the units allotted to the Respondents (Complainants), complete in all respects within a period of four months - HELD THAT - The District Forum under the Consumer Protection Act, 1986 Act is empowered inter-alia to order the opposite party to pay such amount as may be awarded as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party including to grant punitive damages. But the forums under the Act cannot award interest and/or compensation by applying Rule of thumb. The order to grant interest at the maximum of rate of interest charged by nationalised bank for advancing home loan is arbitrary and no nexus with the default committed - There cannot be multiple heads to grant of damages and interest when the parties have agreed for payment of damages at the rate of Rs. 10/- per sq. ft. per month. Once the parties agreed for a particular consequence of delay in handing over of possession then, there has to be exceptional and strong reasons for the SCDRC/NCDRC to award compensation at more than the agreed rate. Though the 1986 Act empowers the authorities to award compensation for any loss or injury including building damages but the order of NCDRC or that of SCDRC of awarding compensation is without any foundation being laid down by the complainant on judicially recognised principles and is by Rule of thumb. Therefore, grant of compensation under various heads granted by the NCDRC cannot be sustained. The complainant is entitled to interest from the Appellant for not handing over possession as projected as is offered by it but it is not a case to award special punitive damages as the one of the causes for late delivery of possession was beyond the control of the Appellant. Appeal allowed.

Summary

Issues Involved:
1. Delay in handing over possession of units.
2. Compensation for mental agony, physical harassment, and litigation expenses.
3. Refund of amounts deposited by the complainants.
4. Interest on the deposited amount due to delay in possession.

Issue-wise Detailed Analysis:

1. Delay in handing over possession of units:
The appeals were directed against orders by the National Consumer Disputes Redressal Commission (NCDRC) which partially modified the State Consumer Disputes Redressal Commission (SCDRC) order directing the Appellant to hand over physical possession of the units within four months. The Appellant contended that construction delays were due to a stay granted by the Supreme Court and sought an extension for handing over possession. The NCDRC upheld that compensation for delay should be just and commensurate with the loss and injury, awarding interest on the deposited amount from the assured date and a lump sum compensation.

2. Compensation for mental agony, physical harassment, and litigation expenses:
The SCDRC directed the Appellant to pay compensation by way of interest at 12% per annum on the deposited amount from the promised date to the date of possession and litigation costs of Rs. 50,000/-. The NCDRC modified this, awarding interest at the maximum rate of interest on house building loans by nationalized banks and a sum of Rs. 1,00,000/- per year for the delay in possession. The Supreme Court found that compensation under various heads for the same default was not sustainable and directed a consolidated amount of Rs. 50,000/- for mental agony and litigation expenses.

3. Refund of amounts deposited by the complainants:
In cases where complainants sought a refund, the SCDRC directed the Appellant to refund the amounts with simple interest at 15% per annum from the respective dates of deposits. The NCDRC dismissed the appeal for non-compliance. The Supreme Court found the interest rate excessive and modified it to 9% per annum from the date of deposit till the date of refund, maintaining the litigation costs of Rs. 35,000/-.

4. Interest on the deposited amount due to delay in possession:
The NCDRC awarded interest on the deposited amount at the maximum rate of interest on house building loans by nationalized banks. The Supreme Court held that interest is a form of compensation for the delay in possession and should be logical and just. It directed the Appellant to pay interest at 9% per annum for a period of two months from the date of offer of possession and consolidated compensation of Rs. 50,000/- for mental agony and litigation expenses. In case of transfer, interest would be payable from the date of expiry of three years from the agreement or from the date of transfer, whichever is later.

Conclusion:
The Supreme Court modified the orders of the NCDRC and SCDRC to ensure just and equitable compensation for the delay in possession and refund cases, emphasizing the need for logical and objective criteria in awarding compensation and interest. The Appellant was directed to complete necessary maintenance works and provide occupation certificates, with interest payable for two months from the date of offer of possession. The consolidated compensation for mental agony and litigation expenses was set at Rs. 50,000/-.