Headnote:(i) Housing Development Authority—Scheme for allotment of land— Unreasonable delay in accomplishment of scheme—Claim for damage/compensation on account of mental agony suffered by applicant to scheme—A vendor who breaks contract by failing to convey land to purchaser is liable to damages for purchaser’s loss—For delay in performance normal nature of damage is value of use of land for period of delay viz. usually its rental value—Compensation for mental agony could not be awarded.
       When a development authority announces a scheme for allotment of plots, the brochure issued by it for public information is an invitation to offer. Several members of public may make applications for availing benefit of the scheme. Such applications are offers. Some of the offers having been accepted subject to rules of priority or preference laid down by the Authority result into a contract between the applicant and the Authority. The legal relationship governing the performance and consequences flowing from breach would be worked out under the provisions of the Contract Act and the Specific Relief Act except to the extent governed by the law applicable to the Authority floating the scheme. In case of breach of contract damages may be claimed by one party from the other who has broken its contractual obligation in some way or the other. The damages may be liquidated or unliquidated. Liquidated damages are such damages as have been agreed upon and fixed by the parties in anticipation of the breach. Unliquidated damages are such damages as are required to be assessed. Broadly the principle underlying assessmentof damages is to put the aggrieved party monetarily in the same position as far as possible in which it would have been if the contract would have been performed. Here the rule as to remoteness of damages comes into play. Such loss may be compensated as the parties could have contemplated at the time of entering into the contract. The party held liable to compensation shall be obliged to compensate for such losses as directly flow from its breach. (Para 5)
       The ordinary heads of damages allowable in contracts for sale of land, are settled. A vendor who breaks the contract by failing to convey the land to the purchaser is liable damages for the purchaser s loss of bargain by paying the market value of the property at the fixed time of completion less the contract price. The purchaser may claim the loss of profit he intended to make from a particular use of the land if the vendor had actual or imputed knowledge thereof. For delay in performance the normal nature of damages is the value of the use of the land for the period of delay, viz. usually its rental value. (Para 6)
       Thus where the MRTP Commission awarded Rs. 50,000 towards compensation for mental agony allegedly suffered by an applicant to a housing land allotment scheme floted by the Ghaziabad Development Authority, the Supreme Court held that the compensation for mental agony could not have been awarded as had been done by the MRTPC. (Paras 7 & 8)
       (ii) Housing Development authority—Ghaziabad Development Authority—Scheme for allotment of housing plot—Delay in accomplishment of project—Return of money deposited by applicants—Brochure issued by GDA not stipulating payment of interest—Interest on equitable grounds can be awarded—Rate of interest awarded in equity should neither be too high nor too low—Interest at rate of 12% would meet ends of justice. (Paras 9 & 10)

Judgement Key Points

Key Points: - This document contains explicit discussion on whether compensation can be awarded for mental agony suffered by claimants in housing scheme delays, and the appropriate basis for damages (contractual vs. administrative law). (!) (!) (!) - It addresses whether interest can be awarded on amounts refundable to claimants, and at what rate, in the absence of a contractual obligation to pay interest. (!) (!) (!) (!) - It considers the proper heads of damages in land sale contracts and the normal measure of damages for delay in performance. (!)

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JUDGMENT

R.C. Lohoti, J.—Leave granted in SLP (C) No.18897/99.

2. In this batch of appeals, Ghaziabad Development Authority constituted under Section 4 of the Uttar Pradesh Urban Planning and Development Act, 1973 is the appellant. The Authority has from time to time promoted and advertised several schemes for allotment of developed plots for construction of apartments and/or flats for occupation by the allottees. Several persons who had subscribed to the schemes approached different forums complaining of failure or unreasonable delay in accomplishing the schemes. Some have filed complaints before the Monopoly and Restrictive Trade Practices Commission and some have raised disputes before the Consumer Disputes Redressal Forum. In two cases civil writ petitions under Article 226 of the Constitution were filed before the High Court seeking refund of the amount paid or deposited by the petitioners with the Authority. In all the cases under appeal the Court or Commission or Forum concerned has found the appellant-Authority guilty of having unreasonably delayed the accomplishment of the announced scheme or guilty or failure to perform the promise held out to the claimants and therefore directed the amount paid or deposited by the respective claimants to be returned along with interest. In the cases filed before the High Court of Allahabad there was a term in the brochure issued by the Authority that in the event of the applicant withdrawing its offer of surrendering the same no interest whatsoever would be payable to the claimants. The High Court has held such term of the brochure to be unconscionable and arbitrary and hence violative of Article 14 of the Constitution. The High Court has directed the amount due and payable to be refunded with interest calculated at the rate of 12 per cent per annum from the date of deposit to the date of refund. In all the other appeals before us the impugned order passed by the Commission or the Forum directs payment of the amount due and payable to the respective claimants with interest at the rate of 18 per cent per annum. In Civil Appeal No. 8316 of 1995, G.D.A. v. Brijesh Mehta, the MRTP Commission has held the claimants entitled to an amount of Rs. 50,000/- payable as compensation for ‘mental agony’ suffered by the claimants for failure of the Authority to make available the plot as promised by it.

3. As all these appeals raise the following common questions of law, they have been heard together and are being disposed of by this common judgment. The questions arising for decision are :—

(i) Whether compensation can be awarded for mental agony’ suffered by the claimants?

(ii) Whether in the absence of any contract or promise held out by the Ghaziabad Development Authority any amount by way of interest can be directed to be paid on the amount found due and payable by the Authority to the claimants?

(iii) If so, the rate at which the interest can be ordered to be paid?

4. In C.A No. 8316/1995, Ghaziabad Development Authority had announced a scheme for allotment of developed plots which was known as “indirapuram Scheme”. The Authority informed the claimants that a plot of 35 sq. metres was reserved for them, the estimated cost of which plot was Rs. 4,20,000/- payable in specified instalments. An allotment of plot was also informed. Then at one point of time the claimants were informed that due to some unavoidable reasons and the development work not having been completed there has been delay in handing over possession. Having waited for an unreasonable length of time the claimants approached the MRTP Commission.

5. When a development authority announces a scheme for allotment of plots, the brochure issued by it for public information is an invitation to offer. Several members of public may make applications for availing benefit of the scheme. Such applications are offers. Some of the offers having been accepted subject to rules of priority o

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2000 Supreme(SC) 1048

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Cases Referred (2)