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SUPREME COURT OF INDIA
T. S. THAKUR, CJI., D.Y. CHANDRACHUD, L. NAGESWARA RAO, JJ.
CHIEF ADMINISTRATOR, H.U.D.A. & ANR. – Appellants
Versus
SHAKUNTLA DEVI – Respondents
CIVIL APPEAL No. 7335 of 2008
Decided On : 08-12-2016
(2000) 7 SCC 668; (2004) 4 SCC 65 – Relied upon
(b) Consumer Protection Act, 1986 – Section 14(1)(d) – Appellants allotting plot to Respondent in 1989 and handing over possession in 2000 – Respondent commencing construction in 2006 – Respondent claiming compensation on account of cost escalation due to delay in handing over possession – State Commission observing that respondent delayed construction from 2000 to 2006 to claim compensation – Yet awarding compensation of Rs.15 lakhs – Not justified. (Para 15)
Facts of the case:
The Respondent was allotted a Plot by the appellants. As physical possession of the plot was not given to her by the Appellants, the Respondent filed Original Complaint before the State Commission.
The State Commission held that the Respondent has established deficiency of service by the Appellants as there was delay in handing over physical possession of the plot. The complaint was allowed and the Appellants were directed to deliver vacant physical possession of the plot, if not already done, to the Respondent within one month from the date of receipt of the order. There was a further direction to pay interest on the amount deposited by the Respondent at the rate of 12% with effect from 03.04.1989 and to pay a sum of Rs. 2 lakhs as compensation on account of escalation in the cost of construction etc. The Appellants were also directed to pay Rs. 20,000/- towards compensation for monetary loss and mental harassment suffered by the Respondent.
The National Commission dismissed Appeal No. 525 of 2007 filed by the Appellants and confirmed the order passed by the State Commission
Finding of the Court:
Impugned order is not justified.
Result: Appeal allowed.
The Supreme Court in this case did not explicitly rule that the consumer commission erred solely in awarding compensation for mental agony and physical discomfort without direct evidence of a substantial deficiency in service. Instead, the Court emphasized that the computation of compensation must be fair, reasonable, and proportionate to the actual loss or injury suffered by the consumer. The Court highlighted that compensation should not be arbitrary and must take into account relevant factors, including the nature of the injury or loss, and the conduct of the parties involved (!) (!) .
Furthermore, the Court pointed out that in cases where there is a delay or deficiency in service, the award of interest might suffice to compensate for the injury, and excessive or arbitrary compensation would be unjustified. The Court specifically set aside the higher compensation awarded, indicating that the amount must be justified by the circumstances and the actual damage caused, rather than awarded in a manner that is excessive or unreasoned (!) .
Thus, the Court's ruling underscores the importance of proportionality and fairness in awarding compensation, rather than endorsing awards based solely on the presence of injury or hardship without clear evidence or proper assessment of the extent of loss or injury (!) (!) .
JUDGMENT
L. Nageswara Rao, J. - This Appeal is filed challenging the order dated 25.09.2007 of the National Consumer Disputes Redressal Commission, New Delhi (hereinafter referred to as ‘National Commission’) by which an order of the State Consumer Disputes Redressal Commission, Union Territory, Chandigarh (hereinafter referred to as ‘State Commission') awarding compensation to the Respondent was confirmed.
2. The Respondent was allotted Plot No. 40, measuring 40 marlas in Sector 8, Urban Estate, Karnal on 03.04.1987. As physical possession of the plot was not given to her by the Appellants, the Respondent filed Original Complaint No. 54 of 1997 before the State Commission. In the said complaint, the Respondent alleged that she had paid the full price of the plot including the enhancement fee as per the terms and conditions of the allotment letter. She averred that she was not given the possession of the plot in spite of repeated requests. The Respondent also pleaded in the complaint that the Appellants were required to complete the development work within 2 years from the date of the allotment letter and hand over the physical possession. She further stated that she wanted to construct a house and the delay in handing over physical possession of the plot resulted in additional expenditure for the building as the price of construction material increased manifold from 1988 to 1997. On the basis of the above averments, the Respondent sought for the following reliefs in Original Complaint No. 54 of 1997:
i. "That the opposite party be directed not to charge any extension fees for not constructing the plot within the stipulated period which could not be done because of non delivery of the physical possession of the plot.
ii. HUDA be directed not to charge interest at all on the amount because the HUDA had offered a paper possession in the year 1982 and had not handed over the physical /actual possession till date.
iii. HUDA be directed to deliver the physical possession immediately after completing development work as per the brochure and advertisement and after providing the community service such as schools, community centre, hospital etc. in the sector.
iv. The HUDA be directed to give compensation of Rs. 1.00 lac against harassment mental agony suffered due to the act and conduct of HUDA.
v. Directed to give cost to the complainant for Rs. 20,000/- against the expenditure incurred in filing this complaint and as well as for spending the amount for visiting the office of the last 8 years.
vi. The complainant be awarded interest at the rate of 18 % on the amount deposited on various time till the actual possession of the plot is given.
vii. The Respondent be directed to pay Rs. 5.00 lac escalation cost of the construction material."
3. The Appellants filed a written statement in which it was stated that the Respondent was allotted the plot from the Government Discretionary Quota vide Allotment Letter No. 5049 dated 03.04.1987. The Appellants alleged that the Respondent did not seek delivery of possession prior to 16.07.1997. It was also stated in the written statement that an amount of Rs. 28,000/- was still outstanding. It was further alleged that the Respondent was not interested in constructing a house and that no building plan was submitted for approval.
4. The State Commission by its order dated 21.12.1998 held that the Respondent has established deficiency of service by the Appellants as there was delay in handing over physical possession of the plot. The complaint was allowed and the Appellants were directed to deliver vacant physical possession of the plot, if not already done, to the Respondent within one month from the date of receipt of the order. There was a further direction to pay interest on the amount deposited by the Respondent at the rate of 12% with effect from 03.04.1989 and to pay a sum of Rs. 2 lakhs as compensation on account of escalation in the cost of construction etc. The Appellants were also directed to pay Rs.
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