IMPORTANT POINT
When allottees are bound by any other conditions imposed by the appellant from time to time and have accepted interest on their deposits without any express condition in the allotment letter, they are also bound to pay cost escalation charges demanded by the Authority.

JUDGMENT :

DHANANJAYA Y. CHANDRACHUD, J.

1. Leave granted.

2. This appeal arises from a judgment in first appeal of the National Consumer Disputes Redressal Commission [“NCDRC”] dated 8 November 2017. The respondent was allotted a flat admeasuring 1765 sq. ft. in Godawari Block-1 of Harita Housing Project Scheme developed by the appellant. The letter of allotment stated that the cost of the flat was Rs 30,40,000. The allotment order set out the payment schedule. Among the terms of allotment, clauses 5, 6(a) and 7 provided as follows:-

“5. No interest is payable on the amounts paid or deposited with VUDA.

6(a) The probable date of completion of construction of the units is by November 2011 and may extend upto 3 month as per site conditions.

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7. The allotee or the purchaser of flat shall be bound by any other conditions of VUDA or State Government or Central Government which may impose from time to time.”

3. During the course of the construction in July 2011, the appellant faced a dispute with the contractor engaged for construction and terminated the contract on 14 October 2011. The construction agency instituted proceedings before the District Court, Vishakhapatnam. In the meantime, a circular was issued by the appellant on 24 February 2012 to all the 710 allottees, bringing to their notice the reasons for the delay in the completion of the project.

4. After the proceedings before the District Court came to a conclusion, the appellant called for tenders for the execution of the balance work. The development was eventually completed. The respondent instituted a consumer complaint before the A.P. State Consumer Disputes Redressal Commission,[“SCDRC”] aggrieved by the escalation of cost.

5. By its order dated 11 December 2015, the SCDRC directed the appellant to:

(i) Deliver possession in accordance with the letter of allotment;

(ii) Pay costs of Rs 2,00,000 towards costs;

(iii) Pay a sum of Rs 2,000 towards causing mental agony;

(iv) Comply within three months failing which the amounts as directed would carry interest at 12% per annum.

6. In appeal, the NCDRC by its judgment dated 8 November 2017 held that the appellant is liable to hand over possession of the allotted flat in terms of the letter of allotment at the price stipulated therein. However, the order of compensation of Rs 2,00,000 was set aside. As regards the fifth and sixth instalment, the NCDRC directed that this should be governed by the letter dated 31 July 2013 re-scheduling the payment of installments.

7. The appeal before this Court raises the issue as to whether the appellant was entitled to raise a demand for escalated cost. According to the appellant, it was entited to raise a demand for the cost escalation. On the other hand, the respondent submits that this was a fixed price contract as a consequence of which no escalation was payable.

8. The original price of the HIG flat allotted to the respondent was Rs 30,40,000 computed at Rs 1719 per sq. ft. The escalated price demanded by the appellant at the rate of Rs 2170 per sq. ft. worked out to Rs 38,30,050. It must be noted that the appellant has in pursuance of its own decision granted interest to all allotttees including the respondent on the moneys deposited, based on the size of the flats. This has been granted despite the specific covenant contained in the letter of allotment that no interest would be payable by the appellant. The respondent has been granted an interest benefit of Rs 6,28,621. The effective cost of the flat has, hence been reduced to that extent as a result of the concession granted on account of interest.

9. We find from the letter of allotment dated 18 October 2010 that the respondent was provisionally allotted a HIG flat admeasuring 1765 sq. ft. Though the cost of the flat is stipulated to be Rs 30,40,000, the conditions of allotment contained certain other stipulations. This includes clause 7 which indicates that the allottee or purchaser would