The main legal point established in the judgment is that flat-owners are not entitled to claim interest on the amounts paid to the builders for the purchase of flats, considering the possession and enjoyment of the flats, the substantial increase in the market value of the land, and the depreciation of the flats.

ORDER :

Issue No. 3: Claim of interest by the flat-owners

1. One of the issues that was brought to the notice of this Court by the learned Amicus Curiae pertains to the interest claimed by the flat-owners on the amount they paid to the Builders. After the demolition of four building complexes situated in Ernakulam, Kerala, Miscellaneous Application Nos. 1808-1809 of 2019 was initiated Suo Motu by this Court for monitoring the compliance of the directions issued by this Court in its judgment dated 08.05.2019 in Civil Appeal Nos. 4784-4785 of 2019 and 4790-4793 of 2019 in The Kerala State Coastal Zone Management Authority vs. State of Kerala Maradu Municipality and Others, (2019) 7 SCC 248.

2. On 27.09.2019, this Court directed the State Government to pay an amount of Rs. 25 lakhs as interim compensation to each of the flat-owners who were evicted at the time of demotion, within a period of four weeks. The said amount was to be recovered from the builders/promoters/persons/officers responsible for raising the illegal constructions. A Committee headed by Justice K. Balakrishnan Nair, Retired Judge of the Kerala High Court was constituted to look after the payment of the amounts to each flat-owners. The Committee has determined only the amount to which the flat-owners are entitled for the building portion of each apartment, as the undivided share in the land has been retained by the respective flat-owners. Based on the amount that was determined by the Committee, while 25 lakhs have already been paid by the State Government as interim compensation, the balance amount was to be paid by the builder to the flat-owners. The flat-owners of three out of four building complexes have received the amount paid by them for the flat, as determined by the Committee. Flat-owners of the building Holy Faith H2O have received only Rs. 25 lakhs/- that the State Government was directed to pay as interim compensation. No monies have been paid by Holy Faith to the flat-owners, as determined by the Committee.

3. Apart from the refund of the principal amount that was paid by the flat-owners to the builders which has already been paid except to the residents of Holy Faith H2O, the flat-owners are also seeking interest on such principal amount. On behalf of the flat-owners, it was submitted that they have invested their life earnings in the flats which have now been demolished. Resultantly, they have lost their place of residence and in view of the price escalation, they are not in a position to purchase a similar accommodation for the amounts they have invested in these building complexes. In addition, after vacating the flats which were demolished later, the flat-owners have to bear the expenditure towards rent to stay in an alternate accommodation.

4. On behalf of Jain Coral Cove Allottee’s Association, it was submitted that the flat-owners had made payment in instalments between 2007-2013. They were given possession in the year 2013 and the demolition took place in the year 2019. It was argued on their behalf that the amount that was directed to be paid to them by the Committee is not the actual market value but only the amount that was paid by them for purchasing the flats. The Association has brought to our notice that for the loans that were taken for purchasing the flats, banks are charging a higher rate of interest at 17 per cent for its repayment as the collateral does not exist anymore.

5. Further, the Alfa Serene Flat Owners Association contended that the amount that was paid to them on determination of the committee should be treated as a rehabilitation compensation or solatium against their displacement from their flats. According to the flat-owners, no development or construction activity can take place on the underlying land and therefore it has no worth and does not carry any market value. It was submitted that they are open to giving up the undivided share in the land in question to the builder or the government against just and proper compe