The court applied the Bihar State Housing Board (Management and Disposal of Housing Estate) Regulation, 1983, specifically Regulation 45, to determine the legality of the deduction and the rate of interest for the delay in refund.

(Per: Hon'ble Mr. Justice Vikash Jain)

The present writ petition has been filed with a prayer for refund of Rs. 15,000/alongwith compound interest @ 16% to the petitioner, the amount having been deposited as earnest money for allotment of a house under M.I.G. Scheme on Hire Purchase basis at Indira Nagar, Purnea. The short facts giving rise to the present petition may be summarized hereunder.

2. It appears that the Bihar State Housing Board (hereinafter referred to as the "Board") issued an advertisement on 19.7.1989, pursuant to which the petitioner made an application for allotment of a house and also deposited a sum of Rs.15,000/- towards earnest money on 15.8.1989 as required in terms of the said advertisement. The application was lodged with the respondent Board on 23.8.1989.

3. It further appears that in due course by letter dated 29.1.1994 (Annexure-3), the Board issued a letter of allotment stating that pursuant to a lottery conducted on 27.12.1993, the petitioner was allotted house no. P.M.R.-12 in the residential colony of Indira Nagar, Purnea. The probable cost of the house was stated to be Rs. 1,82,280/- subject to redetermination upon revaluation. As against this, a net amount of Rs. 58,112/was demanded from the petitioner towards the 'disposal price' being 40% of the probable cost after giving credit of the earnest money of Rs. 15,000/- already paid. The disposal price was required to be paid within 30 days of dispatch of the letter of allotment which thus fell due on 18th March, 1994. The balance amount was payable in 96 equated monthly installments as enumerated in the allotment letter. Each such installment was stated to include a component towards compound interest @ 13.5%, and a further 2.5% penal compound interest in case payment was made after the 7th day of the relevant month totaling upto 16.5% compound interest.

4. The petitioner states that upon inspection of the site, he was dissatisfied as to the progress of the housing project, describing the same as not being fit for human habitation, which fact has not been disputed before this Court. Accordingly by his letter dated 30.3.1994 (Annexure-4) he recorded his objections while pointing out the deficiencies and in view of the escalating cost of the house expressed his unwillingness to proceed in the matter. He accordingly requested for refund of Rs.15,000/- paid by him towards earnest money, together with 16% compound interest being the rate chargeable. by the Board on the installments. This letter was lodged with the respondent Board on 30.3.1994. In response, the Board by its letter dated 19.5.1994 (Annexure-5) approved the refund of the earnest money to the petitioner by letter dated 22.6.1996, that is over two years after the allotment letter was issued. The respondent Board required the petitioner to complete the formalities, including filing of an affidavit, to enable making of refund.

5. The considerable delay in the whole episode and with no relief in sight, this petitioner was thus forced to move this Court in its writ jurisdiction with the present prayer.

6. Consequent to the filing of this writ petition, good sense appears to have prevailed upon the Board and the earnest money was refunded to the petitioner albeit after considerable delay, after deduction of 20% out of the same and a net payment of Rs. 12,000/- has been made to the petitioner by cheque dated 25.9.2001 and which is admitted to have been received by the petitioner.

7. In view of the refund of earnest money having already been made, the points for consideration at the present stage are thus limited to only the following two aspects (a) legality of deduction of 20% out of the earnest money, and (b) rate of interest to which the petitioner is entitled for the delay in the refund.

8. Learned counsel for the petitioner Mr. Gyanand Roy submits that the deficiencies pointed out by him in his letter dated 30.3.1994 have not been controverted by the respondent Board. It is by reason of t