GHAZIABAD DEVELOPMENT AUTHORITY VS BALBIR SINGH

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

SUPREME COURT OF INDIA
S.N. Variava & H.K. Sema, JJ.
GHAZIABAD DEVELOPMENT AUTHORITY––Appellant
versus
BALBIR SINGH—Respondent
Civil Appeal No. 7173 of 2002 from Judgment & Order dated 28.10.2002 in Petition for Special Leave to Appeal (C) No. 21061/2001 from the Order dated 31.8.2001 of N.C.D.R.C., New Delhi in R.P. No. 703 of 2001 with Civil Appeal No. 7391/2002, C.A, No, 7793/2002, C.A, No, 8400/2002, C.A, No. 7700/2002, C,A. No. 7288/2002, C.A. No, 7792/2002, C.A, No. 7788/2002, C.A. No. 7396/2002, C,A, No, 7685/2002, C.A. No. 8408/2002, C.A. No, 8415/2002, C,A. No. 7786/2002, C.A. No. 7790/2002, C.A. No, 7672/2002, C.A. No. 7289/2002, C.A. No. 7723/2002, C,A. No. 8418/2002, C.A. No. 7690/2002, C.A. No. 8407/2002, C.A. No. 7782/2002, C.A. No. 7725/2002, C.A. No. 7695/2002, C.A. No. 8404/2002, C.A. No. 7662/2002, C.A. No. 7676/2002, C.A. No. 7693/2002, C.A. No. 7724/ C.A. No. 7286/2002, C.A. No. 7670/2002, C.A. No. 7688/2002, C.A. No. 8405/2002, C.A. No. 7787/2002, C.A. No. 7789/2002, C.A. No. 8530/2002, C.A. No. 8527/2002, C.A. No. 8588/2002, C.A. No. 7776/2002, C.A. No. 7667/2002, C.A. No. 7783/2002, C.A. No. 7224/2002, C.A. No. 7699/2002, C.A. No. 7698/2002, C.A. No. 7120/2002, C.A. No. 390/ C.A. No. 394/2003, C.A. No. 397/2003, C.A. No. 399/2003, C.A. No. 400/2003, C.A. No. 413/2003, C.A. No. 414/2003, C.A. No. 415/2003, C.A. No. 416/2003, C.A. No. 417/ 2003, C.A. No. 1057/2003,C.A. No. 1012/ 2003,C.A.No. 1018/2003, C.A. No. 1022/2003, C.A. No. 1488/2003,C.A. No. 1489/2003, C.A. No. 1492/2003, C.A. No. 1493/2003, C.A. No. 1494/2003, C.A. No. 1495/2003, C.A. No. 1499/2003, C.A. No. 3256/2003, C.A, No. 3910/2003, SLP(C)No. 8758/2003, SLP(C) No. 8760/2003, SLP(C)No. 8764/2003, C.A. No. 3955/2003, C.A. No. 4068/2003, SLP(C) No. 6079/2003,SLP(C) No. 6081/2003, SLP(C) No. 6083/2003, SLP(C) No. 6084/2003, SLP(C) No. 6085/2003, SLP(C) No. 9600/2003, SLP(C) No. 9663/2003 SLP(C) No. 9666/2003, SLP(C) No. 9669/2003, SLP(C) No. 9060/2003, SLP(C) No. 9061/2003, SLP(C) No. 9062/2003, C.A. No. 3657/2003, C.A. No. 8417/2002, C.A. No. 2692/2003, C.A. No. 4082/2003, SLP(C) No. 11676/2003, SLP(C) No. 12592/2003, C.A. No. 5473/2003, C.A. No. 1010/2003, SLP(C) No.! 6082/2003, SLP(C) No. 12594/2003, C.A. No. 1013/2003, C.A. No. 1019/2003, C.A. No. 1960/2003, C.A. No. 1964/2003, C.A. No. 3382/2003, SLP(C)No. 20283/2003, SLP(C) No. 20285/2003, SLP(C)No. 6299/2003, SLP(C) No. 6302/2003, SLP(C)No. 6303/2003, SLP(C) No, 6304/2003. SLP(C)No. 6305/2003, SLP(C) No. 6306/2003, SLP(C) No, 6307/2003, SLP(C) No, 9715/2003, SLP(C) No, 20289/2003, C.A. No. 8504/2003, SLP(C) No. 22189/2003, C.A. No. 549/2003, SLP(C) No. 23127/2003, C.A. No. 8402/2002, C.A. No. 392/2003, C.A. No. 404/ 2003, C.A. No. 405/2003, C.A. No. 410/2003, C.A. No. 1014/2003, C.A. No. ]491/2003,C.A. No. 1498/2003, C.A. No. 3381/2003,C.A. No. 8514/2002, C.A. No, 1009/2003,C.A.No. 7878/ 2002,C.A. No. 7775/2002,C.A. No. 7781/2002, SLP(C) No. 12584/2003, SLP(C) No. 12596/ 2003, SLP(C) No. 12601/2003, SLP(C)No. 12604/2003, SLP(C) No. 14905/2003, SLP(C) No. 12593/2003, C.A. No. 8?29/2002, C.A. No. 7389/2002, C.A. No. 393/2003, C.A. No. 409/ 2003,C.A. No. 9747/2003,C.A. No. 7780/2002 C.A. No. 8403/2002, C.A. No. 7777/2002, SLP(C) No. 14052/2003, SLP(C) No. 14053/ 2003, C.A. No. 7395/2002, C,A. No. 7388/2002, C.A. No. 407/2003, SLP(C) No. 8765/2003, SLP(C)No. 8766/2003, SLP(C) No. 8763/2003, SLP(C)No. 9190/2003, SLP(C)No. 9670/2003, SLP(C)No. 9665/2003, SLP(C)No. 9662/2003, SLP(C) No. 12583/2003, SLP(C) No. 12587/ 2003, SLP(C) No. 12588/2003, SLP(C) No. 12589/2003, SLP(C) No. 12591/2003, SLP(C) No. 12599/2003, SPP(C:) No. 12603/2003, ST.P(C) No. 12605, 2003, SLP(C) No. 126(16/2003 SL,P(C) No. 12607/.2003, SLP(C) Nos 12608-12609/2003, SLP(C) No. 13785/2003 SLP(C)--No. 12585/2003, SLP(C) No. 12586/2003, SLP(C), No. 14905/ 2003 SLP(C) No. 15139/2003 SLP(C) No. 17803/2003, SLP(C) Nos. 17805-17806/2003, SLP(C) No. 16414/2003, C.A. No. 7397/2002, C.A. No. 7385/2002, C.A. No. 7390/2002, C.A. No. 7875/2002, C.A. No. 7778/2002, C.A. No. 8399/2002, C.A. No. 7774/2002, C.A. No. 7879/2002, C.A. No. 8398/2002, C.A. No. 7232/2002, C.A. No. 7236/2002, C.A. No. 8401/2002, C.A. No. 8586/2002, C.A. No. 8528/2002, C.A. No. 7287/2002, C.A. No. 7779/2002, C.A. No. 389/2003, C.A. No. 391/ 2003, C.A. No. 395/2003, C.A. No. 401/2003, C.A. No, 403/2003, C.A. No. 408/2003, C.A. No. 1011/2003, C.A. No. 1016/2003, C.A. No. 1015/2003, C.A. No. 1017/2003, C.A. No. 1020/2003, C.A. No. 1490/2003, C.A. No. 1496/2003, C,A. No. 1961/2003, C.A, No. 1962/2003, C.A. No. 1963/2003, C.A, No. 1966- 1967/2003, C.A. No. 1965/2003, C.A. No. 3956/2003, C.A. No. 3957/2003, C.A. No. 3958/2003, C.A. No. 3959/2003, C.A. No. 3658/2003, C.A. Nos. 411-412/2003, C.A. No. 7386/2002, C.A. No. 1021/2003, R.P.(C) No. 1649/2003 in SLP(C) No. 18369/2003, SLP (C) No. 4275/2004
Not ready matters - listed for directions
C.A. No. 7225/2002,C.A. No. 7285/2002,C.A. No. 8589/2002, C.A. No. 8587/2002, C.A. No. 398/2003, C.A, No. 1500/2003, C.A. No. 1501/ 2003, SLP(C) No. 8755/2003, SLP(C) No. 6078/ 2003, SLP(C) No. 6080/2003, SLP(C) No. 9059/ 2003,SLP(C)No. 9063/2003, SLP(C) No. 9064/ 2003, SLP(C) No. 12582/2003, SLP(C) No. 12590/2003, SLP(C) No. 12610/2003, SLP(C) No. 16415/2003, SLP(C) No. 6077/2003, SLP(C) No. 15291/2003, SLP(C) No. 20287/2003, SLP(C) No. 20288/2003, SLP(C) No. 23120/ 2003, SLP(C) No. 23124/2003, SLP(C) No. 23122/2003, SLP(C) No. 6297/2003, SLP(C) No. 6298/2003, SLP(C) No. 6300/2003, SLP(C) No. 6301/2003, SLP(C) No. 9717/2003, C.A. No. 1562/2004, with SLP(C) Nos. 4853-4854 of 2004—Decided on 17.3.2004

Counsel for the Parties:
Mr. Soli J. Sorabjee, Attorney General, Mr. K.B. Sinha, Sr. Adv. with Mr. Sudhir Kulshreshta, Mr. Manish Singhvi, Mr. Rakesh Uttamchandra Upadhyay, Mr. Santosh Kumar, Mr. A.S. Rawat, Mr. P. Narasimbah Mr. K.N. Nagpal, Mr. Varinder Kumar Sharma, Mr. Prainod Swarup, Mr. Y. Prabhakar sharma Rao, Mr. Ashok K. Srivastava, Mr. Ravindra Kumar, Mr. Neeraj Kumar Jain, Mr. Aditya Kumar Chaudhary, Mr. Bharat Singh, Mr. Amit Pawan, Mr. Ugra Shankar Prasad, Mr. Anil Nag, Mr. Krishnanand Pandeya, Mr. Shibashish Misra, Mr. Devesh Singh, Mr. Paraney Ranjan, Mr. Praneet Ranjan, Mr. S.C. Paul, Mr. Manoj Kulshreshtha, Mr. Ashok Yadav, Ms. Chanchal Goyal, Mr. C.L Bashal, Mrs. Rekha Pandey, Mr. Himanshu Shekhar, Mr. Prasenjit Keswani, Mr. Prashant Chaudhary, Mr. S.P. Sharma, Mr. Abhishek Atrey, Mr. Shishir Singh, Mr. Ashwani Bhardwaj, Mr. Satinder S. Gulati, Dr. Kailash Chand. Mr. Satish Aggarwal, Mr. Rajesh K. Sharma, Ms. Shalu Sharma, Mr. Irshad Ahmad, Mr. Avtar Singh Rawat, Ms. Hemantika Wahi, Mr. Lakshmi Raman Singh, Mr. S.L Aneja, Mohd. Tahir Siddiqui, Mr. Devcndra Singh, Mr. B.C. Pandey, Mr. Rakesh K. Sharma, Mr. M.C. Dhingra, Mr P.N. Puri, Mr. V. Sudeer, Mr M.B. Rama Subba Raju,Mr. Balaji Srinivasan, Ms. S. Sunita, Mr. S. Srinivasan. Mr. Dcbasis Misra, Mr. P.D. Sharma, Mr. Anil Mittal, Mr. P.K. Aggrawal, Mr. Ranjan Mukherjee, Mr. Uma Datta ,Mr. Rakesh K. Khanna, Mrs. Rashmi Khanna, Mr. Shashank Shekhar, Mr Surya Kant, Mr. Syed Ahmed, Mr. Syed Tauzoecr Ahmed, Mr. R.D. Upadhyay, Mr. Anil Kumar Jha, Mr. Suresh C. Gupta, Mr. A. Guneshwar Sharma, Mr. J.K. Pali, Mr. Kamal Mohan Gupta, Mr. Chandra Prakash Pandey, Mr. Rarneshwar Prasad Goyal, Mr. B.R. Sharma, Mr. Rajeev K. Singh, Mr. P.N. Ramalingam ,Mr. S.K. Nandy, Mr. Alok Gupta, Ms. Indra Sawohney, Ms. Amita Gupta, Mr. Pramjeet Singh Lamba, Ms. Neetam Tiwari, Ms. Manjula Gupta, Mr. M.P. Shorawala, Mr. K.L. Janjani, Mr. Pankaj Kumar Singh, Dr. Vinod Tiwari, Mr. Rakesh K. Khanna, Mrs. Rashmi Khanna, Mr. Shashank Shekhar, Mr. Surya Kant, Mr. Pradeep Misra, Mr Sandeep Kumar, Dr. I.B. Gaur, Mr. Jitendra Mohan Sharma, Mr K.S. Rana, Mr. A.K. Sen Gupta, Mr. M. Jayasree, Mr. Rajiv Mehta, Mr. K.C. Kaushik, Mr. Gulshan Bajwa (NP), Mrs. V.D. Khanna, Dr. Meera Aggarwal, Mr Ramesh Chandra Mishra, Mr. Ashutosh Verma, Mr. Amit Singh, Mr Amit Kumar, Mr. Kuldip Singh. Mr. Prabhijit Jauhar, Mr S.S. Jauhar, Ms. S. Narang, Mr Raj Kumar Mehta, Mr. Prashant Kumar, Mr Himinder Lal, Mr. S.B. Sinha, Mr. Ramesh Babu M.R., Mr. Raj Kumar Gupta, Mr. Sheo Kumar Gupta, Mrs. Anuju, Mr. A.N. Baradaiyar, Mr. Ravi Prakash Mehrotra, Mrs. Deepti R. Mehrotra, Mr. Garvesh Kabra, Mr. Mahesh Srivastava for M/s. I.M. Nanavati Associates, Mr. Vimal Chandra S. Dave, Mr. Brij Bhushan, Mr. Ranjit Khatri. Mr. Abhijat P. Medh, Mr. L.C. Goyal, Mr. A.S. Rawat and Mr. Javed Mahmud Rao, Advocates.
For the Respondent in C.A. No. 8400/2002: In person
For the Respondent in C.A. No. 8418/2002: In person
For the Respondent in C.A. No. 8407/2002: In person
For the Respondent in C.A. No. 7224/2002: In person
For the Respondent in SI.P(C) No. 6079/2003: In person
For the Respondent in SLP (C) No. 6084/2003: In person
For the Respondent in SLP(C) No. 9600/2003: In person
For the Respondent in SLP(C) No. 9663/2003: In person
For the Respondent in SLP(C) No. 9062/2003: In person
For the Respondent in SLP(C) No. 6306/2003: In person
For the Respondent in C,A. No. 393/2003: In person
For the Respondent in C,A. No. 409/2003: in person

Headnote:
Consumer Forums - Interest Rate - Consumer Protection Act - III (1993) CPJ 7 (SC)=(1994) 1 SCC 243, Interest Act, 1978, Section 34 of the Code of Civil Procedure - The court discussed the justifiability of granting interest at the rate of 18% per annum by the Consumer Forums in cases of deficiency of service by Development Authorities. The court emphasized that the award of compensation must be under different separate heads and must vary from case to case depending on the facts of each case. The court also clarified that interest must be granted at the current rate of interest and must be based on a finding of loss or injury and has to correlate with the amount of loss or injury. The court further clarified that the interest will be payable from the date the monies were deposited with the body till they are returned either by payment to that party or deposited in a Court. The court also discussed the liability of payment and the principles of administrative law of accountability of public authorities for their arbitrary and even ultra vires actions.
Fact of the Case:

The court addressed the question of whether the grant of interest at the rate of 18% per annum by the Consumer Forums in cases of deficiency of service by Development Authorities is justifiable. The court emphasized that it is necessary to consider facts and award damage/compensation under various heads. The court also clarified that the interest will be payable from the date the monies were deposited with the body till they are returned either by payment to that party or deposited in a Court.
Finding of the Court:

The court found that the award of compensation must be under different separate heads and must vary from case to case depending on the facts of each case. The court also clarified that interest must be granted at the current rate of interest and must be based on a finding of loss or injury and has to correlate with the amount of loss or injury. The court further clarified that the interest will be payable from the date the monies were deposited with the body till they are returned either by payment to that party or deposited in a Court.
Issues: The issues addressed by the court included the justifiability of granting interest at the rate of 18% per annum by the Consumer Forums in cases of deficiency of service by Development Authorities, the liability of payment, and the principles of administrative law of accountability of public authorities for their arbitrary and even ultra vires actions.
Ratio Decidendi: The court emphasized that the award of compensation must be under different separate heads and must vary from case to case depending on the facts of each case. The court also clarified that interest must be granted at the current rate of interest and must be based on a finding of loss or injury and has to correlate with the amount of loss or injury. The court further clarified that the interest will be payable from the date the monies were deposited with the body till they are returned either by payment to that party or deposited in a Court.
Final Decision: The court clarified that the interest will be payable from the date the monies were deposited with the body till they are returned either by payment to that party or deposited in a Court. The court also emphasized that the mere filing of an Appeal/Revision will not entitle the authority to not comply with the Order of the Forum, and if no stay is obtained or if stay is refused, the Order must be complied with.

Judgement Key Points

The court in this case emphasized that compensation under the Consumer Protection Act must be closely linked to a proven deficiency of service or misfeasance in public office, which results in loss or injury to the consumer. It clarified that the award of compensation is not automatic and must be based on specific findings of such deficiency, negligence, or arbitrary conduct that causes harm or loss to the consumer. The court underscored the importance of establishing a clear causal relationship between the deficiency or negligence and the injury suffered before awarding compensation. Therefore, the court held that compensation must have a direct nexus with the proven deficiency or negligence, and it cannot be awarded arbitrarily or uniformly without considering the facts and the extent of loss or injury.

ORDER

1. In this batch of matters the question is whether grant of interest at the rate of 18% per annum by the Consumer Forums in ail cases is justifiable. As facts are varying, at this stage, this Court is only dealing with the question of law. Thereafter this Court shall take up each case separately.

2. The National Consumer Disputes Redressal Commission considered a bunch of matters, the lead matter being the case of Haryana Urban Devlopment Authority v. Darsh Kumar. The Commission held, in those cases, that in cases of deficiency of service by Development Authorities like HUDA and GDA, interest must be awarded at the rate of 18% per annum and that this would take into consideration the escalation in the cost of construction as well.

3. Pursuant to this Judgment the National Commission has been disposing of all subsequent matters with a one paragraph order which, for all practical purposes, reads as under:

"We have already taken a view in the case of Haryana Urban Development Authority v. Darsh Kumar [Revision Petition No. 1197 of 1998], where we have upheld the award of interest at the rate of 18% per annum. We have provided for certain period during which the interest would not run. The impugned judgment is modified only to that extent. This Revision Petition is disposed of in terms of our judgment in the case of HUDA v. Darsh Kumar."

4. It has been shown to us that the facts are varying and different. Whilst facts of all cases cannot be set out by way of illustration it must be stated that in some cases even though monies had been paid and allotments had been made of flats/plots, the scheme itself got cancelled for some reason or the other. Possession was thus refused to be delivered of the flats/plots allotted to the allottees. In some cases, at a much later date, possession of some other flat/plot was offered at an increased rate. In some cases possession was offered but not taken by the party. In some cases even though the scheme was not cancelled and there was no refusal to deliver possession, yet possession was, not delivered for a number of years even after monies had been received. In some cases the construction was of sub-standard quality or it was incomplete. In some of the cases the authority has demanded extra amounts from the party. In some cases the party had not paid the extra amounts whilst in some cases they had paid those amounts. The question, therefore, was of refund of those amounts wrongly collected. In some cases allotments were made and possession offered of flats/land which was encumbered or occupied by some other party. In some cases the party had asked for refund of amounts paid.

5. Irrespective of the type of case, irrespective of the amount of delay, the National Commission has been granting/confirming interest at the rate of 18% per annum without even going into the facts of the case. It must be mentioned that in some of the matters before us it has been pointed out that the District and the State Forums had granted interest at a lower rate. Appeals had been filed only by the authority. Yet the National Commission has, in the Appeal filed by the authority, increased the rate of interest to 18% per annum.

6. The learned Attorney General submitted that the liability to pay interest only arises if there is any default or omission on the part of the Body which caused damage or prejudice to the allottee of the flat/plot. This submission requires to be accepted. However, in the context of the Consumer Protection Act the principles laid down in the case of Lucknow Development Authority v. M.K. Gupta reported in III (1993) CPJ 7 (SC)=(1994) 1 SCC 243 have to be kept in mind. In this case the question was whether a Development Authority rendered service to bring it within the purview of the Consumer Protection Act. It has been held that the Development Authority is rendering service. It has been also held as follows:

"8. Having examined the wide reach of the Act and jurisdiction of the Commission to entertai

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Cases Referred (9)