THE SUPREME COURT OF INDIA

(2023) 2 RCR(Civil) 742

M/S SUNEJA TOWERS PRIVATE LIMITED AND ANOTHER — Appellant Vs. ANITA MERCHANT — Respondent

Civil Appeal Nos. 2892-2894 of 2023 (Arising Out of SLP (Civil) Nos. 8163-8165 of 2022)

DATE OF DECISION: 18-04-2023

HEADNOTE WITH FULL TEXT JUDGMENT

Consumer Protection Act, 1986 – Section 2(d) – For award of compound interest, relevant factors shall have to be taken into account which would include uncertainties of market and several other imponderables – If at all by way of compensation, the Consumer Forum considers it proper to examine the time value for money, an in-depth and thorough analysis would be required while taking into account all the facts and the material surrounding factors, including those of realities as also uncertainties of market

JUDGMENT

Dinesh Maheshwari, J

Table of Contents

Preliminary and brief outline

Relevant factual and background aspects

The State Commission awarding compound interest

Approval by the National Commission

Rival Contentions

Matters of form and pleading not relevant in the present case

The cited decisions on award of interest in real estate dealings

The decision in Manjeet Kaur Monga’s Case and its connotations

The complexities of present matter requiring further exploration

In extraordinary measure, money received by respondent allowed to be retained

Conclusion

Preliminary and brief outline

Leave granted.

2. In these appeals by special leave, the appellants have essentially questioned a part of the common judgment and order dated 31.03.2022, as passed by the National Consumer Disputes Redressal Commission, New Delhi[1] in Revision Petition Nos. 771 of 2020, 772 of 2020 and 773 of 2020, whereby the National Commission has declined to interfere in the common judgment and order dated 12.03.2020, as passed by the State Consumer Disputes Redressal Commission, Delhi[2], in Appeal Nos. 121 of 2014, 122 of 2014 and 123 of 2014.

[1] Hereinafter also referred to as ‘the National Commission’.

[2] Hereinafter also referred to as ‘the State Commission’.

2.1. The present set of appeals has its genesis in the three complaints filed by the complainant-respondent before the Consumer Disputes Redressal Forum-II, New Delhi[3], bearing Nos. C-252 of 2006, C-283 of 2006 and C-284 of 2006 alleging deficiency of service on the part of the present appellants for having failed to deliver the possession of three flats booked by her, even after expiry of the agreed period and despite the fact that she had admittedly made payment of 60% of the total sale consideration. The District Forum, in its order dated 20.12.2013, dismissed the complaints so filed by the present respondent on various grounds including that she had tried to avail of the services of the builder for commercial purposes by booking three flats and thus, did not fall within the category of ‘consumer’, as defined under Section 2(d) of the Consumer Protection Act, 1986[4].

[3] Hereinafter also referred to as ‘the District Forum’.

[4] Hereinafter also referred to as ‘the Act of 1986’.

2.2. In the said judgment and order dated 12.03.2020, the State Commission, however, disapproved the order so passed by the District Forum as regards the maintainability of complaints and then, particularly with reference to the decision in the case of Dr. Manjeet Kaur Monga v. K.L. Suneja: (2018) 14 SCC 679[5] , wherein the award of compound interest by Competition Appellate Tribunal[6] under the Monopolies and Restrictive Trade Practices Act, 1969[7] was not interfered with by this Court, granted relief to the complainant in the manner that the appellants shall refund the amount deposited by her together with ‘compound interest at the rate of 14% from the date of deposit’. The National Commission rejected all the contentions urged on behalf of the appellant against the order so passed by the State Commission and also found no reason to interfere with the relief granted by the State Commission in view of the decision of this Court in the case of Dr. Manjeet Kaur Monga (supra).

[5] Reference to this case has occurred at multiple places hereafter; where it has been referred to as the case of ‘Dr. Manjeet Kaur Monga’ or the case of ‘Dr. Monga’.

[6] ‘COMPAT’, for short.

[7] Hereinafter also referred to as the ‘MRTP Act’.

3. On 09.05.2022, while considering the petitions leading to these appeals at the initial stage, this Court found the question of awarding compound interest @ 14% on the refund of deposited amount requiring consideration and hence, notice was issued to this limited extent. However, this Court also took note of the fact that a sum of Rs. 1,48,52,000/- had been deposited by the appellants pursuant to an order earlier passed by the National Commission and, in the totality of circumstances, execution of the orders impugned was stayed subject to the condition of the petitioners-appellants depositing a further sum of Rs. 1 crore with the District Forum within four weeks with liberty to the respondent to withdraw the deposited amount with accrued interest. Such deposit and withdrawal were, however, made subject to the final orders of this Court. The order dated 09.05.2022 reads as under: –

‘Having heard learned senior counsel for the respective parties preliminarily and having examined the material placed on record, in our view, only the question of awarding compound interest at the rate of 14% on the refund of deposited amount is required to be considered in this matter.

Issue notice to the limited extent as above.

Ms. Supriya Juneja, learned counsel accepts notice on behalf

of the respondent No. 1.

Counter affidavit may be filed within three weeks.

The petitioners shall have one week thereafter to file rejoinder affidavit, if so chosen.

During the course of submissions, we have been informed that pursuant to the order dated 11.11.2020, as passed by the National Consumer Disputes Redressal Commission, the petitioners had deposited an amount of Rs. 1,48,52,000/- with the President, District Consumer Disputes Redressal Forum-II, New Delhi on 25.11.2020.

Learned senior counsel appearing for the petitioners submits that as per his instructions, the said amount has been invested in a fixed deposit.

Having regard to the circumstances of the case, it is considered appropriate and hence provided in the interim that until further orders of this Court, execution of the orders impugned shall remain stayed, subject to the condition that the petitioners shall deposit further an amount of Rs. 1 crore with the said District Consumer Disputes Redressal Forum within four weeks from today.

It shall be permissible for the respondent herein to withdraw the entire deposited amount, including the earlier deposited amount of Rs. 1,48,52,000/- together with accrued interest.

This deposit by the petitioners and withdrawal by the respondent shall remain subject to the final order to be passed in these petitions.

List these petitions in the second week of July, 2022.’

4. After completion of pleadings, and in view of a short point involved, we have heard learned counsel for the parties finally at this stage itself.

Relevant factual and background aspects

5. As noticed, the only question involved in these appeals is about the legality and validity of the directions by the State Commission to the appellants to refund the deposited amount to the respondent with compound interest. The relevant factual and background aspects, to the extent relevant for the short question involved in the matter could be noticed as follows:

5.1. The appellant No. 1 is said to have launched a residential project namely Siddharth Shila Apartments at Plot No. 24, Vaishali, Ghaziabad, Uttar Pradesh. The appellant No. 2, K.L. Suneja is said to be the Director of the appellant No. 1. On 01.08.1989, the respondent, a Non-Resident Indian, applied for allotment of three flats in the said project and pursuant thereto, the appellant No. 1 issued allotment letter in her favour, purportedly allotting three residential flats bearing Nos. C-601, C-602 and C-603 admeasuring 1375 sq. ft. each (including common areas) for a consideration of Rs. 7,37,000/-, Rs, 7,35,625/- and Rs. 7,35,625/- respectively. The entire consideration was payable by the respondent in 12 instalments. It has been the case of the appellants that the respondent made payment up to 6th instalment but, defaulted thereafter and did not make remaining payment despite numerous reminders.

5.2. On 15.10.2005, the respondent issued a notice to the appellants, stating, inter alia, that even after 16 years, the appellants had kept the allottees waiting despite having received more than 60% of the total cost of the respective flats. It was also stated that she could make further payment towards the remaining instalments but was having legal right to know as to when the construction would be completed and the possession would be handed over; and without disclosing such essential facts, retaining the deposited money amounted to deficiency in service in terms of Section 2 of the Act of 1986. The respondent called upon the appellants to furnish within 15 days a written undertaking supported by a progress certificate from the architect concerned as to when the said flats would be completed or else, she would be approaching the proper forum under the relevant provisions of law against them. The relevant contents of this notice read as under: –

‘5) That it is further needless to mention here that an allottee like my said clientess, who has already invested more than 60% of the total cost of the respective flats, certainly can make further payment towards the remaining instalments but at least the allottees at large are having legal rights to know as to when the said flats will be completed and the possession be handed over to them, and without disclosing the same from your side, and keeping the money collected amounts to deficiency in service as per Section 2 of the Consumer Protection Act for which my said clientess shall have right to invoke the jurisdiction of the competent forum.

6) That without prejudice to the above, my client is ready to make the payment of balance instalments as per the statement of account subject to the undertaking of proposed completion of the said flat and further production of written progress certificate from the architect concerned of yours because my clientess shall not be kept in dark for period not known to her within which she is going to take possession of the flat.

7) That it is further to mention here that as per the various landmark pronouncements of National Commission as well as State Commissions of various states, in the said facts and circumstances, you are certainly liable to be prosecuted and also liable to the damages and interest thereon.

In light of the above facts and circumstances, I do hereby call upon you which I hereby do and call upon you, to furnish or produce a written undertaking supported by a progress/completion certificate from your concerned architect within which the said flats shall be completed, within a period of 15 days from the date of the present legal notice, failing which I have clear instructions from my said clientess to invoke the proper forum under the relevant provisions of law against you.

Without prejudice to the above, my said clientess shall have other legal rights against you as advised in law.’

5.3. In reply to the aforesaid notice, the appellants stated details of payment made by the respondent and it was alleged that it had been a matter only of provisional allotment and no agreement as such was executed between the parties; and the allotment had been cancelled due to default on her part. After tabulating the payment made and the alleged dues, it was also stated on behalf of the appellants that they were ready to refund the amount by way of cheque but the respondent was seeking refund in cash, which was unjustified. However, a cheque in the sum of Rs. 10,68,031/- was sent towards refund with the said reply dated 08.11.2005 while stating, inter alia, as under: –

‘2. From the aforesaid it will be apparent that not only did your client not make the payments within time, but also failed to pay the interest and thereafter stopped making any payments whatsoever in spite of reminders. As in 2002 a sum of Rs 8,22,682.00 (Rupees Eight Lacs Twenty Two Thousand Six Hundred Eighty Two only) was due from your Client and against which your Client sent in early Feb. 2002 total sum of Rs 30,000/- (Rupees Thirty Thousand only) and again in end of Feb. 2002 a total sum of 45,000/- which was returned by my Clients since the allotment stood cancelled due your Client is aware of the allotment having stood cancelled, at least since the year 2002 and the notice now got sent is with ulterior motives. No payments as falsely alleged were even tendered in January, 2004 or after Feb. 2002. In last your Client pursuant to the cancellation of the allotment wanted the refunds in terms of the provisional Allotment of the sum of Rs 10,68,031.00 (Rupees Ten Lacs sixty Eight Thousand Thirty One) only in cash only which my Clients refused and offered to pay the cheque for the said amount, however, your Client pleaded with my Clients that they had not accounted for the payments made to my Clients and as such could not take back the Cheque in refund and thus were demanding the case However my Clients did not want to be privy to the illegal acts of your client and refused to comply with the demand of your client to pay the cash. It is for this reason that the notice has been issued on totally wrong facts and demands.

3. All the other contents of your notice are incorrect and are denied and my clients are along with this reply enclosing their Cheque No. 357757 dated 07 November 2005 of Citibank NA New Delhi for a sum of Rs 10,68,031.00 (Rupees Ten Lakhs Sixty Eight Thousand Thirty One) only in favour of your client towards refund of the amounts due to them under the Letter of Provisional Allotment. Please further note that there never was any Agreement between your Client and my Clients and in accordance with the accepted practice or the trade your client had only made a provisional booking when the project or my clients was at a nascent stage and when there was no certainty and when no flats were in existence. The said Provisional Allotment was to be converted into an Agreements to sell which as per the Law. Where the property is situated is required to be registered upon payments being made by your client and since your client did not comply with the terms or the Provisional Booking no such Agreement came into being and the client of your client after 3 years of the date when at least they admit to have become aware of the cancellation is also barred by time.
4. You are requested to advise your client accordingly and to refrain from any mis-conceived litigation. Upon cancellation of the Provisional allotment no flat has been reserved for your client and no such flat is in existence. The mis-conceived litigation if any instituted by your client shall be defended by my Clients at the cost and risk of your client.’

5.4. On 30.11.2005, a rejoinder was sent on behalf of the respondent to the reply aforesaid, while returning the cheque and while objecting to the conduct of the appellants, in the following words: –

‘I would like to bring to your notice that your client wrote letter dated 26.11.2001 in respect of flat No.(1) C-601 to my clientess whereby accepted receipt of Rs. 4,43,501/- out of total amount of Rs. 7,08,458/-, (2) C-602, receipt of Rs.4,46,912/- out of total amount of Rs. 7,17,114.40 and (3) C-603, receipt of Rs. 4,44,625/-out of total amount of Rs. 7,32,147.50 and demanded balance amounts of Rs. 2,64,957/-, Rs. 2,70,202.40 and Rs. 2,87,522.50 respectively. Photocopies of the aforesaid letters are enclosed for your kind perusal. Thus more than 60% of the total due amount has been paid by my clientess. Since there was no progress in the construction of the above said flats on part of your client, my clientess had no option but to stop the further payment. The cancellation of allotment without show cause notice to my clientess and even non intimation of cancellation order is illegal and thus amounts to illegal malafide intention on part of your client. However, my clientess is still ready to make balance amount if the possession of the above said three flats are handed over to my clientess.

It is wrong and denied that your client ever intimated the stage of construction of the flats. My client had applied in the year 1989 and after 16 years she is being told that her allotment has been cancelled.

My client has been cheated by your client with dishonest intention and has misappropriated her hard money whereby causing huge loss, mental agony to my clientess.

The above said cheque is enclosed herewith and you are requested to acknowledge its receipt.

I, therefore, through this rejoinder call upon you to advise your client to immediately hand over the physical possession of the above said flats failing which my clientess shall be constrained to initiate legal proceedings both civil and criminal before competent court of law/forum and in that event your client shall be liable for its cost, risk and consequences.’

5.5. After such exchange of communications, the respondent appears to have filed a civil suit, which was dismissed for want of jurisdiction. Thereafter, she preferred the said complaints in the District Forum. A copy of one such complaint has been placed on record and the relief claimed therein could be usefully reproduced as under: –

‘Therefore, in the facts and circumstances of the case the Complainant most respectfully prays that this Hon’ble state Forum may kindly be pleased.

(1) To direct the respondent to give possession of the flat C-601 to the complainant within one month;

(2) To direct the opposite Parties to pay a sum of Rs. 14,00,000/- (Fourteen lakh rupees only) as damages for the loss of rent and mental agony and also direct the respondent to pay interest on 4,43,500/- @ of 18% per annum for 16 years i.e. Rs. 10,758,00/- i.e. total sum of Rs. 24,758,00/-

(3) To grant any other and further reliefs as may be deemed fit and proper in the interest of justice.

(4) To award exemplary costs in favour of the Complainant and against the respondent.’

5.6. The District Forum, while taking the three complaint cases together, proceeded to reject the same while observing, inter alia, as under:-

‘7. Apart from it, the Complainant is also guilty of concealment of the material fact from this Forum. OP has alleged that on the same cause of action a case is pending before Civil Court at Karkardooma Courts, Delhi and the Complainant has not denied this fact. Moreover, complaint is also barred by limitation. The Complainant is an NRI. She had invested her amount here in real estate. The Complainant also filed two more complaints here alongwith this complaint therefore as rightly objected by the OP that all such activities of the Complainant were made with a view to earn profit by investing her money in real estate. Thus, Complainant tried to avail of the services of the OP for commercial purpose. Whereas, the provisions of Consumer Protection Act, 1986 were made for the benefit of a Consumer. Thus, Complainant does not fall within the category of consumer as defined under section 2(d) of the Act. Therefore, taking the case of the Complainant from any angle, we do not find any merit in her case hence, we are constrained to dismiss the complaints. Copy of this order be placed on all the files.’

The State Commission awarding compound interest

6. The State Commission, however, did not agree with the reasoning of the District Forum and held that the complaints made by the respondent were maintainable in law. As noticed, those questions relating to maintainability are not involved in these appeals and hence, we need not dilate on the same.

6.1. The relevant aspect of the matter is that after having overruled preliminary objections of the present appellants, the State Commission observed that 60% of the total sale consideration was paid by the complainant-respondent; that possession of the flats booked by her was not handed over even after expiry of the agreed period; that the complainant, having opted for the construction-linked plan, was to make payment of the balance amount on delivery of possession; and the allegation of her being in default was to be rejected because, on inspection of the site, construction was not found as per schedule. Having said so, the State Commission proceeded to consider the question as to how the complainant was to be compensated for the monetary loss, and mental and physical harassment suffered at the hands of opposite parties because of non-delivery of the allotted flats. The relevant observations of the State Commission read as under: –

’19. In these circumstances all the preliminary objections of the OPs/respondents, since not maintainable are sequentially rejected. Coming to the merit of the case, it is a fact that booking of three flats was done. This is also indisputed that 60% of the total sale consideration was paid to OPs. Possession of the flats so booked were not handed over although the agreed period was over. The complainant having opted for the construction linked plan had to pay the balance amount on the delivery of the possession of the flats. But on inspection of the site the construction in the project was not found as per schedule. Finally the objection of the OP to the effect that the complainant was defaulter in making the payment cannot sustain since the complainant had opted for consideration linked plan and she had to make the payment beyond 60% on completion of the construction and thus this objection is also overruled. In these circumstances the complaint deserves to be accepted. Accordingly the orders passed by the District Forum dismissing the complaint since not sustainable are set aside.

20. Having arrived at the said conclusion, the point for consideration is as to how the Complainants are to be compensated for the monetary loss, mental and physical harassment he has suffered at the hands of OPs on account of non-delivery of the allotted flat.’

6.2. The State Commission, thereafter, examined various connotations of the term ‘compensation’ and observed that the Commission or the Forum was entitled to award not only value of goods or services but also to compensate a consumer for injustice suffered by him. With reference to the decision in Ghaziabad Development Authority v. Balbir Singh: (2004) 5 SCC 65, it was observed that this Court had indicated the factors to be kept in view while determining adequate compensation; and in cases where possession was directed to be delivered to the complainant, the compensation for harassment would necessarily have to be less because that party was being compensated by increase in the value of the property but, in cases where only money was to be refunded, the party would be suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot and he was deprived of the same, as also the benefit of price escalation. The State Commission also observed that in such case (only of refund of money), the complainant would suffer substantial loss on account of payment of interest on the loans raised; depreciation in the money value; and escalation in the cost of construction etc. The State Commission also observed that in these proceedings, necessary orders regarding refund of the deposited amount could be passed, notwithstanding the proceedings in any other forum.

The relevant observations of the State Commission read as under: –

’21. The provisions of the Act enable a consumer to claim and empower the Commission/Forum to redress any injustice done to a consumer. The Commission or the Forum is entitled to award not only value of goods or services but also to compensate a consumer for injustice suffered by him. The word compensation is of very wide connotation. It may constitute actual loss or expected loss and may extend the compensation for physical, mental or even emotional suffering, insult or injury or loss. Therefore, for the purpose of determining the amount of compensation, the Commission/Forum must determine the extent of sufferance by the consumer due to action or inaction on the part of the Opposite Party. In Ghaziabad Development Authority Vs. Balbir Singh -(2004) 5 SCC 65, while observing that the power and duty to award compensation does not mean that irrespective of facts of the case, compensation can be awarded in all matters on a uniform basis, the Hon’ble Supreme Court gave certain instances and indicated the factors, which could be kept in view while determining adequate compensation. One of the illustrations given in the said decision was between the cases, where possession of a booked/allotted property was directed to be delivered and the cases where only monies paid as sale consideration, are directed to be refunded. The Hon’ble Court observed, in this behalf, that in cases where possession is directed to be delivered to the Complainant, the compensation for harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is getting. But in cases where monies are being simply refunded, then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is not only deprived of the flat/plot, he has been deprived of the benefit of escalation of the price of the flat/plot. Additionally, in my view, in such a situation, he also suffers substantial monetary loss on account of payment of interest on the loans raised; depreciation in the money value and escalation in the cost of construction etc.

22. From the above it is apparent that this Commission can pass orders regarding the refund of the amount deposited to the company by the complainants, notwithstanding the proceedings pending in any other forum.’

6.3. After the observations afore-stated, the State Commission took note of a few decisions against the builders or the real estate developers and on the rights of the allottee to decline possession at the belated stage. Thereafter, the State Commission referred to the contentions urged on behalf of the complainant on the point of compensation based on the decision of COMPAT in the case of Dr. Manjeet Kaur Monga, which was affirmed by this Court. In paragraph 29 of the judgement, the State Commission presented its observations as also extractions from the said decision of COMPAT in the following manner: –

’29. The ld. Counsel for the appellant while arguing on the point of compensation has submitted that the case under consideration is on the facts of Manjit Kaur Monga versus K.L. Suneja and ors decided by the Hon’ble COMPAT and upheld by the Hon’ble Supreme Court of India in the matter of Manjit Kaur (Supra)-(2018) 14 SCC 679 holding as under:-

’36…. It is clear that the respondents had made a false representation to the general public including Smt. Gursharan Kaur about the time within which the project was to be completed i.e. three years but did not complete the construction for more than one decade. Therefore, there is no escape from the conclusion that they are guilty of unfair trade practice as defined under Section 36-A(1)(i)(ii) and (ix) of the Act.

37. The cancellation of allotment made in favour of the complaint deserves to be declared as wholly arbitrary, illegal and capricious. It is not in dispute that Smt. Gursharan Kaur amount. The complainant, Dr. (Mrs.) Manjeet Kaur Monga deposited three other instalments. She did not despite further instalments because the respondents did not complete the construction within the stipulated time. For the first time a vague statement about the construction was made in letter dated 26.12.2001, which was issued after 12 years of the booking. Even thereafter the respondents did not disclose the stage-wise progress in the construction work and, as mentioned above, they deliberately misconstrued the complaint’s protest dated 22.05.2002 as her disinclination to take the flat…..Therefore, it must be held that the complainant was justified in not paying further instalments of price and the respondent committed grave illegality by cancelling the allotment.’

The quantum of compensation as has been decreed in the aforementioned judgement of the Hon’ble COMPAT and also upheld by the Hon’ble Supreme Court of India stipulates a fair, just, equitable and reasonable award. The respondent has unscrupulously deprived the appellant of the due benefit of escalation in property prices since 1989 till date and therefore, in order to put the appellant in the same place and deny the benefit of his own illegality to the respondent this Hon’ble Court ought to compensate the appellant in terms of the prevailing market value of the property in question.

In conclusion, the appellant seeks the return of the instalments paid by her to the respondent plus compound interest @ 15% p.a. from the date of actual refund, in addition to damages quantified at Rs. 14,00,000/- for mental agony and expenses incurred in protracted litigation.’

6.3.1. We are constrained to observe, in regard to the above-quoted part of the judgment of the State Commission that in the said paragraph 29, the State Commission purportedly extracted a few parts of paragraphs 36 and 37 of the decision of COMPAT in the case of Dr. Manjeet Kaur Monga but then, placed two more passages as if being the part of extractions, though the said two passages had obviously been the part of submissions of the complainant where for the first time, the claim of compound interest @ 15% p.a. occurred in this case. Although, such a presentation in the judgment dated 12.03.2020 of the State Commission (as appearing in the copy of judgment placed before us – pp. 166-167 of the paper book) seems to be that of a typographical/clerical error but, we have reproduced the same verbatim, for being relevant for the present purpose.

6.4. After the observations foregoing, the State Commission found the case of the present complainant akin to that of Dr. Manjeet Kaur Monga; and when the units in question had already been sold, found it just and proper to direct the present appellants to refund the deposited amount together with compound interest @ 14% from the date of deposit. This, according to the State Commission, was in line of the decision of this Court in Malay Kumar Ganguly v. Sukumar Mukherjee (Dr.): [2009] CPJ 17 (SC). The State Commission observed and directed as under: –

’30. In fact reliance of the judgement referred to in the preceding paragraph against the same Ops, would be apt and best suited since against the same builder and involving similar facts In the facts and circumstances of the case, the possession of the unit having already been sold, is not possible to be handed over putting the complainant to a position where she had nothing to fall back upon, the Ops/respondents are directed to refund relying on the judgement in the matter of Manjit Kaur Monga versus K.L. Suneja and ors (Supra) decided by the hon’ble Compat and upheld by the Hon’ble Supreme Court of India, the deposited amount plus compound interest at the rate of 14% from the date of deposit. This would be in line with the principles set out by the Hon’ble Supreme Court of India, in the matter of Malay Kumar Gangully versus Sukumar Mukherjee (Dr.) as reported in III [2009] CPJ 17 (SC) providing that a person is entitled to damages/compensation as nearly as possible sum of money which would have been if he had not sustained the wrong. This would meet the ends of justice.

31. Ordered accordingly leaving the parties to bear the cost.
32. FA-122/2014 and FA-123/2014 being on the same lines bearing the same facts and on the common point of law are also disposed of accordingly with directions to the Ops as contained in para 30 of this order.’

Approval by the National Commission

7. In the revision petitions preferred by the appellants against the judgment and order dated 12.03.2020 so passed by the State Commission, the National Commission, after rejecting other contentions of the appellants, found that the facts of Dr. Manjeet Kaur Monga’s case were almost identical in relation to the flats booked by the respondent in the same project of the appellants. The National Commission took note of the observations of this Court in Dr. Monga’s case and rejected the contentions of the appellant in seeking to avoid the application of the said decision, inter alia, in the following words: –

’32. From the bare reading of this provision, it is clear that the proceedings continuing under MRTP Act before its repeal had been saved under Section 66(1)(A). The argument of learned counsel for the Opposite Party that the order of Dr. Manjeet Kaur Monga’s case (supra) had been passed under a repealed Act and therefore is not applicable in this case, has no force and that the argument is totally misconceived and misdirected. Also, the order in Dr. Monga’s case (supra) was passed in the year 2015 after the repeal of MRTP Act which was challenged before the Hon’ble Supreme Court and the Hon’ble Supreme Court passed its order in 2018. Therefore, it is clear that the order of Dr. Manjeet Kaur Monga’s case (supra) was pronounced after the repeal of the MRTP Act and not during the existence of the MRTP Act.

33. There is no dispute that the facts of the Monga’s case (supra) and the present case are identical as the flats were booked in the same project of the Petitioner, although by different allottees and that in both the cases, despite payment of the money, the allotted flats were not given to its allottees within the stipulated period or even thereafter. In the present case, the flats had been sold during the pendency of the Complaint. The Opposite Party, therefore, is not in a position to hand over the possession of the said flats to the Complainant and the Commission is fully empowered to grant any other relief which is just and proper in such circumstances. It is also settled proposition of law that the Commissions are bound to follow the dictum of the superior Foras on the identical facts. In the present case, on the identical facts there is a judgment of Hon’ble Supreme Court, although the remedy had been sought in that case under a different provision of the Act, however, the findings are on the identical facts of the case and so the order is binding on the Foras below….’

7.1. After reproducing certain passages from the decision of this Court in Dr. Manjeet Kaur Monga (supra), the National Commission concluded on the matter by dismissing the revision petitions in the following terms: –

’34. It is also apparent that the Complainant has specifically argued before the State Commission and also mentioned this fact in her written submissions that they should be awarded the same relief as had been granted in Dr. Monga’s case (supra) and that this contention was not opposed by the Opposite Party before the State Commission.

35. This Commission has a limited revisional jurisdiction. It can set aside the impugned order in exercise of its revisional jurisdiction only when the findings are perverse or without jurisdiction.
36. From above discussion it is clear that in this case, the State Commission had duly followed the dictum of the Hon’ble Supreme Court in Dr. Manjeet Kaur Monga’s case (supra) and therefore, it cannot be said that the findings of the State Commission are perverse or without jurisdiction. We found no illegality or infirmity in the impugned order. The present Revision Petitions have no merit and the same are dismissed.’

Rival Contentions

8. While assailing the orders aforesaid, awarding compound interest to the respondent, learned senior counsel Mr. Ranjit Kumar appearing on behalf of the appellants has put forward six-fold submissions which could be summarised as follows:

8.1. Learned senior counsel has contended in the first place that the Act of 1986 does not confer any power on the Consumer Fora established thereunder to award compound interest on the compensation amount; and for being not envisaged under or by the scheme of the Act of 1986 and being not provided in the contract either, such awarding of compound interest cannot be countenanced. Learned senior counsel has submitted that wherever the legislature intended to confer the power to grant compound interest, an enabling provision has been incorporated in the statute. In this regard, the learned counsel has given several examples, like Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006; Section 5 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993; Section 23 of the Trusts Act, 1882; Section 8 of the Payment of Gratuity Act, 1972; Section 7 of the Public Premises (Eviction of Unauthorised Occupants) Amendment Act, 2015; and Section 3 of the Usurious Loans Act, 1918. Learned counsel has cited the decision of this Court in the case of Central Bank of India v. Ravindra: (2002) 1 SCC 367 in support of the submissions that with the contract not providing so, compound interest could not have been awarded. It has also been contended that in the absence of any agreement or any statutory provision or mercantile usage, interest payable could only be at the market rate and could never be compounded at whopping 14%. Learned counsel has also relied upon the decision in Clariant International Ltd. and Anr. v. Securities & Exchange Board of India: (2004) 8 SCC 524.

8.2. In the second limb of submissions, learned senior counsel for the appellants has contended that in the recent decisions, this Court has only awarded simple interest with the rates ranging from 6% to 9% p.a. in the cases of deficiency of service by the builders. In this regard, learned counsel has referred to the rate of interest awarded in Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor: (2022) SCC OnLine SC 416; NBCC (India) Ltd. v. Shri Ram Trivedi: (2021) 5 SCC 273; Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna and Ors.: (2021) 3 SCC 241; DLF Home Developers Limited and Anr. v. Capital Greens Flat Buyers Association and Ors.: (2021) 5 SCC 537; Arifur Rahman Khan and Ors v. DLF Southern Homes Pvt Ltd and Ors.: (2020) 16 SCC 512 and DLF Home Panchkula Pvt Ltd and Ors. v. DS Dhanda and Ors.: (2020) 16 SCC 318. The learned counsel has particularly referred to the passage in the case of Ireo Grace Realtech (supra) wherein, the prayer for compound interest @ 20% was rejected, for having no nexus with the commercial realities of the prevailing market. Learned counsel would submit that in the face of such decisions, taking even the highest interest rate at 9% p.a., the total amount with interest payable to the respondent on 09.05.2022 (the date of issuance of notice by this Court) would be Rs. 49,87,129/- whereas the respondent has already withdrawn a sum of Rs. 2,55,95,119/-, which was deposited by the appellants pursuant to the directions of the National Commission and then by this Court, alongwith accrued interest. It has been submitted that the amount so received by the respondent would be approximately equal to the principal amount together with simple interest @ over 60% p.a., calculated from the year 1989 to the month of June, 2022.

8.3. Learned senior counsel has contended in the third limb of submissions that the directions as issued in the present matter would result in unjust enrichment of the respondent inasmuch as the present value of the award would be around Rs. 7.35 crore and that would be approximately 4.5 times the cost of all the three flats taken together today as per the current market rate. Pertinently, the learned senior counsel would submit, the respondent had, until the time of cancellation, paid only a sum of Rs. 13.35 lakhs for all the three flats which was only 25% of the final price that would have been payable at the time of taking possession. In this regard, it has also been argued that even with reference to the decision in Ghaziabad Development Authority (supra), the compensation to be awarded to the respondent cannot exceed the fair market value of the flats and as per the circle rates, it would be around Rs. 2.04 crore and even as per the precedents of sale transactions, the amount could at the most be Rs. 2.25 crore as per the average sale price based on 10 sale precedents in the same building and for the flats of similar size. In any case, the amount of compensation on the basis of present market realities would be much lower as compared to the compensation quantified on the basis of compound interest @ 14%.

8.4. In the fourth limb of submissions, learned senior counsel for the appellants has argued that in the present case, the respondent had neither demanded nor prayed for the relief of compound interest in the complaints filed before the District Forum; and with reference to the decision of this Court in the case of Manohar Lal (D) by Lrs. v. Ugrasen (D) by Lrs. and Ors.: (2010) 11 SCC 557, it has been contended that the Consumer Fora could not have granted relief which had not been specifically prayed for. Further to this, learned counsel has also contended that in the present case, there had not been any finding by the State Commission or the National Commission as regards the alleged loss or injury suffered by the respondent. Although, the respondent pleaded loss of rent but no evidence was brought on the record on this issue nor had it been the case of the respondent that she was staying in a rented accommodation or that she had availed loan for purchasing the flats and was making payment of instalments to the lender. It has, thus, been argued that without any pleading, without any evidence, and without any finding on any loss or injury, the State Commission proceeded to direct the refund of deposited amount with compound interest @ 14%, which remains wholly unjustified.

8.5. Fifthly, learned senior counsel for the appellants has referred to the decision of this Court in the case of Dr. Manjeet Kaur Monga (supra) in detail and has contended that therein, the only argument before this Court was as to whether the Tribunal under MRTP Act was required to determine the specific amount towards compensation as envisaged by Section 12-B thereof and the observations in paragraph 5 of the decision, this Court did not interfere with the award of compound interest in that context. The learned counsel has referred to a 3-Judge Bench decision of this Court in the case of Sanjay Singh and Anr. v. U.P. Public Service Commission, Allahabad and Anr.: (2007) 3 SCC 720 to submit that it is the ratio decidendi of a judgment and not the final order therein which form a precedent and, therefore, Dr. Monga’s case cannot be considered to be a binding precedent so far as the proposition with respect to compound interest is concerned.

8.6. In the sixth fold of submissions, essentially being in the alternative, the learned senior counsel has submitted that even in Dr. Manjeet Kaur Monga’s case (supra), this Court upheld the directions for refund with compound interest only until the date of refund postcancellation, which came to Rs.31,87,131/- and which, at the relevant time, was also the approximate market value of the said flat. In this regard, learned counsel for the appellants has also referred to the subsequent decision in Dr. Manjeet Kaur Monga’s case by this Court in K.L. Suneja and Anr. v. Dr. (Mrs.) Manjeet Kaur Monga (D) Through Her LRs and Anr: 2023 SCC OnLine SC 91. It has, thus, been contended that the impugned orders, which direct a refund of the principal amount together with compound interest @ 14% without even specifying the period for which it would be payable, are required to be interfered with by this Court. While elaborating on this line of submissions, learned counsel has submitted that in the present case, the appellants had refunded the entire amount (after deducting the earnest money deposited by the respondent) through the cheque dated 07.11.2005 for an amount of Rs. 10,68,031/- and hence, assuming without admitting the liability towards compound interest at the rate awarded by the State Commission, the total amount payable until 08.11.2005 would be Rs. 84,76,540/- and not beyond. Learned counsel would submit that awarding of compound interest without taking note of the facts of refund cheque issued by the appellants remains wholly unjustified.

9. On the other hand, learned senior counsel for the complainant- respondent Mr. Sidharth Luthra has duly supported the proposition of awarding compound interest in this case and has strenuously countered the submissions made on behalf of the appellants.

9.1. With reference to the background aspects, learned senior counsel has submitted that the respondent purchased 3 flats from the appellants in the year 1989 when she was 39 years of age in anticipation of moving to India and staying together with her daughters; and the appellants promised to complete the construction and deliver the flats within 36 months i.e., by the year 1992 and thus induced the respondent to pay 60% of the consideration amount in a construction-linked payment plan by 1994. However, fact of the matter had been that there was no construction on the ground until about the years 2003-2005 and, thereafter, the appellants fraudulently sold the same flats to a third party without even intimating the alleged cancellation to the respondent. Learned counsel would submit that the appellants have failed to bring on record any cancellation letter pertaining to the said 3 flats and on the contrary, they have made inconsistent statements about the date of cancellation while sometimes alleging that cancellation was in the year 2002 whereas stating before the National Commission that the cancellation was on 25.04.2005. Thus, it has been contended that the appellants had neither been fair in their dealings nor consistent in their stand.

9.2. While placing strong reliance on the decision of this Court in Dr. Manjit Kaur Monga (supra), learned senior counsel has submitted that the said case relating to the same project and the same builder (the appellants) makes it clear that the appellants had duped the respective complainants by employing almost the same modus operandi. Learned counsel would submit that as regards claim for compensation, the respondent’s case stands on a better footing than the case of Dr. Monga inasmuch as in the said case, the appellants had cancelled the allotment by a letter dated 30.04.2005 whereas no such cancellation letter is on record in the present case and in fact, the appellants stated about the alleged cancellation only in their reply dated 08.11.2005 to the notice served by the respondent on 15.10.2005. This is coupled with the fact that the respondent had made payments of Rs. 30,000/-, Rs. 45,000/- and Rs. 75,000/-, respectively on 09.02.2002, 20.02.2002 and 25.01.2004, which shows that she was keenly interested in purchasing the flats for her private use.

9.2.1. Learned counsel has further submitted that while both, the respondent and the said Dr. Manjit Kaur Monga, were duped by the appellants and resultantly both sought possession of their respective flats, the respondent invoked jurisdiction under the Act of 1986 whereas the said complainant approached COMPAT under the MRTP Act. Both the fora had concurrent jurisdiction as regards unfair trade practice, though the respondent also complained of deficiency of service. Learned counsel has referred to the provisions contained in Section 12-B(3) of the MRTP Act and Section 14(1)(d) of the Act of 1986 and has submitted that the provisions are in essence identical, empowering the respective fora to award compensation though, the power to award compensation under the Act of 1986 is wider in scope.

9.2.2. Learned senior counsel has further submitted that in Dr. Monga’s case, this Court has affirmed the measure of compensation for an identically placed complainant by refund of deposit together with 15% p.a. compound interest from the date of deposit till the date of return. Learned counsel has recounted the factors constituting rationale in awarding such compound interest in Dr. Manjit Kaur Monga’s case, including those of extraordinarily long harassment; deprivation of flat; inordinate delay of construction; illegal retention of deposit; and then, compulsion to pursue protracted litigation. Learned counsel would submit that the respondent had been subjected to rather excessive harassment for about 34 years and presently at the age of 73 years, she is required to pursue this litigation. Further, in Dr. Manjit Kaur Monga’s case, the deposits were retained by the appellants for about 12 to 15 years whereas in the case of the respondent, the deposits were illegally retained and utilized by the appellants for 29 to 34 years. Thus, according to the learned counsel, the award of compound interest to the respondent does not call for any interference.

9.3. Learned senior counsel has further cited the decision in Wallersteiner v. Moir (No. 2): (1975) Q.B. 373 to highlight the principles therein that compound interest (i.e. interest with yearly rests in case no other frequency of rests is specified) should be awarded under the equitable jurisdiction of the Court where the wrongdoer utilizes the money retained for business purpose and thereby making the profit thereon. Equally, it should be presumed that the wronged person would have made the most beneficial use of the money, had it not been deprived of it. It was further held that the ‘justification for charging compound interest normally lies in the fact that profits earned in trade would likely be used as working capital for earning further profits’ and that the ‘application of this rule is not confined to cases in which a trustee or agent has misapplied trust funds or a principal’s