M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. versus ANITA MERCHANT on 18 April 2023

[2023] 5 S.C.R.

AM/S SUNEJA TOWERS PRIVATE LIMITED & ANR.

v.

ANITA MERCHANT

(Civil Appeal Nos. 2892–2894 of 2023)

BAPRIL 18, 2023

[DINESH MAHESHWARI AND SANJAY KUMAR, JJ.]

Consumer Protection Act 1986 : s. 14(1)(d) – Award ofcompound interest by Consumer Fora – Justification of – On facts,consumer complaints by the complainant-respondent allegingCdeficiency of service on the part of the appellants-builder for havingfailed to deliver the possession of three flats booked by her, evenafter expiry of the agreed period and despite the fact that she hadadmittedly made payment of 60% of the total sale consideration –Dismissed by the District Forum – However, the State CommissionDawarded compound interest in favor of the respondent @ 14 %,relying upon Dr. Manjeet Kaur Monga’s case – National Commissionupheld the same – On appeal, held: State Commission and theNational Commission passed rather assumptive orders on the basisof the decision in Dr. Monga that compound interest was required tobe allowed – Various factors recounted on behalf of the respondent,Eincluding excessive harassment and denial of the fruits of herinvestment could all lead to a reasonable amount of compensationbut, there appears absolutely no reason that compound interest beallowed in this matter – Award of compound interest had neitherany foundation in the record nor any backing in law nor theFConsumer Fora took care to examine the contours of their jurisdictionand the requirements of proper assessment, if at all any compensationand/or punitive damages were sought to be granted – Awarding ofcompound interest with reference to Dr. Monga’s case and withoutexamining any other factor has led to serious inconsistencies; andif the award as made is approved, it could only lead to unjustGenrichment of the respondent in the name of disgorgement of benefitspurportedly derived by the appellants – Thus, the impugned orderscannot be sustained and is set aside – However, the respondentallowed to retain the sum of money already received by her onlybecause of peculiar circumstances of this case.H

M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITAMERCHANT

Judgment/order : Precedent – Ascertainment of – Held:Judgment is an authority only in regard to its ratio which is requiredto be discerned – Decision cannot be regarded as an authority inregard to its conclusion alone or even in relation to what could bededuced therefrom.

Allowing the appeal, the Court

HELD: 1.1 Keeping the principles in Sanjay Singh’s casein view and for what has been discussed in regard to ratiodecidendi of the decision in Dr. Manjeet Kaur Monga’s case, it isbut clear that the said decision cannot be read in support of theprinciple that compensation and/or punitive damages in terms ofthe Consumer Protection Act, 1986 could also be by way ofcompound interest. The State Commission awarded compoundinterest, and National Commission approved such awarding ofcompound interest to the present respondent, only with referenceto the said decision in the case of Dr. Monga. The ratio decidendiof Dr. Monga is not leading to the enunciation in favour of awardingcompensation and/or punitive damages by way of compoundinterest, the substratum of the orders impugned is knocked tothe ground. [Para 18][1142-F-H]

1.2 In certain eventualities, the legislature has indeedspecified the award of compound interest. Mostly, it has beenprovided so in relation to any monetary involvement having thetrappings of public interests in it. The Consumer Protection Act,1986, on the other hand, being a beneficial legislation, inter alia,empowers the Consumer Fora to direct payment of such amountas may be awarded as compensation to the consumer for any lossor injury suffered due to the negligence of the opposite party.The proviso added to Clause (d) of Section 14(1) of the 1986 Actempowers the Forum to grant punitive damages in suchcircumstances as it deems fit. That being the position, it cannotbe laid down in absolute terms that for no such stipulationregarding compound interest being available in the 1986 Act,the same can never be granted by the Consumer Fora. When thematter is being considered for award of compensation and/orpunitive damages, want of stipulation in the contract as regardsaward of compound or simple interest, cannot be decisive of thematter. [Para 20][1143-E-G]

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A1.3 In an action before the Consumer Fora under the Actof 1986, the forum would be entitled to provide for the amount ofcompensation as deemed fit, having regard to the facts andcircumstances of the case and the gravity of the negligence ofthe opposite party and consequential injury suffered by theconsumer. The forum could award even punitive damages butBthat would depend on the relevant circumstances and for thatmatter, the relevant factors shall have to be specified. In regardto such awarding of compensation and/or punitive damages, theforum concerned could take all the relevant factors into accountand award such amount as deemed fit and necessary but ordinarily,Cin the matters of money refund, awarding of compound interestas a measure of punitive damages is not envisaged. As to whatwould be the quantum of compensation and for that matter, whatwould be the quantum of punitive damages, would depend onfacts and circumstances of each case but while awarding so, theforum would be advised to specify all the relevant factors andDbasis of its quantification. A shortcut of awarding compoundinterest is neither envisaged by the statute nor any such term ofcontract between the parties or any such usage is found. Theattempt to seek compound interest in such real estate dealingsdid not meet with approval of this Court and such a claim wasEdeclined for having no nexus with the commercial realities of theprevailing market. Going by the principles governing the natureof jurisdiction of the Consumer Fora as also the principlesenunciated by this Court, the proposition of awarding compoundinterest in the cases of monetary refund in such dealings isdisapproved. [Para 22][1147-D-G; 1148-A-B]F

1.4 For award of compound interest, relevant factors shallhave to be taken into account which would include uncertaintiesof market and several other imponderables. If at all by way ofcompensation, the Consumer Forum considers it proper toexamine the time value for money, an in–depth and thoroughGanalysis would be required while taking into account all the factsand the material surrounding factors, including those of realitiesas also uncertainties of market. [Para 23][1148-C-D]

1.5 Awarding of compound interest with reference to Dr.Monga’s case and without examining any other factor has led toH

serious inconsistencies; and if the award as made is approved, itcould only lead to unjust enrichment of the respondent in thename of disgorgement of benefits purportedly derived by theappellants. The State Commission and the National Commissionhave passed rather assumptive orders on the basis of the decisionin Dr. Monga’s case that compound interest was required to beallowed. Various factors recounted on behalf of the respondent,including excessive harassment and denial of the fruits of herinvestment could all lead to a reasonable amount of compensationbut, there appears absolutely no reason that compound interestbe allowed in this matter. [Para 24][1148-D-F]

1.6 Having regard to the order proposed to be passed, theminute calculations and variety of alternatives presented by theparties are not entered into but, on a broad consideration of thematter, it is clear that even as per the exemplar sale deeds relatingto the same area and similar flats, the cost of 3 flats booked bythe respondent, as at present, is in the range of 2.25 crore, whereasthe amount payable under the award in question would be aboveRs. 7.35 crore. The respondent has attempted to compare thecircle rates of the land in the area in question with the submissionsthat there were no circle rates of the flats in the year 1989 andthe attempt on her part was to make “apples–to–apples”comparison and then factorising on the cost of flats. In the firstplace, no such efforts of calculation and assessment were madebefore the State Commission or the National Commission by therespondent. Secondly, the said Consumer Fora have not returnedcogent and convincing findings on the loss or injury of therespondent with reference to the relevant factors. These aspectsare referred only to indicate that award of compound interest inthe instant case had neither any foundation in the record nor anybacking in law nor the Consumer Fora took care to examine thecontours of their jurisdiction and the requirements of properassessment, if at all any compensation and/or punitive damageswere sought to be granted. The impugned orders are difficult tobe sustained. [Para 25][1148-F-H; 1149-A-C]

1.7 The State Commission merely referred to the decisionof COMPAT in Dr. Monga’s case and then referred to the prayerof the respondent for award of compound interest coupled with AB

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Athe fact that possession cannot be handed over to her. On thisand with reference to the observations in the case of Malay KumarGanguly’s case, for awarding compensation with such sum ofmoney as to put the wronged person in the position as he wouldhave been if he had not sustained the wrong, the State Commissionstraightaway jumped to the conclusion of awarding compoundBinterest @ 14%. Apart from other shortcomings, the StateCommission, even while awarding compound interest @ 14%,did not even take into account the fact of attempted refund ofmoney by the appellants by the cheque dated 08.11.2005 and didnot specify the period of such operation of compounding ofCinterest. The open-ended and the assumptive order by the StateCommission had been bereft of logic and had been wanting in therequisite reasoning as also specification of the relief sought tobe granted. The position in the National Commission had beenno better and in fact, the Commissions proceeded as if nothing else was required to be considered because of Dr. Manjeet KaurDMonga’s case. [Para 26][1149-D-G]

1.8 The impugned orders are required to be set aside.However, as indicated, the pertinent factors are that Dr. Monga’scase related to the very same project and very same builder withsimilar grievance of the complainant. In the said case, award ofEcompound interest until the date of attempted refund by thebuilders has attained finality. In this view of the matter, even whiledisapproving the proposition of providing compound interest assuch, it is deemed appropriate to take into consideration, onlyfor the purpose of the instant case, the other requirements of Fbalancing the equities. [Para 27][1150-A-C]

1.9 When the amount payable by the appellants withreference to the principles and propositions aforesaid iscalculated, it does not exceed the amount of Rs. 2,48,52,000/-together with accrued interest, which has already been receivedGby the respondent pursuant to the order passed by this Court on09.05.2022. Keeping in view the peculiar circumstances of thiscase, as an extraordinary measure, the respondent is allowed toretain the amount so received. This relaxation for the respondentis in no manner to be read as approval of the orders impugned orapproval of the proposition of awarding compound interest inH

M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITAMERCHANT

M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITAMERCHANT

these matters. Such a proposition of awarding compound interestin these matters by the Fora exercising jurisdiction under theAct of 1986 is disapproved. [Para 27.2, 27.3][1150-G-H; 1151-B-C]

1.10 The impugned orders passed by the State Commissionand National Commission are disapproved. Having regard to thepeculiar circumstances of this case, the amount already receivedby the respondent in the sum of Rs. 2,48,52,000/- together withaccrued interest is allowed to be retained by her but, it is madeclear that the appellants shall not be required to make any furtherpayment to the respondent, whether towards refund or towardscompensation or towards interest. [Para 28][1151-D]

Dr. Manjeet Kaur Monga v. K.L. Suneja (2018) 14 SCC679 : [2017] 6 SCR 453 – explained.

Ghaziabad Development Authority v. Balbir Singh(2004) 5 SCC 65 : [2004] 3 SCR 68; Malay KumarGanguly v. Sukumar Mukherjee (Dr.) [2009] CPJ 17(SC); Central Bank of India v. Ravindra (2002) 1 SCC367 : [2001] 4 Suppl. SCR 323; Clariant InternationalLtd. and Anr. v. Securities & Exchange Board of India(2004) 8 SCC 524 : [2004] 3 Suppl. SCR 843; ExperionDevelopers Pvt. Ltd. v. Sushma Ashok Shiroor (2022)SCC OnLine SC 416; NBCC (India) Ltd. v. Shri RamTrivedi (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. CapitalGreens Flat Buyers Association and Ors. (2021) 5 SCC537; Arifur Rahman Khan and Ors v. DLF SouthernHomes Pvt Ltd and Ors. (2020) 16 SCC 512 : [2020] 9SCR 136; DLF Home Panchkula Pvt Ltd and Ors. v.DS Dhanda and Ors. (2020) 16 SCC 318 : [2019] 7SCR 1061; Manohar Lal (D) by Lrs. v. Ugrasen (D) byLrs. and Ors. (2010) 11 SCC 557:[2010] 7 SCR 346;Sanjay Singh and Anr. v. U.P. Public ServiceCommission, Allahabad and Anr. (2007) 3 SCC 720 :[2007] 1 SCR 235; K.L. Suneja and Anr. v. Dr. (Mrs.)Manjeet Kaur Monga (D) Through Her LRs and Anr2023 SCC OnLine SC 91; Indian Council for Enviro–Legal Action v. Union of India and Ors. (2011) 8 SCC

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[2023] 5 S.C.R.

A161 : [2011] 9 SCR 146; Transmission Corp. of APLtd. v. P. Surya Bhagavan (2003) 6 SCC 353; BalramPrasad v. Kunal Saha (2014) 1 SCC 384 : [2013] 12SCR 30 – referred to.

Wallersteiner v. Moir (No. 2) (1975) Q.B. 373 – referred to.

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CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.2892-2894 of 2023.

From the Judgment and Order dated 31.03.2022 of the NationalConsumers Disputes Redressal Commission, New Delhi in RP Nos.771,772 and 773 of 2020.G

Ranjit Kumar, Sr. Adv., Ajay Bhargava, Ms. Vanita Bhargava,Arvind Ray, Karan Gupta, Ms. Vansha S. Suneja, M/s Khaitan & Co.,Advs. for the Appellants.

Sidharth Luthra, Sr. Adv., Viksit Arora, Ms. Supriya Juneja, AdityaHSingla, Ms. A. Sahitya Veena, Advs. for the Respondent.

The Judgment of the Court was delivered by DINESH MAHESHWARI, J.Table of Contents*Preliminary and brief outline .............................................. 2Relevant factual and background aspects ........................ 5The State Commission awarding compound interest ... 11Approval by the National Commission ...........................17Rival Contentions...............................................................19Matters of form and pleading not relevant in thepresent case ........................................................................35The cited decisions on award of interest in realestate dealings ....................................................................37The decision in Manjeet Kaur Monga’s Caseand its connotations ...........................................................45The complexities of present matter requiringfurther exploration .............................................................57In extraordinary measure, money received byrespondent allowed to be retained ..................................67Conclusion ...........................................................................69Preliminary and brief outlineLeave granted.

2. In these appeals by special leave, the appellants have essentiallyquestioned 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 773of 2020, whereby the National Commission has declined to interfere inthe common judgment and order dated 12.03.2020, as passed by theState Consumer Disputes Redressal Commission, Delhi[2], in Appeal Nos.121 of 2014, 122 of 2014 and 123 of 2014.

*Ed. Note : Pagination in the Table is as per the original judgment.1Hereinafter also referred to as ‘the National Commission’.2Hereinafter also referred to as ‘the State Commission’.

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A2.1. The present set of appeals has its genesis in the threecomplaints filed by the complainant-respondent before the ConsumerDisputes 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 thepart of the present appellants for having failed to deliver the possessionof three flats booked by her, even after expiry of the agreed period andBdespite the fact that she had admittedly made payment of 60% of thetotal sale consideration. The District Forum, in its order dated 20.12.2013,dismissed the complaints so filed by the present respondent on variousgrounds including that she had tried to avail of the services of the builderfor commercial purposes by booking three flats and thus, did not fallCwithin the category of “consumer”, as defined under Section 2(d) of theConsumer Protection Act, 1986[4].

2.2. In the said judgment and order dated 12.03.2020, the StateCommission, however, disapproved the order so passed by the DistrictForum as regards the maintainability of complaints and then, particularlyDwith 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 compoundinterest by Competition Appellate Tribunal[6] under the Monopolies andRestrictive Trade Practices Act, 1969[7] was not interfered with by thisCourt, granted relief to the complainant in the manner that the appellantsshall refund the amount deposited by her together with ‘compoundEinterest at the rate of 14% from the date of deposit’. The NationalCommission rejected all the contentions urged on behalf of the appellantagainst the order so passed by the State Commission and also found noreason to interfere with the relief granted by the State Commission inview of the decision of this Court in the case of Dr. Manjeet Kaur FMonga (supra).

3. On 09.05.2022, while considering the petitions leading to theseappeals at the initial stage, this Court found the question of awardingcompound interest @ 14% on the refund of deposited amount requiringconsideration and hence, notice was issued to this limited extent. However,Gthis Court also took note of the fact that a sum of Rs. 1,48,52,000/- had 3Hereinafter also referred to as ‘the District Forum’.

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

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

6‘COMPAT’, for short.

H7Hereinafteralso referred to as the ‘MRTP Act’.

been deposited by the appellants pursuant to an order earlier passed bythe National Commission and, in the totality of circumstances, executionof the orders impugned was stayed subject to the condition of thepetitioners-appellants depositing a further sum of Rs. 1 crore with theDistrict Forum within four weeks with liberty to the respondent towithdraw the deposited amount with accrued interest. Such deposit andwithdrawal were, however, made subject to the final orders of this Court.The order dated 09.05.2022 reads as under: -

Issues

“Having heard learned senior counsel for the respectiveparties preliminarily and having examined the material placed onrecord, in our view, only the question of awarding compoundinterest at the rate of 14% on the refund of deposited amount isrequired to be considered in this matter.

Issue notice to the limited extent as above.

Ms. Supriya Juneja, learned counsel accepts notice on behalfof the respondent No. 1.

Counter affidavit may be filed within three weeks.

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

During the course of submissions, we have been informedthat pursuant to the order dated 11.11.2020, as passed by theNational Consumer Disputes Redressal Commission, thepetitioners had deposited an amount of Rs.1,48,52,000/- with thePresident, District Consumer Disputes Redressal Forum-II, NewDelhi on 25.11.2020.

Learned senior counsel appearing for the petitioners submitsthat as per his instructions, the said amount has been invested in afixed deposit.

Having regard to the circumstances of the case, it isconsidered appropriate and hence provided in the interim that untilfurther orders of this Court, execution of the orders impugnedshall remain stayed, subject to the condition that the petitionersshall deposit further an amount of Rs. 1 crore with the said DistrictConsumer Disputes Redressal Forum within four weeks fromtoday.

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

This deposit by the petitioners and withdrawal by therespondent shall remain subject to the final order to be passed inBthese petitions.

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

4. After completion of pleadings, and in view of a short pointinvolved, we have heard learned counsel for the parties finally at thisstage itself.

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Relevant factual and background aspects

5. As noticed, the only question involved in these appeals is aboutthe legality and validity of the directions by the State Commission to theappellants to refund the deposited amount to the respondent withDcompound interest. The relevant factual and background aspects, to theextent relevant for the short question involved in the matter could benoticed as follows:

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

G5.2. On 15.10.2005, the respondent issued a notice to the appellants,stating, inter alia, that even after 16 years, the appellants had kept theallottees waiting despite having received more than 60% of the totalcost of the respective flats. It was also stated that she could make furtherpayment towards the remaining instalments but was having legal right toknow as to when the construction would be completed and the possessionH

would be handed over; and without disclosing such essential facts,retaining the deposited money amounted to deficiency in service in termsof Section 2 of the Act of 1986. The respondent called upon the appellantsto furnish within 15 days a written undertaking supported by a progresscertificate from the architect concerned as to when the said flats wouldbe completed or else, she would be approaching the proper forum underthe relevant provisions of law against them. The relevant contents ofthis notice read as under: - “5) That it is further needless to mention here that an allottee likemy said clientess, who has already invested more than 60% ofthe total cost of the respective flats, certainly can make furtherpayment towards the remaining instalments but at least the allotteesat large are having legal rights to know as to when the said flatswill be completed and the possession be handed over to them, andwithout disclosing the same from your side, and keeping the moneycollected amounts to deficiency in service as per Section 2 of theConsumer Protection Act for which my said clientess shall haveright to invoke the jurisdiction of the competent forum.

6) That without prejudice to the above, my client is ready to makethe payment of balance instalments as per the statement of accountsubject to the undertaking of proposed completion of the said flatand further production of written progress certificate from thearchitect concerned of yours because my clientess shall not bekept in dark for period not known to her within which she is goingto take possession of the flat.

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

In light of the above facts and circumstances, I do hereby callupon you which I hereby do and call upon you, to furnish or producea written undertaking supported by a progress/completioncertificate from your concerned architect within which the saidflats shall be completed, within a period of 15 days from the dateof the present legal notice, failing which I have clear instructionsfrom my said clientess to invoke the proper forum under therelevant provisions of law against you.

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AWithout prejudice to the above, my said clientess shall have otherlegal rights against you as advised in law.”

5.3. In reply to the aforesaid notice, the appellants stated detailsof payment made by the respondent and it was alleged that it had beena matter only of provisional allotment and no agreement as such wasBexecuted between the parties; and the allotment had been cancelled dueto default on her part. After tabulating the payment made and the allegeddues, it was also stated on behalf of the appellants that they were readyto refund the amount by way of cheque but the respondent was seekingrefund in cash, which was unjustified. However, a cheque in the sum ofRs. 10,68,031/- was sent towards refund with the said reply datedC08.11.2005 while stating, inter alia, as under: -

“2. From the aforesaid it will be apparent that not only did yourclient not make the payments within time, but also failed to paythe interest and thereafter stopped making any paymentswhatsoever in spite of reminders. As in 2002 a sum of Rs8,22,682.00 (Rupees Eight Lacs Twenty Two Thousand SixHundred Eighty Two only) was due from your Client and againstwhich your Client sent in early Feb. 2002 total sum of Rs 30,000/- (Rupees Thirty Thousand only) and again in end of Feb. 2002 atotal sum of 45,000/- which was returned by my Clients since theallotment stood cancelled due your Client is aware of the allotmenthaving stood cancelled, at least since the year 2002 and the noticenow got sent is with ulterior motives. No payments as falselyalleged were even tendered in January, 2004 or after Feb. 2002.In last your Client pursuant to the cancellation of the allotmentwanted the refunds in terms of the provisional Allotment of thesum of Rs 10,68,031.00 (Rupees Ten Lacs sixty Eight ThousandThirty One) only in cash only which my Clients refused and offeredto pay the cheque for the said amount, however, your Clientpleaded with my Clients that they had not accounted for thepayments made to my Clients and as such could not take back theCheque in refund and thus were demanding the case Howevermy Clients did not want to be privy to the illegal acts of your clientand refused to comply with the demand of your client to pay thecash. It is for this reason that the notice has been issued on totallywrong facts and demands.

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3. All the other contents of your notice are incorrect and are deniedand my clients are along with this reply enclosing their ChequeNo. 357757 dated 07 November 2005 of Citibank NA New Delhifor a sum of Rs 10,68,031.00 (Rupees Ten Lakhs Sixty EightThousand Thirty One) only in favour of your client towards refundof the amounts due to them under the Letter of ProvisionalAllotment. Please further note that there never was anyAgreement between your Client and my Clients and in accordancewith the accepted practice or the trade your client had only madea provisional booking when the project or my clients was at anascent stage and when there was no certainty and when no flatswere in existence. The said Provisional Allotment was to beconverted into an Agreements to sell which as per the Law. Wherethe property is situated is required to be registered upon paymentsbeing made by your client and since your client did not complywith the terms or the Provisional Booking no such Agreementcame into being and the client of your client after 3 years of thedate when at least they admit to have become aware of thecancellation is also barred by time.

4. You are requested to advise your client accordingly and to refrainfrom any mis-conceived litigation. Upon cancellation of theProvisional allotment no flat has been reserved for your client andno such flat is in existence. The mis-conceived litigation if anyinstituted by your client shall be defended by my Clients at thecost and risk of your client.”

5.4. On 30.11.2005, a rejoinder was sent on behalf of therespondent to the reply aforesaid, while returning the cheque and whileobjecting to the conduct of the appellants, in the following words: - “I would like to bring to your notice that your client wroteletter dated 26.11.2001 in respect of flat No.(1) C-601 to myclientess whereby accepted receipt of Rs.4,43,501/- out of totalamount of Rs.7,08,458/-, (2) C-602, receipt of Rs.4,46,912/- outof total amount of Rs.7,17,114.40 and (3) C-603, receipt ofRs.4,44,625/- out of total amount of Rs.7,32,147.50 and demandedbalance amounts of Rs.2,64,957/-, Rs.2,70,202.40 andRs.2,87,522.50 respectively. Photocopies of the aforesaid lettersare enclosed for your kind perusal. Thus more than 60% of thetotal due amount has been paid by my clientess. Since there was AB

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Ano progress in the construction of the above said flats on part ofyour client, my clientess had no option but to stop the furtherpayment. The cancellation of allotment without show cause noticeto my clientess and even non intimation of cancellation order isillegal and thus amounts to illegal malafide intention on part ofyour client. However, my clientess is still ready to make balanceBamount if the possession of the above said three flats are handedover to my clientess.

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

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My client has been cheated by your client with dishonestintention and has misappropriated her hard money whereby causinghuge loss, mental agony to my clientess.

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

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I, therefore, through this rejoinder call upon you to adviseyour client to immediately hand over the physical possession ofthe above said flats failing which my clientess shall be constrainedEto initiate legal proceedings both civil and criminal before competentcourt of law/forum and in that event your client shall be liable forits cost, risk and consequences.”

5.5. After such exchange of communications, the respondentappears to have filed a civil suit, which was dismissed for want ofFjurisdiction. Thereafter, she preferred the said complaints in the DistrictForum. A copy of one such complaint has been placed on record and therelief claimed therein could be usefully reproduced as under: - “Therefore, in the facts and circumstances of the case theComplainant most respectfully prays that this Hon’ble state Forummay kindly be pleased.G

(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 ofHrent and mental agony and also direct the respondent to pay interest on 4,43,500/- @ of 18% per annum for 16 yearsi.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 fitand proper in the interest of justice.

(4) To award exemplary costs in favour of the Complainantand against the respondent.”

5.6. The District Forum, while taking the three complaint casestogether, proceeded to reject the same while observing, inter alia, asunder:- “7. Apart from it, the Complainant is also guilty of concealment ofthe material fact from this Forum. OP has alleged that on thesame cause of action a case is pending before Civil Court atKarkardooma Courts, Delhi and the Complainant has not deniedthis fact. Moreover, complaint is also barred by limitation. TheComplainant is an NRI. She had invested her amount here in realestate. The Complainant also filed two more complaints herealongwith this complaint therefore as rightly objected by the OPthat all such activities of the Complainant were made with a viewto earn profit by investing her money in real estate. Thus,Complainant tried to avail of the services of the OP for commercialpurpose. Whereas, the provisions of Consumer Protection Act,1986 were made for the benefit of a Consumer. Thus, Complainantdoes not fall within the category of consumer as defined undersection 2(d) of the Act. Therefore, taking the case of theComplainant from any angle, we do not find any merit in her casehence, we are constrained to dismiss the complaints. Copy of thisorder be placed on all the files.”

The State Commission awarding compound interest

The State Commission awarding compound interest

6. The State Commission, however, did not agree with thereasoning of the District Forum and held that the complaints made bythe respondent were maintainable in law. As noticed, those questionsrelating 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 overruledpreliminary objections of the present appellants, the State Commissionobserved that 60% of the total sale consideration was paid by the A

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Acomplainant-respondent; that possession of the flats booked by her wasnot handed over even after expiry of the agreed period; that thecomplainant, having opted for the construction-linked plan, was to makepayment of the balance amount on delivery of possession; and theallegation of her being in default was to be rejected because, on inspectionof the site, construction was not found as per schedule. Having said so,Bthe State Commission proceeded to consider the question as to how thecomplainant was to be compensated for the monetary loss, and mentaland physical harassment suffered at the hands of opposite parties becauseof non-delivery of the allotted flats. The relevant observations of theState Commission read as under: -C

“19. In these circumstances all the preliminary objections of theOPs/respondents, since not maintainable are sequentially rejected.Coming to the merit of the case, it is a fact that booking of threeflats was done. This is also indisputed that 60% of the total saleconsideration was paid to OPs. Possession of the flats so bookedDwere not handed over although the agreed period was over. Thecomplainant having opted for the construction linked plan had topay the balance amount on the delivery of the possession of theflats. But on inspection of the site the construction in the projectwas not found as per schedule. Finally the objection of the OP tothe effect that the complainant was defaulter in making the paymentEcannot sustain since the complainant had opted for considerationlinked plan and she had to make the payment beyond 60% oncompletion of the construction and thus this objection is alsooverruled. In these circumstances the complaint deserves to beaccepted. Accordingly the orders passed by the District ForumFdismissing the complaint since not sustainable are set aside.

20. Having arrived at the said conclusion, the point for considerationis as to how the Complainants are to be compensated for themonetary loss, mental and physical harassment he has sufferedat the hands of OPs on account of non-delivery of the allottedGflat.”

6.2. The State Commission, thereafter, examined variousconnotations of the term “compensation” and observed that theCommission or the Forum was entitled to award not only value of goodsor services but also to compensate a consumer for injustice suffered byHhim. With reference to the decision in Ghaziabad Development

Authority v. Balbir Singh: (2004) 5 SCC 65, it was observed that thisCourt had indicated the factors to be kept in view while determiningadequate compensation; and in cases where possession was directed tobe delivered to the complainant, the compensation for harassment wouldnecessarily have to be less because that party was being compensatedby increase in the value of the property but, in cases where only moneywas to be refunded, the party would be suffering a loss inasmuch as hehad deposited the money in the hope of getting a flat/plot and he wasdeprived of the same, as also the benefit of price escalation. The StateCommission also observed that in such case (only of refund of money),the complainant would suffer substantial loss on account of payment ofinterest on the loans raised; depreciation in the money value; andescalation in the cost of construction etc. The State Commission alsoobserved that in these proceedings, necessary orders regarding refundof the deposited amount could be passed, notwithstanding the proceedingsin any other forum. The relevant observations of the State Commissionread as under: - “21. The provisions of the Act enable a consumer to claim andempower the Commission/Forum to redress any injustice done toa consumer. The Commission or the Forum is entitled to awardnot only value of goods or services but also to compensate aconsumer for injustice suffered by him. The word compensationis of very wide connotation. It may constitute actual loss orexpected 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 ofcompensation, the Commission/Forum must determine the extentof sufferance by the consumer due to action or inaction on thepart of the Opposite Party. In Ghaziabad Development AuthorityVs. Balbir Singh – (2004) 5 SCC 65, while observing that thepower and duty to award compensation does not mean thatirrespective of facts of the case, compensation can be awardedin all matters on a uniform basis, the Hon’ble Supreme Courtgave certain instances and indicated the factors, which could bekept in view while determining adequate compensation. One ofthe illustrations given in the said decision was between the cases,where possession of a booked/allotted property was directed tobe delivered and the cases where only monies paid as saleconsideration, are directed to be refunded. The Hon’ble Court AB

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Aobserved, in this behalf, that in cases where possession is directedto be delivered to the Complainant, the compensation forharassment will necessarily have to be less because in a way thatparty is being compensated by increase in the value of the propertyhe is getting. But in cases where monies are being simply refunded,then the party is suffering a loss inasmuch as he had depositedBthe money in the hope of getting a flat/plot. He is not only deprivedof the flat/plot, he has been deprived of the benefit of escalationof the price of the flat/plot. Additionally, in my view, in such asituation, he also suffers substantial monetary loss on account ofpayment of interest on the loans raised; depreciation in the moneyCvalue and escalation in the cost of construction etc.

22. From the above it is apparent that this Commission can passorders regarding the refund of the amount deposited to thecompany by the complainants, notwithstanding the proceedingspending in any other forum.”

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6.3. After the observations afore-stated, the State Commissiontook note of a few decisions against the builders or the real estatedevelopers and on the rights of the allottee to decline possession at thebelated stage. Thereafter, the State Commission referred to thecontentions urged on behalf of the complainant on the point ofEcompensation based on the decision of COMPAT in the case of Dr.Manjeet Kaur Monga, which was affirmed by this Court. In paragraph29 of the judgement, the State Commission presented its observations asalso extractions from the said decision of COMPAT in the followingmanner: - F“29. The ld. Counsel for the appellant while arguing on the pointof compensation has submitted that the case under considerationis on the facts of Manjit Kaur Monga versus K.L. Suneja and orsdecided by the Hon’ble COMPAT and upheld by the Hon’bleSupreme Court of India in the matter of Manjit Kaur (Supra)-(2018) 14 SCC 679 holding as under:-G

“36…. It is clear that the respondents had made a falserepresentation to the general public including Smt.Gursharan Kaur about the time within which the projectwas to be completed i.e. three years but did not completethe construction for more than one decade. Therefore, there H

is no escape from the conclusion that they are guilty ofunfair 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 thecomplaint 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 therespondents did not complete the construction within thestipulated time. For the first time a vague statement aboutthe construction was made in letter dated 26.12.2001, whichwas issued after 12 years of the booking. Even thereafterthe respondents did not disclose the stage-wise progressin the construction work and, as mentioned above, theydeliberately misconstrued the complaint’s protest dated22.05.2002 as her disinclination to take the flat.…..Therefore, it must be held that the complainant wasjustified in not paying further instalments of price and therespondent committed grave illegality by cancelling theallotment.”

The quantum of compensation as has been decreed in theaforementioned judgement of the Hon’ble COMPAT andalso upheld by the Hon’ble Supreme Court of Indiastipulates a fair, just, equitable and reasonable award. Therespondent has unscrupulously deprived the appellant ofthe due benefit of escalation in property prices since 1989till date and therefore, in order to put the appellant in thesame place and deny the benefit of his own illegality to therespondent this Hon’ble Court ought to compensate theappellant in terms of the prevailing market value of theproperty in question.

In conclusion, the appellant seeks the return of theinstalments paid by her to the respondent plus compoundinterest @ 15% p.a. from the date of actual refund, inaddition to damages quantified at Rs. 14,00,000/- formental agony and expenses incurred in protractedlitigation.”

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A6.3.1. We are constrained to observe, in regard to the above-quoted part of the judgment of the State Commission that in the saidparagraph 29, the State Commission purportedly extracted a few partsof 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 beingthe part of extractions, though the said two passages had obviously beenBthe part of submissions of the complainant where for the first time, theclaim of compound interest @ 15% p.a. occurred in this case. Although,such a presentation in the judgment dated 12.03.2020 of the StateCommission (as appearing in the copy of judgment placed before us –pp. 166-167 of the paper book) seems to be that of a typographical/Cclerical error but, we have reproduced the same verbatim, for beingrelevant for the present purpose.

6.4. After the observations foregoing, the State Commission foundthe case of the present complainant akin to that of Dr. Manjeet KaurMonga; and when the units in question had already been sold, found itDjust and proper to direct the present appellants to refund the depositedamount together with compound interest @ 14% from the date of deposit.This, according to the State Commission, was in line of the decision ofthis Court in Malay Kumar Ganguly v. Sukumar Mukherjee (Dr.):[2009] CPJ 17 (SC). The State Commission observed and directed asunder: -E

“30. In fact reliance of the judgement referred to in the precedingparagraph against the same Ops, would be apt and best suitedsince against the same builder and involving similar facts In thefacts and circumstances of the case, the possession of the unithaving already been sold, is not possible to be handed over puttingFthe complainant to a position where she had nothing to fall backupon, the Ops/respondents are directed to refund relying on thejudgement in the matter of Manjit Kaur Monga versus K.L. Sunejaand ors (Supra) decided by the hon’ble Compat and upheld by theHon’ble Supreme Court of India, the deposited amount plusGcompound interest at the rate of 14% from the date of deposit.This would be in line with the principles set out by the Hon’bleSupreme Court of India, in the matter of Malay Kumar Gangullyversus Sukumar Mukherjee (Dr.) as reported in III [2009] CPJ17 (SC) providing that a person is entitled to damages/compensation as nearly as possible sum of money which would H

have been if he had not sustained the wrong. This would meet theends 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 bearingthe same facts and on the common point of law are also disposedof accordingly with directions to the Ops as contained in para 30of this order.”

Approval by the National Commission

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

“32. From the bare reading of this provision, it is clear that theproceedings continuing under MRTP Act before its repeal hadbeen saved under Section 66(1)(A). The argument of learnedcounsel for the Opposite Party that the order of Dr. Manjeet KaurMonga’s case (supra) had been passed under a repealed Act andtherefore is not applicable in this case, has no force and that theargument is totally misconceived and misdirected. Also, the orderin Dr. Monga’s case (supra) was passed in the year 2015 afterthe repeal of MRTP Act which was challenged before the Hon’bleSupreme Court and the Hon’ble Supreme Court passed its orderin 2018. Therefore, it is clear that the order of Dr. Manjeet KaurMonga’s case (supra) was pronounced after the repeal of theMRTP 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 thesame project of the Petitioner, although by different allottees andthat in both the cases, despite payment of the money, the allottedflats were not given to its allottees within the stipulated period oreven thereafter. In the present case, the flats had been sold duringthe pendency of the Complaint. The Opposite Party, therefore, is

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Anot in a position to hand over the possession of the said flats to theComplainant and the Commission is fully empowered to grantany other relief which is just and proper in such circumstances. Itis also settled proposition of law that the Commissions are boundto follow the dictum of the superior Foras on the identical facts.In the present case, on the identical facts there is a judgment ofBHon’ble Supreme Court, although the remedy had been sought inthat case under a different provision of the Act, however, thefindings are on the identical facts of the case and so the order isbinding on the Foras below….”

7.1. After reproducing certain passages from the decision of thisCCourt in Dr. Manjeet Kaur Monga (supra), the National Commissionconcluded on the matter by dismissing the revision petitions in thefollowing terms: - “34. It is also apparent that the Complainant has specifically arguedbefore the State Commission and also mentioned this fact in herDwritten submissions that they should be awarded the same reliefas had been granted in Dr. Monga’s case (supra) and that thiscontention was not opposed by the Opposite Party before theState Commission.

35. This Commission has a limited revisional jurisdiction. It canEset aside the impugned order in exercise of its revisional jurisdictiononly when the findings are perverse or without jurisdiction.

36. From above discussion it is clear that in this case, the StateCommission had duly followed the dictum of the Hon’ble SupremeCourt in Dr. Manjeet Kaur Monga’s case (supra) and therefore,Fit cannot be said that the findings of the State Commission areperverse or without jurisdiction. We found no illegality or infirmityin the impugned order. The present Revision Petitions have nomerit and the same are dismissed.”

Rival ContentionsG

8. While assailing the orders aforesaid, awarding compound interestto the respondent, learned senior counsel Mr. Ranjit Kumar appearingon behalf of the appellants has put forward six-fold submissions whichcould be summarised as follows:

8.1. Learned senior counsel has contended in the first place thatthe Act of 1986 does not confer any power on the Consumer Foraestablished thereunder to award compound interest on the compensationamount; and for being not envisaged under or by the scheme of the Actof 1986 and being not provided in the contract either, such awarding ofcompound interest cannot be countenanced. Learned senior counsel hassubmitted that wherever the legislature intended to confer the power togrant compound interest, an enabling provision has been incorporated inthe statute. In this regard, the learned counsel has given several examples,like Section 16 of the Micro, Small and Medium Enterprises DevelopmentAct, 2006; Section 5 of the Interest on Delayed Payments to Small Scaleand Ancillary Industrial Undertakings Act, 1993; Section 23 of the TrustsAct, 1882; Section 8 of the Payment of Gratuity Act, 1972; Section 7 ofthe Public Premises (Eviction of Unauthorised Occupants) AmendmentAct, 2015; and Section 3 of the Usurious Loans Act, 1918. Learnedcounsel has cited the decision of this Court in the case of Central Bankof India v. Ravindra: (2002) 1 SCC 367 in support of the submissionsthat with the contract not providing so, compound interest could not havebeen awarded. It has also been contended that in the absence of anyagreement or any statutory provision or mercantile usage, interest payablecould only be at the market rate and could never be compounded atwhopping 14%. Learned counsel has also relied upon the decision inClariant International Ltd. and Anr. v. Securities & Exchange Boardof India: (2004) 8 SCC 524.

8.2. In the second limb of submissions, learned senior counsel forthe appellants has contended that in the recent decisions, this Court hasonly 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 ExperionDevelopers Pvt. Ltd. v. Sushma Ashok Shiroor: (2022) SCC OnLineSC 416; NBCC (India) Ltd. v. Shri Ram Trivedi: (2021) 5 SCC273; 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 SCC537; Arifur Rahman Khan and Ors v. DLF Southern Homes PvtLtd and Ors.: (2020) 16 SCC 512 and DLF Home Panchkula PvtLtd and Ors. v. DS Dhanda and Ors.: (2020) 16 SCC 318. Thelearned counsel has particularly referred to the passage in the case ofIreo Grace Realtech (supra) wherein, the prayer for compound interest ABC

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A@ 20% was rejected, for having no nexus with the commercial realitiesof the prevailing market. Learned counsel would submit that in the faceof such decisions, taking even the highest interest rate at 9% p.a., thetotal amount with interest payable to the respondent on 09.05.2022 (thedate of issuance of notice by this Court) would be Rs. 49,87,129/- whereasthe respondent has already withdrawn a sum of Rs. 2,55,95,119/-, whichBwas deposited by the appellants pursuant to the directions of the NationalCommission and then by this Court, alongwith accrued interest. It hasbeen submitted that the amount so received by the respondent would beapproximately equal to the principal amount together with simple interest@ over 60% p.a., calculated from the year 1989 to the month of June,C2022.

8.3. Learned senior counsel has contended in the third limb ofsubmissions that the directions as issued in the present matter wouldresult in unjust enrichment of the respondent inasmuch as the presentvalue of the award would be around Rs. 7.35 crore and that would beDapproximately 4.5 times the cost of all the three flats taken togethertoday as per the current market rate. Pertinently, the learned seniorcounsel 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 only25% of the final price that would have been payable at the time of takingpossession. In this regard, it has also been argued that even with referenceEto the decision in Ghaziabad Development Authority (supra), thecompensation to be awarded to the respondent cannot exceed the fairmarket value of the flats and as per the circle rates, it would be aroundRs. 2.04 crore and even as per the precedents of sale transactions, theamount could at the most be Rs. 2.25 crore as per the average sale priceFbased on 10 sale precedents in the same building and for the flats ofsimilar size. In any case, the amount of compensation on the basis ofpresent market realities would be much lower as compared to thecompensation quantified on the basis of compound interest @ 14%.

8.4. In the fourth limb of submissions, learned senior counsel forGthe appellants has argued that in the present case, the respondent hadneither demanded nor prayed for the relief of compound interest in thecomplaints filed before the District Forum; and with reference to thedecision 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 thatthe Consumer Fora could not have granted relief which had not beenH

specifically prayed for. Further to this, learned counsel has also contendedthat in the present case, there had not been any finding by the StateCommission or the National Commission as regards the alleged loss orinjury suffered by the respondent. Although, the respondent pleaded lossof rent but no evidence was brought on the record on this issue nor hadit been the case of the respondent that she was staying in a rentedaccommodation or that she had availed loan for purchasing the flats andwas making payment of instalments to the lender. It has, thus, beenargued that without any pleading, without any evidence, and without anyfinding on any loss or injury, the State Commission proceeded to directthe refund of deposited amount with compound interest @ 14%, whichremains wholly unjustified.

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

8.6. In the sixth fold of submissions, essentially being in thealternative, the learned senior counsel has submitted that even in Dr.Manjeet Kaur Monga’s case (supra), this Court upheld the directionsfor refund with compound interest only until the date of refund post-cancellation, which came to Rs.31,87,131/- and which, at the relevanttime, was also the approximate market value of the said flat. In thisregard, learned counsel for the appellants has also referred to thesubsequent decision in Dr. Manjeet Kaur Monga’s case by this Courtin 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 theprincipal amount together with compound interest @ 14% without even AB

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Aspecifying the period for which it would be payable, are required to beinterfered with by this Court. While elaborating on this line of submissions,learned counsel has submitted that in the present case, the appellantshad refunded the entire amount (after deducting the earnest moneydeposited by the respondent) through the cheque dated 07.11.2005 foran amount of Rs. 10,68,031/- and hence, assuming without admitting theBliability towards compound interest at the rate awarded by the StateCommission, the total amount payable until 08.11.2005 would be Rs.84,76,540/- and not beyond. Learned counsel would submit that awardingof compound interest without taking note of the facts of refund chequeissued by the appellants remains wholly unjustified.C9. On the other hand, learned senior counsel for the complainant-respondent Mr. Sidharth Luthra has duly supported the proposition ofawarding compound interest in this case and has strenuously counteredthe submissions made on behalf of the appellants.

9.1. With reference to the background aspects, learned seniorDcounsel has submitted that the respondent purchased 3 flats from theappellants in the year 1989 when she was 39 years of age in anticipationof moving to India and staying together with her daughters; and theappellants promised to complete the construction and deliver the flatswithin 36 months i.e., by the year 1992 and thus induced the respondentEto pay 60% of the consideration amount in a construction-linked paymentplan by 1994. However, fact of the matter had been that there was noconstruction on the ground until about the years 2003-2005 and, thereafter,the appellants fraudulently sold the same flats to a third party withouteven intimating the alleged cancellation to the respondent. Learnedcounsel would submit that the appellants have failed to bring on recordFany cancellation letter pertaining to the said 3 flats and on the contrary,they have made inconsistent statements about the date of cancellationwhile sometimes alleging that cancellation was in the year 2002 whereasstating before the National Commission that the cancellation was on25.04.2005. Thus, it has been contended that the appellants had neitherGbeen fair in their dealings nor consistent in their stand.

9.2. While placing strong reliance on the decision of this Court inDr. Manjit Kaur Monga (supra), learned senior counsel has submittedthat the said case relating to the same project and the same builder (theappellants) makes it clear that the appellants had duped the respectiveHcomplainants by employing almost the same modus operandi. Learned

counsel would submit that as regards claim for compensation, therespondent’s case stands on a better footing than the case of Dr. Mongainasmuch as in the said case, the appellants had cancelled the allotmentby a letter dated 30.04.2005 whereas no such cancellation letter is onrecord in the present case and in fact, the appellants stated about thealleged cancellation only in their reply dated 08.11.2005 to the noticeserved by the respondent on 15.10.2005. This is coupled with the factthat 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 forher private use.

9.2.1. Learned counsel has further submitted that while both, therespondent and the said Dr. Manjit Kaur Monga, were duped by theappellants and resultantly both sought possession of their respective flats,the respondent invoked jurisdiction under the Act of 1986 whereas thesaid complainant approached COMPAT under the MRTP Act. Both thefora had concurrent jurisdiction as regards unfair trade practice, thoughthe respondent also complained of deficiency of service. Learned counselhas referred to the provisions contained in Section 12-B(3) of the MRTPAct and Section 14(1)(d) of the Act of 1986 and has submitted that theprovisions are in essence identical, empowering the respective fora toaward compensation though, the power to award compensation underthe 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 compensationfor an identically placed complainant by refund of deposit together with15% p.a. compound interest from the date of deposit till the date ofreturn. Learned counsel has recounted the factors constituting rationalein 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 submitthat the respondent had been subjected to rather excessive harassmentfor about 34 years and presently at the age of 73 years, she is requiredto pursue this litigation. Further, in Dr. Manjit Kaur Monga’s case, thedeposits were retained by the appellants for about 12 to 15 years whereasin the case of the respondent, the deposits were illegally retained andutilized by the appellants for 29 to 34 years. Thus, according to the learned A

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Acounsel, the award of compound interest to the respondent does not callfor any interference.

9.3. Learned senior counsel has further cited the decision inWallersteiner v. Moir (No. 2): (1975) Q.B. 373 to highlight theprinciples therein that compound interest (i.e. interest with yearly restsBin case no other frequency of rests is specified) should be awardedunder the equitable jurisdiction of the Court where the wrongdoer utilizesthe money retained for business purpose and thereby making the profitthereon. Equally, it should be presumed that the wronged person wouldhave made the most beneficial use of the money, had it not been deprivedof it. It was further held that the ‘justification for charging compoundCinterest normally lies in the fact that profits earned in trade wouldlikely be used as working capital for earning further profits’ andthat the ‘application of this rule is not confined to cases in which atrustee or agent has misapplied trust funds or a principal’s property,nor is it confined to trustees and agents.’

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9.3.1. In regard to the principles surrounding and governing theaward of compound interest, learned senior counsel has also madeelaborate reference to the decision of this Court in the case of IndianCouncil for Enviro-Legal Action v. Union of India and Ors.: (2011)8 SCC 161.E9.4. Learned senior counsel has further contended that the 9.4. Learned senior counsel has further contended that theargument on behalf of the appellants that the compound interest couldonly be awarded if provided for in the statute remains baseless inasmuchas the Act of 1986 provides for an award for compensating the consumerfor any loss or injury including punitive damages; and there are no fettersFon the way in which such an award may be expressed. According to thelearned counsel, this view has been affirmed by this Court in Dr. Monga’scase, wherein an award expressed in terms of compound interest hasbeen held to be falling within the definition of “compensation.” Secondly,this Court has held that ‘the inherent powers in the Court andprinciples of justice and equity are sufficient to enable an orderGdirecting payment of compound interest; rather, the power to ordercompound interest as part of restitution cannot be disputed,otherwise there could never be restitution.’

9.5. Learned senior counsel for the respondent has furthercontended that reliance on behalf of the appellants on certain decisions of this Court awarding simple interest was wholly misplaced for thenoteworthy distinction in the facts of all such cases and the present casethat such cases dealt with delayed possession of flats by the builder asopposed to denial of possession altogether. Learned counsel hasunderscored the submission that in case compensation is awarded inaddition to the possession of the property itself, the consumer is notdeprived of the escalation in property prices and thus, an award in termsof simple interest may be suitable, on the given set of facts. Secondly,none of the cases cited by the appellants deal with an exceptionally longperiod of illegal retention of consideration by the builder i.e., 29-34 years.It is undeniable that the property prices escalate exponentially over suchlong period of over three decades and thus , any award must correlate tothe economic realities of real-estate price escalation, as well as theenormous unjust enrichment of the builder.

9.6. Learned counsel has submitted that in the present case, theappellants have illegally retained and utilized the payments made by therespondents for a period of 29-34 years and made huge profits thereuponin real-estate projects. In the event the appellants availed such amountsfor its business purpose from a bank, even at the most conservativerates [15.95% p.a. compound interest], they would have to repay a sumof Rs. 17.52 crore. Thus, the appellants at least made this profit byutilizing the payments made by the respondent leading to unjustenrichment. It is submitted that during the period 1989-1994 when theappellants collected funds from the respondent, lending rates werehistorically at an all-time high (about 20% p.a. in 1991) and therefore,the modus operandi of the appellants in collecting ‘free capital’ frominnocent home buyers without any intent of delivering on their promise,deserves to be disapproved with award of penal damages.

9.6.1. Learned senior counsel has further submitted that therespondent has made investment in real-estate and not in any other sector;and most conservative measure of escalation of real estate prices isprovided by comparing circle rates determined by the Governmentauthorities. In 1989, the circle rate for real estate in Sector 4, Vaishali,Ghaziabad was Rs. 850/sq. mtr. whereas, since 2016, this circle rateescalated to Rs. 74,200/sq. mtr. Thus, property prices in Sector 4,Vaishali, Ghaziabad have risen exponentially since 1989, at least by amultiple of 87.3 times. According to learned counsel, another way ofmathematically expressing the same escalation in property prices, other A

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Athan by way of a multiple, is by way of computing a rate of compoundingand as such, it is equivalent to say that property prices in the area inquestion have escalated at a compound rate of 15% p.a. from 1989 forthe next 32 years.

9.6.2. Learned senior counsel has further argued that the contentionBon the part of the appellants with reference to simple rate of interest anddisputing the reliance on circle rate is also misleading for the reason thatin the year 1989, no circle rates of flats were available. Thus, therespondent has used the then circle rate for land and the present circlerate for land for the purpose of drawing an “apples-to-apples” comparison.To arrive at a more accurate present value of the 3 flats, the respondentChas bifurcated the admitted purchase price in 1989 into land and buildingcomponents, in terms of the allotment letter and thereafter, the buildingcomponent is escalated in terms of the CPWD cost index and the landcomponent is escalated in terms of the increase in circle rate for land.Thus, according to the learned counsel, the present value of 3 flats hasDrightly been arrived at Rs. 9.06 crore.

9.6.3. In regard to such value indicators, it has also been submittedon behalf of the respondent that undervaluing of transaction was that ofcommon knowledge and this apart, value of the project has depreciatedover the decades due to factors such as deterioration of the propertyEupon usage, depression in rates due to multiple litigations etc. Thus, therespondent has rightly placed on record the present cost of alternative 3flats at about Rs 6.48 crore and has computed the loss of rent for 31years at Rs 1.94 crore. Viewed from any angle, according to learnedsenior counsel, the amount receivable under the orders impugned remainsthe minimum towards entitlement of the respondent.F

9.7. As regards the alternative submission of limiting the award ofcompound interest until the year 2005 in terms of Dr. Monga’s case, thelearned senior counsel has submitted that the said proposition remainsinapplicable to the present case for the reason that initial refund of moneyin Dr. Monga’s case was by way of a pay order and thus, the appellantsGdid not utilize or retain the money after 30.04.2005 whereas in the presentcase, they merely attempted to send a cheque with the reply dated08.11.2005 which was never encashed and was promptly returned bythe respondent with rejoinder dated 30.11.2005 and such returned chequewas duly accepted by the appellants. In regard to the later decision inHthe case of K.L. Suneja v. Dr. (Mrs.) Manjeet Kaur Monga (supra), it has also been submitted that the appellants rather conceded before thisCourt that in case money was lying in their account, they would be liableto pay compound interest @ 15% p.a. until the money was paid bythem. It has been submitted that, in the present case, money was debitedfrom the appellants’ account for the first time only on 25.11.2020 whenthey deposited 25% of the award amount pursuant to the direction of theNational Commission. Even if they have made further payment accordingto the order of this Court to the tune of Rs. 1 crore, compound interestmust run on the remainder of the portion of the award amount, whichthe appellants have continued to retain and enjoy.

9.8. It has, therefore, been contended that the facts of the presentcase are more egregious than the facts of the Dr. Monga’s case and inthe overall circumstances, it would be appropriate and just to determinethe compensation in keeping with the formula for measure of suchcompensation adopted in Dr. Monga’s case in order to avoid unequaltreatment to the respondent. It has also been submitted that in fact theappellants did not argue against the award of compound interest beforethe State Commission and thus, their challenge ought not be consideredunder Article 136 of the Constitution of India, for such an argumenthaving been consciously given up by them. The decision of this Court inthe case of Transmission Corp. of AP Ltd. v. P. Surya Bhagavan:(2003) 6 SCC 353 has been referred to in this regard. It has also beenargued in reference to the decision in Balram Prasad v. Kunal Saha:(2014) 1 SCC 384 that while awarding just compensation, merely theform of claim made by the complainant may not be considered decisive.

10. In rejoinder submissions, the learned senior counsel for theappellants has contended that the decision in Dr. Manjeet Kaur Mongacannot be read as an authority for the proposition that compound interestis invariably to be granted in all these cases. Learned counsel has alsosubmitted that the decision in the case of Indian Council for Enviro-Legal Action (supra) is also not applicable as the compound interesttherein was awarded on the unique facts of that case and where themandate of this Court was circumvented for more than a decade.Learned counsel has also submitted that the judicial precedents of EnglishCourts cannot be applied to the present case, in view of specific law inIndia that compound interest would be operated only if the statute or thecontract provides for the same; and there being no such prescription inthe statute or in the contract, awarding of compound interest cannot besaid to be justified.

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A11. We have given our anxious consideration to the rival submissionsand have examined the record with reference to the law applicable.Matters of form and pleading not relevant in the presentcase

12. As noticed, in these appeals, a wide variety of rival submissionsBhave been presented before us on the question as to whether theConsumer Fora had been justified in awarding and approving compoundinterest at the rate of 14%. While dealing with these submissions, wemay observe at the outset that, in our view, neither the submissions onbehalf of the appellants about want of pleading and prayer for compoundCinterest nor the submissions on behalf of the respondent, about want ofopposition before the State Commission by the present appellants, deservemuch dilation. In this regard, it may be observed that in the complaintcase as originally filed, the respondent did not make any prayer for awardof compound interest; rather her prayer had essentially been for directionsto the appellants to deliver the flats and to award damages. If at all, theDrespondent claimed simple interest @ 18% p.a. It appears that such asubmission seeking compound interest was properly made, with referenceto the decision in Dr. Manjeet Kaur Monga’s case (supra), for the firsttime by the claimant-respondent only before the State Commission. Asnoticed hereinbefore, the State Commission, while reproducing twoEpassages from the decision of COMPAT, further reproduced a part ofwritten submissions of the claimant-respondent claiming compoundinterest. The State Commission did not elaborate much on the principlesgoverning its powers and those governing awarding compound interest;and rather considered the decision in Dr. Monga’s case to be decisiveof the matter. In the revision petitions before the National Commission,Fthe appellants seriously contested the applicability of the decision in Dr.Monga’s case to the facts of the present case, albeit on a differentground that the decision rendered in the proceedings under MRTP Actcannot be applied to the present proceedings under the Act of 1986.

12.1. We shall be dealing with the relevant aspects concerningGapplicability of Dr. Monga’s case a little later but suffice it would be toobserve that in the given set of circumstances, the respondent does notappear justified in suggesting that the appellants had consciously givenup their contest to the claim of compound interest. The other side of thematter is that looking to the prayers in the complaints, the complainant-Hrespondent could not have been denied the proper relief, if available on the facts of the case and permissible on the applicable legal principles.Thus, the contentions as regards the matter of form and pleading are leftat that and without further discussion on the decision cited on behalf ofthe appellant in the case of Manohar Lal (supra) as also the decisionscited on behalf to the respondent in the cases of Transmission Corp. ofAP Ltd. and Balram Prasad (supra).

The cited decisions on award of interest in real estate dealings

13. Reverting to the rival submissions concerning the question asto whether the Consumer Fora had been justified in awarding andapproving compound interest at the rate of 14% and a vast variety ofalternative methods for computing damages with reference to the losssaid to have been suffered by the respondent and the punitive measuresagainst the appellants, as noticed, strong reliance has been placed by theState Commission and the National Commission as also by the respondenton the decision in Dr. Manjeet Kaur Monga (supra), which arose outof the case for compensation under the provisions of MRTP Act. Themain plank, rather substratum, of the decision of State Commission inawarding compound interest had been the view taken and relief grantedagainst the appellants in relation to the very same project and in relationto a similar grievance of the said other prospective buyer, Dr. Monga,who was also deprived of the fruits of her deposits.

14. However, before adverting to the decision in the case of Dr.Manjeet Kaur Monga (supra) in necessary details, we may usefullyrefer to the other decisions cited on behalf of the appellants in support ofthe contention that usually in such matters against the builders, this Courthas awarded simple interest in the range of 6% to 9% p.a., which hasbeen countered on behalf of the respondent that the said decisions moreor less related to the cases of delayed delivery of possession and notdeprivation of flat altogether and retention of money for over threedecades.

14.1. In the case of DLF Homes Panchkula Pvt Ltd (supra),the facts- sheet indicates the features of delay in delivery of possessionand grant of compensation for such delay by way of interest as also alump sum and therein, this Court observed that there cannot be multipleheads to grant damages and interest when the parties had agreed topayment of damages in a particular manner. In the given context, thisCourt, inter alia, observed as under:

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A“15. The District Forum under the Consumer Protection Act, 1986(“the 1986 Act”) is empowered inter alia to order the oppositeparty to pay such amount as may be awarded as compensation tothe consumer for any loss or injury suffered by the consumer dueto the negligence of the opposite party including to grant punitivedamages. But the forums under the Act cannot award interestBand/or compensation by applying rule of thumb. The order to grantinterest at the maximum of rate of interest charged by nationalisedbank for advancing home loan is arbitrary and has no nexus withthe default committed. The appellant has agreed to deliverconstructed flats. For delay in handing over possession, theCconsumer is entitled to the consequences agreed at the time ofexecuting buyer’s agreement. There cannot be multiple heads togrant of damages and interest when the parties have agreed forpayment of damages @ Rs 10 per square foot per month. Oncethe parties agreed for a particular consequence of delay in handingover of possession then, there have to be exceptional and strongDreasons for SCDRC/NCDRC to award compensation at more thanthe agreed rate.

16. Though the 1986 Act empowers the authorities to awardcompensation for any loss or injury including building damagesbut the order of NCDRC or that of SCDRC of awarding compensationEis without any foundation being laid down by the complainant onjudicially recognised principles and is by rule of thumb. Therefore,we find that grant of compensation under various heads grantedby NCDRC cannot be sustained.”

14.2. The case of Wing Commander Arifur Rahman KhanF(supra) had been another one of delay in delivery of possession whereinthis Court enunciated principles for awarding of compensation for suchdelay. In that context, this Court held that compensation in excess ofstipulated amount in the agreement was allowable when the stipulatedcompensation was unreasonable and unfair. Therein, this Court ultimatelyGallowed simple interest @ 6% p.a. with the following observations anddirections:

“69. For the above reasons we have come to the conclusion thatthe dismissal of the complaint by NCDRC was erroneous. The flatbuyers are entitled to compensation for delayed handing over ofHpossession and for the failure of the developer to fulfil the representations made to flat buyers in regard to the provision ofamenities. The reasoning of NCDRC on these facets suffers froma clear perversity and patent errors of law which have been noticedin the earlier part of this judgment. Allowing the appeals in part,we set aside the impugned judgment and order of NCDRC dated 2-7-2019 [Rasheed Ahmad Usmani v. DLF Ltd., 2019 SCC OnLineNCDRC 84] dismissing the consumer complaint. While doing so,we issue the following directions:

69.1. Save and except for eleven appellants who entered intospecific settlements with the developer and three appellants whohave sold their right, title and interest under the ABA, the first andsecond respondents shall, as a measure of compensation, pay anamount calculated @ 6 per cent simple interest per annum toeach of the appellants. The amount shall be computed on the totalamounts paid towards the purchase of the respective flats witheffect from the date of expiry of thirty-six months from theexecution of the respective ABAs until the date of the offer ofpossession after the receipt of the occupation certificate.”

14.3. The case of DLF Homes Developers Ltd. (supra), dealtwith by a 3-Judge Bench of this Court, had also been of delay in deliveryof possession and therein, this Court held that compensation for suchdelay over and above contractual rate was allowable even when theseller had given the option to the buyer to exit with interest. In thatcontext, this Court held that such exit option would not disentitle the flatpurchaser from claiming compensation. This Court observed, inter alia,as under: -

“8….The fact that the developer offered an exit option withinterest at 9% would not disentitle the flat purchasers from claimingcompensation. For a genuine flat buyer, who has booked anapartment in the project not as an investor or financier, but for thepurpose of purchasing a family home, a mere offer of refundwould not detract from the entitlement to claim compensation. Agenuine flat buyer wants a roof over the head. The developercannot assert that a buyer who continues to remain committed tothe agreement for purchase of the flat must forsake recourse to aclaim for compensation occasioned by the delay of the developer.Mere refund of consideration together with interest would notprovide a just recompense to a genuine flat buyer, who desires AB

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possession and remains committed to the project. It was for eachbuyer to either accept the offer of the developer or to continuewith the agreement for purchase of the flat.

9. Similar is the position in regard to the submission on theappreciation of the value of the flats. Undoubtedly, this is oneBfactor which has to be borne in mind in considering whether and,if so to what extent, compensation for delay should be awarded.Having regard to the principles which have been enunciated inthe earlier two decisions [Arifur Rahman Khan v. DLF SouthernHomes (P) Ltd., (2020) 16 SCC 512] , [Pioneer Urban Land &Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725 :C(2019) 3 SCC (Civ) 37] which have been noted above, we areunable to subscribe to the submission that the flat buyers are notentitled to any payment whatsoever on account of delayedcompensation.”

14.3.1. In the said case, this Court reduced the compensation onDaccount of delay in handing over possession from 7% p.a. as awardedby the National Commission to 6% p.a. in light of the decision in Wing Commander Arifur Rahman Khan (supra).

14.4. In the case of Ireo Grace Realtech (supra), another 3-Judge Bench of this Court dealt with different categories of cases, someErelating to delay in offering possession and some relating to such allotteeswho had been offered alternative units. This Court found such otherallottees who had not been offered possession of the units allotted tothem to be entitled to refund of the amount deposited by them but theirclaim for award of compound interest was declined for having no nexusFwith the commercial realities of the prevailing market. The considerationof this Court in relation to such class of allottees with the relevantobservations could be usefully reproduced as under:

“47. Insofar as the allottees in Chart B are concerned, they havepaid part consideration, in most cases up to the 4th instalment tillG2017, when they found that there was no progress being made inrespect of the Towers in which the apartments had been allottedto them. It is an admitted position that occupation certificate forTowers A1, A2, A3, B7, C9 and C11, in which the allotments havebeen made for this category has not been issued by the MunicipalCorporation. The apartments have not been ready for allotment H

even as on 30-6-2020, as per the date fixed before RERAAuthority.

48. The allottees submitted that they were facing great hardshipsince they had obtained loans from banks for purchasing theseapartments, and were paying high rates of interest. In 2017, whenthey realised that there was no construction activity in progress,they were constrained to file consumer complaints before theNational Commission, and then discontinued payment of furtherinstalments.

49. The developer made an alternate offer of allotment ofapartments in Phase 1 of the project. The allottees are howevernot bound to accept the same because of the inordinate delay incompleting the construction of the Towers where units wereallotted to them. The occupation certificate is not available evenas on date, which clearly amounts to deficiency of service. Theallottees cannot be made to wait indefinitely for possession of theapartments allotted to them, nor can they be bound to take theapartments in Phase 1 of the project. The allottees have submittedthat they have taken loans, and are paying high rates of interest tothe tune of 7.9%, etc. to the banks. Consequently, we hold thatthe allottees in Chart B are entitled to refund of the entire amountdeposited by them.

50. Insofar as award of compensation by payment of interest isconcerned, Clause 13.4 of the apartment buyer’s Agreementprovides that the developer shall be liable to pay the allotteecompensation calculated @ Rs 7.5 per square foot of the superarea for every month of delay, after the end of the grace period.The compensation will be payable only for a period of 12 months.The apartment buyers in their complaint filed before the NationalCommission made a prayer for refund of the amount depositedalong with interest @ 20% p.a. compounding quarterly till itsrealisation. The apartment buyers, in their submissions have statedthat they have obtained home loans on which interest @ 7.90%p.a. is being paid, even as on date.

51. We have considered the rival submissions made by both theparties. The delay compensation specified in the apartment buyer’sAgreement of Rs 7.5 per square foot which translates to 0.9% to A

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A1% p.a. on the amount deposited by the apartment buyer cannotbe accepted as being adequate compensation for the delay in theconstruction of the project. At the same time, we cannot acceptthe claim of the apartment buyers for payment of compoundinterest @ 20% p.a., which has no nexus with the commercialrealities of the prevailing market. We have also taken intoBconsideration that in IREO Grace Realtech (P) Ltd. v. SubodhPawar [IREO Grace Realtech (P) Ltd. v. Subodh Pawar, 2019SCC OnLine SC 1937], this Court recorded the statement of thecounsel for the developer that the amount would be refunded withinterest @ 10% p.a. A similar order was passed in IREO GraceCRealtech (P) Ltd. v. Surendra Arora [IREO Grace Realtech (P)Ltd. v. Surendra Arora, 2019 SCC OnLine SC 1943]. However,the order in these cases were passed prior to the outbreak of thepandemic.

52. We are cognizant of the prevailing market conditions as aresult of Covid-19 Pandemic, which have greatly impacted theconstruction industry. In these circumstances, it is necessary tobalance the competing interest of both parties. We think it wouldbe in the interests of justice and fairplay that the amounts depositedby the apartment buyers is refunded with interest @ 9% SI p.a.from 27-11-2018 till the date of payment of the entire amount.The refund will be paid within a period of three months from thedate of this judgment. If there is any further delay, the developerwill be liable to pay default interest @ 12% SI p.a.

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53. The developer shall not deduct the earnest money of 20%from the principal amount, or any other amount as mentioned inFClause 21.3 of the Agreement, on account of the various defaultscommitted by the developer, including the delay of over 7 monthsin obtaining the fire NOC.”

14.5. The case of NBCC (India) Ltd. (supra) was directly acase of delayed delivery of possession and therein, this Court awardedGsimple interest @ 7% p.a. for the default period and did not approve ofawarding any additional amount towards compensation. This Court, interalia, said as under: - “13. As regards, the date on which interest would becomepayable, having regard to the one-year period which is stipulated, H

beyond two and a half years from the original period under Clause20, interest would become payable from 1-1-2016. Secondly, insofaras the rate of interest is concerned, the interest should be fixed at7% p.a. instead and in place of 10% which has been awardedby NCDRC. Interest @ 10% is excessive, in light of prevailingmarket conditions. [Central Bank of India v. Ravindra, (2002)1 SCC 367, SCC para 39.]

14. NCDRC has, in addition to the award of interest, grantedcompensation of Rs 2,00,000 for loss of rent.Once NCDRC awarded interest for the delayed handing over ofpossession, there would be no justification to award an additionalamount of Rs 2,00,000.”

14.6. In the case of Experion Developers Pvt. Ltd. (supra),another 3-Judge Bench of this Court dealt with a case where the developerdid not offer possession within the period stipulated in the agreementand the complainant sought refund of the total consideration of Rs.2,06,41,379/- with interest at the rate of 24% p.a. The reasons given bythe developer for delay in handing over the possession was non-availabilityof occupation certificate and it was pointed out that after securingoccupation certificate on 23.07.2018, notice of possession was issued tothe consumers on 24.07.2018. It was, therefore, claimed that possessioncould be handed over and the complaint ought to be dismissed. TheNational Commission allowed the complaint and directed the developerto refund the deposited amount with interest @ 9% p.a. In the givencontext, this Court examined the other decisions of this Court as also thecontentions concerning the provisions of the Real Estate (Regulationand Development Act), 2016 and held that the Commission has the powerand jurisdiction to direct return of money under Section 14 of the Act of1986 if the consumer so chooses. The order of the National Commissionwas approved by this Court with the following observations: - “28. The Consumer in present case prayed for the solitary relieffor return of the amount paid towards purchase of the apartmentwithout a prayer for alternate relief. Recognizing the right of theConsumer for return of the amount with interest and compensation,the Commission passed an order directing the Developer as under:

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A@ 9% p.a. from the date of last deposit before the duedate of possession till actual payment on the amount paidbefore due date of possession and after this date if anyamount is deposited, then from the date of deposit till actualpayment.”

B29. For the reasons stated above, we are of the opinion that theCommission has correctly exercises its power and jurisdiction inpassing the above directions for refund of the amount withinterest.”

14.7. A look at the decisions aforesaid makes it clear that thoughCin most of the cases, the questions were relating to the compensation fordelayed delivery of possession but even in the cases where possessionwas not being delivered by the builder or not being taken by the purchaserfor a valid reason, the award of compensation was restricted to therefund with simple interest in the range 6% to 9% p.a. The claim forawarding compound interest, as in the case of Ireo Grace Realtech (P)DLtd. (supra), was declined by this Court while observing that it had ‘nonexus with the commercial realities of the prevailing market’.

The decision in Manjeet Kaur Monga’s Case and itsconnotations E15. We may now closely examine the decision of this Court in Dr.Manjeet Kaur Monga’s case that has been the sheet anchor of theentire consideration of the State Commission as also the NationalCommission in awarding compensation in terms of compound interest.The said decision has been strongly relied upon by the respondent whilethe appellant has attempted to distinguish the same. Having regard toFthe importance of the questions involved and for clarity on all the relevantaspects, we deem it appropriate to reproduce the entire judgment of thisCourt in Dr. Manjeet Kaur Monga with its extractions (even at the-cost of a little extra length of this judgment) as under:

“Leave granted in SLPs (C) Nos. 10484-85 of 2016 and 10481-G82 of 2016.

2. The appellant in Civil Appeals Nos. 5032-33 of 2016, who isthe legal representative of the original complainant, is before usaggrieved by the order dated 3-8-2015 passed by the CompetitionAppellate Tribunal, New Delhi (for short “the Tribunal”)Hin Manjeet Kaur Monga v. K.L. Suneja [Manjeet Kaur

Monga v. K.L. Suneja, 2015 SCC OnLine Comp AT 593], paras37 and 42 to 44 of the impugned order read as follows: (SCCOnLine Comp AT)

“37. The cancellation of allotment made in favour of thecomplainant deserves to be declared as wholly arbitrary, illegaland capricious. It is not in dispute that Smt Gursharan Kaurhad deposited three instalments including the booking amount.The complainant, Dr (Ms) Manjeet Kaur Monga deposited threeother instalments (total Rs 4,53,850). She did not deposit furtherinstalments because the respondents did not complete theconstruction within the stipulated time. For the first time a vaguestatement about the construction was made in letter dated 26-12-2001, which was issued after 12 years of the booking. Eventhereafter the respondents did not disclose the stage-wiseprogress in the construction work and, as mentioned above,they deliberately misconstrued the complainant’s protest dated22-5-2002 as her disinclination to take the flat. Between 2002and 2005 i.e. the date on which the cancellation letter wasissued, the respondents neither entered into any correspondencewith the complainant nor apprised her about the progress madein the construction. Therefore, it must be held that thecomplainant was justified in not paying further instalments ofprice and the respondents committed grave illegality bycancelling the allotment.

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42. In my view, even though the Tribunal cannot, in view ofthe law laid down in Ved Prakash Aggarwalcase [Ghaziabad Development Authority v. Ved PrakashAggarwal, (2008) 7 SCC 686], issue direction to the respondentsto deliver physical possession of the flat, there is amplejustification for awarding compensation by invoking Section12-B of the Act and even otherwise, because the complainantand her legal representatives have been subjected to harassmentfor the period of more than 25 years. If the building had beencompleted within three years as promised by the respondents,the complainant may have got possession thereof and utilisedthe same. She could not do so during her lifetime and her legalrepresentatives have been compelled to pursue this litigation.

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It is an admitted position that between August 1989 and October1993, Smt Gursharan Kaur and the complainant deposited atotal sum of Rs 4,53,850 in the form of instalments. Therespondents not only failed to complete the project within thestipulated time but also failed to return the instalments depositedby Smt Gursharan Kaur and the complainant. The amount wasreturned only along with the cancellation letter and, as mentionedabove, the complainant had returned the pay order with thelegal notice sent on 7-9-2005.

43. Though Section 12-B empowers the Tribunal to awardcompensation but no criteria has been laid down by thelegislature for exercise of that power. However, keeping inview the fact that the construction of the flat was delayed bymore than one decade and the amount of instalments depositedby Smt Gursharan Kaur and the complainant totalling Rs4,53,850 was retained by the respondents for a period rangingfrom 15 years to more than 12 years, I feel that ends of justicewould be served by directing the respondents to pay compoundinterest @ 15% per annum to the legal representatives of thecomplainant.

44. Accordingly, UTPE No. 90 of 2005 and CA No. 39 of2009 are disposed of in the following terms:

(i) It is declared that the respondents have acted in violation ofSections 36-A(1)(i), (ii) and (ix) of the Act and they are guiltyof unfair trade practice,

(ii) The complainant’s prayer for directing the respondents todeliver possession of Flat B-301 in Siddharth Shila Apartmentsis rejected,

(iii) The respondents are directed to pay compound interest@ 15% per annum to the legal representatives of thecomplainant. The interest shall be calculated on each instalmentpaid by Smt Gursharan Kaur and the complainant from thedate of deposit till 30-4-2005 i.e. the date on which the allotmentwas cancelled, and

(iv) The respondents shall pay Rs 4,53,850 and compoundinterest to the legal representatives of the complainant in termsof (iii) above within a period of three months from today. If the needful is not done, then the legal representatives of thecomplainant shall be entitled to file appropriate application forexecution of this order.”

3. Since the facts have clearly emerged from what we haveextracted above, we need not to go into the factual matrix. Thecontention of the appellant is that since the allotment has beencancelled, the appellant should be entitled to compound interest@ 15% from the original dates of payment from 1989 till the dateof payment and there is no justification in limiting the interest to30-4-2005.

4. It is the contention of the respondents, who have filed separateappeals arising from SLPs (C) Nos. 10484-85 of 2016 and SLPs(C) Nos. 10481-82 of 2016, that the company and the directorhave no liability to pay the compound interest even assuming thatthe appellant in Civil Appeals Nos. 5032-33 of 2016 is entitled toany compensation. It can be only the amount determined underSection 12-B of the Monopolies and Restrictive Trade PracticesAct, 1969 (for short “the Act”). Section 12-B reads as follows:

“12-B. Power of the Commission to award compensation.—(1) Where, as a result of the monopolistic or restrictive, orunfair trade practice, carried on by any undertaking or anyperson, any loss or damage is caused to the CentralGovernment, or any State Government or any trader or classof traders or any consumer, such Government or, as the casemay be, trader or class of traders or consumer may, withoutprejudice to the right of such Government, trader or class oftraders or consumer to institute a suit for the recovery of anycompensation for the loss or damage so caused, make anapplication to the Commission for an order for the recoveryfrom that undertaking or owner thereof or, as the case may be,from such person, of such amount as the Commission maydetermine, as compensation for the loss or damage so caused.

(2) Where any loss or damage referred to in sub-section (1) iscaused to numerous persons having the same interest, one ormore of such persons may, with the permission of theCommission, make an application, under that sub-section, forand on behalf of, or for the benefit of, the persons so interested,and thereupon the provisions of Rule 8 of Order 1 of the First AB

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Schedule to the Code of Civil Procedure, 1908 (5 of 1908),shall apply subject to the modification that every referencetherein to a suit or decree shall be construed as a reference tothe application before the Commission and the order of theCommission thereon.

(3) The Commission may, after an inquiry made into theallegations made in the application filed under sub-section (1),make an order directing the owner of the undertaking or otherperson to make payment, to the applicant, of the amountdetermined by it as realisable from the undertaking or the ownerthereof, or, as the case may be, from the other person, ascompensation for the loss or damage caused to the applicantby reason of any monopolistic or restrictive, or unfair tradepractice carried on by such undertaking or other person.

(4) Where a decree for the recovery of any amount ascompensation for any loss or damage referred to in sub-section(1) has been passed by any court in favour of any person orpersons referred to in sub-section (1), or, as the case may be,sub-section (2), the amount, if any, paid or recovered inpursuance of the order made by the Commission under sub-section (3) shall be set off against the amount payable undersuch decree and the decree shall, notwithstanding anythingcontained in the Code of Civil Procedure, 1908 (5 of 1908), orany other law for the time being in force, be executable for thebalance, if any, left after such set off.”

5. We do not think that there needs to be any elaborate considerationof the meaning of the word “compensation” in terms of the amountreferred to under the section. The amount referred to under thesection is the amount @ 15% compound interest on the amountalready deposited, as ordered [Manjeet Kaur Monga v. K.L.Suneja, 2015 SCC OnLine Comp AT 593] by the Tribunal. Merely,because a liquidated amount is not stipulated or determined by theTribunal, it cannot be said that it is not the compensation. Oncethe interest, as ordered by the Tribunal, is calculated that will bethe amount of compensation referred to under Section 12-B ofthe Act.

6. During the course of hearing of the appeals another interestingpoint came up for consideration. It has been brought to the notice

of this Court that when the builder company, the appellant in theappeals arising out of SLPs (C) Nos. 10484-85 of 2016, had takenthe pay order from Citibank on 30-4-2005, the amount of Rs4,53,750 covered by the pay order had actually been deductedfrom their current account. But at the same time, the amount hadnot been paid/received by the payee. In the instant case, theaccount-holder cancelled the pay order and requested for re-creditof the amount and, accordingly, it is seen that Citibank has re-credited the amount to the account only on 22-6-2016. It is thecontention of the account-holder company that for the period themoney was with the Bank, the account-holder is entitled to interestand that can be the compensation if at all that can be paid to theappellant in Civil Appeals Nos. 5032-33 of 2016 for the periodafter the cancellation of the allotment. We may, of course, takenote of the submission of the builder that in terms of the principlesof restitution under Section 144 CPC and on the general principleof restitution, the builder cannot be put to unmerited injustice andthe appellant should not take the undue advantage as held by thisCourt in Citibank N.A. v. Hiten P. Dalal [Citibank N.A. v. HitenP. Dalal, (2016) 1 SCC 411 : (2016) 1 SCC (Civ) 342] , ascanvassed by the learned counsel appearing for the builder.

7. The learned counsel appearing for Citibank, inviting ourreference to the additional affidavit contended that it is a fact thatthe money from the current account of the builder has beendeducted on 30-4-2005 and it has not been paid to the payee. But,at the same time, it cannot be said that the money was enjoyed bythe Bank, since being a pay order, at any moment the instrumentis presented, the Bank was bound to honour the same and,therefore, only for the lapse on the part of either the payee or theaccount-holder for encashing or cancelling the instrument, the Bankcannot be saddled with any interest. It is also submitted by thelearned counsel appearing for the Bank that they are governed bythe instructions issued by Reserve Bank of India in that regard.

8. We find from the order [Manjeet Kaur Monga v. K.L. Suneja,2015 SCC OnLine Comp AT 593] of the Tribunal that both theissues have not been gone into, apparently because these aspectshave not been canvassed and obviously because Citibank wasnot before the Tribunal.

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9. To that limited extent we propose to send back the matters tothe Tribunal. Therefore, these appeals are disposed of as follows:

9.1. Citibank N.A., represented by its Manager, Jeevan BhartiBuilding, 124, Connaught Circus, New Delhi will stand impleadedas additional respondent in the complaint before the CompetitionBAppellate Tribunal, New Delhi.

9.2. The builder shall pay the compensation worked @ 15%compound interest up to 30-4-2005.

9.3. Whether there should be any compensation and if so, whatshould be the amount payable after 30-4-2005 and whether Citibankis liable to pay any interest to the account-holder by the Tribunal.

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10. To the above limited extent, we remit the matters to theCompetition Appellate Tribunal, New Delhi.

11. It will be open to the parties to take all available contentions inrespect of the issues remitted to the Tribunal.

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12. With the above observations and directions, the appeals aredisposed of.

13. Pending applications, if any, shall stand disposed of. Thereshall be no orders as to costs.”

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15.1. The observations and directions in paragraphs 6 to 11 in theaforesaid decision led to another round of litigation that culminated in theother decision of this Court in K.L Suneja (supra) wherein, ultimately,this Court declined any interest to the complainant after tender of theamount by the developer. In the given context, this Court observed, interFalia, as under: - “31. The provisions of Order XXI are applicable to decreesof civil court. However, they embody a sound policy principle,that if the amount is deposited, or paid to the decree holder orperson entitled to it, the person entitled to the amount cannot laterGseek interest on it. This is a rule of prudence, inasmuch as thedebtor, or person required to pay or refund the amount, is underan obligation to ensure that the amount payable is placed at thedisposal of the person entitled to receive it. Once that is complete(in the form of payment, through different modes, includingtendering a Banker’s Cheque, or Pay Order or Demand Draft, all H

of which require the account holder/debtor to pay the bank, whichwould then issue the instrument) the tender, or ‘payment’ iscomplete.

32. In the present case, the complainant was aware thatthe Pay Order had been tendered by the developer to her;nevertheless she filed the original Pay Order with her complaint,and did not seek any order from the MRTP Commission at therelevant time. The pleadings in the complaint did not disclose thatthe Pay Order was filed in the Commission, to enable the developerto respond appropriately. In these circumstances, the developer’sargument that the rule embodied in Order XXI, Rule 4 CPC, isapplicable, is merited. The developer cannot be fastened with anylegal liability to pay interest on the sum of Rs. 4,53,750/- after30[th] April 2005.

33. This court is also of the opinion that the complainant’sargument that on account of the omission of the developer, shewas wronged, and was thus entitled to receive interest, cannotprevail. The records nowhere disclose any fault on the part of thedeveloper; on the other hand, the complainant did not take stepsto protect her interests. It has been held by this court, in SailenKrishna Majumdar v. Malik Labhu Masih [Sailen KrishnaMajumdar v. Malik Labhu Masih, (1989) 1 SCR 817] that in suchcases, even if equities are equal, the court should not intervene:

“Equity is being claimed by both the parties. Under thecircumstances we have no other alternative but to let theloss lie where it falls. As the maxim is, ‘in aequali juremelior est conditio possidentis’. Where the equities areequal, the law should prevail. The respondent’s right topurchase must, therefore, prevail.”

34. In the present case too, the complainant cannot claiminterest from the developer, who had returned the Pay Order. Asdiscussed, at the time of filing of the complaint, she could havechosen one among the various options to ensure that the amountpresented to her was kept in an interest-bearing account, withoutprejudice to her rights to claim interest later. In thesecircumstances, no equities can be extended to her aid.

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A35. As regards the complainant’s appeal, the contention isthat the impugned order is in error, because the Tribunal ought tohave directed that the developer ought to have been directed topay interest on the sum of Rs. 4,53,750/- from 4[th] October 1993till the date of its realization i.e., 7[th] May 2016. This plea is plainlyuntenable, because the interest payable for the past period wasBconcluded in the previous proceedings. The complainant did notpoint to any rule or binding legal principle which obliged thedeveloper to pay such interest, or justify the direction in theimpugned order, by showing how such liability arose in the factsand circumstances of this case.”C

15.2. The said case of Dr. Manjeet Kaur Monga had been ofclaiming compensation under the provisions of MRTP Act whereas thepresent one is a case of claiming compensation under the ConsumerProtection Act, 1986. Hence, a comparison of the provisions of Section14(1)(d) of the Act of 1986 and Section 12-B(3) of MRTP Act, as regardsDpowers of respective fora, shall be apposite and could be made as under:- E

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16. The question is as to whether the aforesaid decision in Dr.Manjeet Kaur Monga could be read as laying down a principle ofuniversal applicability that in such matters of dealing in real estate, the 8 The proviso aforesaid was inserted by Act 62 of 2002 with effect from 15.03.2003H

question of compensation or damages could be determined invariably byawarding compound interest whenever the deposited money is to bereturned by the builder or developer in case of default in carrying out itsobligations under the agreement and in failing to deliver the propertyenvisaged by the agreement. In our view, the answer could only be inthe negative.

16.1. It is at once clear on a bare look at the aforesaid decision ofthis Court in Dr. Manjeet Kaur Monga that therein, the CompetitionAppellate Tribunal, while exercising powers under Section 12-B of theMRTP Act, directed the builder to pay compound interest at rate of 15%p.a. from the date of deposit and until the date on which allotment wascancelled. There were cross appeals in this Court. The complainant inher appeals questioned the award of compound interest only until thedate of cancellation and sought the same until the date of payment. Onthe other hand, the builders, that is, the present appellants, contendedthat they could not be made liable to pay compound interest becauseeven if the complainant was entitled to any compensation, it could onlybe that of the amount determined under Section 12-B MRTP Act. In thisbackground and in regard to such contentions of the present appellants,this Court observed that there was no need for any interpretation of themeaning of the term “compensation” because once the amount of interestas ordered by COMPAT was calculated, that would be the compensationreferred to under Section 12-B of the MRTP Act; and merely becauseliquidated amount was not stipulated or determined by COMPAT, it couldnot be said that the awarded amount was not that of compensation. Thisall was said by this Court, as could be noticed from paragraph 5 in theextraction aforesaid. In the subsequent passages, this Court adverted toanother peculiar feature of this case where the amount of pay order,despite being deducted from current account of appellants, did not reachthe payee and re-credit was allowed by the bank more than 11 yearslater; and as the bank was not a party to the litigation, the said aspectwas remitted for consideration of COMPAT.

Ratio decidendi

16.2. In the aforesaid decision in Dr. Manjeet Kaur Monga bythis Court, the question was not raised as to whether compound interestcould be granted as a measure of compensation nor this Court decidedso. The question raised had been the other way round that COMPAThad not specified the amount of compensation payable, to which, thisCourt observed that calculating the amount as per directions of COMPATwould lead to the quantum of compensation.

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17. What has been argued before us on behalf of respondent isessentially on the basis of the relief granted by COMPAT to the saidcomplainant Dr. Manjeet Kaur Monga, which was not interfered withby this Court. That aspect, in our view, only relates to the conclusion ofthe decision and not to its ratio decidendi.

B17.1. It has rightly been argued on behalf of the appellants that ajudgment is an authority only in regard to its ratio which is required to bediscerned; and a decision cannot be regarded as an authority in regardto its conclusion alone or even in relation to what could be deducedtherefrom. In Sanjay Singh (supra), a 3-Judge Bench of this Court hasexplained these principles in clear terms as follows: -C

“10. The contention of the Commission also overlooks thefundamental difference between challenge to the final orderforming part of the judgment and challenge to the ratio decidendiof the judgment. Broadly speaking, every judgment of superiorcourts has three segments, namely, (i) the facts and the point atDissue; (ii) the reasons for the decision; and (iii) the final ordercontaining the decision. The reasons for the decision or the ratiodecidendi is not the final order containing the decision. In fact, ina judgment of this Court, though the ratio decidendi may point to aparticular result, the decision (final order relating to relief) may beEdifferent and not a natural consequence of the ratio decidendi ofthe judgment. This may happen either on account of any subsequentevent or the need to mould the relief to do complete justice in thematter. It is the ratio decidendi of a judgment and not the finalorder in the judgment, which forms a precedent.”

F18. Keeping the principles aforesaid in view and for what hasbeen discussed hereinbefore in regard to ratio decidendi of the decisionin Dr. Manjeet Kaur Monga, it is but clear that the said decision cannotbe read in support of the principle that compensation and/or punitivedamages in terms of the Act of 1986 could also be by way of compoundinterest. As noticed, the State Commission has awarded compoundGinterest, and National Commission has approved such awarding ofcompound interest to the present respondent, only with reference to thesaid decision in the case of Dr. Monga. When we do not find ratiodecidendi of Dr. Monga leading to the enunciation in favour of awardingcompensation and/or punitive damages by way of compound interest,Hthe substratum of the orders impugned is knocked to the ground.

The complexities of present matter requiring furtherexploration

19. However, the complexities of the present matter are that eventhe observations and conclusions foregoing cannot be taken as decisiveof the matter. It is because of the other pertinent factors that in Dr.Monga’s case, compound interest was indeed awarded against the verysame builders in relation to the very same project. The respondent assertsto be identically situated and rather having suffered excessive losses fora longer period of time. The respondent has been awarded compoundinterest at rate of 14%. The frequency of compounding has not beenspecified but, we may take it as that of yearly rests. In the circumstances,the question to be addressed is as to whether compound interest couldhave been allowed in this case under the Act of 1986 and if so, untilwhich date and for what period. Therefore, a little further exploration isrequisite.

20. The submissions on behalf of the appellants that wherever thelegislature considered it permissible to award compound interest it hasprovided so in the enactment, has its own limitations. The illustrationsplaced before this Court by the learned counsel for the appellantsconcerning different enactments, though make it clear that in certaineventualities, the legislature has indeed specified the award of compoundinterest. Mostly, it has been provided so in relation to any monetaryinvolvement having the trappings of public interests in it. The Act of1986, on the other hand, being a beneficial legislation, inter alia, empowersthe Consumer Fora to direct payment of such amount as may be awardedas compensation to the consumer for any loss or injury suffered due tothe negligence of the opposite party. The proviso added to Clause (d) ofSection 14(1) of the Act of 1986 empowers the Forum to grant punitivedamages in such circumstances as it deems fit. That being the position,it cannot be laid down in absolute terms that for no such stipulationregarding compound interest being available in the Act of 1986, the samecan never be granted by the Consumer Fora. Equally, when the matteris being considered for award of compensation and/or punitive damages,want of stipulation in the contract as regards award of compound orsimple interest, cannot be decisive of the matter.

20.1. In the case of Clariant International Ltd. (supra), the Courtwas considering the power of Securities & Exchange Board of India todirect payment of compensation and interest to the shareholders of the A

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Atarget company because of delay in or failure to make public offer aftertakeover. This Court, inter alia, held that in the absence of any agreementor statutory provision or mercantile usage, interest payable could only beat the market rate; and the interest could be payable upon establishingtotality of circumstances justifying exercise of such equitable jurisdiction.This Court, inter alia, observed and held as under: -B

“30. Interest can be awarded in terms of an agreement or statutoryprovisions. It can also be awarded by reason of usage or tradehaving the force of law or on equitable considerations. Interestcannot be awarded by way of damages except in cases wheremoney due is wrongfully withheld and there are equitable groundsCtherefor, for which a written demand is mandatory.

31. In absence of any agreement or statutory provision or amercantile usage, interest payable can be only at the market rate.Such interest is payable upon establishment of totality ofcircumstances justifying exercise of such equitable jurisdiction.D(See Municipal Corpn. of Delhi v. Sushila Devi [(1999) 4 SCC317] , SCC para 16.)

32. In Executive Engineer, Dhenkanal Minor IrrigationDivision v. N.C. Budharaj [(2001) 2 SCC 721] Raju, J. speakingfor the majority held that a person deprived of the use of moneyEto which he is legitimately entitled has a right to be compensatedfor the deprivation by whatever name it may be called, namely,interest, compensation or damages.”

20.2. In the case of Central Bank of India (supra), theConstitution Bench of this Court essentially dealt with the question as toFthe meaning to be assigned to the phrases “the principal sum adjudged”and “such principal sum”, as occurring in Section 34 of the Code of CivilProcedure, 1908. The Constitution Bench answered the reference inthe following terms: - “58. Subject to the above we answer the reference in the followingGterms:

(1) Subject to a binding stipulation contained in a voluntary contractbetween the parties and/or an established practice or usage intereston loans and advances may be charged on periodical rests andalso capitalised on remaining unpaid. The principal sum actuallyHadvanced coupled with the interest on periodical rests so capitalised is capable of being adjudged as principal sum on the date of thesuit.

(2) The principal sum so adjudged is “such principal sum” withinthe meaning of Section 34 of the Code of Civil Procedure, 1908on which interest pendente lite and future interest i.e. post-decreeinterest, at such rate and for such period which the court maydeem fit, may be awarded by the court.”

20.2.1. The said case, essentially on enunciation of the principlesrelating to charge of interest by a creditor with reference to stipulation inthe contract, or by a practice or usage when established, subject to thestatutory provision, does not have an application to the question at hand.

21. On the other hand, the observations made by this Court in thecase of Indian Council for Enviro-Legal Action (supra), which havebeen extensively relied upon by the learned counsel for the respondentcannot as such be applied to the case at hand either. In the said case,this Court dealt with the principles governing compensation for the losssuffered by citizenry due to pollution and the ‘polluter pays’ principle.Such observations, essentially relating to public law remedies underinherent powers of this Court, are difficult to be applied to the case ofthe present nature, essentially emanating from the allegations of breachof contract. In other words, the observations of this Court as regardsdisgorgement of all the benefits arrived at by the wrongdoer and restitutionin full and effective form are difficult to be directly applied to the natureof claim in the present case. The set up and background in which theCourt made the observations could be noticed from paragraph 169 ofthe said decision that reads as under: - “169. In the point under consideration, which does not arise froma suit for recovery under the Code of Civil Procedure, the inherentpowers in the court and the principles of justice and equity areeach sufficient to enable an order directing payment of compoundinterest. The power to order compound interest as part of restitutioncannot be disputed, otherwise there can never be restitution.”

21.1. A few other referred paragraphs of the said decision mayalso be reproduced, which read as under: - “177. This Court in Alok Shanker Pandey v. Union ofIndia [(2007) 3 SCC 545] observed as under: (SCC p. 547, paras8 and 9)

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“8. We are of the opinion that there is no hard-and-fast ruleabout how much interest should be granted and it all dependson the facts and circumstances of each case. We are of theopinion that the grant of interest of 12% per annum isappropriate in the facts of this particular case. However, weare also of the opinion that since interest was not granted tothe appellant along with the principal amount, the respondentshould then in addition to the interest at the rate of 12% perannum also pay to the appellant, interest at the same rate onthe aforesaid interest from the date of payment of instalmentsby the appellant to the respondent till the date of refund on thisamount, and the entire amount mentioned above must be paidto the appellant within two months from the date of thisjudgment.

9. It may be mentioned that there is misconception aboutinterest. Interest is not a penalty or punishment at all, but it isthe normal accretion on capital.”

178. To do complete justice, prevent wrongs, remove incentivefor wrongdoing or delay, and to implement in practical terms theconcepts of time value of money, restitution and unjust enrichmentnoted above—or to simply levelise—a convenient approach iscalculating interest. But here interest has to be calculated oncompound basis—and not simple—for the latter leaves muchuncalled for benefits in the hands of the wrongdoer.

179. Further, a related concept of inflation is also to be kept inmind and the concept of compound interest takes into account, byreason of prevailing rates, both these factors i.e. use of the moneyand the inflationary trends, as the market forces and predictionswork out.

180. Some of our statute law provide only for simple interest andnot compound interest. In those situations, the courts are helplessand it is a matter of law reform which the Law Commission musttake note and more so, because the serious effect it has on theadministration of justice. However, the power of the Court to ordercompound interest by way of restitution is not fettered in anyway. We request the Law Commission to consider and recommendnecessary amendments in relevant laws.”

21.2. The observations aforesaid, as occurring in the referreddecision in the case of Alok Shankar Pandey (supra) make it clear thatthere could be no hard and fast rule as to how much interest should begranted and it would depend on the facts and circumstances of eachcase. However, interest is not considered to be a penalty or punishmentbut is considered to be a normal accretion on capital.

21.3. The decision of English Courts cannot be taken as instructivein view of the principles available in the decisions of this Court and theentirely different socio-economic factors. Hence, we do not propose todilate on the decision in the case of Wallersteiner (supra) as cited bythe learned counsel for the respondent but, this much is apparent fromthe said decision too that in the absence of statutory provisions, theprinciples of equity have been invoked for awarding interest.

22. The synthesis of the cited decisions aforesaid, for the presentpurpose, leads to the result that none of these decisions could be takenas guide for award of compound interest in an action before the ConsumerFora under the Act of 1986. In regard to such cases, in our view, theforum would be entitled to provide for the amount of compensation asdeemed fit, having regard to the facts and circumstances of the caseand the gravity of the negligence of the opposite party and consequentialinjury suffered by the consumer. The forum could award even punitivedamages but that would depend on the relevant circumstances and forthat matter, the relevant factors shall have to be specified. In regard tosuch awarding of compensation and/or punitive damages, the forumconcerned could take all the relevant factors into account and awardsuch amount as deemed fit and necessary but ordinarily, in the mattersof money refund, awarding of compound interest as a measure of punitivedamages is not envisaged. As to what would be the quantum ofcompensation and for that matter, what would be the quantum of punitivedamages, would depend on facts and circumstances of each case butwhile awarding so, the forum would be advised to specify all the relevantfactors and basis of its quantification. A shortcut of awarding compoundinterest is neither envisaged by the statute nor do we find any such termof contract between the parties or any such usage. As noticed, the attemptto seek compound interest in such real estate dealings did not meet withapproval of this Court and in the case of Ireo Grace Realtech (supra)such a claim was declined by a 3-Judge Bench of this Court for havingno nexus with the commercial realities of the prevailing market. Going AB

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Aby the principles governing the nature of jurisdiction of the ConsumerFora as also the principles enunciated by this Court including those in the3-Judge Bench decision, we need to disapprove the proposition ofawarding compound interest in the cases of monetary refund in suchdealings.B23. Several submissions made on behalf of the respondent as tothe alleged advantage derived by the appellants by retention of money,again, cannot lead to award of compound interest while ordering refund.For award of compound interest, relevant factors shall have to be takeninto account which would include uncertainties of market and severalother imponderables. We would hasten to observe that if at all by way ofCcompensation, the Consumer Forum considers it proper to examine thetime value for money, an in-depth and thorough analysis would be requiredwhile taking into account all the facts and the material surrounding factors,including those of realities as also uncertainties of market.

24. In our view, awarding of compound interest with reference toDDr. Monga’s case and without examining any other factor has led toserious inconsistencies; and if the award as made is approved, it couldonly lead to unjust enrichment of the respondent in the name ofdisgorgement of benefits purportedly derived by the appellants. Asnoticed, the State Commission and the National Commission have passedErather assumptive orders on the basis of the decision in Dr. Monga thatcompound interest was required to be allowed. Various factors recountedon behalf of the respondent, including excessive harassment and denialof the fruits of her investment could all lead to a reasonable amount ofcompensation but, there appears absolutely no reason that compoundinterest be allowed in this matter.F

25. Having regard to the order proposed to be passed, we are notentering into the minute calculations and variety of alternatives presentedby the parties before us but, on a broad consideration of the matter, it isclear that even as per the exemplar sale deeds relating to the same areaand similar flats, the cost of 3 flats booked by the respondent, as atGpresent, is in the range of 2.25 crore, whereas the amount payable underthe award in question would be above Rs. 7.35 crore. The respondenthas attempted to compare the circle rates of the land in the area inquestion with the submissions that there were no circle rates of the flatsin the year 1989 and the attempt on her part was to make “apples-to-Happles” comparison and then factorising on the cost of flats. In the first place, no such efforts of calculation and assessment were made beforethe State Commission or the National Commission by the respondent.Secondly, the said Consumer Fora have not returned cogent andconvincing findings on the loss or injury of the respondent with referenceto the relevant factors. We have referred to these aspects only to indicatethat award of compound interest in the present case had neither anyfoundation in the record nor any backing in law nor the Consumer Foratook care to examine the contours of their jurisdiction and the requirementsof proper assessment, if at all any compensation and/or punitive damageswere sought to be granted. The impugned orders are difficult to besustained.

26. Even while we have disapproved the award of compoundinterest by the Consumer Fora in the cases of the present nature, thereis yet another factor for which the impugned orders are required to beinterfered with. As noticed, the State Commission merely referred tothe decision of COMPAT in Dr. Monga’s case and then referred to theprayer of the respondent for award of compound interest coupled withthe fact that possession cannot be handed over to her. On this and withreference to the observations in the case of Malay Kumar Ganguly(supra)[9], for awarding compensation with such sum of money as to putthe wronged person in the position as he would have been if he had notsustained the wrong, the State Commission straightaway jumped to theconclusion of awarding compound interest @ 14%. Apart from othershortcomings as noticed above, the State Commission, even whileawarding compound interest @ 14%, did not even take into account thefact of attempted refund of money by the appellants by the cheque dated08.11.2005 and did not specify the period of such operation ofcompounding of interest. The open-ended and the assumptive order bythe State Commission had been bereft of logic and had been wanting inthe requisite reasoning as also specification of the relief sought to begranted. The position in the National Commission had been no betterand in fact, the Commissions proceeded as if nothing else was required to be considered because of Dr. Manjeet Kaur Monga’s case.

9Malay Kumar Ganguly had been a case relating to compensation on account ofmedical negligence. The referred passage in the said decision reads as under: - “Indisputably, grant of compensation involving an accident is within therealm of law of torts. It is based on the principle of restitution in interregnum.The said principle provides that a person entitled to damages should, asnearly as possible, get that sum of money which would put him in the sameposition as he would have been if he had not sustained the wrong.”

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27. For what has been discussed hereinabove, the impugned ordersare required to be set aside. However, as indicated, the pertinent factorsare that Dr. Monga’s case related to the very same project and veryBsame builder with similar grievance of the complainant. In the said case,award of compound interest until the date of attempted refund by thebuilders has attained finality. In this view of the matter, even whiledisapproving the proposition of providing compound interest as such, wedeem it appropriate to take into consideration, only for the purpose ofthe present case, the other requirements of balancing the equities.

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27.1. For the peculiar factors of the present case, we are inclinedto examine the matter with reference to the alternative submission onthe part of the appellants that if at all awarding of compound interestwas to be considered, their efforts to make refund of the sum of Rs.10,68,031/- on 08.11.2005 by way of a cheque cannot be ignored. It hasDbeen argued in this regard on behalf of the respondent that the saidcheque was promptly returned by the respondent and accepted by theappellants. Such return of cheque by the respondent and acceptance bythe appellants is not decisive of the matter. The relevant aspect of thematter is that the appellants indeed attempted to refund the said sum ofERs. 10,68,031/- on 08.11.2005. Even if the respondent was within herright to decline the offer, in our view, if at all compounding of interestwas to be allowed, that could not have run beyond 08.11.2005, at least inregard to the said sum of Rs. 10,68,031/-. Put in other words, even whenwe may not find fault with stance of the respondent in refusing to acceptsuch an offer of refund, particularly when she was desirous of the flatsFrather than money refund, the appellants cannot be saddled with anyliability to pay compound interest over the amount offered by them beyondthe date of their offer. The Consumer Fora have failed to consider thatwhen the appellants had indeed offered to pay the money and sent thecheque on 08.11.2005, it would be bringing about negative imbalance ifGsuch an effort on the part of the appellants was to be ignored altogetherand compounding of interest was continued beyond 08.11.2005.

27.2. When the amount payable by the appellants with referenceto the principles and propositions aforesaid is calculated, in our view, itdoes not exceed the amount of Rs. 2,48,52,000/- together with accruedHinterest, which has already been received by the respondent pursuant to the order passed by this Court on 09.05.2022. Keeping in view the peculiarcircumstances of this case, as an extraordinary measure, we propose toallow the respondent to retain the amount so received.

27.3. However, we would hasten to observe that the respondentis being allowed to retain the sum of money already received by her onlybecause of peculiar circumstances of this case and else, this relaxationfor the respondent is in no manner to be read as approval of the ordersimpugned or approval of the proposition of awarding compound interestin these matters. As said and iterated hereinbefore, such a proposition ofawarding compound interest in these matters by the Fora exercisingjurisdiction under the Act of 1986 stands disapproved.

Conclusion

28. Accordingly and in view of the above, these appeals succeedand are allowed. The impugned orders passed by the State Commissionand National Commission are disapproved. Having regard to the peculiarcircumstances of this case, the amount already received by the respondentin the sum of Rs. 2,48,52,000/- together with accrued interest is allowedto be retained by her but, we make it clear that the appellants shall notbe required to make any further payment to the respondent, whethertowards refund or towards compensation or towards interest. The partiesare left to bear their own costs of these appeals.

Nidhi Jain(Assisted by : Rakhi, LCRA)

Appeals allowed.

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