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Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 7335 of 2008

CHIEF ADMINISTRATOR, H.U.D.A. & ANR.  

.... Appellant(s) Versus

SHAKUNTLA DEVI

….Respondent(s)

J U D G M E N T

L. NAGESWARA RAO, J.

This  Appeal  is  filed  challenging  the  order  dated

25.09.2007 of  the National  Consumer Disputes Redressal

Commission, New Delhi (hereinafter referred to as ‘National

Commission’)  by  which  an  order  of  the  State  Consumer

Disputes  Redressal  Commission,  Union  Territory,

Chandigarh (hereinafter referred to as  ‘State Commission’)

awarding compensation to the Respondent was confirmed.

2. The Respondent was allotted Plot No. 40, measuring

40 marlas in Sector 8, Urban Estate, Karnal on 03.04.1987.

As physical possession of the plot was not given to her by

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the  Appellants,  the  Respondent  filed  Original  Complaint

No. 54 of 1997 before the State Commission.  In the said

complaint,  the Respondent alleged that  she had paid the

full price of the plot including the enhancement fee as per

the  terms  and  conditions  of  the  allotment  letter.   She

averred that she was not given the possession of the plot in

spite of repeated requests.   The Respondent also pleaded in

the complaint that the Appellants were required to complete

the development work within 2 years from the date of the

allotment  letter  and  hand  over  the  physical  possession.

She further stated that  she wanted to construct a house

and the delay in handing over physical possession of the

plot resulted in additional expenditure for the building as

the price of construction material increased manifold from

1988 to 1997.  On the basis of the above averments, the

Respondent  sought  for  the  following  reliefs  in  Original

Complaint No. 54 of 1997:

i. “That the opposite party be directed not to charge

any extension fees for not constructing the plot

within the stipulated period which could not be

done  because  of  non  delivery  of  the  physical

possession of the plot.  

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ii. HUDA be directed not to charge interest at all on

the  amount  because  the  HUDA  had  offered  a

paper possession in the year 1982 and had not

handed over the physical /actual possession till

date.  

iii. HUDA  be  directed  to  deliver  the  physical

possession  immediately  after  completing

development  work  as  per  the  brochure  and

advertisement and after providing the community

service  such  as  schools,  community  centre,

hospital etc. in the sector.  

iv. The HUDA be directed to  give compensation of

1.00  lac  against  harassment  mental  agony

suffered due to the act and conduct of HUDA.

v. Directed to give cost to the complainant for Rs.

20,000/-  against  the  expenditure  incurred  in

filing this complaint and as well as for spending

the  amount  for  visiting  the  office  of  the  last  8

years.

vi. The complainant be awarded interest at the rate

of 18 % on the amount deposited on various time

till the actual possession of the plot is given.  

vii. The Respondent be directed to pay Rs. 5.00 lac

escalation  cost  of  the  construction  material.”       

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3. The Appellants  filed a written statement in which it

was stated that the Respondent was allotted the plot from

the Government Discretionary Quota  vide Allotment Letter

No. 5049 dated 03.04.1987.  The Appellants alleged that the

Respondent  did  not  seek  delivery  of  possession  prior  to

16.07.1997.  It was also stated in the written statement that

an amount  of  Rs.28,000/-  was still  outstanding.   It  was

further alleged that the Respondent was not interested in

constructing  a  house  and  that  no  building  plan  was

submitted for approval.   

4. The State Commission by its order dated 21.12.1998

held  that  the  Respondent  has  established  deficiency  of

service by the Appellants as there was delay in handing over

physical possession of the plot.  The complaint was allowed

and the Appellants were directed to deliver vacant physical

possession  of  the  plot,  if  not  already  done,  to  the

Respondent within one month from the date of receipt of the

order.    There was a further direction to pay interest on the

amount  deposited by the  Respondent  at  the  rate  of  12%

with effect from 03.04.1989 and to pay a sum of Rs.2 lakhs

as  compensation  on  account  of  escalation  in  the  cost  of

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construction etc.   The Appellants were also directed to pay

Rs.20,000/- towards compensation for monetary loss and

mental harassment suffered by the Respondent.   

5. Aggrieved by the said order dated 21.12.1998 of the

State Commission, the Appellants filed an appeal before the

National Commission.  The National Commission confined

the  dispute  in  First  Appeal  No.  154 of  1999 only  to  the

award of compensation of Rs.2 lakhs relating to escalation

in  cost  of  construction.   The  other  reliefs  pertaining  to

payment  of  compensation  towards  monetary  loss  and

mental  harassment  of  Rs.  20,000/-  and  interest  on  the

amount deposited by the Respondent were confirmed. The

National  Commission  remanded  the  matter  for

re-consideration of  compensation for  escalation of  cost  of

construction in accordance with CPWD rates.       6. The  State  Commission  reconsidered  the  matter  and

permitted  both  sides  to  produce  evidence  which  would

enable  it  to  compute  the  compensation  for  escalation  of

construction  cost  as  per  CPWD  rates.   The  Respondent

produced evidence to show that  the escalation in cost  of

construction between April, 1989 and January, 2000 would

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be Rs. 18,67,000/-.  An affidavit dated 06.02.2007 was filed

by Sh. Vikram Singh Malik, Estate Officer, HUDA, Karnal

on behalf of the Appellants in which it was stated that the

physical possession of the plot was given to the Respondent

on 21.01.2000.  The Respondent submitted a building plan

only  on  14.02.2006  which  would  clearly  prove  that  the

Respondent was not interested in constructing the house.

The submission of the Appellants that the Respondent was

not entitled for more than Rs. 2,00,000/- towards increase

in  the  construction  cost  was  rejected  by  the  State

Commission on the ground that the National Commission

directed computation of compensation at CPWD rates and

that there was no restriction in the order of remand.    The

material produced by the Respondent to prove escalation in

the  cost  of  construction  was  accepted  by  the  State

Commission which held that the Respondent was entitled

for a sum of  Rs.  18,67,000/- as compensation.  However,

the State Commission held that since the Respondent did

not  commence  construction  till  2006  with  a  view  to  get

more  compensation.   Therefore,  she  was  awarded  a

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compensation of Rs. 15,00,000/- instead of Rs. 18,67,000/-

towards increase in the cost of construction.   

7. The  National  Commission  by  an  order  dated

25.09.2007 dismissed Appeal No. 525 of 2007 filed by the

Appellants  and  confirmed  the  order  passed  by  the  State

Commission holding  that  the  compensation awarded was

just and reasonable. According to the National Commission

even if 15 % interest on the amount of Rs.5 lakhs claimed

by the Respondent for 10 years is awarded, the Respondent

would be entitled to Rs. 12.5 lakhs.  Aggrieved by the order

dated 15.09.2007 in First  Appeal No.  525 of  2007 of  the

National Commission, the Appellants have filed this Appeal.    8. The  Counsel  for  the  Appellants  submitted  that  the

Respondent  was  allotted  the  plot  in  the  Government

Discretionary  Quota  and  that  the  Respondent  did  not

approach the Appellants seeking possession of the plot till

1997.   He  also  submitted  that  the  Respondent  did  not

commence the construction till 2006 though she was given

possession on 21.01.2000.  He further contended that the

State  Commission  erred  in  awarding  Rs.  15  lakhs  as

compensation when the earlier order granting Rs. 2 lakhs

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as  compensation  was  not  challenged by  the  Respondent.

According to him, the remand by the National Commission

was  to  examine  whether  the  Respondent  was  entitled  to

Rs. 2 lakhs as compensation which meant that she cannot

be given any compensation beyond Rs. 2,00,000/-.    9. The Counsel for the Respondent submitted that there

was  no  restriction  in  the  remand  by  the  National

Commission as the compensation towards escalation of the

cost  of  construction was directed to be calculated as per

CPWD rates.  He submitted that the State Commission was

right in awarding Rs. 15 lakhs as compensation when the

deficiency of service by the Appellant in not handing over

the possession of  the plot  till  2000 was proved.  He also

urged that the Civil Procedure Code has limited application

in the Consumer Fora and relief cannot be denied on the

grounds of  defective pleadings and the relief  sought.   He

also submitted that cogent material was placed before the

State  Commission  to  prove  the  escalation  in  the  cost  of

construction between 1989 and 2000.  

10. The  avowed  object  of  the  Consumer  Protection  Act,

1986 is to provide for  better  protection of  the interest of

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consumers.  The statement of the objects and reasons, inter

alia,  provides  for  a  speedy  and  simple  redressal  to

consumer  disputes.   The  quasi  judicial  bodies  at  the

District,  State  and Central  levels were empowered to give

relief  to the consumers and award, wherever appropriate,

compensation to consumers.  

11. Section 14 (1) (d) of the Act which is relevant for the

adjudication of the dispute in this case is as follows:

“14. Finding of the District Forum.- (1) If, after the  proceeding conducted under  section 13,  the

District  Forum  is  satisfied  that  the  goods

complained against suffer from any of the defects

specified  in  the  complaint  or  that  any  of  the

allegations contained in the complaint about the

services are proved, it shall issue an order to the

opposite party directing him to do one or more of

the following things, namely: ……. (d) to pay such amount as may be awarded by it as compensation to the consumer for any loss or

injury  suffered  by  the  consumer  due  to  the

negligence of the opposite party.”

12. The  sine qua non for entitlement of  compensation is

proof of loss or injury suffered by the consumer due to the

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negligence of the opposite party.  Once the said conditions

are satisfied, the Consumer Forum would have to decide the

quantum  of  compensation  to  which  the  consumer  is

entitled.  There cannot be any dispute that the computation

of  compensation  has  to  be  fair,  reasonable  and

commensurate to the loss or injury.  There is a duty cast on

the  Consumer  Forum  to  take  into  account  all  relevant

factors for arriving at the compensation to be paid.    13.  In  Charan  Singh  v.  Healing  Touch  Hospital  and

Others, reported in (2000) 7 SCC 668, this Court held as

follows:

“12. …..  Indeed, calculation of damages depends on the facts and circumstances of each case.   No

hard and fast rule can be laid down for universal

application.  While  awarding  compensation,  a

Consumer  Forum  has  to  take  into  account  all

relevant factors and assess compensation on the

basis of accepted legal principles, on moderation.

It  is  for  the  Consumer  Forum  to  grant

compensation to the extent it finds it reasonable,

fair and proper in the facts and circumstances of a

given  case  according  to  the  established  judicial

standards where the claimant is able to establish

his charge.”

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In Ghaziabad Development Authority v. Balbir Singh,

reported in (2004) 4 SCC 65,  this Court was considering

the compensation to be awarded to the consumers in cases of

deficiency  of  service  by  Development  Authorities  like  the

Appellant  herein  and  Ghaziabad  Development  Authority.

Considering a situation similar to the one that arises in the

instant case, it was held as follows:

“9. That  compensation  cannot  be  uniform  and can  best  be  illustrated  by  considering  cases

where  possession  is  being  directed  to  be

delivered  and  cases  where  only  monies  are

directed  to  be  returned.  In  cases  where

possession is being directed to be delivered the

compensation  for  harassment  will  necessarily

have to be less because in a way that party is

being compensated by increase in the value of the

property he is getting.  

*** *** ***

11. Further,  in  cases  where  the Commission/Forum  has  directed  delivery  of

possession,  the  party  has  to  a  certain  extent

already got a benefit.  The cost of the land/flat

would have gone up in the meantime.  Of course,

even in cases, where delivery of possession has

been directed there could be compensation for the 11

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harassment/ loss.  But such compensation has to

be worked out after looking into the facts of each

case and after determining what is the amount of

harassment/loss which has been caused to the

consumer.”

         14. It  is  undisputed that the Appellant handed over the

plot  to  the  Respondent  only  in  the  year  2000 instead  of

1989.  The Respondent had paid Rs.1,22,400/- towards the

cost  of  the  plot  at  the  rates  prevailing  in  the  year  of

allotment  i.e.  1986.   There  is  no  dispute  that  the

Respondent  was  paid  Rs.1,28,188/-  towards  interest

awarded by the State Commission.  There is also no dispute

about  the  fact  that  the  Respondent  did  not  commence

construction  till  2006.   The  State  Commission  while

awarding  the  compensation  of  Rs.  15  lakhs  towards

escalation in the  cost  of  construction commented on the

conduct of the Respondent in delaying the construction only

with a view to claim higher compensation.  

15. The point that falls for our consideration in this case is

whether the State Commission was justified in awarding Rs.

15 lakhs towards the escalation in the cost of construction

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as compensation.  We are of the view that the Respondent is

not  entitled  to  such compensation  awarded  by  the  State

Commission  and  confirmed  by  the  National  Commission.

The  Respondent  suffered  an  injury  due  to  the  delay  in

handing  over  the  possession  as  there  was  definitely

escalation in the cost of construction. At the same time the

Respondent has surely benefited by the increase in the cost

of plot between 1989 to 2000.  In our opinion, the order of

the State Commission is vitiated for non application of mind

to a vital and relevant factor and hence, suffers from the

vice of unreasonableness.  The State Commission criticized

the conduct of the Respondent in intentionally delaying the

construction  for  6  years  but  still  proceeded  to  award

compensation.   In the facts and circumstances of this case,

we are  of  the  opinion that  award of  interest  would  have

been sufficient to compensate the Respondent for the loss

suffered  by  him  due  to  the  delay  in  handing  over  the

possession of the plot.  The compensation of Rs. 15 lakhs

awarded by the State Commission is excessive.  As we have

not reversed the impugned order on any other ground, it is

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not necessary for us to delve into other points  that  were

urged by the Respondent.    

16. For the aforementioned reasons, the Order of the State

Commission dated 05.07.2007 as confirmed by the National

Commission  is  set  aside  and  the  Appeal  is  allowed.   No

costs.                                                

    .…............................CJI                   [T. S. THAKUR]

.........................................J [DR. D. Y. CHANDRACHUD]

                     ................................J        [L. NAGESWARA RAO]

New Delhi, December  8, 2016

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