KERALA STATE HOUSING BOARD Vs KERALA STATE HOUSING BRD.,NHCA ASSN.&ORS
Bench: R.V. RAVEENDRAN,A.K. PATNAIK, , ,
Case number: C.A. No.-007835-007835 / 2011
Diary number: 15468 / 2006
Advocates: M. T. GEORGE Vs
A. RAGHUNATH
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No.7835 OF 2011 (Arising out of S.L.P. (C) No. 10580 of 2006)
Kerala State Housing Board & Ors. … Appellants
Versus
Kerala State Housing Board, Nellikode Housing Colony Allottees Assn. & Ors. … Respondents
WITH
CIVIL APPEAL No.7836 OF 2011 (Arising out of S.L.P. (C) No. 21478 of 2008)
Kerala State Housing Board & Anr. … Appellants
Versus
K. Narayana Poduval & Ors. … Respondents
AND
CIVIL APPEAL No.7837 OF 2011 (Arising out of S.L.P. (C) No. 21817 of 2008)
Kerala State Housing Board & Anr. … Appellants
Versus
Smt. M. P. Meenakshi & Ors. … Respondents
O R D E R
A. K. PATNAIK, J.
Leave granted. 2. Civil Appeal arising out of S.L.P.(C) No.10580 of 2006
is against the judgment dated 28.02.2006 in Writ
Appeal No.1760 of 2004 of the Division Bench of the
Kerala High Court. Civil Appeal arising out of S.L.P.(C)
No.21478 of 2008 is against the order dated
13.06.2008 in Writ Appeal No.1968 of 2007 disposing
of the Writ Appeal in terms of the judgment dated
28.02.2006 in Writ Appeal No.1760 of 2004. Civil
Appeal arising out of S.L.P.(C) No.21817 of 2008 is
against the order 13.06.2008 in Writ Appeal No.1940
of 2008 disposing of the Writ Appeal in terms of the
judgment dated 28.02.2006 in Writ Appeal No.1760 of
2004. These three appeals are being disposed of by
this common order as common questions of fact and
law arise in the appeals.
3. The facts very briefly are that in the years 1984 and
1985 land was acquired for allotment of plots under
the Chevayur Housing Scheme and the Nellikode
Housing Scheme respectively undertaken by the Kerala
State Housing Board (for short ‘the Board’). The
landowners did not accept the compensation offered
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for the acquired land and sought a reference to the
Civil Court under Section 18 of the Land Acquisition
Act, 1894. While the dispute in regard to quantum of
compensation was pending, the Board entered into
agreements of sale with various allottees of the plots of
land during the years 1988-1990 and made a provision
therein that the Board shall be entitled to re-fix the
final price of the property agreed to be sold to the
allottees taking into account inter alia the enhanced
compensation awarded by the Courts and Tribunals
and that the decision of the Board in fixing the revised
price of the property shall be conclusive and final. It
was also expressly agreed in the agreements of sale
that after finalization of the price of the property
agreed to be sold by the Board, the allottee shall pay to
the Board together with interest at the rate of 15% per
annum, the difference between the tentative price fixed
and the price finally fixed for the property by the Board
within thirty days of the date of a registered notice
demanding the payment thereof or in such quarterly
installments over a period not exceeding two years to
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be determined by the Board. After the reference cases
were finalized and disposed of in the year 1997, the
Board deposited the enhanced compensation with
interest, but did not promptly serve the demand
notices on the allottees for payment of the difference
between the tentative price and the final price with
interest and it was only in the year 1999 that the
Board served the notices on the allottees to pay the
said difference with interest at the rate of 15% per
annum.
4. The allottees then filed Writ Petitions before the Kerala
High Court and the learned Single Judge passed
orders refusing to interfere with the claim of interest
on the enhanced amounts of compensation on the
differential amount till 1997 when the references were
finally disposed of by the Court and the Board
deposited the enhanced compensation with interest.
The learned Single Judge, however, found that
individual account statements giving the relevant
details and calculations of the amounts demanded had
not been served on the allottees and held that this was
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on account of the lethargy of the officials of the Board
and, therefore, the Board was not entitled to any
interest on the differential amount from the allottees
for the period from 1997 till the date of service of
individual account statements on the allottees.
5. Aggrieved by the orders of the learned Single Judge,
the Board filed Writ Appeals before the Division Bench
of the Kerala High Court and by the impugned
judgments and orders the Division Bench dismissed
the appeals. In the impugned judgments and orders,
the Division Bench of the High Court agreed with the
view taken by the learned Single Judge that the Board
was not entitled to claim any interest and that too at
the rate of 15% per annum for the period from the date
of deposit of enhanced compensation in 1997 till the
date of service of the individual account statements
saying that the Board cannot punish the allottees for
its own lethargies. Aggrieved, the Board is in appeal
before us.
6. Learned counsel for the appellant-Board submitted
that there was a clause in the agreements of sale
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executed between the Board and the allottees that
after finalization of the price of the property agreed to
be sold by the Board, the allottee shall pay to the
Board together with interest at the rate of 15% per
annum, the difference between the tentative price fixed
and the price finally fixed for the property by the Board
within thirty days of the date of a registered notice
demanding the payment thereof or in such quarterly
installments over a period not exceeding two years to
be determined by the Board. He submitted that it was
only in the year 1998 that the price was finalized and
the demand notices were served in the year 1999 on
the allottees to pay the difference between the tentative
price and the final price together with interest at the
rate of 15% per annum as per the aforesaid clause in
the agreements. He further submitted that till the
allottees paid the difference between the tentative price
and the final price, they retained the differential
amount with them and made use thereof while the
appellant-Board was deprived of the use of the money.
He relied on the decision of this Court in Chandigarh
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Housing Board, Chandigarh v. K.K. Kalsi & Ors. [(2003)
12 SCC 734] wherein it has been held that in such
cases where the allottees have retained the money with
them and made use thereof while the Board has been
deprived of the use of the money, it will be equitable
for the allottees to pay a reasonable interest to the
Board on such money.
7. Learned counsel appearing for the respondents, on the
other hand, supported the orders of the learned Single
Judge and the impugned judgment and orders of the
Division Bench of the Kerala High Court contending
that there was no justification whatsoever for the
appellant-Board to claim any interest on the
differential amount between the tentative price and the
final price from 1997 till the date of service of
individual account statements on the allottees.
8. We have considered the submissions of the learned
counsel for the parties and we find that the reason why
a clause in the agreements of sale executed by the
Board and the allottees for payment of interest at the
rate of 15% per annum on the differential amount
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between the tentative price and the final price of the
land allotted to the allottees was inserted was that in
the proviso to Section 34 of the Land Acquisition Act,
1894 it is provided that if the compensation for the
acquired land or any part thereof is not paid or
deposited within a period of one year from the date on
which possession of the acquired land is taken,
interest at the rate of fifteen per centum per annum
shall be payable from the date of expiry of the said
period of one year on the amount of compensation or
part thereof which has not been paid or deposited
before the date of such expiry. Since references under
Section 18 of the Land Acquisition Act, 1894 were
pending in the Civil Court when the agreements of sale
were executed by the Board and the allottees, a
stipulation had to be made in the agreements of sale
that as and when the Court finally determines the
compensation and the Board becomes liable to pay
enhanced compensation, the Board will have to deposit
not only the enhanced compensation but also interest
at the rate of 15% per annum on such enhanced
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compensation. If this was the purpose of the clause in
the agreements of sale between the Board and the
allottees, once the compensation was finalized by the
Court and the enhanced compensation was paid or
deposited in the year 1997, the Board was not liable
for any interest under the proviso to Section 34 of the
Land Acquisition Act, 1894 from the date of such
payment or deposit. Since the purpose of stipulating
the rate of interest of 15% per annum was to take care
of the liability on the enhanced compensation provided
in the Land Acquisition Act, 1894 and not to enrich
the Board by recovery of high rate of interest from the
allottees, we agree with the view taken by the High
Court that the Board was not entitled to interest at the
rate of 15% per annum on the difference between the
tentative price and the final price after the finalization
of the compensation and payment or deposit of the
enhanced compensation by the Board in the year
1997.
9. We, however, do not think that the High Court was
right in taking a view that the appellant-Board was not
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entitled to any interest for the period from the date of
payment or deposit of the enhanced compensation in
1997 till the date of service of individual account
statements on the allottees. The relevant clause in the
agreements of sale requires the Board to serve only a
notice of demand on the allottee and such notice of
demand must obviously indicate the tentative price
and the final price as determined by the Board and the
differential amount between the tentative price and the
final price, which the allottee was required to pay along
with interest. The clause did not stipulate that the
individual account statements giving the details and
calculations as enumerated in the orders of the
learned Single Judge were also required to be served
on the allottees by the Board. It is not disputed that
notices of demand were served on the allottees not
immediately after finalization of the compensation by
the Court and payment or deposit of the enhanced
amount by the Board in the year 1997, but after a
period of more than an year some time in 1999.
During the period the allottees did not make payment
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of the differential amount between the tentative price
and the final price, they retained the differential
amount in their hands and used the same and the
Board lost the opportunity to utilize this for its
activities, the Board would be entitled to interest on
the differential amount at a reasonable rate as has
been held by this Court in Chandigarh Housing Board,
Chandigarh v. K.K. Kalsi & Ors. (supra). In our
considered opinion, interest at the rate of 8% per
annum on such differential amount between the
tentative price and the final price would be reasonable,
which the allottees must pay to the Board.
10. We accordingly set aside the order passed by the
learned Single Judge and the impugned judgment and
orders of the Division Bench of the High Court and
dispose of the Writ Petitions of the respondents with
the direction that the respondents will be liable to pay
interest to the appellant-Board on the differential
amount between the tentative price and the final price
at the rate of 8% per annum from the date of deposit
or payment of the enhanced compensation by the
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Board in 1997 till payment of the differential amounts
by the allottees. The appeals are allowed to the extent
indicated above with no order as to costs.
……………………..J. (R.V. Raveendran)
……………………..J. (A. K. Patnaik) New Delhi, September 14, 2011.
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