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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3 OF 2003

Delhi Development Authority        …..Appellant

Versus

P.R. Samanta               …..Respondent

J U D G M E N T

SHIVA KIRTI SINGH, J.

1. This statutory appeal under Section 55 of the Monopolies and

Restrictive Trade Practices Act, 1969 (hereinafter referred to as ‘the

Act’)  is  directed  against  judgment  and  order  dated  20.08.2002

passed  by  the  Monopolies  and  Restrictive  Trade  Practices

Commission,  New  Delhi  (hereinafter  referred  to  as  ‘the

Commission’) in Compensation Application No.367/97 preferred by

the sole respondent.

2. In  view of  controversy  arising  for  determination  being very

limited and confined to reasonableness of rate of interest payable

on refund of registration amount, it is not necessary to delve deeper

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into the facts.  Suffice to note that the appellant Delhi Development

Authority  is  a  statutory  body  constituted  under  the  Delhi

Development  Act,  1957.   It  is  entrusted  with  the  planned

development of Delhi and claims to function on a No Profit No Loss

basis  in  the  matter  of  providing  subsidized  housing  to  different

income groups.   The  appellant  invited  applications  from eligible

members  of  the  general  public  during  the  period  May  1985  to

August  1985  in  a  scheme  described  as  Sixth  Self  Financing

Housing Registration Scheme, 1985.  The respondent deposited the

requisite  sum of  Rs.15000/- and by filing  application became a

member of that scheme.  In due course the appellant released a

scheme for allocation of self  financing society flats.  Pursuant to

advertisements published by the appellant the respondent vide his

application  dated  27.02.1991  opted  for  a  flat  at  either  of  three

locations,  namely,  (1)  Sarita  Vihar,  (2)  Kondli  Gharoli  and  (3)

Narela.  He was allotted a flat at Narela but the offer was declined

by the respondent on 27.10.1991.

3. In the year 1995 under a similar fresh scheme the persons

who had registered with  the appellant  were  required to  indicate

their preferences for upto 14 localities mentioned in the Brochure

Annexure ‘A’ and ‘B’.  The advertised terms and conditions clarified

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that the registrants not indicating their preferences for 14 localities

will  be  allocated/allotted  flats  which  would  be  available  after

accommodating  the  preferences  and  choices  of  the  registrants

applying  in  terms  of  advertisement  and  the  allotment  would  be

through draw of lots.  The respondent gave his preference only for 6

localities.   He could not  be accommodated against  any of  his  6

preferred localities but as per draw of lots he was allotted a flat in

Dwarka.  On receipt of the allotment letter dated 14/22.03.1995

the  respondent  through  his  letter  dated  17.5.1995  declined  the

offer  on  the  ground  that  the  allotment  was  not  as  per  his

preferences.  He demanded the registration deposit of Rs.15000/-

made in 1985 along with an interest @ 15% p.a. in place of 7% p.a.

indicated in the scheme and the Brochure on the ground that the

deposit  would have earned a minimum of 15% interest if  it  was

deposited in a Class I company.

4. The appellant chose to accept the proposal for cancellation of

allotment made by the respondent but it refunded the registration

amount along with only 7% interest in terms of the offer document

which had been accepted by the respondent and was thus the rate

finalized by agreement between the parties.

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5. The respondent in his complaint before the Commission filed

on 29.6.1997 raised two-fold grievances which have been noted by

the Commission in paragraph 3 of the impugned judgment.  The

first  grievance  was  against  the  levy  of  cancellation  charges  and

penalty when the flat allotted to him was not in the 6 localities for

which he had indicated his preference.  The second grievance of the

respondent was that the interest paid on the registration amount is

at  a rate  lower than the rate  at  which the applicants  are  to  be

charged in case of delay/default.

6. After  noticing  the  relevant  provisions  in  the  Brochure  for

1985 scheme the Commission found no merit in the first grievance

of the respondent since clause 5.5 of the Brochure made it clear

that  allotment  of  flat  as  per  preference  would  depend  on  its

availability and it was not the case of the respondent that inspite of

availability  of  flats  in  the localities  preferred,  the same was  not

allocated to the applicant.

7. The Commission thereafter considered the next grievance in

respect  of  rate  of  interest  in  the  penultimate  paragraph  of  the

judgment which reads as follows :

“The applicant’s main grievance is against the payment of the interest on the registration amount, which is less than  the  one  charged  from  the  applicants  when  in default.   I  find  substantial  force  in  this  plea   of  the

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applicant and would award interest @ 12% per annum on the registration amount as against the one paid by the Respondent authority.  The rate of interest at 12% per annum is considered to be reasonable and equitable and has also been awarded in other cases in the similar circumstances.  The applicant is also awarded a sum of Rs.5,000/-  towards  litigation  charges  which  the Respondent is directed to pay.”

8. Inspite of notice the respondent has not chosen to appear nor

he has filed any counter affidavit.  We have heard learned counsel

for  the  appellant  and  perused  the  relevant  materials  on  record

including the order under appeal.  According to learned counsel for

the appellant when the main grievance of the respondent in respect

of  levy  of  cancellation  charges  and  penalty  was  not  found

acceptable by the Commission and when the Commission found

nothing wrong in the action of the appellant in the light of declared

policy and contract  governing the matter  at  hand,  it  should not

have enhanced the contract rate of  7% interest over registration

amount  on  the  singular  ground  that  it  was  less  than  the  one

charged from the applicants when in default.  According to learned

counsel for the appellant the Commission was wholly unjustified in

interfering with the contractual terms and conditions and directing

the appellant to pay a higher rate of interest at 12% p.a. on the

specious  plea  that  such  rate  in  the  consideration  of  the

Commission was reasonable and equitable and had been awarded

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in some other cases.  The award of litigation charges of Rs.5000/-

was also seriously contested when the Commission had not found

any action of the appellant to be unfair, monopolistic or increasing

the cost of production unreasonably.

9. The  Act  was  enacted  with  the  object  of  preventing  the

concentration of economic power to the common detriment, for the

control  of  monopolies,  for  the  prohibition  of  monopolistic  and

restrictive trade practices and for matters connected therewith or

incidental thereto.  It has now been replaced by the Competition

Act,  2002.   The  terms  ‘monopolistic  trade  practice’  as  well  as

‘restrictive trade practice’ have been defined and undoubtedly the

Commission  had the  jurisdiction  and power  to  inquire  into  any

restrictive trade practice or any monopolistic trade practice in view

of  Section  10  of  the  Act  and  also  into  unfair  trade  practice  as

stipulated in Section 36A.

10. Considering  the  submissions  advanced  on  behalf  of  the

appellant as well as the discussion and reasonings in the impugned

order in respect of rate of interest, we find sufficient merit in the

submissions advanced on behalf of the appellant.  The Commission

has clearly erred in interfering with the contractual rate of interest

in absence of  any finding against  the actions and orders  of  the

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appellant.  Without returning a finding that there was any unfair

trade  practice  or  any  restrictive/monopolistic  trade  practice

pursuant  to  inquiry  under  the  provisions  of  the  Act,  the

Commission clearly erred in compensating the respondent with a

higher rate of interest.  Even the basis for grant of higher interest is

without discussion of any material.  The judgment and order under

appeal indicates no material  for coming to the impugned finding

that payment of interest on the registration amount should not be

less  than one charged from the applicants  when they commit  a

default.  A default clause is introduced to deter any delay or default

and hence such penalty is by its very nature a deterrent one.  That

by itself offers a reasonable justification for the appellant to charge

a higher rate of interest in the case of delay/default.   So far as

interest  on the registration amount  is  concerned it  stands on a

different footing.  In absence of relevant pleadings and evidence it

cannot be presumed that the appellant has resorted to any unfair

trade practice as defined under Section 36A or has increased its

price  unreasonably  or  made unreasonable  earnings  by  investing

the registration amount in accounts bearing higher interest.  The

relevant provision in the Brochure of  the 1985 scheme by itself

does not appear to be unreasonable in allowing interest @ 7% p.a.

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It is relevant to indicate here that nothing has been brought to our

notice which may show that the registration amount is to remain

locked  for  any  fixed  term  or  that  the  appellant  can  refuse  an

application for cancellation of registration at an early stage or even

before  draw of  lots  for  allotment/allocation  of  flats.   In  such  a

situation it  is not possible to infer that the registration deposits

must reasonably be kept in long term fixed deposits with a view to

earn higher interests.  In any case such aspects had to be pleaded

and proved by the respondent before the Commission but that has

not been done leading to absence of requisite findings.

11. Accordingly, we find the impugned order of the Commission

awarding interest at the rate of 12% per annum on the registration

amount and also award of Rs.5000/- towards litigation charges to

be against law and unjustified.  The impugned judgment and order

is therefore set aside.  The appeal stands allowed.  However, in the

facts of the case the appellant shall itself bear its cost of litigation.

     …………………………………….J.       [VIKRAMAJIT SEN]

      ……………………………………..J.                  [SHIVA KIRTI SINGH]

New Delhi. July 21, 2015.

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