REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4910-4941 / 2019 (@ SLP(C) Nos. 3623-3654 OF 2019)

DLF HOMES PANCHKULA PVT. LTD                     …… APPELLANT

vs.

D.S. DHANDA, ETC.ETC.                     .…..RESPONDENTS WITH

CIVIL APPEAL NOS. 4942-4945  2019 (@ SLP(C) Nos. 4363-4366 OF 2019)

DLF HOMES PANCHKULA PVT. LTD. & ANR.        …… APPELLANTS

vs.

SUDESH GOYAL, ETC.                      .…..RESPONDENTS

J U D G M E N T

Hemant Gupta, J.  

CIVIL APPEAL NOS.4910-4941  OF 2019 (@ SLP(C) Nos. 3623-3654 OF 2019)

Leave granted.

2. The  present  appeals  are  directed  against  orders  dated

24.10.2018 & 12.12.2018 passed by the National Consumer Disputes

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Redressal Commission1 disposing 16 First Appeals wherein the appeals

filed by the Appellant were decided by partially modifying the order

passed  by  the  State  Consumer  Disputes  Redressal  Commission2 on

02.06.2016 wherein SCDRC directed the Appellant to hand over the

physical  possession  of  the  units  allotted  to  the  respondents

(Complainants),  complete  in  all  respects  within  a  period  of  four

months.  However,  for facility of  reference,  facts  are taken from the

complaint filed by Shri D.S. Dhanda. The SCDRC issued the following

directions:    

“Consumer  Complaint  bearing  No.  94  of  2016, titled  as  D.S.  Dhanda  Vs  DLF  Homes  Panchkula Private Limited and anr. The opposite parties are jointly and severally directed as under:-

1. To hand over physical  possession of  the unit, allotted in favour of the complainant, complete in all respects, as per the terms and conditions of the Agreement, to the complainant, within a period of four months, from the date of receipt of a certified copy of this order, on payment of the amount, legally due against him.

2. To execute and get registered the sale deed, in respect  of  the  unit,  in  question,  within  one month  from  the  date  of  handling  over possession, as indicated in Clause (i) above, on payment  of  registration  charges  and  stamp duty,  by  the  complainant,  directly  to  the Registering Authorities concerned.

3. To pay compensation, by way of interest @ 12% p.a.,  on  the  deposited  amount,  to  the complainant, from 10.02.2014(promised date in view of the extension sought vide letter dated 05.06.2013 i.e. 12 months after the stipulated date as per Agreement i.e. from 10.02.2013) to 31.05.2016, within 2 months, from the date of

1 NCDRC 2 SCDRC

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receipt of a certified copy of this order, failing which,  the  said  amount  shall  carry  penal interest  @ 15% p.a.  instead  of  12% p.a.,  till realization.

4. To pay compensation by way of interest @12% p.a.  on  the  deposited  amount,  due  to  the complainant  w.e.f.  01.06.2016,  onwards  (per month)  by  the  10th of  the  following  month, failing which, the same shall  also carry penal interest @ 15% p.a., instead of 12% p.a., from the  date  of  default,  till  the  delivery  of possession.

5. To pay compensation by way of interest @12% p.a.  on  the  deposited  amount,  due  to  the complainant  w.e.f.  01.06.2016,  onwards  (per month)  by  the  10th of  the  following  month, failing which, the same shall  also carry penal interest @ 15% p.a., instead of 12% p.a., from the  date  of  default,  till  the  delivery  of possession.

6. To  pay  cost  of  litigation,  to  the  tune  of  Rs. 50,000/-,  to  the  complainant,  within  two months from the date of receipt of a certified copy of this order, failing which, the same shall also carry interest @12% p.a., from the date of filing the complaint till realization.”  

3. The  Appellant  preferred  appeal  against  such  order  passed  by

SCDRC before the NCDRC. The NCDRC issued inter-alia the following

directions:

“(C) Compensation:

The compensation for loss and injury, for mental agony  and  physical  harassment,  hardship  and difficulty,  uncertainty  and  helplessness,  can  be neither meagre nor exorbitant, but has to be just and  equitable,  commensurate  with  the  loss  and injury  (note:  it  could  be  less  than  or  more  than what the complainant asked for or what the State Commission determined, at the considered wisdom

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of the adjudicating authority/court in the facts and specificities of the case).

And it  is always desirable and preferable, to the extent  feasible  and appropriate  in  the facts  and specificities of a case, that some objective logical criteria be identified and adopted to determine the compensation.  The  compensation  cannot  be arbitrary  or  whimsical,  some  reasonable  and acceptable rational has to be evident subjectivity has to be minimized.

We  note  that  the  State  Commission  has  given compensation in two parts, one, by way of interest on  the  deposited  amount  from  the  ‘promised’/ assured  date  after  taking  in  view  the  extension sought vide letter dated 05.06.2013 i.e. 12 months after  the  24  months’  conveyed  and  understood time  period  for  completing  construction  and handling  over  possession,  and,  two,  a  lumpsum amount.

If compensation comprises of two parts, (i) by way of  interest  on  the  deposited  amount  from  the assured  date  (milestone  date)  of  completing construction and handling over possession to the actual date of handling over possession, and, (ii) lumpsum amount, we find nothing wrong in it.

We do not agree with the builder co.’s contentions that interest on the deposited amount should not be provided since it is not a case of refund but a case of  delay in possession.  The interest  on the deposited amount has to be viewed in the light of the purpose for which it is intended. It is but a way of  computing  compensation  for  delay  in possession that is commensurate with the amount deposited  by  the  complainant,  and  here  it  has been computed after adopting a milestone date as per  the  builder  co.’s  own (unfair  and deceptive) letter  of  05.06.2013.  There  can  be  and  is  no question  of  not  agreeing  to  an  endorsing  the award of interest from the said milestone date.

Here we may however add that the rate of interest also  cannot  be  arbitrary  or  whimsical,  some reasonable  and  acceptable  rationale  has  to  be

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evident, subjectivity has to be minimized, a logical correlation has to be established.  Albeit  detailed arithmetic  or  algebra is  not  required.  Logical  (to the extent  feasible)  objective  parameters  should be  adopted.  Rounding  off  simplification  etc.  to make the computation doable could be adopted.

We feel  it  appropriate  that,  considering that  the subject units in  question are dwelling units,  in  a residential housing project, the rate of interest for house building loan for the corresponding period in a scheduled nationalized bank (take, State Bank of India)  would  be appropriate  and logical,  and ,  if ‘floating’/ varying/different rates of interest were/ are prescribed, the higher rate of interest should be taken for this instant computation.

We  also  feet  it  appropriate  and  logical  that  the lumpsum  amount  awarded  should  be commensurate with the period for which there has been  delay  in  possession  beyond  the  milestone date,  and  be  objectively  and  logically  computed so.

In our considered view, a sum of Rs. 1 lakh per year from  the  assured  date  of  handing  over possession to the actual date of possession (pro- rata to the nearest whole month, with part month to  be  taken  as  one  month)  would  be  objective, logical,  just  and  equitable  in  the  facts  and specificities of the case.

(D) Cost of litigation:

In  respect  of  cost  of  litigation,  too,  just  and equitable cost is necessary (this, by its very nature needs no elaboration).

In our considered view, cost of litigation of Rs. 1 lakh  is  just  and  appropriate  in  the  facts  and specificities of the case.”  

4. The Complainant book a built up flat for purchase in pursuance

of a  brochure on 30.03.2010 in  a project known as “DLF Valley” in

Sector  3,  Kalka-Pinjore  Urban  Complex,  Panchkula,  Haryana.   The

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Buyer’s  Agreement was executed on 11.02.2011.  The possession of

the unit was contemplated to be delivered within 24 months from the

date of execution of the agreement i.e. up to 10.2.2013 failing which

the Appellant was liable to pay Rs. 10/- per sq. ft. per month for the

period of delay.  The complaints were filed before the SCDRC alleging

delay  in  delivery  of  possession  of  the  escalation  free  flats  and

compensation  on  account  of  delay  in  handing  over  possession

including mental agony and litigation expenses etc.

5. In the return, the stand of the Appellant was, construction could

not be completed on account of stay granted on construction activities

by  this  Court  which  operated  from  19.04.2012  to  12.12.2012.

Thereafter,  the  Appellant  sought  consent  from  the  Complainant  to

extend the period of handing over possession by one year vide letter

dated 05.06.2013. In the alternative, option was given to get back the

money deposited by the Complainant along with simple interest at the

rate of 9 per cent per annum.  It is also pointed out that on the day

reply was filed, construction of 258 independent floors was complete

and  another  1517  built-up  units  were  near  completion.   Even

occupation  certificate  has  been  received  for  the  units  for  which

construction was complete.  

6. The  similar  dispute  in  respect  of  same  project  came  up  for

decision before this Court in  DLF Homes Panchkula Pvt. Ltd. and

Another Etc. v. Himanshu Arora and Another, Etc.3.  The said set

of appeals were decided on consent granting interest at the rate of 9 3 C.A No. 11097/2018 with C.A. Nos. 11098-11138 of 2018 decided on 19.11.2018

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per cent per annum.

7. Subsequently,  another set  of  appeals,  Civil  Appeal  Nos.  2285-

2330 of  2019 titled  DLF Homes Panchkula (P.) Ltd. vs.  Sushila

Devi and Another came up for decision before this Court including

appeals filed by the Appellants as well as by the Complainants. Such

appeals were also decided by consent. The agreed terms are as under:

“(a) In all  Refund cases,  the award of  interest @ 9% would be payable in respect of deposits from the day they were made till the date of refund.  

(b) In cases where,  upon transfer,  a subsequent purchaser  had  stepped  into  the  shoes  of  the original  allottee and had prayed for  Refund,  the reckoning date for computing the interest be from the  date  of  his  transfer  in  respect  of  all  the amounts  that  were  deposited  by  the  original allottee and if any subsequent deposits were made by the transferee, from the dates of such deposits;

(c) In  cases  where  Possession  was  sought,  the period  available  to  the  Developer  under  the agreement  being  three  years  (that  is  to  say original period of two years which was extendable, at the option of the Developer, by further period of one  year)  ought  not  to  be  computed  while calculating compensation in the form of interest. Therefore, the period to be reckoned shall be after expiry of three years from the date of agreement and in  respect  of  such period the compensation shall be at the same rate of 9%.

(d) In Possession cases, if there was any transfer and the transferee had stepped into the shoes of the  original  allottee,  the  compensation  shall  be paid from the date of expiry of three years from the agreement  as  aforesaid  or  from the  date  of transfer, whichever is later.”

8. Learned Senior Counsel for the Appellant submitted that in terms

of the consent orders passed by this Court, the consumer complaints

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be decided in terms of the Court orders passed in two sets of appeals

that is the cases of delay in handing over possession as well the cases,

where the complainants have sought refund of the amount deposited.

However,  it  is  contended  that  certain  allottees  are  not  taking

possession so as to earn interest at the rate of 9 per cent per annum

which is more than a contractual compensation of Rs.10/- per sq. ft.

per month for the delayed possession as well as the loss of rent per

month  pleaded  by  the  allottees  such  as  D.S.  Dhanda  (F.A.  No.

853/2016),  Sandeep  Malik  (F.A.  No.  1312/2016),  Bijender  Singh

Sangwan (F.A. No. 1314/2016), Kanwal Mohan (F.A. No. 1356/2016).  

9. It is contended that since the rental value is not more than the

compensation awarded by this Court in the consent order referred to

above,  therefore,  some of  the  allottees  are  intentionally  not  taking

possession so as to continue to earn interest under the guise that it is

the Appellant who is not handing over the possession. It is contended

that in terms of the chart produced in Sushila Devi's case (supra), 9

per cent interest is payable till  two months after offer of possession

though such clause does not find specifically mentioned in the order

passed by this Court.

10. It  is  argued that the Appellant will  hand over possession only

after  obtaining  occupancy  certificate  from  the  Town  and  Country

Planning Department of the State of Haryana and after ensuring that

the maintenance works are taken care of by  Jones Lang LaSalle -  the

international real estate maintenance agency.

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11. On the other hand, learned counsel for the allottees argued that

the  possession  is  being  offered  of  incomplete  building  and  that

allottees are entitled to compensation on account of the mental agony

and litigation expenses awarded by SCDRC and as modified by NCDRC.

12. We have heard learned counsel for the parties and find that the

appellant offered for built up 1775 flats in its project the DLF Valley in

Sector 3, Kalka-Pinjore Urban Complex, Panchkula, Haryana. Some of

the disputes settled in earlier two rounds of appeals, whereas, many

complaints are still pending before different fora.

13. There is no surviving dispute in respect of extended period of

handing over possession available to the Appellant i.e. 36 months.  By

virtue  of  such  extended period,  the  possession  was  required  to  be

handed  over  on  or  about  11.02.2014.   The  present  set  of  appeals

relates to the Complainants claiming possession of the flats allotted to

them in the DLF Valley. It is categorical stand of the Appellant that the

flats have been completed and occupation certificate obtained from

the Office of Director, Town and Country Planning Department of State

of Haryana.  

14.  The learned NCDRC rightly held that compensation for loss, mental

agony, litigation expenses and hardship, uncertainty and helplessness

can  neither  be  meagre  nor  exorbitant  but  has  to  be  just  and

commensurate with the loss and injury.  After holding so, the learned

NCDRC  found  that  the  Complainants  are  not  entitled  to  stipulated

amount on account of delay in handing over possession but damages

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on  the  amount  deposited  apart  from  interest  on  the  amount  so

deposited.  

15. A perusal of the order passed by NCDRC shows that it approved

the directions of the SCDRC granting interest on the amount deposited

from the assured date and a lumpsum compensation on the deposited

amount from the assured date of completing construction and handing

over possession to the actual  date of  handing over possession.  The

NCDRC thereafter  awarded interest on the amount deposited by the

complainants  at  the  maximum rate  of  interest  on  which  the  House

Building  Loans  are  granted by  nationalized Bank  such  as  the  State

Bank  of  India;  awarded  a  sum of  Rs.  1,00,000/-  per  year  from the

assured  date  of  handing  over  possession  to  the  actual  date  of

compensation and another sum of Rs. 1,00,000/- as cost of litigation.

16. The District Forum under the Consumer Protection Act, 19864  is

empowered inter-alia   to order the opposite party to pay such amount

as may be awarded as compensation to the consumer for any loss or

injury suffered by the consumer due to the negligence of the opposite

party including  to grant punitive damages. But the forums under the

Act  cannot  award interest  and/or  compensation  by  applying  rule  of

thumb.  The order to grant interest at the maximum of rate of interest

charged by nationalised bank for advancing home loan is arbitrary and

no nexus  with  the  default  committed.  The  appellant  has  agreed to

deliver  constructed flats.  For  delay in  handing over possession,  the

consumer  is  entitled  to  the  consequences  agreed  at  the  time  of

4 1986 Act

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executing  buyer’s  agreement.   There  cannot  be  multiple  heads  to

grant  of  damages  and  interest  when  the  parties  have  agreed  for

payment of damages at the rate of Rs.10/- per sq. ft. per month. Once

the parties agreed for a particular consequence of delay in handing

over  of  possession  then,  there  has  to  be  exceptional  and  strong

reasons for the SCDRC/NCDRC to award compensation at more than

the agreed rate.  

17. Though  the  1986  Act  empowers  the  authorities  to  award

compensation for any loss or injury including building damages but the

order of NCDRC or that of SCDRC of awarding compensation is without

any  foundation  being  laid  down  by  the  complainant  on  judicially

recognised principles and is by rule of thumb.  Therefore, we find that

grant  of  compensation  under  various  heads  granted by the  NCDRC

cannot be sustained.  

18. This  Court  in  a  judgment  reported  as  Secretary,  Irrigation

Department,  Government  of  Orissa  &  Others  vs.  G.C.  Roy5

examined the question as to whether an arbitrator has the power to

award interest pendente lite. It was held that a person deprived of use

of  money  to  which  he  is  legitimately  entitled  has  a  right  to  be

compensated  for  the  deprivation  which  may  be  called  interest,

compensation or damages. Thus, keeping in view the said principle

laid down in the aforesaid judgment, the amount of the interest is the

compensation  to  the  beneficiary  deprived  of  the  use  of  the

investment  made by the complainant.  Therefore,  such interest  will

5 (1992) 1 SCC 508

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take into its ambit, the consequences of delay in not handing over his

possession. In fact, we find that the learned SCDRC as well as NCDRC

has  awarded  compensation  under  different  heads  on  account  of

singular default of not handing over possession. Such award under

various heads in respect of the same default is not sustainable.

19.  Thus, we find that the complainant is entitled to interest from the

Appellant for not handing over possession as projected as is offered by

it but it is not a case to award special punitive damages as the one of

the causes for late delivery of possession was beyond the control of

the Appellant. Therefore, in view of the settlement proposal submitted

by  the  Appellant  in  earlier  two  set  of  appeals  in  respect  of  same

project, and to settle any further controversy, the Appellant is directed

as follows:  

i)  To  send  a  copy  of  the  occupation  certificate  to  the

Complainants along with offer of possession. The Appellant shall

also direct the Jones Lang LaSalle - the real estate maintenance

agency,  engaged  by  the  Appellant  to  undertake  such

maintenance works as is necessary on account of damage due to

non-occupation of the flats after construction etc.

ii) It shall be open to the Complainants to seek the assistance of

the  maintenance  agency  to  attend  to  the  maintenance  work

which may arise on account of non-occupation or on account of

natural vagaries.   

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iii) Such maintenance work shall be completed by the Appellant

within two months of the offer of possession but the payment of

interest at the rate of 9 per cent per annum will be for a period of

two months from the date of offer of possession in all situations.

v) Since the Complainants have been forced to invoke jurisdiction

of the consumer forums, they shall be entitled to consolidated

amount of Rs. 50,000/- in each complaint on all accounts such as

mental agony and litigation expenses etc.  The complainant shall

not be entitled to any other amount over and above the amount

mentioned above.

vi)  In  case,  the  original  allottee  has  transferred  the  flat,  the

transferee shall be entitled to interest at the rate of 9 per cent

per  annum  from  the  date  of  expiry  of  three  years  from  the

agreement or from the date of transfer, whichever is later.

CIVIL APPEAL NOS.4942-4945   OF 2019 (@SLP (C) Nos. 4363-4366 of 2019)

20. Leave granted.

21. The  Complainant  in  these  cases  have  sought  refund  of  the

amount  deposited  by  them with  the  Appellant.  The  learned  SCDRC

passed an order on 04.08.2017 directing the Appellant as under:-

“i.  To  refund  the  amounts  of  Rs.  49,25,461/- alongwith  simple  interest  @ 15% per  annum, to

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the  complainant,  from  the  respective  dates  of deposits, till  realization, within 45 days, from the date of  receipt  of  a  certified copy of  this  order, failing  which,  the  Opposite  Parties  shall  pay  the aforesaid  amounts  alongwith  simple  interest  @ 18% per annum, instead of 15% per annum, from the date of default till actual payments;

ii.  To pay an amount of Rs. 35,000/- as litigation costs,  to  the complainant,  within  a  period of  45 days from the date of receipt of a certified copy of the order, failing which, the Opposite Parties shall pay  the  aforesaid  amount  alongwith  simple interest @ 15% per annum from the date of filing the complaint till actual payment.”

22. The appeal filed by the Appellant before NCDRC was dismissed

for  non-compliance of  an  order  in  an application  of  condonation  of

delay. Still aggrieved, the Appellants are before this Court.

23. We find that the grant of interest at the rate of 15% by SCDRC is

highly excessive. Since in other two set of appeals decided earlier, this

Court  has  awarded  interest  at  the  rate  of  9%  per  annum  on  the

amount of refund, therefore, the order of SCDRC stand modified so as

to pay interest at the rate of 9% per annum from the date of deposit till

the date of refund.

24. However, in case any transfer of the flat, such interest will be

payable  from  the  date  of  expiry  of  three  years  from  the  date  of

agreement or from the date of transfer whichever is later.

25. The Costs of Rs. 35,000/- imposed by the SCDRC is maintained.

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26. The amount of refund be paid to the Complainants within two

months along with the costs.

……………………...……………………………..J.       (Dr. Dhananjaya Y. Chandrachud)

…………………..………………..……………….J. (Hemant Gupta)

New Delhi May 10, 2019

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