Punjab Urban Planning & Development Authority v. Bhupinder Singh

# [2008] 10 S.C.R. 958 A # PUNJAB URBAN PLANNING & DEVELOPMENT AUTHORITY _v._ ## BHUPINDER SINGH (Civil Appeal No. 7727 of 2002) B JULY 14, 2008 **[Al TAMAS KABIR AND DR. MUKUNDAKAM SHARMA, JJ]** c _Consumer Protection Act, 1986- s. 14(1)(d)_ - _Compensation_ - _Housing_ - _Interest on earnest money_ - _Advertisement for allotment of houses_ - _Stipulation therein that interest would not be payable on earnest money_ - _First draw of lots_ - _Unsuccessful applicants not seeking refund of earnest money[Such applicants included in second draw ][of ][lots ]_[-] _[Unsuc-]_ 0[-] _cessful applicants returned earnest money but without interest_ - _Challenge to_ - _Forums below directing the Development Authority to pay interest on earnest money deposited_ @ _18% p.a. from two years after date of deposit till date of payment_ - _On appeal, held: Complainants got benefit of such retention by_ E _participating in second draw of lots-Applicants having not asked for refund, cannot take advantage of their lapse_ - _More so, they would have not raised the claim, had they succeeded in second draw_ - _Thus, the Authority should not be burdened with the responsibility of non-refund of earnest money from date of de-_ F _posit to date of filing complaint_ - _Rate of interest reduced to 10% p.a. from date of deposit till date of actual payment._ **In 1989, the appellant-PUDA invited applications for allotment of Higher Income Group (Single Storey) category houses. The amount of Rs. 4000/- was to be de-** G **posited as earnest money. However, no interest was payable on its refund. The appellant received applications and draw of lots was held. Among the unsuccessful applicants, 1965 applicants did not seek refund of earnest money and were not returned the same.** H 958 > PUNJAB URBAN PLANNING & DEV. AUTHORITY 959 _v._ BHUPINDER SINGH 't· .. , ~~ Seven years later, PUDA formulated a Scheme for A construction of 354 Higher Income Group Houses. The notice was published in the newspaper that the applicants who applied in 1989 and had not withdrawn the earnest money would be considered in draw of lots for 154 houses. 200 houses were to be offered to the fresh appliB cants at present rates. The second draw of lots was held. The unsuccessful applicants were returned the earnest money of Rs. 4000/ deposited by them. However, no interest was paid on the earnest money even though it had been retained since 1989. Aggrieved, applicants filed com- c plaints before the District Forum claiming compensation from PUCA by way of interest @ 24% p. a. on the earnest money deposited by them. The complaints were allowed. PUCA was directed to pay interest on the amount deposited as earnest money in 1989,@ 18% p.a. for the period 0 commencing from two years after the date of deposit till the date of payment. Both the State Commission and the National Commission upheld the order. Hence the present appeal. ,.., Partly allowing the appeals, the Court HELD: 1.1 The earnest money deposited by the respondents in 1989, when making applications for acquiring Higher Income Group (Single storey) Category Houses had not been returned to the respondents, while in other cases the same was returned to the applicants. The explanation given by PUCA that such earnest money was refunded to those who had claimed such refund, but was not refunded to those who did not, is not very convincing. However, it cannot be overlooked that the respondents did get the benefit of such retention by being permitted to participate in the draw of lots held for the second time on 20.9.1996. Apart from that, there is also no explanation as to why the respondents had not asked for refund of the earnest money and allowed the same to remain with PUCA. [Para 16] [967-H; 968-A,B & C] E F G H _!_ ._ ' 1 960 SUPREME COURT REPORTS [2008] 10 S.C.R. _c'1_ A 1.2 The respondents did not object to the contents of the public notice published in the "Tribune", categorically indicating that those applicants who had earlier applied for allotment of Higher Income Group Houses and had not withdrawn the deposit of Rs.4,000/- made by them B would also be included in the draw of lots scheduled to be held on 20th September, 1996 for 154 such houses. On the other hand, the respondents allowed themselves to be included in the draw and only when they proved ~o be unsuccessful, then they moved the Consumer Forum conc[tending ][that ][they were entitled ][to ][interest oh the ][deposit ] which had been made in 1989 and had not been returned to them by PUDA. [Para 17] [968-C,D & E] A 1.3 There is also nothing on record to show that the respondents had even asked for return of their individual D deposits of Rs.4,000/-, with or without interest thereupon, from PUDA before the same was returned to them after they were unsuccessful in the second draw of lots. Despite, the stipulation in the advertisements that no interest would be paid on the earnest money, the District FoE[rum allowed the ][complaints ][made by the respondents and ] awarded cost in each case together with interest at the rate of 18% per annum for the period from the date of deposit up to the date of payment of the total amount, less a period of two years from the date of deposits. Since no F one had appeared on behalf of PUDA before the District Forum, the matter was proceeded with ex-parte and merely upon recording that it was specified that PUDA had retained the amount of Rs.4,000/- from 1Qth March, 1989 till 19th January, 1997, without any reasonable cause, G[which ][amounted ][to ][deficiency ][in service on ][the ][part ][of ] PUDA, it granted interest to the complainant at the rate of 18%. [Para 17] [968-F,G,H; 969-A & B] .-~ • -< >i>A 1.4 In the appeal filed by PUDA, the State Commission did not give much importance to the stipulation conH[tained in the advertisement ][that ][no ][interest ][would ][be pay-] / / " "' l· ## PUNJAB URBAN PLANNING & DEV. AUTHORITY 961 _v._ BHUPINDER SINGH ... able on the registration fee, and without taking into account the fact that on the basis of the said deposits the respondents had been included in the second draw of lots, affirmed the order passed by the District Forum. [Para 18] [969-8 & C] A B 1.5 On the failure of the respondents to ask for refund of the deposited amount within a reasonable time, the same was not refunded to them by PUDA. Not having asked for such refund, the respondents cannot also take advantage of their lapse. If the respondents had sueceeded in the second draw of lots, this question, which[c ] has been raised on their behalf before the Consumer Forum might never have arisen. It will be inequitable to saddle the appellants only with the responsibility of non-refund of the earnest money between 1 Oth March 1989 and 19th January, 1997. [Para 20] [969-G & H; 970-A & 8] D D 1.6 The rate of interest payable by the appellant, as directed by the District Forum and upheld by the State Commission, at the rate of 18% per annum from the date of deposit till the date of actual payment shall stand reduced to E 10% for the period in question. [Para 21] [970-8 & C] .. > _S.P Davaskar vs. Housing Commissioner Karnataka Housing Board_ 1977 CCJ 360; _George Thomas and ors. Vs. Ghaziabad Development Authority and Anr_ 1999 (1) CPC 183 - distinguished . F CIVILAPPELLATE JURISDICTION: Civil Appeal No. 7727 of 2002 From the Judgment and Order dated 18.9.2001 of the National Consumer Disputes Redressal Commission, New G Delhi in R.P. No. 1057/2001 _1>-_ ## WITH Civil Appeal No. 7728, 7730, 7726, 7729 of 2002 and C.A. No. 4366 of 2008 H SUPREME COURT REPORTS [2008) 10 S.C.R. 962 ·~ A Rachna Joshi lssar and Rupal Bhatia for the Appellant. Bhupinder Singh Respondent - In - Person. The Judgment of the Court was delivered by **ALTAMAS KABIR, J.** 1. Civil Appeal Nos. 7726 to 7730 B arise out of a common order dated 18[1] h September, 2001, passed by the National Consumer Disputes Redressal Commission in respect of Revision Petitions Nos. 1056, 1057, 1058, 1136 and 1055 of 2001. Special Leave Petition (C) No. 7280 of 2002 arises out of a similar order of the National Commisc sion dated 7[1] h November, 2001, passed in Revision Petition No. 17 43 of 2001. Since the five appeals arise out of a common order of the National Commission and the issue involved in the special leave petitions is the same, all the six matters were taken up for hearing and final disposal together. Leave is D granted in Special Leave Petition (C) No. 7280 of 2002. 2. As will appear from the materials on record, in 1989 the Punjab Urban Planning and Development Authority (hereinafter referred to as the "PUDA"), the appellant herein, invited applications from persons who wished to acquire Higher Income Group E (Single Storey) category houses at Phase IX SAS Nagar. Interested applicants were required to deposit a sum of Rs.4,000/while making such application. In the advertisement inviting applications, it was categorically mentioned that no interest would be payable on the earnest money. About 5416 applications were reF ceived by PUDA in response to the said advertisement and draw of lots for houses immediately available in Phase IX SAS Nagar was held on 10[1] h November, 1989. According to PUDA, the information sheet, supplied along with the prescribed application forms, made it clear that allotment of houses would be made on the basis G of draw of lots and that the deposit of earnest money would not create any vested right of allotment to any of the applicants. According to PUDA, earnest money was refunded to those unsuccessful applicants who desired that their earnest money be returned to them. However, out of the unsuccessfal applicants, 1965 appliH[cants did not seek refund of their earnest money. ] ... ,,. .. ~~ .,I l :1 PUNJAB URBAN PLANNING & DEV. AUTHORITY 963 _v._ BHUPINDER SINGH [ALTAMAS KABIR, J.] ., ,.. 3. It transpires that in 1991 the Department of Housing A and Urban Development of the Government of Punjab was merged with the Punjab Housing Development Board. ln 1995, the Punjab Housing Development Board which had been constituted under the Punjab Housing Development Board Act, 1972, was abolished by virtue of the provisions of the Punjab B Regional and Town Planning and DevelopmentAct, 1995 (hereinafter referred to as "the 1995 Act"). The Punjab Urban and Development Authority was thereafter constituted with effect from 1st July, 1995, under the provisions of the 1995 Act and was given the responsibility for the effective and planned develop- c ment of housing schemes and for undertaking Urban Development and Housing Programmes for establishing new towns in the State of Punjab. It appears that on account of non- availability of suitable land with PUDA, no High Income Group Scheme could be formulated for construction of Higher Income Group D houses between 1989 and July, 1996. ~·y ~~ 4. In 1996 PUDA formulated a scheme for construction of 354 Higher Income Group Houses on land available in Sector 70 SAS Nagar. It also appears that under Section 23 of the 1995 Act, the authority is competent to appoint one or more committees for securing efficient discharge of the functions of the authority. Under Regulation 8 of the Punjab Urban Planning and Development Authority (Committees and Conduct of Business) Regulations, 1996, the Finance and Accounts Committee was duly constituted to perform the function of determining prices and policies for disposal of land, plots and houses, besides discharging other functions. The said committee at its meeting held on 24[1] h July, 1996, considered the question of disposal of the proposed 354 partially finished duplex houses in Sector 70, SAS Nagar and took the following decision: "Item No. 9.07. Disposal of 354 independent partially finished duplex houses in Sector 70, SAS Nagar. E I F G Approved with the modification that 154 houses be offered to old applicants and 200 to fresh applicants at present H [2008] 10 S.C.R. 964 SUPREME COURT REPORTS "t rates .. It may be ensured that money deposited by old or new applicants be refunded to all unsuccessful applicants immediately after draw _·at_ lots." A 5. Pursuant to the aforesaid decision, a public notice was published in the Tribune on 12[1] h September, 1996, wherein it B was announced that the applicants.who had applied in 1989 for Higher Income Group Scheme by deposit of Rs.4,000/- and had not received refund.of the same would be considered for,allotment by draw of lots for 154 such houses in Sector 70, SAS Nagar. Subsequently, on 20th September, 1996, it appears that c those applicants_ who had· participated in the draw of lots on 1 Oth November, 1989, and had not withdrawn their earnest money, were induded.in.the draw of lots for the 154 Higher Income 9roup Houses in Sectdr 70 SAS N_agar. 6. Thatall the applicants who were successful in the draw D of lots conducted on 20.9.1996 were issued allotment letters and those who were unsuccessful were returned the earnest m.oney 9f Rs.4,000/-which had been deposited by them. Since the sa,id earnest money .was returned by PUDA without any interest calculated thereupon, some of the' u'nsuccessful candiE dates. filed complaints before the District Forum _complaining that despite having retained the earnest mc:mey of RsA,000/since 1989, PUDA had refunded o.nly the said amount without a~y int¢re~t thereupon. The complainants in the several complaints GI.aimed c,ompensation from PUDA in respect of the F ear.nest money depbsited by them py way of interest at the rate o( . 2:4% ' - . p_er I , annt,Jm I . apart from compensation for harassment, ~ "' .. I - mental agony and inconvenience .. The applicants also prayed for co~ts of the proceedings .. ' 7. The appellant .herein contested the several proceedG ings initiated by the unsuccessful cipplicants and took a plea ited by the complainants on account that.no'interest was required to be paid , # • ' \ • • of the _qn_ factthat the amount depos-it had been categorically mentibned·in the advertisement inviting applicaH[tions that no interest would be payable on the earnest money. ] ... ~4 ,....~ .,. 'I PUNJAB URBAN PLANNING & DEV. AUTHORITY 965 _v._ BHUPINDER SINGH [ALTAMAS KABIR, J.] On the basis of the evidence before it the District Forum allowed the complaints and awarded a cost of Rs.550/- in each case and also directed PUDA to pay interest on the amount deposited as earnest money at the rate of 18% per annum. for the period up to the date of payment of the total amount to the complainants, less a period of two years from the date of deposit. A B 8. Aggrieved by the aforesaid order of the District Forum, PUDA filed appeals before the Consumer Disputes Redressal Commission, Chandigarh. The submissions made before the District Forum that interest was not payable on the earnest c money was reiterated and it was also indicated that since the earnest money deposited by the respondents in 1989 had not been returned to them, as the respondents had not asked for refund of the same, they had been given a second opportunity to participate in the draw of, lots on the basis of their original D deposit, although, the deposits for participating in the subsequent draw of lots held on 20.9.1996 was much higher. PUDA's case appears to be that on the strength of the earnest money deposited once the respondents had been given two opportunities to participate in the draw of lots and that it could not, thereE fore, be contended that the said sums deposited by way of earnest money had been retained by PUDA with an ulterior objective in mind. _:>.,_ ## ·- 9. Concurring with the view expressed by the District Forum and relying upon the decision of the National Commission in F the case of S. P. Davaskar vs. Housing Commissioner Karnataka Housing Board, reported in 1977 CCJ 360, the Appellate Forum came to the conclusion that according to the law as explained by the National Commission in its above decision, PUDA was required to pay interest on the amounts deposited which were kept G by the Board for a period of 2 years or more. The Consumer Disputes Rederessal Commission, Chandigarh, accordingly dismissed the appeals preferred by PUDA upon holding that the District Forum had rightly allowed the interest at a rate which was neither excessive nor unreasonable. H. [2008] 10 S.C.R. 966 SUPREME COURT REPORTS ~ A H A 10. The said decision of the Consumer Disputes Redressal Commission, Chandigarh was challooged by PUDA before the National Consumer Disputes Redressal Commission, New Delhi, by way of Revision. The same was, however, dismissed by the National Commission which agreed with the B[decision of the District Forum directing PUDA to pay interest ] on the deposits made in 1989 and left unreturned till 1996, at the rate of 18% per annum for the period commencing from two years afterthe date of deposit till the date of payment. ..., 11. It is ag_ainst the said order of the National Commission c that the_ present appeals have been filed. 12. Right at the outset it was submitted on behalf of PUDA that the proceedings taken by the respondents before the Consumer Forum were fnvalid and ought not to have been enterD[tained by the District Forum, inasmuch as, no case ][of ][deficiency ] of service had been made out on behalf of the respondents to attract the provisions of the Consumer Protection Act, 1986. Appearing for the appellant, Ms. Rachna Joshi lssar submitted that it had been consistently held by this Court that the onus of E[proving deficiency ][of ][service ][is ][upon the complainant seeking ] relief under the Consumer Protection Act. The respondent did not have any vested right of allotment unless they succeeded in the draw of lots. It was submitted that the respondents on their application had_ only a right to be considered for allotment if they were otherwise eligible and that they have been so considF ered for allotment on 10 .11 .1989 and also on 20 .9 .1996 when the earnest money was fixed at Rs.62, 700/-, as against Rs.4,000/- deposited by them at the time of the first draw of lots held on 10.11.1989. Ms. lssar urged that neither had any malafide been alleged or proved against PUDA in the conduct of proG ceedings relating to the draw of lots on both the dates. Accordingly, in the absence of any case for deficiency of service or breach of contract made out by the applicants, the application before the District Forum was entirely misconceived and wholly without jurisdiction. -~· ...( ,_. .. PUNJAB URBAN PLANNING & DEV. AUTHORITY 967 _v._ BHUPINDER SINGH [ALTAMAS KABIR, J.] 13. Ms. lssar also urged that when initially the draw of lots A was held on 10.11.1989, those unsuccessful applicants who desired refund of their earnest money were given such refund immediately. Out of the unsuccessful candidates 1965 applicants did not seek refund of their earnest money which was retained by PUDA to give such applicants an opportunity _to_ par8 ticipate in the next draw of lots. Mr. lssar also reiterated that in the advertisement inviting applications it had been clearly indicated that no interest would be payable on the earnest money deposited and that having regard to the above the respondents should have asked for refund of the amount deposited by them c without waiting for the same to be refunded by PUDA. 14. Ms. lssar submitted that the respondents should not be allowed to approbate and reprobate in the same breath having participated in the second draw of lots bn the basis of the earnest money deposited by them earlier, and, on the other hand,[D, ] claiming interest thereupon after being unsuccessful in the draw of lots. Ms. lssar submitted that this amounted to malice in law and the claim of the respondents, instead of being allowed, should have been rejected with appropriate costs. ...... 15. At this stage it may be indicated that when the appeals were taken up for final hearing on 3.4.2008, no one appea red on behalf of the respondents in any of the appeals, and, accordingly, fresh notices were issued to the respondents indieating that in the event they were not represented on the next date of hearing, the appeals would be heard and disposed of finally in the absence of the respondents. The Office Report dated 5.5.2008, indicates that notices had been issued to all the respondents on 9.4.2008 but neither the AD Cards nor the unserved covers have been received back. Since one month had expired when the appeals were again listed for hearing and still no one was present on behalf of the respondents, the appeals were taken up for hearing in their absence. 16. From the materials placed before us by Ms.lssar, the admitted position is that the earnest money deposited by the E, G H [2008] 10 S.C.R. 968 SUPREME COURT REPORTS A respondents in 1989, when making applications for acquiring Higher Income Group (Single storey) Category Houses at Phase IX, SAS Nagar, had not been returned to the respondents, while in other cases the same was returned to the applicants. The explanation given by PUDA that suQh earnest money was reB funded to those who had claimed such refund; but was not refunded to those who did not, is not very convincing. It cannot, however, be overlooked that the respondents did get the benefit of such retention by being permitted to participate in the draw of lots held for ·the second time on 20.9.1996. Apart from c that, there is also no explanation as to why the respondents had not asked for refund of the earnest money and allowed the same to remain with PUDA. 17. Furthermore, the respondents did not object to the contents of the public notice published in the "Tribune" on 12[1] h SepD tember, 1996, categorically indicating that those applicants who had earlier applied for allotment of Higher Income Group Houses and had not withdrawn the deposit of Rs.4,000/- made by them would also be included in the draw of lots scheduled to be held on 20th September, 1996 for 154 such houses in Sector 70 SAS E Nagar. On the other hand, the respondents allowed themselves to be included in the draw and only when they proved to be unsuccessful, then they moved the Consumer Forum contending that they were entitled to interest on the deposit which had been made in 1989 and had not been returned to them by PUDA. Of F course, there is also nothing on record to show that the respondents had even asked for return of their individual deposits of Rs.4,000/~, with or without interest thereupon, fro,m PUDA before the same was returned to them after they were unsuccessful in the second draw of lots. Despite, the stipulation in the G advertisements that no interest would be paid on the earnest money, the District Forum allowed the complaints made by the respondents and awarded cost in each case together with interest at the rate of 18% per annum for the period from the date of deposit up to the date of payment of the total amount, less a H period of two years from the date of deposits. Since no one ,A PUNJAB URBAN PLANNING & DEV. AUTHORITY 969 _v._ BHUPINDER SINGH [ALTAMAS KABIR, J.] ~' 'llf!.-c had appeared on behalf of PUDA before the District Forum, A the matter was proceeded with ex-parte and merely upon recording that it was specified that PUDA had retained the amount of Rs.4,000/- from 10[1] h March, 1989 till 19[1] h January, 1997, without any reasonable cause, which amounted to deficiency in service on the part of PUDA, it granted interest to the complainB ant at the rate of 18% in the manner indicated herein above. 18. In the appeal filed by PUDA the State Commission did not give much importance to the stipulation contained in the advertisement that no interest would be payable on the registration fee, and without taking into account the fact that on the[c ] basis of the said deposits the respondents had been included in the second draw of lots, affirmed the order passed by the District Forum mainly on the basis of a decision of the National Commission in the case of S.P. Davaskar (supra) the facts of which are not only distinguishable but completely different from D the facts of the present case. 19. Even the facts of the other decision of the National Commission in the case of George Thomas and ors. Vs. Ghaziabad Development Authority and Anr., [1999 (1) CPC E 183], relating to payment of interest on deposited amounts, is distinguishable on facts. If the facts, which are peculiar to this case, are taken into consideration, the retention of the earnest money by PUDA cannot be brought within the ambit of the two aforesaid decisions. The retention of the amount in this particular case was pursuant to a policy which allowed the depositors,[F ] who had not withdrawn their deposit, to participate in a subsequent draw of lots without having to pay anything more than what had been deposited by them, even though the amount of deposit may have gone up several times. 20. In our view, the single most important aspect of this[G ] case is that on the failure of the respondents to ask for refund of the deposited amount within a reasonable time, the same was not refunded to them by PUDA. Not having asked for such refund, the respondents cannot also take advantage of their lapse. H 970 SUPREME COURT REPORTS [2008] 10 S.C.R. - A H the respondents had succeeded in the second draw of lots, this question, which has been raised on their behalf before the Consumer Forum might never have arisen. In our view, it will be inequitable to saddle the appellants only with the responsibility of non-refund of the earnest money between 10[1] h March 1989 - 8 and 19[1] h January, 1997. 21. We, therefore, allow the appeals in part and direct that the rate of interest payable by the appellant, as directed by the District Forum and upheld by the State Commission, at the rate of 18% per annum from the date of deposit till the date of actual C payment shall stand reduced to 10% for the period in question. The cost of litigation granted by the District Forum is also set aside. 22. There will be no order as to costs. N.J. Appeals partly allowed. • _.L_