Punjab Urban Planning & Dev. Authority vs Bhupinder Singh

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

Commission dated 7th November, 2001, passed in

Revision Petition No. 1743 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 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 (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 3

the advertisement inviting applications, it was

categorically mentioned that no interest would

be payable on the earnest money. About 5416

applications were received by PUDA in response

to the said advertisement and draw of lots for

houses immediately available in Phase IX SAS

Nagar was held on 10th 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 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

unsuccessful applicants, 1965 applicants did

not seek refund of their earnest money.

3. It transpires that in 1991 the Department of

Housing and Urban Development of the Government

of Punjab was merged with the Punjab Housing 4

Development Board. In 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 Regional and Town Planning and

Development Act, 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 development 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 houses

between 1989 and July, 1996.

4. In 1996 PUDA formulated a scheme for

construction of 354 Higher Income Group Houses

on land available in Sector 70 SAS Nagar. It 5

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 24th 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. Approved with the modification that 154 houses be offered to old applicants and 200 to fresh applicants at present rates.

It may be ensured that money deposited by old or new applicants be refunded to all unsuccessful applicants immediately after draw of lots."

6

5. Pursuant to the aforesaid decision, a public

notice was published in the Tribune on 12th

September, 1996, wherein it 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 those applicants who had

participated in the draw of lots on 10th

November, 1989, and had not withdrawn their

earnest money, were included in the draw of

lots for the 154 Higher Income Group Houses in

Sector 70 SAS Nagar.

6. That all the applicants who were successful in

the draw of lots conducted on 20.9.1996 were

issued allotment letters and those who were

unsuccessful were returned the earnest money of

Rs.4,000/- which had been deposited by them.

Since the said earnest money was returned by 7

PUDA without any interest calculated thereupon,

some of the unsuccessful candidates filed

complaints before the District Forum

complaining that despite having retained the

earnest money of Rs.4,000/- since 1989, PUDA

had refunded only the said amount without any

interest thereupon. The complainants in the

several complaints claimed compensation from

PUDA in respect of the earnest money deposited

by them by way of interest at the rate of 24%

per annum apart from compensation for

harassment, mental agony and inconvenience.

The applicants also prayed for costs of the

proceedings.

7. The appellant herein contested the several

proceedings initiated by the unsuccessful

applicants and took a plea that no interest was

required to be paid on the amount deposited by

the complainants on account of the fact that it

had been categorically mentioned in the

advertisement inviting applications that no 8

interest would be payable on the earnest money.

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.

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 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 9

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,

therefore, 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 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 by the Board for a

period of 2 years or more. The Consumer 10

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.

10. The said decision of the Consumer Disputes

Redressal Commission, Chandigarh was

challenged 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 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 after the date of

deposit till the date of payment.

11. It is against the said order of the National

Commission 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 11

respondents before the Consumer Forum were

invalid and ought not to have been entertained

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 Issar submitted that it had been

consistently held by this Court that the onus

of 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 considered 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 12

on 10.11.1989. Ms.Issar urged that neither had

any malafide been alleged or proved against

PUDA in the conduct of proceedings 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.

13. Ms.Issar also urged that when initially the

draw of lots 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

participate in the next draw of lots. Mr. Issar

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 13

regard to the above the respondents should have

asked for refund of the amount deposited by

them without waiting for the same to be

refunded by PUDA.

14. Ms. Issar submitted that the respondents should

not be allowed to approbate and reprobate in

the same breath having participated in the

second draw of lots on the basis of the earnest

money deposited by them earlier, and, on the

other hand, claiming interest thereupon after

being unsuccessful in the draw of lots. Ms.

Issar 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 appeared on behalf of the

respondents in any of the appeals, and,

accordingly, fresh notices were issued to the

respondents indicating that in the event they

were not represented on the next date of 14

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.Issar, the admitted position is that the

earnest money deposited by the 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 such earnest

money was refunded to those who had claimed

such refund, but was not refunded to those who 15

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 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 12th September, 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 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 16

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 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, 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 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 period of two years from the

date of deposits. Since no 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 17

had retained the amount of Rs.4,000/- from 10th

March, 1989 till 19th January, 1997, without

any reasonable cause, which amounted to

deficiency in service on the part of PUDA, it

granted interest to the complainant at the rate

of 12% 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 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 the facts of the

present case.

19. Even the facts of the other decision of the

National Commission in the case of George 18

Thomas and ors. Vs. Ghaziabad Development

Authority and Anr., [1999 (1) CPC 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, 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 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 19

take advantage of their lapse. If 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 10th March 1989 and 19th 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 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.

..................J. 20

(Altamas Kabir)

..................J. (Mukundakam Sharma) New Delhi,

Dated:July 14,2008