The Kerala State Coastal Zone Management Authority Member Secretary vs Maradu Municipality and Others

4 | Page rehabilitation compensation or solatium against their

displacement from their flats. According to the flat-

owners, no development or construction activity can

take place on the underlying land and therefore it has no

worth and does not carry any market value. It was

submitted that they are open to giving up the undivided

share in the land in question to the builder or the

government against just and proper compensation. They

have sought for compound interest at the rate of 15 per

cent on the land price paid by them to the Builder at the

time of purchase of flat.

6. The Golden Kayaloram Residents Association and

H2O Apartment Owners Association have also sought

interest on the amounts that were disbursed by them to

the builder as they have been deprived of enjoying the

flats which they had purchased more than a decade

back. On behalf of the flat-owners, it was submitted that

most of them are senior citizens and are not in a position

to construct any structure on the undivided portion of

the land.

5 | Page

7. On the other hand, the builders submitted that all

the flat-owners are not similarly situated. Some of the

flat-owners have paid the amount towards the cost of

the flats in full and the others would have been paying

the amounts till the date of demolition. Therefore, a

blanket rate of interest cannot be determined by this

Court to be paid to all the flat-owners. It was argued on

behalf of the builders that there is no dispute that

possession has been given to the flat-owners of the four

building complexes between 2009 to 2013 and they

have enjoyed the fruits of their investment from thereon

till 2019. The builders contended that the flat-owners

have the undivided interest in the said land till date and

that the market value of the land has increased

exponentially. As the flat-owners have resided in their

apartment for 6 to 10 years, the depreciation cost of the

flats also has to be taken into consideration. It was

contended on behalf of one of the builders that the flat-

owners were well aware of the show cause notices

issued by the authorities, and even then, they proceeded

6 | Page to invest in the property and reside therein. It was

further contended on behalf of the builders that while

the four building complexes might have been

demolished in 2020, construction is permitted on the

land as it now falls under the CRZ-II category. It is open

to the flat-owners to get a new structure constructed on

the land that is owned by them. Therefore, according to

the builders they cannot be mulcted with any further

liability of payment of interest to the flat-owners when

the amount that was paid by each flat-owner for the

purchase of flats has already been disbursed and the

ownership in the undivided potion of the land still rests

with the flat-owners.

8. The report that has been submitted in this Court by

Justice K. Balakrishnan Nair Committee, observed that it

would be difficult to determine the market value of the

flats since the furnishing and interior of each flat is

different. Therefore, assessment of the market value

after their demolition in 2019 is not possible as it would

have varied substantially. The Committee further

7 | Page observed that the particulars of the payment made in

instalments by the flat-owner was not available and,

therefore, it is difficult to determine the calculation of

interest in respect of at least 1/3 rd of the flat-owners. In

so far as the remaining flat-owners are concerned, the

Committee held that it is not easy to calculate the

interest that has to be paid. The committee pointed out

the procedural difficulties and also mentioned that if it

was to do this exercise, all the cases will have to be re-

opened with notices to the Builders and the flat-owners

of each flat and the entire exercise would take at least 6

months to materialize, not to mention the further

unforeseen complications that might arise due to lack of

material data on record.

9. In the opinion of the learned Amicus Curiae, the

flat-owners are not entitled to interest at the rate of 12

per cent per annum on the amount which they paid to

the builder for the purchase of flat, as was granted by

this Court in Supertech Limited v. Emerald Court

Owner Resident Welfare Association 2. The learned 2 (2021) 10 SCC 1

8 | Page Amicus Curiae submitted that in the case of Supertech

Limited (supra) neither the possession of the flats was

handed over by the builder to the flat-owners nor the

ownership of the undivided interest in the land was

transferred. While in this case, the flat-owners have

been given the possession of the flats which they have

enjoyed for a period of approximately 6 to 10 years. The

learned Amicus Curie was also of the opinion that the

value of the land which belongs to the flat-owners have

increased substantially.

10. “Interest” as defined in Black’s Law Dictionary is

the compensation fixed by agreement or allowed by law

for the use or detention of money, or for the loss of

money by one who is entitled to its use; especially, the

amount owed to a lender in return for the use of the

borrowed money. A person deprived of the use of money

to which he is legitimately entitled has a right to be

compensated for the deprivation, call it by any name 3.

3 Secretary, Irrigation Department, Government of Orissa & Ors. v. G.C. Roy (1992) 1 SCC 508

9 | Page

11. In Central Bank of India v. Ravindra 4, this Court

observed that a person is entitled for compensation for

the deprivation of the money due to the creditor which

was not paid, or, in other words, was withheld from him

by the debtor after the time when payment should have

been made, in breach of his legal rights, and interest

was a compensation whether the compensation was

liquidated under an agreement or statute.

12. While rejecting the claim of payment of interest by

the Applicants who have been handed over possession

of the assets, this Court in Allahabad Bank v. Bengal

Paper Mills Company Limited & Ors.5, held that the

Applicants were not entitled for any interest as

compensation in view of their enjoyment of assets for 10

years on deposit of the purchase price. While relying on

the observations of this Court in Central Bank of India

v. Ravindra, it was held that interest was really

compensation for the use of the money which the

purchaser was deprived of, and that the fact that the

4 (2002) 1 SCC 367 5 (2004) 8 SCC 236

10 | P a g e obtaining of possession by the purchaser on deposit of

the purchase price was a consideration relevant in

deciding whether or not the purchaser would be entitled

to interest on the purchaser price as claimed.

13. In the present case, the facts that are not in dispute

are that flat-owners have purchased their apartments by

paying instalments somewhere between 2007 to 2013

depending on the construction of the particular building

complex. Possession of the flats was handed over to the

flat-owners between 2009-2013 and admittedly, the flat-

owners were in possession of the flats since 2009-2013

till 2019 when they were asked to vacate the flats for the

demolition of the buildings. There is no dispute that the

amount of Rs.25 lakhs has been paid as interim

compensation by the State Government in 2019 itself. It

is also admitted that except Holy Faith builder, the other

builders have also paid the balance amount to which the

flat-owners were entitled. It is no doubt true that the

flat-owners were paid only the amount that was invested

by them at the time of purchase of flats. However, it is

11 | P a g e relevant to take into account the fact that the flat-

owners had the benefit of staying in the flats for a period

of 8-9 years on an average and also that the land

belongs to the flat-owners as joint owners the market

value of which has increased substantially. It is also to

be noted that flats that were taken possession of in the

years between 2009-2013 would have depreciated in

value.

14. Therefore, in view of the position as stated above,

we are of the considered view that the flat-owners are

not entitled for any interest on the amounts paid by

them to the builders.

15. For the aforementioned reasons, the third issue

pertaining to claim of interest by the flat-owners is

answered accordingly.

................................J. [L. NAGESWARA RAO]

.............................J. [B. R. GAVAI]

New Delhi, May 13, 2022

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