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Saturday, July 25, 2015

Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as ‘the Act’) =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. 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.=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. 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. 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.

                                                                  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.

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.
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  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.
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  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.
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.
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.
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.
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
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.”

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 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.
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.
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 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.
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.
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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