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Thursday, December 15, 2016

whether the State Commission was justified in awarding Rs. 15 lakhs towards the escalation in the cost of construction as compensation. We are of the view that the Respondent is not entitled to such compensation awarded by the State Commission and confirmed by the National Commission. The Respondent suffered an injury due to the delay in handing over the possession as there was definitely escalation in the cost of construction. At the same time the Respondent has surely benefited by the increase in the cost of plot between 1989 to 2000. In our opinion, the order of the State Commission is vitiated for non application of mind to a vital and relevant factor and hence, suffers from the vice of unreasonableness. The State Commission criticized the conduct of the Respondent in intentionally delaying the construction for 6 years but still proceeded to award compensation. In the facts and circumstances of this case, we are of the opinion that award of interest would have been sufficient to compensate the Respondent for the loss suffered by him due to the delay in handing over the possession of the plot. The compensation of Rs. 15 lakhs awarded by the State Commission is excessive. As we have not reversed the impugned order on any other ground, it is not necessary for us to delve into other points that were urged by the Respondent.

                                                              Non-Reportable


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 7335 of 2008


CHIEF ADMINISTRATOR, H.U.D.A. & ANR.


                                                           .... Appellant(s)
                                   Versus

SHAKUNTLA DEVI

                                                             ….Respondent(s)




                               J U D G M E N T


L. NAGESWARA RAO, J.

      This Appeal is filed challenging the order  dated  25.09.2007  of  the
National Consumer Disputes  Redressal  Commission,  New  Delhi  (hereinafter
referred to as ‘National  Commission’)  by  which  an  order  of  the  State
Consumer  Disputes  Redressal  Commission,   Union   Territory,   Chandigarh
(hereinafter referred to as ‘State Commission’)   awarding  compensation  to
the Respondent was confirmed.
The Respondent was allotted Plot No. 40, measuring 40 marlas  in  Sector  8,
Urban Estate, Karnal on 03.04.1987. As physical possession of the  plot  was
not given to her by the Appellants, the Respondent filed Original  Complaint
     No. 54 of 1997 before the State Commission.   In  the  said  complaint,
the Respondent alleged that  she  had  paid  the  full  price  of  the  plot
including the enhancement fee  as  per  the  terms  and  conditions  of  the
allotment letter.  She averred that she was not given the possession of  the
plot in spite of repeated requests.   The Respondent  also  pleaded  in  the
complaint that the Appellants were  required  to  complete  the  development
work within 2 years from the date of the allotment letter and hand over  the
physical possession.   She further stated that she  wanted  to  construct  a
house and the  delay  in  handing  over  physical  possession  of  the  plot
resulted in  additional  expenditure  for  the  building  as  the  price  of
construction material increased manifold from 1988 to 1997.   On  the  basis
of the above averments, the Respondent sought for the following  reliefs  in
Original Complaint No. 54 of 1997:

“That the opposite party be directed not to charge any  extension  fees  for
not constructing the plot within the stipulated period which  could  not  be
done because of non delivery of the physical possession of the plot.
HUDA be directed not to charge interest at all on  the  amount  because  the
HUDA had offered a paper possession in the year  1982  and  had  not  handed
over the physical /actual possession till date.

HUDA be directed  to  deliver  the  physical  possession  immediately  after
completing development work as per the brochure and advertisement and  after
providing the community service such as schools, community centre,  hospital
etc. in the sector.

The HUDA be directed to give compensation of  1.00  lac  against  harassment
mental agony suffered due to the act and conduct of HUDA.

Directed to give cost to  the  complainant  for  Rs.  20,000/-  against  the
expenditure incurred in filing this complaint and as well  as  for  spending
the amount for visiting the office of the last 8 years.

The complainant be awarded interest at the  rate  of  18  %  on  the  amount
deposited on various time till the actual possession of the plot is given.

The Respondent be directed to pay  Rs.  5.00  lac  escalation  cost  of  the
construction material.”

The Appellants filed a written statement in which it  was  stated  that  the
Respondent was allotted the plot from  the  Government  Discretionary  Quota
vide Allotment Letter No. 5049 dated  03.04.1987.   The  Appellants  alleged
that  the  Respondent  did  not  seek  delivery  of  possession   prior   to
16.07.1997.  It was also stated in the written statement that an  amount  of
Rs.28,000/-  was  still  outstanding.   It  was  further  alleged  that  the
Respondent was not interested in constructing a house and that  no  building
plan was submitted for approval.

The State Commission by its order dated 21.12.1998 held that the  Respondent
has established deficiency of service by the Appellants as there  was  delay
in handing over physical possession of the plot.  The complaint was  allowed
and the Appellants were directed to deliver vacant  physical  possession  of
the plot, if not already done, to the Respondent within one month  from  the
date of receipt of the order.     There  was  a  further  direction  to  pay
interest on the amount deposited by the Respondent at the rate of  12%  with
effect from 03.04.1989 and to pay a sum of Rs.2  lakhs  as  compensation  on
account of escalation in the cost  of  construction  etc.    The  Appellants
were also directed to pay  Rs.20,000/-  towards  compensation  for  monetary
loss and mental harassment suffered by the Respondent.

Aggrieved by the said order dated 21.12.1998 of the  State  Commission,  the
Appellants filed an appeal before the  National  Commission.   The  National
Commission confined the dispute in First Appeal No. 154 of 1999 only to  the
award of compensation of Rs.2  lakhs  relating  to  escalation  in  cost  of
construction.  The other  reliefs  pertaining  to  payment  of  compensation
towards monetary loss and mental harassment of Rs. 20,000/- and interest  on
the  amount  deposited  by  the  Respondent  were  confirmed.  The  National
Commission remanded the matter  for  re-consideration  of  compensation  for
escalation of cost of construction in accordance with CPWD rates.

The State Commission reconsidered the matter and  permitted  both  sides  to
produce evidence which would enable  it  to  compute  the  compensation  for
escalation of construction cost as per CPWD rates.  The Respondent  produced
evidence to show that the escalation in cost of construction between  April,
1989 and January,  2000  would  be  Rs.  18,67,000/-.   An  affidavit  dated
06.02.2007 was filed by  Sh.  Vikram  Singh  Malik,  Estate  Officer,  HUDA,
Karnal on behalf of the Appellants in which it was stated that the  physical
possession of the plot was given  to  the  Respondent  on  21.01.2000.   The
Respondent submitted a building plan only on 14.02.2006 which would  clearly
prove that the Respondent was not  interested  in  constructing  the  house.
The submission of the Appellants that the Respondent was  not  entitled  for
more than Rs. 2,00,000/- towards  increase  in  the  construction  cost  was
rejected by the State Commission on the ground that the National  Commission
directed computation of compensation at CPWD rates and  that  there  was  no
restriction in  the  order  of  remand.     The  material  produced  by  the
Respondent to prove escalation in the cost of construction was  accepted  by
the State Commission which held that the Respondent was entitled for  a  sum
of Rs. 18,67,000/- as compensation. However, the State Commission held  that
since the Respondent did not commence construction till 2006 with a view  to
get more compensation.  Therefore, she was awarded  a  compensation  of  Rs.
15,00,000/- instead of Rs. 18,67,000/-  towards  increase  in  the  cost  of
construction.

The National Commission by an order dated 25.09.2007  dismissed  Appeal  No.
525 of 2007 filed by the Appellants and confirmed the order  passed  by  the
State  Commission  holding  that  the  compensation  awarded  was  just  and
reasonable. According to the National Commission even if 15  %  interest  on
the amount of Rs.5 lakhs claimed by the Respondent for 10 years is  awarded,
the Respondent would be entitled to Rs. 12.5 lakhs.  Aggrieved by the  order
dated  15.09.2007  in  First  Appeal  No.  525  of  2007  of  the   National
Commission, the Appellants have filed this Appeal.

The Counsel for the Appellants submitted that the  Respondent  was  allotted
the plot in the Government Discretionary Quota and that the  Respondent  did
not approach the Appellants seeking possession of the plot  till  1997.   He
also submitted that the Respondent did not commence  the  construction  till
2006 though she was given possession on 21.01.2000.   He  further  contended
that the State Commission erred in awarding Rs.  15  lakhs  as  compensation
when the earlier  order  granting  Rs.  2  lakhs  as  compensation  was  not
challenged by the Respondent.  According to him, the remand by the  National
Commission was to examine whether the Respondent was entitled to      Rs.  2
lakhs as compensation which meant that she cannot be given any  compensation
beyond Rs. 2,00,000/-.

The Counsel for the Respondent submitted that there was  no  restriction  in
the  remand  by  the  National  Commission  as  the   compensation   towards
escalation of the cost of construction was directed to be calculated as  per
CPWD rates.  He submitted that the State Commission was  right  in  awarding
Rs. 15  lakhs  as  compensation  when  the  deficiency  of  service  by  the
Appellant in not handing over the possession  of  the  plot  till  2000  was
proved.   He  also  urged  that  the  Civil  Procedure  Code   has   limited
application in the Consumer Fora and relief cannot be denied on the  grounds
of defective pleadings and  the  relief  sought.   He  also  submitted  that
cogent material  was  placed  before  the  State  Commission  to  prove  the
escalation in the cost of construction between 1989 and 2000.

The avowed object of the Consumer Protection Act, 1986  is  to  provide  for
better protection of the  interest  of  consumers.   The  statement  of  the
objects and reasons, inter alia, provides for a speedy and simple  redressal
to consumer disputes.  The quasi judicial bodies at the District, State  and
Central levels were empowered to give relief to  the  consumers  and  award,
wherever appropriate, compensation to consumers.

Section 14 (1) (d) of the Act which is relevant for the adjudication of  the
dispute in this case is as follows:

“14. Finding of the District Forum.- (1) If, after the proceeding  conducted
under section 13, the District Forum is satisfied that the goods  complained
against suffer from any of the defects specified in the  complaint  or  that
any of the allegations contained in the complaint  about  the  services  are
proved, it shall issue an order to the opposite party directing  him  to  do
one or more of the following things, namely:
…….
(d) to pay such amount as may be  awarded  by  it  as  compensation  to  the
consumer for any loss  or  injury  suffered  by  the  consumer  due  to  the
negligence of the opposite party.”


The sine qua non for entitlement of compensation is proof of loss or  injury
suffered by the consumer due to the negligence of the opposite party.   Once
the said conditions are satisfied, the Consumer Forum would have  to  decide
the quantum of compensation  to  which  the  consumer  is  entitled.   There
cannot be any dispute that the computation of compensation has to  be  fair,
reasonable and commensurate to the loss or injury.  There is a duty cast  on
the Consumer Forum to take into account all relevant  factors  for  arriving
at the compensation to be paid.

 In Charan Singh v. Healing Touch Hospital and Others, reported in (2000)  7
SCC 668, this Court held as follows:

      “12. …..  Indeed, calculation of damages  depends  on  the  facts  and
circumstances of each case.   No hard and fast rule can  be  laid  down  for
universal application. While awarding compensation, a Consumer Forum has  to
take into account all relevant factors and assess compensation on the  basis
of accepted legal principles, on moderation.  It is for the  Consumer  Forum
to grant compensation to the extent it finds it reasonable, fair and  proper
in the facts and circumstances of a given case according to the  established
judicial standards where the claimant is able to establish his charge.”

      In Ghaziabad  Development  Authority  v.  Balbir  Singh,  reported  in
(2004) 4 SCC 65, this Court was considering the compensation to  be  awarded
to  the  consumers  in  cases  of  deficiency  of  service  by   Development
Authorities like the Appellant herein and Ghaziabad  Development  Authority.
Considering a situation similar to the one that arises in the instant  case,
it was held as follows:

“9. That compensation cannot be uniform  and  can  best  be  illustrated  by
considering cases where possession is being directed  to  be  delivered  and
cases where only  monies  are  directed  to  be  returned.  In  cases  where
possession  is  being  directed  to  be  delivered  the   compensation   for
harassment will necessarily have to be less because in a way that  party  is
being compensated by increase in the value of the property he is getting.

***         ***        ***

11. Further, in cases where the Commission/Forum has  directed  delivery  of
possession, the party has to a certain extent already got  a  benefit.   The
cost of the land/flat would have gone up in the meantime.  Of  course,  even
in cases, where delivery of possession has  been  directed  there  could  be
compensation for the harassment/ loss.  But  such  compensation  has  to  be
worked out after looking into the facts of each case and  after  determining
what is  the  amount  of  harassment/loss  which  has  been  caused  to  the
consumer.”


It is undisputed that the Appellant handed over the plot to  the  Respondent
only  in  the  year  2000  instead  of  1989.   The  Respondent   had   paid
Rs.1,22,400/- towards the cost of the plot at the rates  prevailing  in  the
year of allotment i.e. 1986.  There is no dispute that  the  Respondent  was
paid Rs.1,28,188/- towards interest awarded by the State Commission.   There
is also no dispute about the fact  that  the  Respondent  did  not  commence
construction  till  2006.   The  State   Commission   while   awarding   the
compensation of Rs. 15 lakhs towards escalation in the cost of  construction
commented on the conduct of the  Respondent  in  delaying  the  construction
only with a view to claim higher compensation.

The point that falls for our consideration  in  this  case  is  whether  the
State Commission  was  justified  in  awarding  Rs.  15  lakhs  towards  the
escalation in the cost of construction as compensation.  We are of the  view
that the Respondent is not entitled to  such  compensation  awarded  by  the
State Commission and confirmed by the National Commission.   The  Respondent
suffered an injury due to the delay in handing over the possession as  there
was definitely escalation in the cost of construction. At the same time  the
Respondent has surely benefited by the increase in the cost of plot  between
1989 to 2000.  In  our  opinion,  the  order  of  the  State  Commission  is
vitiated for non application of mind to a  vital  and  relevant  factor  and
hence, suffers from the vice  of  unreasonableness.   The  State  Commission
criticized the conduct of  the  Respondent  in  intentionally  delaying  the
construction for 6 years but still proceeded  to  award  compensation.    In
the facts and circumstances of this case, we are of the opinion  that  award
of interest would have been sufficient to compensate the Respondent for  the
loss suffered by him due to the delay in handing over the possession of  the
plot.  The compensation of Rs. 15 lakhs awarded by the State  Commission  is
excessive.  As we have not reversed the impugned order on any other  ground,
it is not necessary for us to delve into other points  that  were  urged  by
the Respondent.

For the aforementioned reasons, the Order  of  the  State  Commission  dated
05.07.2007 as confirmed by the National Commission  is  set  aside  and  the
Appeal is allowed.  No costs.

                        .…............................CJI
                  [T. S. THAKUR]



                 .........................................J
                           [DR. D. Y. CHANDRACHUD]



                      ................................J
                                 [L. NAGESWARA RAO]
New Delhi,
December  8, 2016


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