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.
-----------------------
8
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.
-----------------------
8
