Consumer Protection Act 1986 : s. 14(1)(d) – Award of compound interest by Consumer Fora – Justification of – On facts, consumer complaints by the complainant-respondent alleging deficiency of service on the part of the appellants-builder for having failed to deliver the possession of three flats booked by her, even after expiry of the agreed period and despite the fact that she had admittedly made payment of 60% of the total sale consideration – Dismissed by the District Forum – However, the State Commission awarded compound interest in favor of the respondent @ 14 %, relying upon Dr. Manjeet Kaur Monga’s case – National Commission upheld the same – On appeal, held: State Commission and the National Commission passed rather assumptive orders on the basis of the decision in Dr. Monga that compound interest was required to be allowed – Various factors recounted on behalf of the respondent, including excessive harassment and denial of the fruits of her investment could all lead to a reasonable amount of compensation but, there appears absolutely no reason that compound interest be allowed in this matter – Award of compound interest had neither any foundation in the record nor any backing in law nor the Consumer Fora took care to examine the contours of their jurisdiction and the requirements of proper assessment, if at all any compensation and/or punitive damages were sought to be granted – Awarding of compound interest with reference to Dr. Monga’s case and without examining any other factor has led to serious inconsistencies; and if the award as made is approved, it could only lead to unjust enrichment of the respondent in the name of disgorgement of benefits purportedly derived by the appellants – Thus, the impugned orders cannot be sustained and is set aside – However, the respondent allowed to retain the sum of money already received by her only because of peculiar circumstances of this case. Judgment/order : Precedent – Ascertainment of – Held: Judgment is an authority only in regard to its ratio which is required to be discerned – Decision cannot be regarded as an authority in regard to its conclusion alone or even in relation to what could be deduced therefrom.
Allowing the appeal, the Court
HELD: 1.1 Keeping the principles in Sanjay Singh’s case in view and for what has been discussed in regard to ratio decidendi of the decision in Dr. Manjeet Kaur Monga’s case, it is but clear that the said decision cannot be read in support of the principle that compensation and/or punitive damages in terms of the Consumer Protection Act, 1986 could also be by way of compound interest. The State Commission awarded compound interest, and National Commission approved such awarding of compound interest to the present respondent, only with reference to the said decision in the case of Dr. Monga. The ratio decidendi of Dr. Monga is not leading to the enunciation in favour of awarding compensation and/or punitive damages by way of compound interest, the substratum of the orders impugned is knocked to the ground. [Para 18][1142-F-H]
1.2 In certain eventualities, the legislature has indeed specified the award of compound interest. Mostly, it has been provided so in relation to any monetary involvement having the trappings of public interests in it. The Consumer Protection Act, 1986, on the other hand, being a beneficial legislation, inter alia, empowers the Consumer Fora to direct payment of such amount as may be awarded as compensation to the consumer for any loss or injury suffered due to the negligence of the opposite party. The proviso added to Clause (d) of Section 14(1) of the 1986 Act empowers the Forum to grant punitive damages in such circumstances as it deems fit. That being the position, it cannot be laid down in absolute terms that for no such stipulation regarding compound interest being available in the 1986 Act, the same can never be granted by the Consumer Fora. When the matter is being considered for award of compensation and/or punitive damages, want of stipulation in the contract as regards award of compound or simple interest, cannot be decisive of the matter. [Para 20][1143-E-G]
1.3 In an action before the Consumer Fora under the Act of 1986, the forum would be entitled to provide for the amount of compensation as deemed fit, having regard to the facts and circumstances of the case and the gravity of the negligence of the opposite party and consequential injury suffered by the consumer. The forum could award even punitive damages but that would depend on the relevant circumstances and for that matter, the relevant factors shall have to be specified. In regard to such awarding of compensation and/or punitive damages, the forum concerned could take all the relevant factors into account and award such amount as deemed fit and necessary but ordinarily, in the matters of money refund, awarding of compound interest as a measure of punitive damages is not envisaged. As to what would be the quantum of compensation and for that matter, what would be the quantum of punitive damages, would depend on facts and circumstances of each case but while awarding so, the forum would be advised to specify all the relevant factors and basis of its quantification. A shortcut of awarding compound interest is neither envisaged by the statute nor any such term of contract between the parties or any such usage is found. The attempt to seek compound interest in such real estate dealings did not meet with approval of this Court and such a claim was declined for having no nexus with the commercial realities of the prevailing market. Going by the principles governing the nature of jurisdiction of the Consumer Fora as also the principles enunciated by this Court, the proposition of awarding compound interest in the cases of monetary refund in such dealings is disapproved. [Para 22][1147-D-G; 1148-A-B]
1.4 For award of compound interest, relevant factors shall have to be taken into account which would include uncertainties of market and several other imponderables. If at all by way of compensation, the Consumer Forum considers it proper to examine the time value for money, an in–depth and thorough analysis would be required while taking into account all the facts and the material surrounding factors, including those of realities as also uncertainties of market. [Para 23][1148-C-D]
1.5 Awarding of compound interest with reference to Dr. Monga’s case and without examining any other factor has led to serious inconsistencies; and if the award as made is approved, it could only lead to unjust enrichment of the respondent in the name of disgorgement of benefits purportedly derived by the appellants. The State Commission and the National Commission have passed rather assumptive orders on the basis of the decision in Dr. Monga’s case that compound interest was required to be allowed. Various factors recounted on behalf of the respondent, including excessive harassment and denial of the fruits of her investment could all lead to a reasonable amount of compensation but, there appears absolutely no reason that compound interest be allowed in this matter. [Para 24][1148-D-F]
1.6 Having regard to the order proposed to be passed, the minute calculations and variety of alternatives presented by the parties are not entered into but, on a broad consideration of the matter, it is clear that even as per the exemplar sale deeds relating to the same area and similar flats, the cost of 3 flats booked by the respondent, as at present, is in the range of 2.25 crore, whereas the amount payable under the award in question would be above Rs. 7.35 crore. The respondent has attempted to compare the circle rates of the land in the area in question with the submissions that there were no circle rates of the flats in the year 1989 and the attempt on her part was to make “apples–to–apples” comparison and then factorising on the cost of flats. In the first place, no such efforts of calculation and assessment were made before the State Commission or the National Commission by the respondent. Secondly, the said Consumer Fora have not returned cogent and convincing findings on the loss or injury of the respondent with reference to the relevant factors. These aspects are referred only to indicate that award of compound interest in the instant case had neither any foundation in the record nor any backing in law nor the Consumer Fora took care to examine the contours of their jurisdiction and the requirements of proper assessment, if at all any compensation and/or punitive damages were sought to be granted. The impugned orders are difficult to be sustained. [Para 25][1148-F-H; 1149-A-C]
1.7 The State Commission merely referred to the decision of COMPAT in Dr. Monga’s case and then referred to the prayer of the respondent for award of compound interest coupled with the fact that possession cannot be handed over to her. On this and with reference to the observations in the case of Malay Kumar Ganguly’s case, for awarding compensation with such sum of money as to put the wronged person in the position as he would have been if he had not sustained the wrong, the State Commission straightaway jumped to the conclusion of awarding compound interest @ 14%. Apart from other shortcomings, the State Commission, even while awarding compound interest @ 14%, did not even take into account the fact of attempted refund of money by the appellants by the cheque dated 08.11.2005 and did not specify the period of such operation of compounding of interest. The open-ended and the assumptive order by the State Commission had been bereft of logic and had been wanting in the requisite reasoning as also specification of the relief sought to be granted. The position in the National Commission had been no better and in fact, the Commissions proceeded as if nothing else was required to be considered because of Dr. Manjeet Kaur Monga’s case. [Para 26][1149-D-G]
1.8 The impugned orders are required to be set aside. However, as indicated, the pertinent factors are that Dr. Monga’s case related to the very same project and very same builder with similar grievance of the complainant. In the said case, award of compound interest until the date of attempted refund by the builders has attained finality. In this view of the matter, even while disapproving the proposition of providing compound interest as such, it is deemed appropriate to take into consideration, only for the purpose of the instant case, the other requirements of balancing the equities. [Para 27][1150-A-C]
1.9 When the amount payable by the appellants with reference to the principles and propositions aforesaid is calculated, it does not exceed the amount of Rs. 2,48,52,000/together with accrued interest, which has already been received by the respondent pursuant to the order passed by this Court on 09.05.2022. Keeping in view the peculiar circumstances of this case, as an extraordinary measure, the respondent is allowed to retain the amount so received. This relaxation for the respondent is in no manner to be read as approval of the orders impugned or approval of the proposition of awarding compound interest in these matters. Such a proposition of awarding compound interest in these matters by the Fora exercising jurisdiction under the Act of 1986 is disapproved. [Para 27.2, 27.3][1150-G-H; 1151-BC]
1.10 The impugned orders passed by the State Commission and National Commission are disapproved. Having regard to the peculiar circumstances of this case, the amount already received by the respondent in the sum of Rs. 2,48,52,000/- together with accrued interest is allowed to be retained by her but, it is made clear that the appellants shall not be required to make any further payment to the respondent, whether towards refund or towards compensation or towards interest. [Para 28][1151-D]
Dr. Manjeet Kaur Monga v. K.L. Suneja (2018) 14 SCC
679 : [2017] 6 SCR 453 – explained.
Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65 : [2004] 3 SCR 68; Malay Kumar Ganguly v. Sukumar Mukherjee (Dr.) [2009] CPJ 17 (SC); Central Bank of India v. Ravindra (2002) 1 SCC
367 : [2001] 4 Suppl. SCR 323; Clariant International Ltd. and Anr. v. Securities & Exchange Board of India (2004) 8 SCC 524 : [2004] 3 Suppl. SCR 843; Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor (2022) SCC OnLine SC 416; NBCC (India) Ltd. v. Shri Ram Trivedi (2021) 5 SCC 273; Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna and Ors. (2021) 3 SCC 241; DLF Home Developers Limited and Anr. v. Capital Greens Flat Buyers Association and Ors. (2021) 5 SCC 537; Arifur Rahman Khan and Ors v. DLF Southern Homes Pvt Ltd and Ors. (2020) 16 SCC 512 : [2020] 9 SCR 136; DLF Home Panchkula Pvt Ltd and Ors. v. DS Dhanda and Ors. (2020) 16 SCC 318 : [2019] 7 SCR 1061; Manohar Lal (D) by Lrs. v. Ugrasen (D) by Lrs. and Ors. (2010) 11 SCC 557:[2010] 7 SCR 346; Sanjay Singh and Anr. v. U.P. Public Service
Commission, Allahabad and Anr. (2007) 3 SCC 720 : [2007] 1 SCR 235; K.L. Suneja and Anr. v. Dr. (Mrs.) Manjeet Kaur Monga (D) Through Her LRs and Anr 2023 SCC OnLine SC 91; Indian Council for Enviro– Legal Action v. Union of India and Ors. (2011) 8 SCC
161 : [2011] 9 SCR 146; Transmission Corp. of AP Ltd. v. P. Surya Bhagavan (2003) 6 SCC 353; Balram Prasad v. Kunal Saha (2014) 1 SCC 384 : [2013] 12 SCR 30 – referred to.
Wallersteiner v. Moir (No. 2) (1975) Q.B. 373 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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