Full Judgment Text
2025 INSC 808
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2025
(Arising out of SLP(C)Nos.27847-27848 of 2019)
GREATER MOHALI AREA
DEVELOPMENT AUTHORITY
(GMADA) THROUGH ITS ESTATE
OFFICER (H) … APPELLANT(S)
VERSUS
ANUPAM GARG ETC. … RESPONDENT(S)
J U D G M E N T
SANJAY KAROL J.
Leave Granted.
2. Under challenge in these appeals is a judgment and
st
final order dated 1 April, 2019 passed in First Appeal Nos.
1852 of 2018 and 1853 of 2018 by the National Consumer
1
Disputes Redressal Commission, New Delhi , at the instance
Signature Not Verified
Digitally signed by
NAVEEN D
Date: 2025.06.06
16:06:31 IST
Reason:
1
NCDRC
CA@ SLP © Nos. 27847-48 of 2019 Page 1 of 15
2
of Greater Mohali Area Development Authority , who is
st
aggrieved by the order dated 1 March, 2018 of the State
Consumer Disputes Redressal Commission, Punjab,
3
Chandigarh , whereby the State Commission partly allowed
the respondents’ complaints (being CC No.438 of 2017 filed
by respondent Anupam Garg; and CC No.439 of 2017 filed
by respondent Rajiv Kumar) against GMADA directing the
latter to refund the entire amount deposited by both parties in
respect of securing flats in the residential scheme launched
by it along with 8% interest thereon as also paying additional
costs for mental harassment, litigation and the interest paid
by the respondents to the State Bank of India, for the loans
that they had secured to arrange for the funds required to be
invested in the project.
3. For the sake of convenience we only illustrate the facts
of CC No.438 of 2017 filed by Anupam Garg, which are
similar to the facts being in CC No.439 of 2017 filed by Rajiv
Kumar. The sequence of events and background (as per CC
438 of 2017), as have been culled out by the Commissions,
leading up to these appeals are:
3.1 GMADA launched a scheme of residential flats
termed ‘Purab Premium Apartments’ to be constructed
in the Sector 88 locality, at Mohali in the year 2011.
2
GMADA
3
State Commission
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Anupam Garg secured an application form for a 2-BHK
+ Servant Room Residential Apartment-Type II upon
payment of 10% of the total consideration of ₹ 55 lakhs,
i.e., ₹ 5,50,000/- as earnest money.
3.2 The allotment of the flats took place through a
th
‘draw of lots’ on 19 March, 2012. He was successful
4 st
and a Letter of Intent was issued in his favour on 21
May, 2012. It provided details regarding price, payment
schedule, possible plans of payment, locations where
payment can be deposited, particulars of ownership,
possession, management and maintenance and other
general terms and conditions. The relevant extracts of
the LOI are as follows:
“ PAYMENT SCHEDULE
2.1 For Initial 30%
(i) Payment of Rs.1100000 (Eleven
Lakhs Only) being 20 % price of the apartment is to be
made by 22.6.2012 to complete 30% of the apartment.
(ii) In case of failure to make the payment within
stipulated period, the amount paid shall be refunded with
10% deduction and allotment cancelled. However, this
period can be further extended up to 30 days with 2%
Penalty, up to 60 days with 3 % penalty and up to 90 days
with 5 % penalty on prior written request.
2.2 For Balance Payment of 65%
Plan-A
A sum of Rs.33,96,250/- (Thirty three lakhs
ninety six thousand two hundred fifty only) being
4
LOI
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balance 65% of tentative price of apartment within 60
days of the issue of LOI with a rebate of 5% on the
balance amount payable.
Plan-B
A sum of Rs. 35,75,000 (Thirty five lakhs seventy
five thousand only) being balance 65% of the tentative
price can be paid with 12% interest in 6 half yearly
instalments from the date of issue of LOI, Payment
schedule mentioned as under:-
2.3 For Balance Payment of 5%
(i) The balance amount of Rs.275000/- (Two lakhs
seventy five thousand Only) being 5% of the tentative
price of apartment shall be payable at the time of
possession.
(ii) Delays in payment of instalments shall result in
cancellation of the allotment. However, on request
establishing genuine grounds, delays up to 12 months
can be condoned by the Estate Officer, by charging 18%
interest for the period of delay. Delays beyond 12 months
shall not be condoned under any circumstances and shall
result in cancellation of allotment and refund of the
amounts paid, after forfeiture of 10% of the amount.
Possession shall not be handed over till all dues are
cleared.
(iii) In case of fully paid apartments, the enhancement
in price (due to the reasons laid down in para 1(ii), shall
have to be paid within 90 days of such demand without
payment of any interest or in 6 Half Yearly instalments
along with interest @ 12 per annum. In other cases the
enhancement shall be built into balance instalments.
(iv) All payments shall be made by a bank draft drawn
in favour of Estate Officer GMADA…
OWNERSHIP AND POSSESSION
(I) Allotments shall be on free hold basis.
(II) Possession of apartment shall be handed over
after completion of development works at site
in a period of 36 months from the date of
issuance of Letter of Intent. In case for any
reason, the Authority is unable to deliver the
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possession of apartments within stipulated
period, allottee shall have the right to
withdraw from the scheme by moving an
application to the Estate Officer, in which
case, the Authority shall refund the entire
amount deposited by the applicant along with
8 % interest compounded annually. Apart
from this, there shall be no other liability of
the Authority.
(III) The ownership and possession of apartments
shall continue to vest with Greater Mohali
Area Development Authority until full
payment is made of outstanding dues in
respect of said apartment.
(IV) The allottee shall be required to execute a
Deed of Conveyance in prescribed format and
manner within 90 days of payment of entire
money. The expenses of registration and
execution of Conveyance Deed shall be borne
by the allottee.
(V) There shall be bar on sale of the apartment till
2 years after handing over of possession or 5
years from date of issuance of LOI whichever
is earlier.
(VI) The floor of the apartment shall be allocated
through draw of lots.”
3.3 The scheduled date of delivery of possession was
st
21 May, 2015. It has been alleged that on his visit to the
development site in May, 2015, the respondent found no
development commensurate to the time that had passed.
Since it did not appear likely that possession of the flat
would be delivered to the respective owners for another 2-3
years, he resolved to opt out of the scheme.
3.4 He approached the concerned official in this regard,
who apparently informed him that if he chooses to pursue
this route, GMADA would pay him the deposited amount,
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st
along with 8% interest thereon, from 21 May, 2015, till the
date of payment.
3.5 Given that no relevant document stipulated such a
condition, the respondents filed a consumer complaint (CC
No.197 of 2016), which was withdrawn due to certain
technical reasons. Shortly after, GMADA issued a letter of
th
allotment-cum-offer of possession dated 29 June, 2016,
th
stating that the ‘numbering draw’ was held on 5 January,
2016 and he had been allotted ‘Apartment No.902, Tower
No.7, Block C, Floor 8, Type 2’.
3.6 Upon visiting the allotted flat, of which he has
allegedly been in possession as of now, he found that various
changes were made to the project itself, as also in the
facilities and amenities provided therein, unilaterally.
4. It is in the aforesaid backdrop that the complaint, the
subject matter of these appeals, came to be filed.
5. The State Commission’s findings can be summarized inter
alia as under :
a) There is no substance to the allegation that the
facilities to be provided by GMADA have not been
provided. There are no photographs to substantiate this, nor
is there any report issued by a competent person to prove the
absence of these facilities in the project.
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b) The presence of an arbitration clause would not bar
the jurisdiction of the State Commission, in view of the
findings of this Court in National Seeds Corporation Ltd.
5
v. M. Madhusudan Reddy .
c) GMADA cannot stop the respondents from seeking
a refund of their money because it was concluded that there
is no proof on record that the authority completed the project
within the stipulated time. Such desire to seek a refund is
also not without precedent as GMADA had already
extended this facility to another allottee.
d) It is an undisputed position that the respondents had
paid a substantial amount of consideration towards the flats
they were to receive and only a small portion of the total
consideration remained to be paid.
e) The respondents were entitled to withdraw from the
scheme. GMADA cannot be accorded any benefit on the
ground that they had offered possession to the respondents
th
on 29 June, 2016, which is more than a year after the
stipulated date of completion.
6. Having come to the conclusions as above, the State
Commission passed the following order:
“17. In view of the above discuss, the Consumer
Complaint No.438 of 2017 is accepted and the opposite
party is directed to refund the entire deposited amount of
Rs.50,46,250/- to the complainant along with interest at
the rate of 8%, compounded annually under Clause 3(II)
5
(2012) 2 SCC 505
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of the Letter of Intent, Ex. C-2. The opposite party shall
also pay a compensation of Rs.60,000/- to the
complainant for mental tension and harassment suffered
by him and Rs.30,000/-, as costs of litigation. The
opposite party shall also pay the interest paid by the
complainant to State Bank of India on the loan taken
from it and paid to the opposite party for the purchase of
the flat, as charged by the Bank from the complainant.
18. In view of reasons and discussion held in Consumer
Complaint No.438 of 2017, the Consumer Complaint
No.439 of 2017 accepted and the opposite party is
directed to refund the entire deposited amount of
Rs.41,29,619/- to the complainant, along with interest at
the rate of 8%, compounded annually under Clause 3(II)
of the Letter of Intent, Ex. C-2. The opposite party shall
also pay a compensation of Rs.60,000/- to the
complainant for the mental tension and harassment
suffered by him and Rs.30,000/- as costs of litigation.
The opposite party shall also pay the interest paid by the
complainant to State Bank of Hyderabad and State Bank
of India on the loan taken from it and paid to the opposite
party for the purchase of the flat as charged by the Bank
from the complainant.”
(Emphasis supplied)
7. GMADA carried the matter in appeals to NCDRC. In the
impugned order, reference is made to Greater Mahali Area
6
Development Authority v. Priyanka Naiyyar , which was also
referred to by the State Commission, where the Commission had
granted compensation of ₹2 lakhs to the complainant in addition
to the 8% interest, which was to be given on account of the fact
that the interest charged by the bank in the case was @ 10.75%.
It was concluded that there was no merit in the appeals which
were dismissed on the grounds of delay and merit, along with
6
1st appeal No. 1456 of 2016
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costs quantified at ₹20,000/- each to be paid to both the
respondents herein.
8. Aggrieved by this order, GMADA is before us. Notice was
th
issued on 8 November, 2019 limited to that part of the order by
which interest has been awarded on the loan taken by the
respondent-Anupam Garg from the State Bank of India in
addition to the 8% compounded interest already granted.
9. We have heard the learned counsel for the parties.
10. The appellants’ case is that casting liability for the
respondents’ loan upon GMADA is not a position under law. In
contrast, the respondents argue to the contrary, stating that the
Commissions have the requisite authority to grant compensation
over and above what is agreed in the contract. It is their case that
the terms of the agreement cannot circumscribe the authority of
the Commission to award just compensation.
7
11. In Bangalore Development Authority v. Syndicate Bank ,
this Court having surveyed several other judgments, laid down
seven principles regarding grant/non-grant of relief to an allottee
who is aggrieved by non-delivery or delay in delivery of
plots/flats. This case is covered by the first one, which is as
follows :
“( a ) Where the development authority having received
the full price, does not deliver possession of the allotted
plot/flat/house within the time stipulated or within a
reasonable time, or where the allotment is cancelled or
7
(2007) 6 SCC 711
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possession is refused without any justifiable cause, the
allottee is entitled for refund of the amount paid, with
reasonable interest thereon from the date of payment to
date of refund. In addition, the allottee may also be
entitled to compensation, as may be decided with
reference to the facts of each case.”
8
12. The observations made in GDA v. Balbir Singh are also
important when it comes to the determination of compensation.
It was held as under :
“…Thus the Forum or the Commission must determine
that there has been deficiency in service and/or
misfeasance in public office which has resulted in loss
or injury. No hard-and-fast rule can be laid down,
however, a few examples would be where an allotment
is made, price is received/paid but possession is not
given within the period set out in the brochure. The
Commission/Forum would then need to determine the
loss. Loss could be determined on basis of loss of rent
which could have been earned if possession was given
and the premises let out or if the consumer has had to
stay in rented premises then on basis of rent actually paid
by him. Along with recompensing the loss the
Commission/Forum may also compensate for
harassment/injury, both mental and physical. Similarly,
compensation can be given if after allotment is made
there has been cancellation of scheme without any
justifiable cause.
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. But in
cases where monies are being simply returned then the
party is suffering a loss inasmuch as he had deposited the
8
(2004) 5 SCC 65
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money in the hope of getting a flat/plot. He is being
deprived of that flat/plot. He has been deprived of the
benefit of escalation of the price of that flat/plot.
Therefore the compensation in such cases would
necessarily have to be higher. Further if the construction
is not of good quality or not complete, the compensation
would be the cost of putting it in good shape or
completing it along with some compensation for
harassment. Similarly, if at the time of giving possession
a higher price or other amounts are collected
unjustifiably and without there being any provision for
the same the direction would be to refund it with a
reasonable rate of interest. If possession is refused or not
given because the consumer has refused to pay the
amount, then on the finding that the demand was
unjustified the consumer can be compensated for
harassment and a direction to deliver possession can be
given. If a party who has paid the amount is told by the
authority that they are not in a position to ascertain
whether he has paid the amount and that party is made to
run from pillar to post in order to show that he has paid
the amount, there would be deficiency of service for
which compensation for harassment must be awarded
depending on the extent of harassment. Similarly, if after
delivery of possession, the sale deeds or title deeds are
not executed without any justifiable reasons, the
compensation would depend on the amount of
harassment suffered. We clarify that the above are mere
examples. They are not exhaustive. The above shows
that compensation cannot be the same in all cases
irrespective of the type of loss or injury suffered by the
consumer.”
13. The entitlement of compensation, therefore, is not in
dispute. A reference to Balbir Singh (supra) shows that
compensation can take different forms, considering the facts and
circumstances at hand. Determination has to be made, keeping
in view the stage of the work completed, where the service
provider has lapsed in duty and the loss caused thereby etc.
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Uniformity is foreign to such determination. Here only we may
observe that the State Commission, as well as NCDRC’s reliance
on Priyanka Nayyar (supra) is misplaced. In that case, ₹ 2 lakhs
was given as compensation, taking into account that the
complainant had suffered interest in the loan taken at the rate of
10.75%. It was not given as payment for the interest itself. By
placing reliance on this order, against which one special leave
petition indeed stands dismissed, what was open for the
commission to do was to, in the attending facts and
circumstances, compute an amount as compensation, in which
one of the factors would be that in order to secure a property in
the scheme floated by the GMADA, the respondents had taken
out a loan and would be liable to pay interest thereon. However,
this order does not permit the interest on the loan, in its entirety,
to be saddled by the authority responsible for the housing scheme
and the delay, which is the genesis of the dispute.
14. We are supported in this view by the findings made by a
coordinate Bench of this Court in DLF Homes Panchkula (P)
9
Ltd. v. D.S. Dhanda , which is extracted as under :
“15. The District Forum under the Consumer Protection
Act, 1986 (“the 1986 Act”) is empowered inter alia to
order the opposite party to pay such amount as may be
awarded as compensation to the consumer for any loss
or injury suffered by the consumer due to the negligence
of the opposite party including to grant punitive
damages. But the forums under the Act cannot award
interest and/or compensation by applying rule of thumb.
9
(2020) 16 SCC 318
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The order to grant interest at the maximum of rate of
interest charged by nationalised bank for advancing
home loan is arbitrary and has no nexus with the default
committed. The appellant has agreed to deliver
constructed flats. For delay in handing over possession,
the consumer is entitled to the consequences agreed at
the time of executing buyer's agreement. There cannot
be multiple heads to grant of damages and interest when
the parties have agreed for payment of damages @ Rs 10
per square foot per month. Once the parties agreed for a
particular consequence of delay in handing over of
possession then, there have to be exceptional and strong
reasons for Scdrc/Ncdrc to award compensation at more
than the agreed rate.”
(Emphasis supplied)
15. A perusal of the judgment and orders of the Commissions
does not reveal any exceptional or strong reasons for the interest
on the loan taken by the respondents to be paid by GMADA.
That apart, whether the buyers of the flat do so by utilizing their
savings, taking a loan for such purpose or securing the required
finances by any other permissible means, is not a consideration
that the developer of the project is required to keep in mind. For,
so far as they are concerned, such a consideration is irrelevant.
The one who is buying a flat is a consumer, and the one who is
building it is a service provider. That is the only relationship
between the parties. If there is a deficiency or delay in service,
the consumer is entitled to be compensated for the same.
Repayment of the entire principal amount along with 8% interest
thereon, as stipulated in the contract, alongside the clarification
that there shall be no other liability on the authority, sufficiently
meets this requirement.
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16. In DLF Homes Panchkula (P) Ltd. (supra), it was also
observed as follows:
“ 17. This Court in a judgment reported as Irrigation
Department, State of Orissa v. G.C. Roy [ Irrigation
Department, State of Orissa v. G.C. Roy , (1992) 1 SCC
508] examined the question as to whether an arbitrator
has the power to award interest pendente lite. It was held
that a person deprived of use of money to which he is
legitimately entitled has a right to be compensated for
the deprivation which may be called interest,
compensation or damages. Thus, keeping in view the
said principle laid down in the aforesaid judgment, the
amount of the interest is the compensation to the
beneficiary deprived of the use of the investment made
by the complainant. Therefore, such interest will take
into its ambit, the consequences of delay in not handing
over his possession. In fact, we find that the
learned Scdrc as well as Ncdrc has awarded
compensation under different heads on account of
singular default of not handing over possession. Such
award under various heads in respect of the same default
is not sustainable.”
(Emphasis supplied)
17. What flows from the above is that the amount of interest
awarded is the compensation to the investment maker for the
amount of money and the time he has been denied the fruits of
that investment. The 8% interest awarded in this case on top of
the entire amount that is being invested, is the compensation for
being deprived of the investment of that money. Apart from this
no amount of interest on the loan taken by the respondents could
have been awarded.
18. We clarify that we have in no way held that the
Commission is not empowered to give compensation, generally.
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For that reason, we do not interfere with the award of certain
amounts on account of mental agony and litigation costs. We
have only interfered with that part of the order as set out in the
notice. It has come on record that the amount deposited before
the State Commission does not include the amount of interest on
the loan. In view of the above discussion, we hold that there is
no requirement for GMADA to make any further deposit. The
amount as it stands currently, be dispersed to the respondents.
19. The appeals are allowed. Pending applications, if any,
shall stand disposed of.
…………………….J.
(Sanjay Karol)
…………………….J.
(Prasanna B. Varale)
th
4 June, 2025;
New Delhi.
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2025
(Arising out of SLP(C)Nos.27847-27848 of 2019)
GREATER MOHALI AREA
DEVELOPMENT AUTHORITY
(GMADA) THROUGH ITS ESTATE
OFFICER (H) … APPELLANT(S)
VERSUS
ANUPAM GARG ETC. … RESPONDENT(S)
J U D G M E N T
SANJAY KAROL J.
Leave Granted.
2. Under challenge in these appeals is a judgment and
st
final order dated 1 April, 2019 passed in First Appeal Nos.
1852 of 2018 and 1853 of 2018 by the National Consumer
1
Disputes Redressal Commission, New Delhi , at the instance
Signature Not Verified
Digitally signed by
NAVEEN D
Date: 2025.06.06
16:06:31 IST
Reason:
1
NCDRC
CA@ SLP © Nos. 27847-48 of 2019 Page 1 of 15
2
of Greater Mohali Area Development Authority , who is
st
aggrieved by the order dated 1 March, 2018 of the State
Consumer Disputes Redressal Commission, Punjab,
3
Chandigarh , whereby the State Commission partly allowed
the respondents’ complaints (being CC No.438 of 2017 filed
by respondent Anupam Garg; and CC No.439 of 2017 filed
by respondent Rajiv Kumar) against GMADA directing the
latter to refund the entire amount deposited by both parties in
respect of securing flats in the residential scheme launched
by it along with 8% interest thereon as also paying additional
costs for mental harassment, litigation and the interest paid
by the respondents to the State Bank of India, for the loans
that they had secured to arrange for the funds required to be
invested in the project.
3. For the sake of convenience we only illustrate the facts
of CC No.438 of 2017 filed by Anupam Garg, which are
similar to the facts being in CC No.439 of 2017 filed by Rajiv
Kumar. The sequence of events and background (as per CC
438 of 2017), as have been culled out by the Commissions,
leading up to these appeals are:
3.1 GMADA launched a scheme of residential flats
termed ‘Purab Premium Apartments’ to be constructed
in the Sector 88 locality, at Mohali in the year 2011.
2
GMADA
3
State Commission
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Anupam Garg secured an application form for a 2-BHK
+ Servant Room Residential Apartment-Type II upon
payment of 10% of the total consideration of ₹ 55 lakhs,
i.e., ₹ 5,50,000/- as earnest money.
3.2 The allotment of the flats took place through a
th
‘draw of lots’ on 19 March, 2012. He was successful
4 st
and a Letter of Intent was issued in his favour on 21
May, 2012. It provided details regarding price, payment
schedule, possible plans of payment, locations where
payment can be deposited, particulars of ownership,
possession, management and maintenance and other
general terms and conditions. The relevant extracts of
the LOI are as follows:
“ PAYMENT SCHEDULE
2.1 For Initial 30%
(i) Payment of Rs.1100000 (Eleven
Lakhs Only) being 20 % price of the apartment is to be
made by 22.6.2012 to complete 30% of the apartment.
(ii) In case of failure to make the payment within
stipulated period, the amount paid shall be refunded with
10% deduction and allotment cancelled. However, this
period can be further extended up to 30 days with 2%
Penalty, up to 60 days with 3 % penalty and up to 90 days
with 5 % penalty on prior written request.
2.2 For Balance Payment of 65%
Plan-A
A sum of Rs.33,96,250/- (Thirty three lakhs
ninety six thousand two hundred fifty only) being
4
LOI
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balance 65% of tentative price of apartment within 60
days of the issue of LOI with a rebate of 5% on the
balance amount payable.
Plan-B
A sum of Rs. 35,75,000 (Thirty five lakhs seventy
five thousand only) being balance 65% of the tentative
price can be paid with 12% interest in 6 half yearly
instalments from the date of issue of LOI, Payment
schedule mentioned as under:-
2.3 For Balance Payment of 5%
(i) The balance amount of Rs.275000/- (Two lakhs
seventy five thousand Only) being 5% of the tentative
price of apartment shall be payable at the time of
possession.
(ii) Delays in payment of instalments shall result in
cancellation of the allotment. However, on request
establishing genuine grounds, delays up to 12 months
can be condoned by the Estate Officer, by charging 18%
interest for the period of delay. Delays beyond 12 months
shall not be condoned under any circumstances and shall
result in cancellation of allotment and refund of the
amounts paid, after forfeiture of 10% of the amount.
Possession shall not be handed over till all dues are
cleared.
(iii) In case of fully paid apartments, the enhancement
in price (due to the reasons laid down in para 1(ii), shall
have to be paid within 90 days of such demand without
payment of any interest or in 6 Half Yearly instalments
along with interest @ 12 per annum. In other cases the
enhancement shall be built into balance instalments.
(iv) All payments shall be made by a bank draft drawn
in favour of Estate Officer GMADA…
OWNERSHIP AND POSSESSION
(I) Allotments shall be on free hold basis.
(II) Possession of apartment shall be handed over
after completion of development works at site
in a period of 36 months from the date of
issuance of Letter of Intent. In case for any
reason, the Authority is unable to deliver the
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possession of apartments within stipulated
period, allottee shall have the right to
withdraw from the scheme by moving an
application to the Estate Officer, in which
case, the Authority shall refund the entire
amount deposited by the applicant along with
8 % interest compounded annually. Apart
from this, there shall be no other liability of
the Authority.
(III) The ownership and possession of apartments
shall continue to vest with Greater Mohali
Area Development Authority until full
payment is made of outstanding dues in
respect of said apartment.
(IV) The allottee shall be required to execute a
Deed of Conveyance in prescribed format and
manner within 90 days of payment of entire
money. The expenses of registration and
execution of Conveyance Deed shall be borne
by the allottee.
(V) There shall be bar on sale of the apartment till
2 years after handing over of possession or 5
years from date of issuance of LOI whichever
is earlier.
(VI) The floor of the apartment shall be allocated
through draw of lots.”
3.3 The scheduled date of delivery of possession was
st
21 May, 2015. It has been alleged that on his visit to the
development site in May, 2015, the respondent found no
development commensurate to the time that had passed.
Since it did not appear likely that possession of the flat
would be delivered to the respective owners for another 2-3
years, he resolved to opt out of the scheme.
3.4 He approached the concerned official in this regard,
who apparently informed him that if he chooses to pursue
this route, GMADA would pay him the deposited amount,
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st
along with 8% interest thereon, from 21 May, 2015, till the
date of payment.
3.5 Given that no relevant document stipulated such a
condition, the respondents filed a consumer complaint (CC
No.197 of 2016), which was withdrawn due to certain
technical reasons. Shortly after, GMADA issued a letter of
th
allotment-cum-offer of possession dated 29 June, 2016,
th
stating that the ‘numbering draw’ was held on 5 January,
2016 and he had been allotted ‘Apartment No.902, Tower
No.7, Block C, Floor 8, Type 2’.
3.6 Upon visiting the allotted flat, of which he has
allegedly been in possession as of now, he found that various
changes were made to the project itself, as also in the
facilities and amenities provided therein, unilaterally.
4. It is in the aforesaid backdrop that the complaint, the
subject matter of these appeals, came to be filed.
5. The State Commission’s findings can be summarized inter
alia as under :
a) There is no substance to the allegation that the
facilities to be provided by GMADA have not been
provided. There are no photographs to substantiate this, nor
is there any report issued by a competent person to prove the
absence of these facilities in the project.
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b) The presence of an arbitration clause would not bar
the jurisdiction of the State Commission, in view of the
findings of this Court in National Seeds Corporation Ltd.
5
v. M. Madhusudan Reddy .
c) GMADA cannot stop the respondents from seeking
a refund of their money because it was concluded that there
is no proof on record that the authority completed the project
within the stipulated time. Such desire to seek a refund is
also not without precedent as GMADA had already
extended this facility to another allottee.
d) It is an undisputed position that the respondents had
paid a substantial amount of consideration towards the flats
they were to receive and only a small portion of the total
consideration remained to be paid.
e) The respondents were entitled to withdraw from the
scheme. GMADA cannot be accorded any benefit on the
ground that they had offered possession to the respondents
th
on 29 June, 2016, which is more than a year after the
stipulated date of completion.
6. Having come to the conclusions as above, the State
Commission passed the following order:
“17. In view of the above discuss, the Consumer
Complaint No.438 of 2017 is accepted and the opposite
party is directed to refund the entire deposited amount of
Rs.50,46,250/- to the complainant along with interest at
the rate of 8%, compounded annually under Clause 3(II)
5
(2012) 2 SCC 505
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of the Letter of Intent, Ex. C-2. The opposite party shall
also pay a compensation of Rs.60,000/- to the
complainant for mental tension and harassment suffered
by him and Rs.30,000/-, as costs of litigation. The
opposite party shall also pay the interest paid by the
complainant to State Bank of India on the loan taken
from it and paid to the opposite party for the purchase of
the flat, as charged by the Bank from the complainant.
18. In view of reasons and discussion held in Consumer
Complaint No.438 of 2017, the Consumer Complaint
No.439 of 2017 accepted and the opposite party is
directed to refund the entire deposited amount of
Rs.41,29,619/- to the complainant, along with interest at
the rate of 8%, compounded annually under Clause 3(II)
of the Letter of Intent, Ex. C-2. The opposite party shall
also pay a compensation of Rs.60,000/- to the
complainant for the mental tension and harassment
suffered by him and Rs.30,000/- as costs of litigation.
The opposite party shall also pay the interest paid by the
complainant to State Bank of Hyderabad and State Bank
of India on the loan taken from it and paid to the opposite
party for the purchase of the flat as charged by the Bank
from the complainant.”
(Emphasis supplied)
7. GMADA carried the matter in appeals to NCDRC. In the
impugned order, reference is made to Greater Mahali Area
6
Development Authority v. Priyanka Naiyyar , which was also
referred to by the State Commission, where the Commission had
granted compensation of ₹2 lakhs to the complainant in addition
to the 8% interest, which was to be given on account of the fact
that the interest charged by the bank in the case was @ 10.75%.
It was concluded that there was no merit in the appeals which
were dismissed on the grounds of delay and merit, along with
6
1st appeal No. 1456 of 2016
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costs quantified at ₹20,000/- each to be paid to both the
respondents herein.
8. Aggrieved by this order, GMADA is before us. Notice was
th
issued on 8 November, 2019 limited to that part of the order by
which interest has been awarded on the loan taken by the
respondent-Anupam Garg from the State Bank of India in
addition to the 8% compounded interest already granted.
9. We have heard the learned counsel for the parties.
10. The appellants’ case is that casting liability for the
respondents’ loan upon GMADA is not a position under law. In
contrast, the respondents argue to the contrary, stating that the
Commissions have the requisite authority to grant compensation
over and above what is agreed in the contract. It is their case that
the terms of the agreement cannot circumscribe the authority of
the Commission to award just compensation.
7
11. In Bangalore Development Authority v. Syndicate Bank ,
this Court having surveyed several other judgments, laid down
seven principles regarding grant/non-grant of relief to an allottee
who is aggrieved by non-delivery or delay in delivery of
plots/flats. This case is covered by the first one, which is as
follows :
“( a ) Where the development authority having received
the full price, does not deliver possession of the allotted
plot/flat/house within the time stipulated or within a
reasonable time, or where the allotment is cancelled or
7
(2007) 6 SCC 711
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possession is refused without any justifiable cause, the
allottee is entitled for refund of the amount paid, with
reasonable interest thereon from the date of payment to
date of refund. In addition, the allottee may also be
entitled to compensation, as may be decided with
reference to the facts of each case.”
8
12. The observations made in GDA v. Balbir Singh are also
important when it comes to the determination of compensation.
It was held as under :
“…Thus the Forum or the Commission must determine
that there has been deficiency in service and/or
misfeasance in public office which has resulted in loss
or injury. No hard-and-fast rule can be laid down,
however, a few examples would be where an allotment
is made, price is received/paid but possession is not
given within the period set out in the brochure. The
Commission/Forum would then need to determine the
loss. Loss could be determined on basis of loss of rent
which could have been earned if possession was given
and the premises let out or if the consumer has had to
stay in rented premises then on basis of rent actually paid
by him. Along with recompensing the loss the
Commission/Forum may also compensate for
harassment/injury, both mental and physical. Similarly,
compensation can be given if after allotment is made
there has been cancellation of scheme without any
justifiable cause.
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. But in
cases where monies are being simply returned then the
party is suffering a loss inasmuch as he had deposited the
8
(2004) 5 SCC 65
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money in the hope of getting a flat/plot. He is being
deprived of that flat/plot. He has been deprived of the
benefit of escalation of the price of that flat/plot.
Therefore the compensation in such cases would
necessarily have to be higher. Further if the construction
is not of good quality or not complete, the compensation
would be the cost of putting it in good shape or
completing it along with some compensation for
harassment. Similarly, if at the time of giving possession
a higher price or other amounts are collected
unjustifiably and without there being any provision for
the same the direction would be to refund it with a
reasonable rate of interest. If possession is refused or not
given because the consumer has refused to pay the
amount, then on the finding that the demand was
unjustified the consumer can be compensated for
harassment and a direction to deliver possession can be
given. If a party who has paid the amount is told by the
authority that they are not in a position to ascertain
whether he has paid the amount and that party is made to
run from pillar to post in order to show that he has paid
the amount, there would be deficiency of service for
which compensation for harassment must be awarded
depending on the extent of harassment. Similarly, if after
delivery of possession, the sale deeds or title deeds are
not executed without any justifiable reasons, the
compensation would depend on the amount of
harassment suffered. We clarify that the above are mere
examples. They are not exhaustive. The above shows
that compensation cannot be the same in all cases
irrespective of the type of loss or injury suffered by the
consumer.”
13. The entitlement of compensation, therefore, is not in
dispute. A reference to Balbir Singh (supra) shows that
compensation can take different forms, considering the facts and
circumstances at hand. Determination has to be made, keeping
in view the stage of the work completed, where the service
provider has lapsed in duty and the loss caused thereby etc.
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Uniformity is foreign to such determination. Here only we may
observe that the State Commission, as well as NCDRC’s reliance
on Priyanka Nayyar (supra) is misplaced. In that case, ₹ 2 lakhs
was given as compensation, taking into account that the
complainant had suffered interest in the loan taken at the rate of
10.75%. It was not given as payment for the interest itself. By
placing reliance on this order, against which one special leave
petition indeed stands dismissed, what was open for the
commission to do was to, in the attending facts and
circumstances, compute an amount as compensation, in which
one of the factors would be that in order to secure a property in
the scheme floated by the GMADA, the respondents had taken
out a loan and would be liable to pay interest thereon. However,
this order does not permit the interest on the loan, in its entirety,
to be saddled by the authority responsible for the housing scheme
and the delay, which is the genesis of the dispute.
14. We are supported in this view by the findings made by a
coordinate Bench of this Court in DLF Homes Panchkula (P)
9
Ltd. v. D.S. Dhanda , which is extracted as under :
“15. The District Forum under the Consumer Protection
Act, 1986 (“the 1986 Act”) is empowered inter alia to
order the opposite party to pay such amount as may be
awarded as compensation to the consumer for any loss
or injury suffered by the consumer due to the negligence
of the opposite party including to grant punitive
damages. But the forums under the Act cannot award
interest and/or compensation by applying rule of thumb.
9
(2020) 16 SCC 318
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The order to grant interest at the maximum of rate of
interest charged by nationalised bank for advancing
home loan is arbitrary and has no nexus with the default
committed. The appellant has agreed to deliver
constructed flats. For delay in handing over possession,
the consumer is entitled to the consequences agreed at
the time of executing buyer's agreement. There cannot
be multiple heads to grant of damages and interest when
the parties have agreed for payment of damages @ Rs 10
per square foot per month. Once the parties agreed for a
particular consequence of delay in handing over of
possession then, there have to be exceptional and strong
reasons for Scdrc/Ncdrc to award compensation at more
than the agreed rate.”
(Emphasis supplied)
15. A perusal of the judgment and orders of the Commissions
does not reveal any exceptional or strong reasons for the interest
on the loan taken by the respondents to be paid by GMADA.
That apart, whether the buyers of the flat do so by utilizing their
savings, taking a loan for such purpose or securing the required
finances by any other permissible means, is not a consideration
that the developer of the project is required to keep in mind. For,
so far as they are concerned, such a consideration is irrelevant.
The one who is buying a flat is a consumer, and the one who is
building it is a service provider. That is the only relationship
between the parties. If there is a deficiency or delay in service,
the consumer is entitled to be compensated for the same.
Repayment of the entire principal amount along with 8% interest
thereon, as stipulated in the contract, alongside the clarification
that there shall be no other liability on the authority, sufficiently
meets this requirement.
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16. In DLF Homes Panchkula (P) Ltd. (supra), it was also
observed as follows:
“ 17. This Court in a judgment reported as Irrigation
Department, State of Orissa v. G.C. Roy [ Irrigation
Department, State of Orissa v. G.C. Roy , (1992) 1 SCC
508] examined the question as to whether an arbitrator
has the power to award interest pendente lite. It was held
that a person deprived of use of money to which he is
legitimately entitled has a right to be compensated for
the deprivation which may be called interest,
compensation or damages. Thus, keeping in view the
said principle laid down in the aforesaid judgment, the
amount of the interest is the compensation to the
beneficiary deprived of the use of the investment made
by the complainant. Therefore, such interest will take
into its ambit, the consequences of delay in not handing
over his possession. In fact, we find that the
learned Scdrc as well as Ncdrc has awarded
compensation under different heads on account of
singular default of not handing over possession. Such
award under various heads in respect of the same default
is not sustainable.”
(Emphasis supplied)
17. What flows from the above is that the amount of interest
awarded is the compensation to the investment maker for the
amount of money and the time he has been denied the fruits of
that investment. The 8% interest awarded in this case on top of
the entire amount that is being invested, is the compensation for
being deprived of the investment of that money. Apart from this
no amount of interest on the loan taken by the respondents could
have been awarded.
18. We clarify that we have in no way held that the
Commission is not empowered to give compensation, generally.
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For that reason, we do not interfere with the award of certain
amounts on account of mental agony and litigation costs. We
have only interfered with that part of the order as set out in the
notice. It has come on record that the amount deposited before
the State Commission does not include the amount of interest on
the loan. In view of the above discussion, we hold that there is
no requirement for GMADA to make any further deposit. The
amount as it stands currently, be dispersed to the respondents.
19. The appeals are allowed. Pending applications, if any,
shall stand disposed of.
…………………….J.
(Sanjay Karol)
…………………….J.
(Prasanna B. Varale)
th
4 June, 2025;
New Delhi.
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