Special Period of Limitation under DDA Act is Inapplicable to Restitutionary Claims for Interest on Earnest Money.

The Respondent was the highest bidder in a 2008 auction for an industrial plot, depositing ₹63,12,500 as earnest money

The auction was subsequently challenged by local residents in W.P.(C) 123/2009. Although the Appellant (DDA) initially defended the auction, it later filed an affidavit seeking its cancellation

While the Respondent intervened in the writ petition to protect its interest, the auction was eventually cancelled on 26.04.2012

DDA refunded only the principal earnest money on 29.01.2013, retaining the funds for over four years

The Respondent filed a suit for recovery of interest, which the Trial Court decreed at 12% p.a. for the retention period

DDA appealed the decree, and the Respondent filed cross-objections for interest during the litigation gap

1. Whether the suit was barred by the special six-month limitation period under Section 53B of the DDA Act, 1957.

2. Whether the Respondent was entitled to interest despite Clause 7 of the auction terms and its proactive participation in the writ proceedings.

3. Whether the Respondent was entitled to further interest for the period between the refund of the principal and the institution of the suit.

The court primarily applied Section 53B of the Delhi Development Authority Act, 1957, which requires a two-month notice and a six-month limitation for suits challenging acts done "pursuant to the Act"

It relied on the precedent M/s Lucky Star Estates (India) Pvt. Ltd. v. DDA, establishing that claims for restitution or interest on wrongfully retained money do not fall under the restrictive limitation of Section 53B(2) but under general limitation law

Furthermore, the court applied the contractual principle found in Clause 7 of the DDA's own auction advertisement, which mandates a 7% p.a. interest payment if DDA retains earnest money beyond six months

The court rejected DDA’s limitation plea, reasoning that a suit for recovery of interest on earnest money is a restitutionary claim rather than a challenge to an act performed under the DDA Act’s statutory powers; thus, the general limitation period applied

Regarding the merits, the court noted that Clause 7 of the DDA’s own terms explicitly acknowledged a liability to pay interest for retention beyond six months, which the DDA breached by refunding only the principal

The court dismissed DDA's argument that the Respondent "volunteered" for litigation, finding that the Respondent participated only to protect its legitimate commercial interest after becoming the successful bidder

Since the Respondent was a commercial entity whose funds were gainfully utilized by the DDA for four years, the award of 12% interest was deemed appropriate

It further dismissed the Respondent’s cross-objections, ruling that once the principal earnest money was refunded on 29.01.2013, no further interest liability could accrue on that principal

The Trial Court’s decree awarding 12% p.a. interest from 07.12.2008 to 29.01.2013, and 9% future interest, was upheld