2007 (5) TMI 565 - SC - Indian Laws

Supreme Court sets aside interest award for delayed possession of houses, directs completion of sale deeds

Bangalore Development Authority Versus Syndicate Bank

Bangalore Development Authority Versus Syndicate Bank - 2007 AIR 2198, 2007 (6) SCC 711 Issues Involved:1. Delay in delivery of houses.2. Entitlement to interest for delayed possession.3. Entitlement to compensation for mental agony and harassment.4. Maintainability of the complaint under the Consumer Protection Act, 1986.Analysis of Judgment:Delay in Delivery of Houses:The Bangalore Development Authority (BDA) introduced a 'Self Financing Housing Scheme' in 1982 for constructing flats/houses categorized as Higher Income Group (HIG), Middle Income Group (MIG), and Low Income Group (LIG). The Syndicate Bank applied for 250 units, including 15 HIG houses. BDA initially set the tentative price of an HIG house at Rs. 2.85 lakhs, later revised to Rs. 4.75 lakhs per unit. BDA informed the respondent that the units would be ready by December 1986. However, due to disputes with the contractor, the delivery of 11 HIG houses was delayed. BDA delivered the houses only in January/March 1997 during the pendency of the complaint before the National Consumer Disputes Redressal Commission.Entitlement to Interest for Delayed Possession:The respondent sought interest on the sum paid for the 11 HIG houses from January 1, 1986, to the date of delivery. The Commission awarded interest at 18% per annum from two years after the deposit of the last installment. However, the Supreme Court found this direction vague and unsustainable. The payment for the HIG houses was made on May 15, 1989, and the houses were delivered in 1997 at the agreed price. The Court held that the respondent, who benefited from the appreciation in the value of the houses, was not entitled to interest on the price paid.Entitlement to Compensation for Mental Agony and Harassment:The respondent also sought compensation for rent paid due to the non-delivery of houses and for mental agony. The Court noted that the respondent did not provide evidence of the rent paid or prevailing rent rates. Moreover, the Court found no negligence or deficiency in service on BDA's part. The delay was due to the contractor's dispute, and BDA took steps to resolve it. The Court emphasized that time was not made the essence of the contract by the respondent, and the houses were delivered at the agreed price under a 'No-Profit No-Loss' scheme. Therefore, the respondent was not entitled to any compensation.Maintainability of the Complaint under the Consumer Protection Act, 1986:BDA contended that it was not a service provider and the respondent was not a 'consumer' under the Act. However, this contention was not pressed before the Commission nor raised as a specific ground in the special leave petition. The Supreme Court referred to the decision in Lucknow Development Authority vs. M. K. Gupta, which held that development authorities providing housing services fall under the Consumer Protection Act. However, the Court did not decide on this issue as it allowed the appeal on other grounds.Conclusion:The Supreme Court allowed the appeal, setting aside the Commission's order awarding interest. It directed BDA to complete the execution and registration of sale deeds for the houses without claiming extra costs within three months, with the respondent bearing the stamp duty and registration costs. Each party was to bear its respective costs.