2012 (8) TMI 1187 - SC - Indian Laws

Supreme Court Upholds Interest Payment Obligation for Delayed Installments on Commercial Plots

The Supreme Court held that the Respondents were legally obliged to pay interest, penal interest, and penalty for delayed installment payments of ... Allotment of Commercial Plots by way of Auction - Delayed in payment of installments - Liability to pay interest - Terms and condition of the allotment letter binds both the parties - In present case, since PUDA had failed to provide the basic amenities, Respondents were not legally obliged to pay interest, penal interest, penalty etc. on the delayed installments. PUDA submitted that the electrical works had been completed by 24.12.2002, public health works had been completed by 22.11.2002 and the development of the commercial pocket had been completed by 20.12.2002. On getting possession after payment of 25% of the total cost, Respondent raised construction on the allotted site in the year 2002. HELD THAT:- There was no dispute that the plots were auctioned on 16.3.2001 on the basis of the terms and conditions stipulated therein. Clause 25 is the most important clause, which binds both the parties, the Respondents had accepted the commercial plots with the open eyes, subject to the conditions. that after having accepted the offer of the commercial plots in a public auction with a super imposed condition i.e. on 'as is where is' basis and after having accepted the - terms and conditions of the allotment letter, including installment facility for payment, Respondents cannot say that they are not bound by the terms and conditions of the auction notice, as well as that of the allotment letter. On facts also, court have found that there was no inordinate delay on the part of PUDA in providing those facilities. Hence, the High Court was not justified in holding that the Respondents are not liable to pay the interest, penal interest and penalty for the period commencing from 1.6.2001 to 31.12.2002 for the belated payment of installments. Consequently, the judgments of the High Court are set aside and the writ petitions would stand dismissed and the appeals would stand allowed as above. There will be no order as to costs. Issues Involved:1. Whether the Respondents are legally obliged to pay interest, penal interest, and penalty on account of delayed payment of installments after accepting the allotment of commercial plots by auction.Detailed Analysis:Issue 1: Obligation to Pay Interest, Penal Interest, and PenaltyThe primary question in these appeals is whether the Respondents are legally obliged to pay interest, penal interest, and penalty due to delayed installment payments after accepting the allotment of commercial plots through auction. The High Court had ruled that PUDA could not claim these charges due to its delay in providing basic amenities like parking, lights, roads, water, and sewerage. The High Court relied on the Supreme Court judgment in *Municipal Corporation, Chandigarh and Ors. v. Shantikunj Investment (P) Ltd.* (2006) 4 SCC 109.Facts and Arguments:PUDA conducted a public auction on 16.3.2001 for the sale of commercial plots. The Respondent was the successful bidder for a shop and paid 25% of the total cost, with the remaining 75% payable in installments with interest at 15% per annum. Specific clauses in the Allotment Letter outlined the payment schedule and penalties for delayed payments, including a 2% per month penalty and the possibility of forfeiture and cancellation of the allotment.The Respondent accepted these terms and took possession of the plot, subsequently raising construction. However, PUDA completed the development work, including essential amenities, by 20.12.2002. The Respondent filed a writ petition seeking relief from paying interest on delayed installments until the amenities were provided, which led to a series of legal proceedings culminating in the High Court's favorable decision for the Respondent.Supreme Court's Analysis:The Supreme Court examined the auction notification and the terms and conditions of the allotment. Clause 25 of the auction terms explicitly stated that the site was offered on an 'as is where is' basis, binding both parties. The Respondents had accepted the commercial plots under these terms and were aware of the existing conditions at the time of the auction.The Court emphasized that the Respondents could not later argue that PUDA failed to provide basic amenities, as they had accepted the plots with open eyes. The Court also noted that PUDA had not caused an inordinate delay in providing the amenities, completing the necessary works by the end of 2002.The Supreme Court referred to its earlier judgments in *Shantikunj Investment* and *UT Chandigarh Administration v. Amerjeet Singh* (2009) 4 SCC 660, which supported the principle that participants in a public auction on an 'as is where is' basis cannot later dispute the lack of amenities or seek relief from agreed payment terms.Conclusion:The Supreme Court concluded that the High Court had misinterpreted the scope of its judgment in *Shantikunj Investment* and the terms of the auction. The Respondents, having accepted the plots on 'as is where is' basis and the terms of the allotment letter, were bound by those terms. The Court held that the High Court was incorrect in exempting the Respondents from paying interest, penal interest, and penalty for the delayed installments.Judgment:The Supreme Court set aside the High Court's judgments, dismissed the writ petitions, and allowed the appeals, reaffirming PUDA's right to claim interest, penal interest, and penalty as stipulated in the allotment terms. There was no order as to costs.