Consumer forums cannot award arbitrary interest and compensation without proper foundation under Consumer Protection Act

The SC held that consumer forums under the Consumer Protection Act, 1986 cannot award interest and compensation arbitrarily using rule of thumb methods. Where parties agreed to damages at Rs. 10/- per sq. ft. per month for delayed possession, exceptional reasons are required to award compensation exceeding the agreed rate. The NCDRC's order granting compensation under multiple heads without proper foundation was unsustainable. While complainants were entitled to interest for delayed possession, special punitive damages were not warranted as some delays were beyond the appellant's control. The appeal was allowed.

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Issues Involved:
1. Delay in handing over possession of units.
2. Compensation for mental agony, physical harassment, and litigation expenses.
3. Refund of amounts deposited by the complainants.
4. Interest on the deposited amount due to delay in possession.

Issue-wise Detailed Analysis:

1. Delay in handing over possession of units:
The appeals were directed against orders by the National Consumer Disputes Redressal Commission (NCDRC) which partially modified the State Consumer Disputes Redressal Commission (SCDRC) order directing the Appellant to hand over physical possession of the units within four months. The Appellant contended that construction delays were due to a stay granted by the Supreme Court and sought an extension for handing over possession. The NCDRC upheld that compensation for delay should be just and commensurate with the loss and injury, awarding interest on the deposited amount from the assured date and a lump sum compensation.

2. Compensation for mental agony, physical harassment, and litigation expenses:
The SCDRC directed the Appellant to pay compensation by way of interest at 12% per annum on the deposited amount from the promised date to the date of possession and litigation costs of Rs. 50,000/-. The NCDRC modified this, awarding interest at the maximum rate of interest on house building loans by nationalized banks and a sum of Rs. 1,00,000/- per year for the delay in possession. The Supreme Court found that compensation under various heads for the same default was not sustainable and directed a consolidated amount of Rs. 50,000/- for mental agony and litigation expenses.

3. Refund of amounts deposited by the complainants:
In cases where complainants sought a refund, the SCDRC directed the Appellant to refund the amounts with simple interest at 15% per annum from the respective dates of deposits. The NCDRC dismissed the appeal for non-compliance. The Supreme Court found the interest rate excessive and modified it to 9% per annum from the date of deposit till the date of refund, maintaining the litigation costs of Rs. 35,000/-.

4. Interest on the deposited amount due to delay in possession:
The NCDRC awarded interest on the deposited amount at the maximum rate of interest on house building loans by nationalized banks. The Supreme Court held that interest is a form of compensation for the delay in possession and should be logical and just. It directed the Appellant to pay interest at 9% per annum for a period of two months from the date of offer of possession and consolidated compensation of Rs. 50,000/- for mental agony and litigation expenses. In case of transfer, interest would be payable from the date of expiry of three years from the agreement or from the date of transfer, whichever is later.

Conclusion:
The Supreme Court modified the orders of the NCDRC and SCDRC to ensure just and equitable compensation for the delay in possession and refund cases, emphasizing the need for logical and objective criteria in awarding compensation and interest. The Appellant was directed to complete necessary maintenance works and provide occupation certificates, with interest payable for two months from the date of offer of possession. The consolidated compensation for mental agony and litigation expenses was set at Rs. 50,000/-.

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