Summary
The Supreme Court held that, where allottees withdrew from a delayed GMADA housing scheme and were awarded refund of the entire deposit with 8% compound interest as stipulated in the Letter of Intent, the consumer fora could not additionally direct GMADA to pay the interest the allottees had paid to their banks on home loans. The interest awarded on the deposit is itself the compensation for deprivation of the investment; the loan interest could at most be a factor in computing compensation, not a separate head.
Issues
- Whether the State Commission and the NCDRC could direct GMADA to pay, in addition to refund of the deposit with 8% compound interest, the interest paid by the complainants to their banks on loans taken to fund the flat purchase.
Held
- An allottee who does not receive possession within the stipulated time is entitled to refund with reasonable interest and may also be entitled to compensation determined on the facts of each case; the entitlement to compensation was not in dispute, and compensation can take different forms depending on the stage of work, the lapse and the loss caused, so uniformity is foreign to such determination. (¶¶ 11, 12, 13)
- The Commissions' reliance on GMADA v. Priyanka Nayyar was misplaced. That order awarded a lump sum of Rs 2 lakhs as compensation taking into account that the complainant was paying loan interest at 10.75%; it did not award the loan interest itself. At most, the fact that the allottee had borrowed to invest could be one factor in computing compensation; it does not permit the entire loan interest to be saddled on the authority. (¶ 13)
- Consumer fora cannot award interest or compensation by rule of thumb or under multiple heads for the same default. Where the parties have agreed on the consequence of delay, exceptional and strong reasons are needed to award more than the agreed rate. No such reasons were recorded here, and how a buyer finances the purchase (savings, loan or otherwise) is irrelevant to the developer; refund of the principal with the contractual 8% interest, coupled with the LOI's stipulation that the authority has no other liability, sufficiently compensates the consumer. (¶¶ 14, 15)
- Interest awarded on the refunded amount is the compensation for being deprived of the use of the investment and takes in the consequences of delay; apart from the 8% interest on the entire deposit, no interest on the respondents' bank loans could have been awarded. (¶¶ 16, 17)
- The Court did not hold that the Commission lacks power to award compensation generally; the awards for mental agony and litigation costs were left undisturbed, interference being confined to the loan-interest direction covered by the limited notice. (¶¶ 8, 18)
Result
Appeals allowed to the extent of the limited notice: the direction to pay the interest charged by the banks on the respondents' loans is set aside; refund with 8% compound interest, compensation for mental harassment and litigation costs stand. GMADA need make no further deposit; the amount deposited before the State Commission to be disbursed to the respondents. Pending applications disposed of.