Summary
A developer cancelled a flat allotment in 2005 and sent the buyer a pay order refunding her deposits. She returned it, received it back and filed it with her MRTP complaint without seeking any order, so it lay unencashed until 2016. Earlier proceedings had awarded 15 per cent compound interest up to 30 April 2005. On remand, the NCLAT added the same interest from 2005 to 2016. The Supreme Court set that aside. Once the developer tendered the refund by a pay order debited from its account, interest ceased, by analogy with Order XXI Rule 1 CPC. The buyer had failed to protect her interest, and the earlier period was concluded.
Issues
- Whether a developer who refunded the deposits by a pay order drawn on its account, which the allottee kept unencashed and filed with her complaint, is liable to pay interest on that sum for the period after the tender.
- Whether the allottee could claim interest on her deposits from 1993 until actual realisation in 2016, when the earlier proceedings had already fixed compensation up to 30.04.2005.
Provisions considered
- Order XXI Rule 1(4) and (5), Code of Civil Procedure, 1908Though applicable to civil court decrees, the rule that interest ceases to run once money is deposited or paid to the person entitled, including by banker's cheque, pay order or demand draft, embodies a sound policy principle that applied to the developer's tender; Gurpreet Singh and V. Kala Bharathi followed. (¶¶ 29, 30, 31, 32)
- Sections 12B and 36A, Monopolies and Restrictive Trade Practices Act, 1969The developer's unfair trade practice and liability for compensation as 15 per cent compound interest up to 30.04.2005 had been finally affirmed in 2017, and the remand was limited to whether any compensation was payable for the period after that date. (¶¶ 6, 7, 18, 19)
Held
- The complaint and its index did not disclose that the original pay order had been filed, the allottee sought no order to place the amount in an interest-bearing account, encash it without prejudice or keep it with the developer subject to interest, and the developer learnt of the filing only in 2016 and promptly had the instrument revalidated; the NCLAT, swayed by the allottee's plight, rested its order on no principle of law, and since the amount was debited from the developer's account no liability for interest after 30.04.2005 could be fastened on it. (¶¶ 20, 21, 26, 27, 28, 32)
- Where equities are equal the loss lies where it falls (Sailen Krishna Majumdar), and the allottee's claim to interest from 1993 to 2016 failed because the earlier period was concluded and no rule obliged the developer to pay such interest. (¶¶ 33, 34)
- All courts and adjudicatory forums should frame rules requiring amounts or instruments deposited in their registries, including pay orders filed without any order being sought, to be placed in a bank or financial institution so that no loss results. (¶ 35)
Result
Developer's Civil Appeal No. 1401 of 2019 allowed and the NCLAT order dated 19.12.2018 awarding further compound interest from 01.05.2005 to 07.05.2016 set aside; allottee's Civil Appeal No. 4530 of 2019 dismissed; no costs.