Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 7335 of 2008

CHIEF ADMINISTRATOR, H.U.D.A. & ANR.

.... Appellant(s)
Versus
SHAKUNTLA DEVI

….Respondent(s)

JUDGMENT

L. NAGESWARA RAO, J.

This Appeal is filed challenging the order dated

25.09.2007 of the National Consumer Disputes Redressal

Commission, New Delhi (hereinafter referred to as ‘National

Commission’) by which an order of the State Consumer

Disputes Redressal Commission, Union Territory,

Chandigarh (hereinafter referred to as ‘State Commission’)

awarding compensation to the Respondent was confirmed.

2. The Respondent was allotted Plot No. 40, measuring

40 marlas in Sector 8, Urban Estate, Karnal on 03.04.1987.

As physical possession of the plot was not given to her by

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the Appellants, the Respondent filed Original Complaint

No. 54 of 1997 before the State Commission. In the said

complaint, the Respondent alleged that she had paid the

full price of the plot including the enhancement fee as per

the terms and conditions of the allotment letter. She

averred that she was not given the possession of the plot in

spite of repeated requests. The Respondent also pleaded in

the complaint that the Appellants were required to complete

the development work within 2 years from the date of the

allotment letter and hand over the physical possession.

She further stated that she wanted to construct a house

and the delay in handing over physical possession of the

plot resulted in additional expenditure for the building as

the price of construction material increased manifold from

1988 to 1997. On the basis of the above averments, the

Respondent sought for the following reliefs in Original

Complaint No. 54 of 1997:

i. “That the opposite party be directed not to charge

any extension fees for not constructing the plot
within the stipulated period which could not be
done because of non delivery of the physical
possession of the plot.
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 ii. HUDA be directed not to charge interest at all on
the amount because the HUDA had offered a
paper possession in the year 1982 and had not
handed over the physical /actual possession till
date.

iii. HUDA be directed to deliver the physical

possession immediately after completing
development work as per the brochure and
advertisement and after providing the community
service such as schools, community centre,
hospital etc. in the sector.

iv. The HUDA be directed to give compensation of

1.00 lac against harassment mental agony
suffered due to the act and conduct of HUDA.

v. Directed to give cost to the complainant for Rs.

20,000/- against the expenditure incurred in
filing this complaint and as well as for spending
the amount for visiting the office of the last 8
years.

vi. The complainant be awarded interest at the rate

of 18 % on the amount deposited on various time
till the actual possession of the plot is given.

vii. The Respondent be directed to pay Rs. 5.00 lac

escalation cost of the construction material.”

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3. The Appellants filed a written statement in which it

was stated that the Respondent was allotted the plot from

the Government Discretionary Quota vide Allotment Letter

No. 5049 dated 03.04.1987. The Appellants alleged that the

Respondent did not seek delivery of possession prior to

16.07.1997. It was also stated in the written statement that

an amount of Rs.28,000/- was still outstanding. It was

further alleged that the Respondent was not interested in

constructing a house and that no building plan was

submitted for approval.

4. The State Commission by its order dated 21.12.1998

held that the Respondent has established deficiency of

service by the Appellants as there was delay in handing over

physical possession of the plot. The complaint was allowed

and the Appellants were directed to deliver vacant physical

possession of the plot, if not already done, to the

Respondent within one month from the date of receipt of the

order. There was a further direction to pay interest on the

amount deposited by the Respondent at the rate of 12%

with effect from 03.04.1989 and to pay a sum of Rs.2 lakhs

as compensation on account of escalation in the cost of

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construction etc. The Appellants were also directed to pay

Rs.20,000/- towards compensation for monetary loss and

mental harassment suffered by the Respondent.

5. Aggrieved by the said order dated 21.12.1998 of the

State Commission, the Appellants filed an appeal before the

National Commission. The National Commission confined

the dispute in First Appeal No. 154 of 1999 only to the

award of compensation of Rs.2 lakhs relating to escalation

in cost of construction. The other reliefs pertaining to

payment of compensation towards monetary loss and

mental harassment of Rs. 20,000/- and interest on the

amount deposited by the Respondent were confirmed. The

National Commission remanded the matter for

re-consideration of compensation for escalation of cost of

construction in accordance with CPWD rates.

6. The State Commission reconsidered the matter and

permitted both sides to produce evidence which would

enable it to compute the compensation for escalation of

construction cost as per CPWD rates. The Respondent

produced evidence to show that the escalation in cost of

construction between April, 1989 and January, 2000 would

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be Rs. 18,67,000/-. An affidavit dated 06.02.2007 was filed

by Sh. Vikram Singh Malik, Estate Officer, HUDA, Karnal

on behalf of the Appellants in which it was stated that the

physical possession of the plot was given to the Respondent

on 21.01.2000. The Respondent submitted a building plan

only on 14.02.2006 which would clearly prove that the

Respondent was not interested in constructing the house.

The submission of the Appellants that the Respondent was

not entitled for more than Rs. 2,00,000/- towards increase

in the construction cost was rejected by the State

Commission on the ground that the National Commission

directed computation of compensation at CPWD rates and

that there was no restriction in the order of remand. The

material produced by the Respondent to prove escalation in

the cost of construction was accepted by the State

Commission which held that the Respondent was entitled

for a sum of Rs. 18,67,000/- as compensation. However,

the State Commission held that since the Respondent did

not commence construction till 2006 with a view to get

more compensation. Therefore, she was awarded a

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compensation of Rs. 15,00,000/- instead of Rs. 18,67,000/-

towards increase in the cost of construction.

7. The National Commission by an order dated

25.09.2007 dismissed Appeal No. 525 of 2007 filed by the

Appellants and confirmed the order passed by the State

Commission holding that the compensation awarded was

just and reasonable. According to the National Commission

even if 15 % interest on the amount of Rs.5 lakhs claimed

by the Respondent for 10 years is awarded, the Respondent

would be entitled to Rs. 12.5 lakhs. Aggrieved by the order

dated 15.09.2007 in First Appeal No. 525 of 2007 of the

National Commission, the Appellants have filed this Appeal.

8. The Counsel for the Appellants submitted that the

Respondent was allotted the plot in the Government

Discretionary Quota and that the Respondent did not

approach the Appellants seeking possession of the plot till

1997. He also submitted that the Respondent did not

commence the construction till 2006 though she was given

possession on 21.01.2000. He further contended that the

State Commission erred in awarding Rs. 15 lakhs as

compensation when the earlier order granting Rs. 2 lakhs

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as compensation was not challenged by the Respondent.

According to him, the remand by the National Commission

was to examine whether the Respondent was entitled to

Rs. 2 lakhs as compensation which meant that she cannot

be given any compensation beyond Rs. 2,00,000/-.

9. The Counsel for the Respondent submitted that there

was no restriction in the remand by the National

Commission as the compensation towards escalation of the

cost of construction was directed to be calculated as per

CPWD rates. He submitted that the State Commission was

right in awarding Rs. 15 lakhs as compensation when the

deficiency of service by the Appellant in not handing over

the possession of the plot till 2000 was proved. He also

urged that the Civil Procedure Code has limited application

in the Consumer Fora and relief cannot be denied on the

grounds of defective pleadings and the relief sought. He

also submitted that cogent material was placed before the

State Commission to prove the escalation in the cost of

construction between 1989 and 2000.

10. The avowed object of the Consumer Protection Act,

1986 is to provide for better protection of the interest of

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consumers. The statement of the objects and reasons, inter

alia, provides for a speedy and simple redressal to

consumer disputes. The quasi judicial bodies at the

District, State and Central levels were empowered to give

relief to the consumers and award, wherever appropriate,

compensation to consumers.

11. Section 14 (1) (d) of the Act which is relevant for the

adjudication of the dispute in this case is as follows:

“14. Finding of the District Forum.- (1) If, after

the proceeding conducted under section 13, the
District Forum is satisfied that the goods
complained against suffer from any of the defects
specified in the complaint or that any of the
allegations contained in the complaint about the
services are proved, it shall issue an order to the
opposite party directing him to do one or more of
the following things, namely:
…….
(d) to pay such amount as may be awarded by it
as compensation to the consumer for any loss or
injury suffered by the consumer due to the
negligence of the opposite party.”

12. The sine qua non for entitlement of compensation is

proof of loss or injury suffered by the consumer due to the

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negligence of the opposite party. Once the said conditions

are satisfied, the Consumer Forum would have to decide the

quantum of compensation to which the consumer is

entitled. There cannot be any dispute that the computation

of compensation has to be fair, reasonable and

commensurate to the loss or injury. There is a duty cast on

the Consumer Forum to take into account all relevant

factors for arriving at the compensation to be paid.

13. In Charan Singh v. Healing Touch Hospital and

Others, reported in (2000) 7 SCC 668, this Court held as

follows:

“12. ….. Indeed, calculation of damages depends

on the facts and circumstances of each case. No
hard and fast rule can be laid down for universal
application. While awarding compensation, a
Consumer Forum has to take into account all
relevant factors and assess compensation on the
basis of accepted legal principles, on moderation.
It is for the Consumer Forum to grant
compensation to the extent it finds it reasonable,
fair and proper in the facts and circumstances of a
given case according to the established judicial
standards where the claimant is able to establish
his charge.”
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 In Ghaziabad Development Authority v. Balbir Singh,

reported in (2004) 4 SCC 65, this Court was considering

the compensation to be awarded to the consumers in cases of

deficiency of service by Development Authorities like the

Appellant herein and Ghaziabad Development Authority.

Considering a situation similar to the one that arises in the

instant case, it was held as follows:

“9. That compensation cannot be uniform and

can best be illustrated by considering cases
where possession is being directed to be
delivered and cases where only monies are
directed to be returned. In cases where
possession is being directed to be delivered the
compensation for harassment will necessarily
have to be less because in a way that party is
being compensated by increase in the value of the
property he is getting.

*** *** ***

11. Further, in cases where the
Commission/Forum has directed delivery of
possession, the party has to a certain extent
already got a benefit. The cost of the land/flat
would have gone up in the meantime. Of course,
even in cases, where delivery of possession has
been directed there could be compensation for the
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 harassment/ loss. But such compensation has to
be worked out after looking into the facts of each
case and after determining what is the amount of
harassment/loss which has been caused to the
consumer.”

14. It is undisputed that the Appellant handed over the

plot to the Respondent only in the year 2000 instead of

1989. The Respondent had paid Rs.1,22,400/- towards the

cost of the plot at the rates prevailing in the year of

allotment i.e. 1986. There is no dispute that the

Respondent was paid Rs.1,28,188/- towards interest

awarded by the State Commission. There is also no dispute

about the fact that the Respondent did not commence

construction till 2006. The State Commission while

awarding the compensation of Rs. 15 lakhs towards

escalation in the cost of construction commented on the

conduct of the Respondent in delaying the construction only

with a view to claim higher compensation.

15. The point that falls for our consideration in this case is

whether the State Commission was justified in awarding Rs.

15 lakhs towards the escalation in the cost of construction

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as compensation. We are of the view that the Respondent is

not entitled to such compensation awarded by the State

Commission and confirmed by the National Commission.

The Respondent suffered an injury due to the delay in

handing over the possession as there was definitely

escalation in the cost of construction. At the same time the

Respondent has surely benefited by the increase in the cost

of plot between 1989 to 2000. In our opinion, the order of

the State Commission is vitiated for non application of mind

to a vital and relevant factor and hence, suffers from the

vice of unreasonableness. The State Commission criticized

the conduct of the Respondent in intentionally delaying the

construction for 6 years but still proceeded to award

compensation. In the facts and circumstances of this case,

we are of the opinion that award of interest would have

been sufficient to compensate the Respondent for the loss

suffered by him due to the delay in handing over the

possession of the plot. The compensation of Rs. 15 lakhs

awarded by the State Commission is excessive. As we have

not reversed the impugned order on any other ground, it is

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not necessary for us to delve into other points that were

urged by the Respondent.

16. For the aforementioned reasons, the Order of the State

Commission dated 05.07.2007 as confirmed by the National

Commission is set aside and the Appeal is allowed. No

costs.

.…............................CJI
[T. S. THAKUR]

.........................................J
[DR. D. Y. CHANDRACHUD]

................................J
[L. NAGESWARA RAO]
New Delhi,
December 8, 2016

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