Tuesday, 28 March 2017

When compensation granted to complainant can be reduced on ground that she has adopted dilatory tactics?

 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

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.
Non-Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No. 7335 of 2008
CHIEF ADMINISTRATOR, H.U.D.A. & ANR.

V
SHAKUNTLA DEVI
Dated:December 8, 2016
Citation: (2017) 2 SCC 301

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

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.

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.”


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

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

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

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

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

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

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.”

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

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

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

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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