PER JUSTICE R.C. JAIN (ORAL)

          The above named complainant, a public limited Company incorporated under the Companies Act has filed the present complaint alleging deficiency in service on the part of Opposite Party / City & Industrial Development Corporation (for short ‘CIDCO’) claiming the following reliefs :

“a) That this Hon’ble Commission be pleased to direct the respondents to rectify the defect in its service with further directions to pay to the complainants a compensation of Rs. 19.47 crores in the following manner:

i)    A sum of Rs. 437 lakhs towards interest due as on 26.3.1996       on the amounts paid by complainants to the respondents and further interest thereon till date of realization @ 18% P.A.

ii)   A sum of Rs. 500 lakhs towards the loss of profit suffered by    the complainants on account of the breach committed by the respondents as admitted by them.

iii)      A sum of Rs. 1000 lakhs towards damages for loss of credibility, goodwill, sales, future business potential, mental torture and agony.

      iv)      Costs of this complaint quantified as Rs. 10 lakhs be awarded    to the complainants.

b)     Such further and other reliefs as the nature and circumstances of the case may require be granted to the complainants.”

2.     In nutshell, the case of the complainant is that pursuant to a Tender Notice issued by the opposite party/CIDCO in April, 1994, the complainant submitted their bid for allotment of plot No. 13 in Sector-15, CBD Belapur, New Bombay (now Navi Mumbai) measuring 2847.39 sq. meters at a rate of Rs. 46,225/- per sq. meter.  The bid being highest was accepted by the O.P. A sum of Rs. 40.00 lakhs was deposited as Earnest Money and balance amount of lease money amounting to Rs.12,76,20,603 was payable in two installments, besides other charges.  The allotment of plot was subject the terms and conditions contained in the allotment letter dated 04.7.1994 and that of the lease deed for commercial plots.  It is not in dispute that pursuant to the demand made by the opposite party, the complainant in all paid a sum of Rs. 14,00,61,729/-  to the O.P. towards the lease premium and delayed payment charges.  However, when the complainant wanted to take possession of the said allotted plot, it found that a small part of the plot was under encroachment by a third party.  The complainant not happy with the situation, vide letter dated 15.1.1996,  sought termination of the contract and asked for the refund of the entire amount alongwith the interest thereon without any delay and that in the event of delay beyond thirty days, complainant demanded all losses incurred due to not handing over the possession of the plot.  The request of the complainant was accepted by the opposite party/CIDCO and they communicated their decision to refund the amount vide their letter dated 08.3.1996.  On a further request made by the complainant, CIDCO agreed to refund the amount of Rs.6.00 Crores to the complainant out of the deposited amount and as per the complainant’s own request, a sum of around Rs. 8.00 crores was adjusted towards the cost of the other plot which was also allotted to the complainant.  The amount was released in favour of the complainant subject to the complainant giving an Indemnity Bond to the satisfaction of the opposite party.  Since only the principal amount deposited by the complainant and delayed payment charges was refunded to the complainant, vide letter dated 15.6.1996, the complainant represented to the O.P./CIDCO for payment of interest on the refunded amount for the period the amount remained with the opposite party due to non-performance of CIDCO.  It was also represented that the Bank had charged a sum of  Rs. 1,23,35,344/- as interest calculated @ 20.7% on the amount of Rs. 6.00 crores for the  period the amount was deposited.  The said representation remained pending consideration of the O.P./CIDCO and it was only by a communication dated 14.12.1998, CIDCO rejected the representation and denied its liability to pay any interest as sought by the complainant.  It would appear that after some time the complainant made another representation to the Managing Director and Joint Managing Director of the CIDCO on 04.1.1999 but CIDCO maintained its earlier stand that they are not liable to pay any interest and communicated vide letter dated 05.2.1999.  After issuing the legal notice, the complainant has filed the present complaint.

3.     The complaint has been resisted by the opposite party/CIDCO by filing written version raising a number of preliminary objections to the effect viz. that the complainant being engaged in the business of acquiring land for construction of building / flats or apartments and selling such flats to serve its commercial purpose had obtained the plot in question, for commercial purpose was not a ‘Consumer’ within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986;  the complaint was barred by limitation and not maintainable.  The factum of the complainant having submitted its tender for the allotment of the above numbered plot at the above mentioned rate and the plot having been allotted to it and thereafter the complainant having deposited a sum of Rs. 14,61,729/- is not disputed.  The factum of a small part of the plot in question being under encroachment is also not disputed but it is pleaded that the encroachment was on a very small area measuring at 10 sq. meters, which was ultimately removed during March, 1996 itself.  Liability to pay interest much less any compensation for loss etc. as claimed by the complainant  is denied on the premise that the terms of lease of the commercial plot as also the allotment letter do not provide for the payment of any interest to the allottee in case the allottee surrenders the plot. It is denied that the opposite party has committed any deficiency in service entitling the complainant to any relief.

4.     In the rejoinder the complainant has controverted the pleas and objections and has generally reiterated the averments and allegations made in the complaint.

5.     Parties have mostly relied upon the documentary evidence i.e. terms and conditions of the tender documents, the allotment letter and the terms and conditions of the lease of the commercial plot besides the correspondence exchanged between the parties during the relevant period.  That apart parties have filed supporting affidavits.  Affidavit of Mr. Surinder M. Arenja, Director of the Company has been filed from the side of the complainant.  Opposite Party has filed the affidavits of Mr. Rajendra Gangaram More, Marketing Manager of the Opposite Party / CIDCO. 

6.     We have carefully gone through the entire evidence and material placed on record and have heard Mr. M.N. Krishnamani, learned Sr. Advocate assisted by Mr. Mohan Babu Aggarwal and
Mr. Ajit Bhasme, learned counsel for the O.P./CIDCO at length and have given our thoughtful consideration to their submissions. 

7.     The foremost objection raised by the opposite party/CIDCO is in regard to the maintainability of the present complaint before a Consumer Fora like the National Commission.  The basis of this objection is that as per the complainant’s own showing, it was engaged at the material point time in the business of acquiring land for construction of building / flats or apartments thereon and selling such flats to serve its commercial purpose and therefore, it cannot be said to be ‘Consumer’ within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986,  even if all the averments and allegations are to be believed. In our view, the objection is misconceived because by virtue of Sub-clause (ii) of Section 2(1)(d), a person that includes a company which has availed services from a service provider even for commercial purpose was covered under the definition of ‘Consumer’ as it existed prior to its amendment by Amending Act-62 of 2002 effective from 15^th March, 2003.  In the case in hand all the transactions regarding which the complainant has alleged deficiency in service pertain to the period 1994-1999 i.e. much prior to coming into force of the Amending Act, which has taken out a consumer who has received the services for commercial purpose, out of the purview of the said definition.  The objection is therefore, rejected.

8.     Another objection taken by the opposite party/CIDCO in response to the complaint is that the complaint is barred by limitation.  In this connection, learned counsel for the O.P. pointed out that the cause of action for filing the present complaint as per the complainant’s own showing arose some time in January, 1996 when the complainant sought to terminate the contract on the alleged ground of the encroachment of the small area measuring 10 sq. meter in March, 1996 when agreeing to the request of the complainant, the contract / allotment of the plot was terminated and the entire amount of Rs. 6.00 crores including the delayed payment charges were refunded to the complainant after adjustment of sum of around Rs. 8.00 crores towards the cost of the other plot.  As against this, Mr. Krishnamani, learned senior counsel has invited our attention to the correspondence exchanged between the parties between 15^th June, 1996 to  5^th February, 1999.  According to the learned counsel, even after  March, 1996, the cause of action continued as the final decision of the opposite party not to pay interest was communicated to the complainant vide communication dated 5^th February, 1999. This submission is refuted by the counsel for the opposite party.  We have gone through the said correspondence and in particular letter dated 14^th December, 1998, issued by the O.P. to the complainant.  We would like to extract the same below:

          “The claim of your company for the payment of interest / compensation in respect of plot No. 13, Sector 15, CBD-Belapur has been rejected by our Corporation, since the matter of refund had been considered earlier and the full amount of lease premium returned to you.  Interest is not payable on payment made to this Corporation in usual course of business.”       

9.     From a perusal of the above communication, atleast one thing is clear that the opposite party/CIDCO took unusual time in communicating their decision that no interest is payable on the refunded amount.  We say so  because the representation of the complainant was received by them on 02.7.1996 i.e. more than 2 ½ years ago and they took long time in deciding the said representation. They sat over the matter for unduly long period.  Whatever may be the case, the fact is that the opposite party communicated their final decision in the matter to the complainant on 14^th December, 1998.  In our view, the cause of action for filing the present complaint has lastly arisen in December 1998 which in our view should be the starting point for computation of the limitation period of two years for filing of the complaint as envisaged by Section 24A of the Consumer Protection Act, 1986.  Mr. Krishnamani has contended that the further representation was made to the higher authorities of the opposite party on 4^th January, 1999 and it was responded by the opposite party on 5.2.1999 and the limitation should be computed from that day.  We must reject this contention because on 5.2.1999 the opposite party simply responded to the complainant by saying that the decision on the subject has already been communicated to the complainant on 14.12.1998.   Strictly speaking going by the provisions of Section 24A, the complaint appears to be barred by time as it ought to have been filed latest by December, 2001.  Even then we notice that the delay in filing the complaint would be of few days because the complaint was presented in the Commission on  2^nd January, 2001, However, a few days delay in our view should not disentitle the complainant for consideration of its complaint on merits.

10.   Irrespective of the above finding, we are willing to consider the case of the complainant on merits.  Our attention has been invited to the terms of allotment letter, in particular Clause 20, which deals with the subject of the refund of the deposited lease money etc., in case the allottee surrenders the plot.  The clause reads as under:

        “20.    If you fail to pay the above lease premium on the due dates or revoke the offer or fail to execute the agreement to lease or fail to submit the plans to the Town Planning Officer or complete the construction work in accordance with the terms and conditions provided or commit breach of any conditions of the agreement, the amount of Earnest Money Deposit shall be forfeited.  In case you withdraw offer after payment of lease premium fully or partly or surrender the plot, 25% of the lease premium will be forfeited in addition to the Earnest Money Deposit paid by you and the balance lease premium will be refunded without any interest.”

11.   On the strength of the above clause, learned counsel for the opposite party strongly contended that there is no stipulation in the said clause for payment of interest on the amount to be refunded. Rather the clause stipulates and empowers the opposite party to deduct 25% of the lease premium in case the allottee itself surrenders the plot.  In our view, the said clause is not attracted and would not govern the facts of the present case inasmuch as here the complainant had not sought the termination of the allotment of his own volition but it was due to the reason that there was encroachment on a part of the plot, may be on smaller portion.   Our attention has also been invited to the other clauses of the allotment letter as also the terms and conditions appearing in the lease of commercial plots for the said scheme and on the strength of  Clauses 12 and 15 of the same, it is argued that the complainant knew the factual position of the site and knowing fully well the complainant has given his bid for the allotment of the plot at a particular rate.  In our view, reliance on the above conditions is misplaced because the opposite party as a statutory institution falls within the definition of ‘State’ under Article of 12 of the Constitution, was expected to discharge its functions in a just manner and in the overall interest of public at large.  We are of the view that once the tenders were floated by the opposite party for allotment of plot they must have ensured that the plot of land offered for allotment was free from all type of encumbrances and encroachment (s) and without ensuring the same they should not have offered the plots for allotment.  Therefore, it is difficult to hold that the complainant wanted to terminate the contract for certain extraneous circumstances as is sought to be made out in Para 11 of affidavit of Mr. Rajendra Gangaram More.  We, therefore, hold that the complainant had sought the termination of the contract / allotment of the plot for the sole reason that there was encroachment on a part of the plot in question.

12.   There is no denial of the factual position that in response to the request made by the complainant for refund of the termination of the allotment of the plot and for refund of the deposited amount, the opposite party after adjusting Rs.8.00 Crores from the deposited amount of more than 14.00 Crores had refunded a sum of Rs.6.00 Crores to the complainant which included the surcharge for the delayed payment.  They, however, declined to pay any interest on the refunded amount.  Therefore, the crucial question which will decide the fate of this complaint is as to whether the opposite party CIDCO committed any deficiency in service by refusing to pay the interest on the refunded amount.

13.   Learned counsel for the complainant could not point out any condition containing stipulation about the payment of interest by the opposite party in case the deposited amount was to be refunded to the allottee pursuant to the cancellation / termination of the allotment.  Claim of interest  is, however,  sought to be justified on the ground that there was some stipulation in the lease deed for payment of interest at an exorbitant rate @ 18 to 27% in case the allottee commits default in payment of instalment(s) of the lease premium.  No such clause was pointed to us. Even if there was one, that cannot form the basis for payment of interest by the opposite party to the complainant as there is no stipulation for payment of such interest by the opposite party. 

14.   The next contention of the learned counsel for the complainant is that even in absence of any stipulation in the terms and condition of allotment for payment of interest on the refunded amount, the opposite party ought to have paid some reasonable interest to the complainant particularly when it was brought to the notice of the opposite party that complainant had raised money from the bank at high interest of 20.7% against which claim has been made only at 18%.  Counsel submitted that amount of Rs.6.00 Crores deposited by the complainant with the opposite party-CIDCO remained with them for a period of more than one year and it must have been gainfully utilized by the opposite party during that period and, therefore, they should not grudge in paying atleast some reasonable interest to the complainant.  The argument appears to be attractive but is unacceptable because the parties are governed by the terms and condition of the contract which require strict interpretation. 

15.   On the other hand, learned counsel for the opposite party on the strength of the decision of the Apex Court in the case of Ferro Alloys  Corporation Vs. Andhra Pradesh Electricity Board AIR 1993 SC 2005 strongly urged that no interest is payable by the opposite party in the case in hand.  The Supreme Court after surveying the law on the question of pay-ability of interest has expounded the following salient principles:

“i)      Interest payable if its pay-ability is mandated by the interest Act, 1978;

        ii)       Interest is claimable if a local law provides for its payments;

        iii)      Interest is payable at common law;

a)   Where there is an express agreement to pay interest;

b)   Where an agreement to pay interest can be implied from the course of dealing between the parties or from the nature of transaction or customs or usage of trade or profession concerned and

c)   In certain cases by way of damages for breach of a contract other than a contract merely to pay money where the contract, if performed would to the knowledge of the parties have entitled the plaintiff (one of the parties to claim and receive interest).”

16.     Bearing in mind the above principles and that there exists no agreement between the parties in regard to the payment of interest on the refunded amount, we are of the clear opinion that complainant is not entitled to any interest and opposite party has not committed any deficiency in service by declining to pay the same.  However, in this case we have noted that opposite party caused delay of about 2 ½ years in deciding the representation of the complainant which in our opinion is an act of deficiency in service particularly when it comes to the Institution like the opposite party.  For this limited deficiency, the complainant is entitled to some nominal compensation which we quantify at Rs.5.00 Lakh.

17.     In the result, the complaint is partly allowed and opposite party is directed to pay compensation of  Rs.5.00 Lakh to the complainant within a period of six weeks from the date of this order, failing which the awarded amount shall carry interest @ 12% p.a. w.e.f. date of default.  In the facts and circumstances of the case, parties are left to bear their own costs.