JUSTICE SUDIP AHLUWALIA, MEMBER

2. The factual background in brief is that the Complainant applied for a residential plot in a proposed layout to be developed by the Petitioner/Opposite Party in Bangalore. After making the required payments totalling to Rs. 9,00,000/- as demanded by the Opposite Party, the Complainant was assured of plot allotment as Phase 1 of the layout was purportedly completed, and Phase 2 was underway. However, despite several years passing, there was no progress or communication regarding plot allotment. Due to the lack of development and communication, and the Opposite Party holding onto his money without any interest payment, the Complainant issued a Legal Notice seeking a refund with interest. While the Opposite Party eventually refunded the deposit, no interest amount was provided to the Complainant. Consequently, aggrieved with the deficiency of service and the absence of interest payment on the deposited amount, the Complainant filed his complaint before the Ld. District Forum, Bangalore. 

 

3. The District Forum vide its Order dated 09.10.2020 dismissed the Complaint. The Complainant then filed his Appeal before the Ld. State Commission, which allowed it and directed the Petitioner/Opposite Party to pay to him Rs. 9,00,000/- with interest @ 9% p.a. from the respective date of receipt of amount till 20.10.2018. The relevant extracts of the impugned Order are set out as below -

“7. Perused the order passed by the District Commission.  We noticed that District Commission has relied on the judgement reported in (2014) SCC 773 in the matter between Ganeshlal Vs. Shyam and also relied on decision rendered by State Consumer Disputes Redressal Commission in Appeal No.FA/2017/462 dated 09.11.2017 and held that the dispute with regard to immovable property does not fall under service housing construction.  Moreover, the claim does not fall under the “Service”.  Hence, there is no deficiency in service on the part of respondent and dismissed the complaint.  We are not agree with the findings of the District Commission because the respondent issued notification for residential plots which would be developed and allotted to members of the society.  Respondent society by notification called on applications from the members of the society to develop layout and respondent has induced in the development of land not for sale of the plot of land simpliciter.  As per Section 2 (42) of Consumer Protection Act, 2019 “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.  Hence, if respondent is engaged in development of layout, it comes under the Consumer Protection Act.  Hence, complainant is ‘consumer’ as per Section 2 (42) of Consumer Protection Act, 2019.  Moreover, inspite of receiving full consideration amount for residential plot respondent has not developed layout and allotted site to the appellant as per the assurance which is nothing but deficiency in service on the part of respondent.  If the appellant has paid the amount for residential plot, then it is the bounden duty of the respondent to allot site and if not, refund the amount with interest.  Any how the appellant has received the amount of Rs.9.00 lakhs by the respondent on 20.10.2018, but, respondent has refunded the amount after lapse of 8 years without interest and without any reason.  Hence, appellant is entitled for interest on Rs.9.00 lakhs from the date of payment.  Accordingly, the following:

 

ORDER

The appeal is allowed and the impugned order is set aside.  Consequently, the complaint is allowed.  OP is directed to pay interest on Rs.9.00 lakhs at the rate of 9% p.a. from the respective date of receipt of the amount till 20.10.2018.  The OP is further directed to pay Rs.25,000/- towards compensation and Rs.10,000/- towards costs.

 

The OP is directed to comply the order within two months from the date of receipt of the order.”

 

4. Ld. Counsel for Respondent/Complainant has argued that the Petitioner's contention that disputes between the Society and its members fall solely under the jurisdiction of the Karnataka Co-Operative Societies Act, 1959 is untenable, as the Hon’ble Apex Court in "Ghaziabad Development Authority v. Balbir Singh, 2004 (5) SCC 65" has held that the Consumer Protection Act has a broad scope, including cases involving services provided by statutory and public authorities; That the Petitioner has contended that they have not invested the Complainant's money to earn a profit, citing a notification dated 20.05.2010, but this notification also imposes obligations on the Petitioner to complete the layout formation work within 18 months. Given that it had been eight years since the Complainant remitted the amount and no progress had been made, the Petitioner had unjustly withheld the Complainant's money and deprived him of potential interest earnings had the amount been invested elsewhere; That in "Bangalore Development Authority v. Syndicate Bank, (2007) 6 SCC 711" the Hon’ble Apex Court held that when a development authority fails to deliver possession of an allotted plot, the Allottee is entitled to a refund along with interest from the date of payment.

5. This Commission has heard both the Ld. Counsel for Petitioner and Respondent, and perused the material available on record.

6. The Petitioner is aggrieved that interest @ 9% p.a. was awarded on the amount deposited by the Respondent/ Complainant, which was admittedly refunded to him on 20.10.2018.  Ld. Counsel for the Petitioner has drawn attention to Clause 9 of the second stage Scheme/Plan circulated by the Petitioner under its Memo No. KHF:Admn:258:2010-11 dated20.5.2010 in which it was mentioned –

“9. No interest will be paid on the amount remitted by the prospective buyers.”

 

Ld. Counsel for the Petitioner has contended that as per Section 3(3)(a)(ii) of the Interest Act, which has also been quoted by the Hon’ble Supreme Court in its decision in “Garg Builders Vs. Bharat Heavy Electricals Limited, Civil Appeal No. 6216 of 2021”, the Interest Act does not apply to situations where the payment of interest is “barred by virtue of an expressed agreement”. This Commission is however unable to appreciate as to how, because the Interest Act does not apply where the payment of interest is barred by an ‘express agreement’, any compensation payable to a ‘Consumer’ can be denied.

7. In this regard, it would be appropriate to refer to the observations of the Hon’ble Supreme Court in “Ghaziabad Development Authority Vs. Balbir Singh, (2004) 5 SCC 65”; in which it had been served inter alia –

“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. But in cases where monies are being simply returned then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that flat/plot. Therefore the compensation in such cases would necessarily have to be higher. Further if the construction is not of good quality or not complete, the compensation would be the cost of putting it in good shape or completing it along with some compensation for harassment. Similarly, if at the time of giving possession a higher price or other amounts is collected unjustifiably and without there being any provision for the same the direction would be to refund it with a reasonable rate of interest.”

 

8. In the present case, the amount of Rs. 9,00,000/- was paid by the Respondent/Complainant to the Petitioner way back in the year 2010 and he had a legitimate expectation that the plot would be allotted to him within a reasonable time.  But there was no virtually developmental work at all at the concerned site and the Petitioner Federation was also unable to give him even a tentative time frame for that purpose.  He therefore had no other option but to seek refund of his money at that part of his life when he was already a retired person.  He was therefore certainly entitled to reasonable compensation for the entire period during which his money had remained with the Petitioner Federation and was denied even the basic minimum interest which he could have earned on the same, not to speak of the higher compensation discussed by the Hon’ble Supreme Court in the case of “Ghaziabad Development Authority Vs. Balbir Singh” (supra).

9. The Ld. State Commission was, therefore, justified in granting him compensation by way of interest in the given facts and circumstances.  However, considering that the Petitioner Federation happens to be Cooperative Society and essentially a non-commercial body, award of compensation by way of interest @ 9% p.a. does appear to be on the higher side.

10. The Revision Petition is, therefore, allowed by modifying the impugned Order of the Ld. State Commission to the extent that the compensation by way of interest to the Respondent/Complainant is reduced from 9% p.a. as awarded to 6% p.a.  The Petitioner shall pay the accrued interest accordingly to the Respondent/ Complainant within three months from the date of this Order failing which any outstanding arrears shall attract interest @ 8% p.a. till full realisation.

11. Parties to bear their own costs.

12. Pending application(s), if any, also stand disposed off as having been rendered infructuous.