# M/S SUNEJA TOWERS PRIVATE LIMITED & ANR v. ANITA MERCHANT

- **Citation:** [2023] 5 S.C.R. 1092
- **Court:** Supreme Court of India
- **Decided:** 2023-04-18
- **Case number:** Civil Appeal Nos. 2892-2894 of 2023
- **Bench:** Dinesh Maheshwari, Sanjay Kumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-suneja-towers-private-limited-anr-v-anita-merchant-37153
- **Pages:** 60

## Headnote

Consumer Protection Act 1986 : s. 14(1)(d) - Award of
compound interest by Consumer Fora - Justification of - On facts,
consumer complaints by the complainant-respondent alleging
deficiency of service on the part of the appellants-builder for having
failed to deliver the possession of three flats booked by her, even
after expiry of the agreed period and despite the fact that she had
admittedly made payment of 60% of the total sale consideration -
Dismissed by the District Forum - However, the State Commission
awarded compound interest in favor of the respondent @ 14 %,
relying upon Dr. Manjeet Kaur Monga's case - National Commission
upheld the same - On appeal, held: State Commission and the
National Commission passed rather assumptive orders on the basis
of the decision in Dr. Monga that compound interest was required to
be allowed - Various factors recounted on behalf of the respondent,
including excessive harassment and denial of the fruits of her
investment could all lead to a reasonable amount of compensation
but, there appears absolutely no reason that compound interest be
allowed in this matter - Award of compound interest had neither
any foundation in the record nor any backing in law nor the
Consumer Fora took care to examine the contours of their jurisdiction
and the requirements of proper assessment, if at all any compensation
and/or punitive damages were sought to be granted - Awarding of
compound interest with reference to Dr. Monga's case and without
examining any other factor has led to serious inconsistencies; and
if the award as made is approved, it could only lead to unjust
enrichment of the respondent in the name of disgorgement of benefits
purportedly derived by the appellants - Thus, the impugned orders
cannot be sustained and is set aside - However, the respondent
allowed to retain the sum of money already received by her only
because of peculiar circumstances of this case.
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Judgment/order : Precedent - Ascertainment of - Held:
Judgment is an authority only in regard to its ratio which is required
to be discerned - Decision cannot be regarded as an authority in
regard to its conclusion alone or even in relation to what could be
deduced therefrom.
Allowing the appeal, the Court
HELD: 1.1 Keeping the principles in Sanjay Singh's case
in view and for what has been discussed in regard to ratio
decidendi of the decision in Dr. Manjeet Kaur Monga's case, it is
but clear that the said decision cannot be read in support of the
principle that compensation and/or punitive damages in terms of
the Consumer Protection Act, 1986 could also be by way of
compound interest. The State Commission awarded compound
interest, and National Commission approved such awarding of
compound interest to the present respondent, only with reference
to the said decision in the case of Dr. Monga. The ratio decidendi
of Dr. Monga is not leading to the enunciation in favour of awarding
compensation and/or punitive damages by way of compound
interest, the substratum of the orders impugned is knocked to
the ground. [Para 18][1142-F-H]
1.2 In certain eventualities, the legislature has indeed
specified the award of compound interest. Mostly, it has been
provided so in relation to any monetary involvement having the
trappings of public interests in it. The Consumer Protection Act,
1986, on the other hand, being a beneficial legislation, inter alia,
empowers the Consumer Fora to direct payment of such amount
as may be awarded as compensation to the consumer for any loss
or injury suffered due to the negligence of the opposite party.
The proviso added to Clause (d) of Section 14(1) of the 1986 Act
empowers the Forum to grant punitive damages in such
circumstances as it deems fit. That being the position, it cannot
be laid down in absolute terms that for no such stipulation
regarding compound interest being available in the 1986 Act,
the same can never be granted by the Consumer Fora. When the
matter is being considered for awa

## Text

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SUPREME COURT REPORTS
[2023] 5 S.C.R.
 [2023] 5 S.C.R. 1092
1092
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR.
v.
ANITA MERCHANT
(Civil Appeal Nos. 2892-2894 of 2023)
APRIL 18, 2023
[DINESH MAHESHWARI AND SANJAY KUMAR, JJ.]
Consumer Protection Act 1986 : s. 14(1)(d) - Award of
compound interest by Consumer Fora - Justification of - On facts,
consumer complaints by the complainant-respondent alleging
deficiency of service on the part of the appellants-builder for having
failed to deliver the possession of three flats booked by her, even
after expiry of the agreed period and despite the fact that she had
admittedly made payment of 60% of the total sale consideration -
Dismissed by the District Forum - However, the State Commission
awarded compound interest in favor of the respondent @ 14 %,
relying upon Dr. Manjeet Kaur Monga's case - National Commission
upheld the same - On appeal, held: State Commission and the
National Commission passed rather assumptive orders on the basis
of the decision in Dr. Monga that compound interest was required to
be allowed - Various factors recounted on behalf of the respondent,
including excessive harassment and denial of the fruits of her
investment could all lead to a reasonable amount of compensation
but, there appears absolutely no reason that compound interest be
allowed in this matter - Award of compound interest had neither
any foundation in the record nor any backing in law nor the
Consumer Fora took care to examine the contours of their jurisdiction
and the requirements of proper assessment, if at all any compensation
and/or punitive damages were sought to be granted - Awarding of
compound interest with reference to Dr. Monga's case and without
examining any other factor has led to serious inconsistencies; and
if the award as made is approved, it could only lead to unjust
enrichment of the respondent in the name of disgorgement of benefits
purportedly derived by the appellants - Thus, the impugned orders
cannot be sustained and is set aside - However, the respondent
allowed to retain the sum of money already received by her only
because of peculiar circumstances of this case.
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Judgment/order : Precedent - Ascertainment of - Held:
Judgment is an authority only in regard to its ratio which is required
to be discerned - Decision cannot be regarded as an authority in
regard to its conclusion alone or even in relation to what could be
deduced therefrom.
Allowing the appeal, the Court
HELD: 1.1 Keeping the principles in Sanjay Singh's case
in view and for what has been discussed in regard to ratio
decidendi of the decision in Dr. Manjeet Kaur Monga's case, it is
but clear that the said decision cannot be read in support of the
principle that compensation and/or punitive damages in terms of
the Consumer Protection Act, 1986 could also be by way of
compound interest. The State Commission awarded compound
interest, and National Commission approved such awarding of
compound interest to the present respondent, only with reference
to the said decision in the case of Dr. Monga. The ratio decidendi
of Dr. Monga is not leading to the enunciation in favour of awarding
compensation and/or punitive damages by way of compound
interest, the substratum of the orders impugned is knocked to
the ground. [Para 18][1142-F-H]
1.2 In certain eventualities, the legislature has indeed
specified the award of compound interest. Mostly, it has been
provided so in relation to any monetary involvement having the
trappings of public interests in it. The Consumer Protection Act,
1986, on the other hand, being a beneficial legislation, inter alia,
empowers the Consumer Fora to direct payment of such amount
as may be awarded as compensation to the consumer for any loss
or injury suffered due to the negligence of the opposite party.
The proviso added to Clause (d) of Section 14(1) of the 1986 Act
empowers the Forum to grant punitive damages in such
circumstances as it deems fit. That being the position, it cannot
be laid down in absolute terms that for no such stipulation
regarding compound interest being available in the 1986 Act,
the same can never be granted by the Consumer Fora. When the
matter is being considered for award of compensation and/or
punitive damages, want of stipulation in the contract as regards
award of compound or simple interest, cannot be decisive of the
matter. [Para 20][1143-E-G]
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
MERCHANT
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SUPREME COURT REPORTS
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1.3 In an action before the Consumer Fora under the Act
of 1986, the forum would be entitled to provide for the amount of
compensation as deemed fit, having regard to the facts and
circumstances of the case and the gravity of the negligence of
the opposite party and consequential injury suffered by the
consumer. The forum could award even punitive damages but
that would depend on the relevant circumstances and for that
matter, the relevant factors shall have to be specified. In regard
to such awarding of compensation and/or punitive damages, the
forum concerned could take all the relevant factors into account
and award such amount as deemed fit and necessary but ordinarily,
in the matters of money refund, awarding of compound interest
as a measure of punitive damages is not envisaged. As to what
would be the quantum of compensation and for that matter, what
would be the quantum of punitive damages, would depend on
facts and circumstances of each case but while awarding so, the
forum would be advised to specify all the relevant factors and
basis of its quantification. A shortcut of awarding compound
interest is neither envisaged by the statute nor any such term of
contract between the parties or any such usage is found. The
attempt to seek compound interest in such real estate dealings
did not meet with approval of this Court and such a claim was
declined for having no nexus with the commercial realities of the
prevailing market. Going by the principles governing the nature
of jurisdiction of the Consumer Fora as also the principles
enunciated by this Court, the proposition of awarding compound
interest in the cases of monetary refund in such dealings is
disapproved. [Para 22][1147-D-G; 1148-A-B]
1.4 For award of compound interest, relevant factors shall
have to be taken into account which would include uncertainties
of market and several other imponderables. If at all by way of
compensation, the Consumer Forum considers it proper to
examine the time value for money, an in-depth and thorough
analysis would be required while taking into account all the facts
and the material surrounding factors, including those of realities
as also uncertainties of market. [Para 23][1148-C-D]
1.5 Awarding of compound interest with reference to Dr.
Monga's case and without examining any other factor has led to
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serious inconsistencies; and if the award as made is approved, it
could only lead to unjust enrichment of the respondent in the
name of disgorgement of benefits purportedly derived by the
appellants. The State Commission and the National Commission
have passed rather assumptive orders on the basis of the decision
in Dr. Monga's case that compound interest was required to be
allowed. Various factors recounted on behalf of the respondent,
including excessive harassment and denial of the fruits of her
investment could all lead to a reasonable amount of compensation
but, there appears absolutely no reason that compound interest
be allowed in this matter. [Para 24][1148-D-F]
1.6 Having regard to the order proposed to be passed, the
minute calculations and variety of alternatives presented by the
parties are not entered into but, on a broad consideration of the
matter, it is clear that even as per the exemplar sale deeds relating
to the same area and similar flats, the cost of 3 flats booked by
the respondent, as at present, is in the range of 2.25 crore, whereas
the amount payable under the award in question would be above
Rs. 7.35 crore. The respondent has attempted to compare the
circle rates of the land in the area in question with the submissions
that there were no circle rates of the flats in the year 1989 and
the attempt on her part was to make "apples-to-apples"
comparison and then factorising on the cost of flats. In the first
place, no such efforts of calculation and assessment were made
before the State Commission or the National Commission by the
respondent. Secondly, the said Consumer Fora have not returned
cogent and convincing findings on the loss or injury of the
respondent with reference to the relevant factors. These aspects
are referred only to indicate that award of compound interest in
the instant case had neither any foundation in the record nor any
backing in law nor the Consumer Fora took care to examine the
contours of their jurisdiction and the requirements of proper
assessment, if at all any compensation and/or punitive damages
were sought to be granted. The impugned orders are difficult to
be sustained. [Para 25][1148-F-H; 1149-A-C]
1.7 The State Commission merely referred to the decision
of COMPAT in Dr. Monga's case and then referred to the prayer
of the respondent for award of compound interest coupled with
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the fact that possession cannot be handed over to her. On this
and with reference to the observations in the case of Malay Kumar
Ganguly's case, for awarding compensation with such sum of
money as to put the wronged person in the position as he would
have been if he had not sustained the wrong, the State Commission
straightaway jumped to the conclusion of awarding compound
interest @ 14%. Apart from other shortcomings, the State
Commission, even while awarding compound interest @ 14%,
did not even take into account the fact of attempted refund of
money by the appellants by the cheque dated 08.11.2005 and did
not specify the period of such operation of compounding of
interest. The open-ended and the assumptive order by the State
Commission had been bereft of logic and had been wanting in the
requisite reasoning as also specification of the relief sought to
be granted. The position in the National Commission had been
no better and in fact, the Commissions proceeded as if nothing
else was required to be considered because of Dr. Manjeet Kaur
Monga's case. [Para 26][1149-D-G]
1.8 The impugned orders are required to be set aside.
However, as indicated, the pertinent factors are that Dr. Monga's
case related to the very same project and very same builder with
similar grievance of the complainant. In the said case, award of
compound interest until the date of attempted refund by the
builders has attained finality. In this view of the matter, even while
disapproving the proposition of providing compound interest as
such, it is deemed appropriate to take into consideration, only
for the purpose of the instant case, the other requirements of
balancing the equities. [Para 27][1150-A-C]
1.9 When the amount payable by the appellants with
reference to the principles and propositions aforesaid is
calculated, it does not exceed the amount of Rs. 2,48,52,000/-
together with accrued interest, which has already been received
by the respondent pursuant to the order passed by this Court on
09.05.2022. Keeping in view the peculiar circumstances of this
case, as an extraordinary measure, the respondent is allowed to
retain the amount so received. This relaxation for the respondent
is in no manner to be read as approval of the orders impugned or
approval of the proposition of awarding compound interest in
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these matters. Such a proposition of awarding compound interest
in these matters by the Fora exercising jurisdiction under the
Act of 1986 is disapproved. [Para 27.2, 27.3][1150-G-H; 1151-BC]
1.10 The impugned orders passed by the State Commission
and National Commission are disapproved. Having regard to the
peculiar circumstances of this case, the amount already received
by the respondent in the sum of Rs. 2,48,52,000/- together with
accrued interest is allowed to be retained by her but, it is made
clear that the appellants shall not be required to make any further
payment to the respondent, whether towards refund or towards
compensation or towards interest. [Para 28][1151-D]
Dr. Manjeet Kaur Monga v. K.L. Suneja (2018) 14 SCC
679 : [2017] 6 SCR 453 - explained.
Ghaziabad Development Authority v. Balbir Singh
(2004) 5 SCC 65 : [2004] 3 SCR 68; Malay Kumar
Ganguly v. Sukumar Mukherjee (Dr.) [2009] CPJ 17
(SC); Central Bank of India v. Ravindra (2002) 1 SCC
367 : [2001] 4 Suppl. SCR 323; Clariant International
Ltd. and Anr. v. Securities & Exchange Board of India
(2004) 8 SCC 524 : [2004] 3 Suppl. SCR 843; Experion
Developers Pvt. Ltd. v. Sushma Ashok Shiroor (2022)
SCC OnLine SC 416; NBCC (India) Ltd. v. Shri Ram
Trivedi (2021) 5 SCC 273; Ireo Grace Realtech Pvt.
Ltd. v. Abhishek Khanna and Ors. (2021) 3 SCC 241;
DLF Home Developers Limited and Anr. v. Capital
Greens Flat Buyers Association and Ors. (2021) 5 SCC
537; Arifur Rahman Khan and Ors v. DLF Southern
Homes Pvt Ltd and Ors. (2020) 16 SCC 512 : [2020] 9
SCR 136; DLF Home Panchkula Pvt Ltd and Ors. v.
DS Dhanda and Ors. (2020) 16 SCC 318 : [2019] 7
SCR 1061; Manohar Lal (D) by Lrs. v. Ugrasen (D) by
Lrs. and Ors. (2010) 11 SCC 557:[2010] 7 SCR 346;
Sanjay Singh and Anr. v. U.P. Public Service
Commission, Allahabad and Anr. (2007) 3 SCC 720 :
[2007] 1 SCR 235; K.L. Suneja and Anr. v. Dr. (Mrs.)
Manjeet Kaur Monga (D) Through Her LRs and Anr
2023 SCC OnLine SC 91; Indian Council for EnviroLegal Action v. Union of India and Ors. (2011) 8 SCC
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
MERCHANT
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161 : [2011] 9 SCR 146; Transmission Corp. of AP
Ltd. v. P. Surya Bhagavan (2003) 6 SCC 353; Balram
Prasad v. Kunal Saha (2014) 1 SCC 384 : [2013] 12
SCR 30 - referred to.
Wallersteiner v. Moir (No. 2) (1975) Q.B. 373 - referred to.
Case Law Reference
[2004] 3 SCR 68
referred to
Para 6.2
[2001] 4 Suppl. SCR 323
referred to
Para 8.1
[2004] 3 Suppl. SCR 843
referred to
Para 8.1
(2021) 5 SCC 273
referred to
Para 8.2
(2021) 3 SCC 241
referred to
Para 8.2
(2021) 5 SCC 537
referred to
Para 8.2
[2020] 9 SCR 136
referred to
Para 8.2
[2019] 7 SCR 1061
referred to
Para 8.2
[2010] 7 SCR 346
referred to
Para 8.4
[2007] 1 SCR 235
referred to
Para 8.5
[2011] 9 SCR 146
referred to
Para 9.3.1
(2003) 6 SCC 353
referred to
Para 9.8
[2013] 12 SCR 30
referred to
Para 9.8
[2017] 6 SCR 453
explained
Para 15.2-19, 24,
26, 27
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos.28922894 of 2023.
From the Judgment and Order dated 31.03.2022 of the National
Consumers Disputes Redressal Commission, New Delhi in RP Nos.771,
772 and 773 of 2020.
Ranjit Kumar, Sr. Adv., Ajay Bhargava, Ms. Vanita Bhargava,
Arvind Ray, Karan Gupta, Ms. Vansha S. Suneja, M/s Khaitan & Co.,
Advs. for the Appellants.
Sidharth Luthra, Sr. Adv., Viksit Arora, Ms. Supriya Juneja, Aditya
Singla, Ms. A. Sahitya Veena, Advs. for the Respondent.
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The Judgment of the Court was delivered by
DINESH MAHESHWARI, J.
Table of Contents*
Preliminary and brief outline .............................................. 2
Relevant factual and background aspects ........................ 5
The State Commission awarding compound interest ... 11
Approval by the National Commission ...........................17
Rival Contentions...............................................................19
Matters of form and pleading not relevant in the
present case ........................................................................35
The cited decisions on award of interest in real
estate dealings ....................................................................37
The decision in Manjeet Kaur Monga's Case
and its connotations ...........................................................45
The complexities of present matter requiring
further exploration .............................................................57
In extraordinary measure, money received by
respondent allowed to be retained ..................................67
Conclusion ...........................................................................69
Preliminary and brief outline
Leave granted.
2. In these appeals by special leave, the appellants have essentially
questioned a part of the common judgment and order dated 31.03.2022,
as passed by the National Consumer Disputes Redressal Commission,
New Delhi1 in Revision Petition Nos. 771 of 2020, 772 of 2020 and 773
of 2020, whereby the National Commission has declined to interfere in
the common judgment and order dated 12.03.2020, as passed by the
State Consumer Disputes Redressal Commission, Delhi2, in Appeal Nos.
121 of 2014, 122 of 2014 and 123 of 2014.
*Ed. Note : Pagination in the Table is as per the original judgment.
1Hereinafter also referred to as 'the National Commission'.
2Hereinafter also referred to as 'the State Commission'.
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
MERCHANT
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2.1. The present set of appeals has its genesis in the three
complaints filed by the complainant-respondent before the Consumer
Disputes Redressal Forum-II, New Delhi3, bearing Nos. C-252 of 2006,
C-283 of 2006 and C-284 of 2006 alleging deficiency of service on the
part of the present appellants for having failed to deliver the possession
of three flats booked by her, even after expiry of the agreed period and
despite the fact that she had admittedly made payment of 60% of the
total sale consideration. The District Forum, in its order dated 20.12.2013,
dismissed the complaints so filed by the present respondent on various
grounds including that she had tried to avail of the services of the builder
for commercial purposes by booking three flats and thus, did not fall
within the category of "consumer", as defined under Section 2(d) of the
Consumer Protection Act, 19864.
2.2. In the said judgment and order dated 12.03.2020, the State
Commission, however, disapproved the order so passed by the District
Forum as regards the maintainability of complaints and then, particularly
with reference to the decision in the case of Dr. Manjeet Kaur Monga
v. K.L. Suneja: (2018) 14 SCC 6795, wherein the award of compound
interest by Competition Appellate Tribunal6 under the Monopolies and
Restrictive Trade Practices Act, 19697 was not interfered with by this
Court, granted relief to the complainant in the manner that the appellants
shall refund the amount deposited by her together with 'compound
interest at the rate of 14% from the date of deposit'. The National
Commission rejected all the contentions urged on behalf of the appellant
against the order so passed by the State Commission and also found no
reason to interfere with the relief granted by the State Commission in
view of the decision of this Court in the case of Dr. Manjeet Kaur
Monga (supra).
3. On 09.05.2022, while considering the petitions leading to these
appeals at the initial stage, this Court found the question of awarding
compound interest @ 14% on the refund of deposited amount requiring
consideration and hence, notice was issued to this limited extent. However,
this Court also took note of the fact that a sum of Rs. 1,48,52,000/- had
3Hereinafter also referred to as 'the District Forum'.
4Hereinafter also referred to as 'the Act of 1986'.
5Reference to this case has occurred at multiple places hereafter; where it has been
referred to as the case of 'Dr. Manjeet Kaur Monga' or the case of 'Dr. Monga'.
6'COMPAT', for short.
7Hereinafteralso referred to as the 'MRTP Act'.
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been deposited by the appellants pursuant to an order earlier passed by
the National Commission and, in the totality of circumstances, execution
of the orders impugned was stayed subject to the condition of the
petitioners-appellants depositing a further sum of Rs. 1 crore with the
District Forum within four weeks with liberty to the respondent to
withdraw the deposited amount with accrued interest. Such deposit and
withdrawal were, however, made subject to the final orders of this Court.
The order dated 09.05.2022 reads as under: -
"Having heard learned senior counsel for the respective
parties preliminarily and having examined the material placed on
record, in our view, only the question of awarding compound
interest at the rate of 14% on the refund of deposited amount is
required to be considered in this matter.
Issue notice to the limited extent as above.
Ms. Supriya Juneja, learned counsel accepts notice on behalf
of the respondent No. 1.
Counter affidavit may be filed within three weeks.
The petitioners shall have one week thereafter to file
rejoinder affidavit, if so chosen.
During the course of submissions, we have been informed
that pursuant to the order dated 11.11.2020, as passed by the
National Consumer Disputes Redressal Commission, the
petitioners had deposited an amount of Rs.1,48,52,000/- with the
President, District Consumer Disputes Redressal Forum-II, New
Delhi on 25.11.2020.
Learned senior counsel appearing for the petitioners submits
that as per his instructions, the said amount has been invested in a
fixed deposit.
Having regard to the circumstances of the case, it is
considered appropriate and hence provided in the interim that until
further orders of this Court, execution of the orders impugned
shall remain stayed, subject to the condition that the petitioners
shall deposit further an amount of Rs. 1 crore with the said District
Consumer Disputes Redressal Forum within four weeks from
today.
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
MERCHANT [DINESH MAHESHWARI, J.]
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It shall be permissible for the respondent herein to withdraw
the entire deposited amount, including the earlier deposited amount
of Rs.1,48,52,000/- together with accrued interest.
This deposit by the petitioners and withdrawal by the
respondent shall remain subject to the final order to be passed in
these petitions.
List these petitions in the second week of July, 2022."
4. After completion of pleadings, and in view of a short point
involved, we have heard learned counsel for the parties finally at this
stage itself.
Relevant factual and background aspects
5. As noticed, the only question involved in these appeals is about
the legality and validity of the directions by the State Commission to the
appellants to refund the deposited amount to the respondent with
compound interest. The relevant factual and background aspects, to the
extent relevant for the short question involved in the matter could be
noticed as follows:
5.1. The appellant No. 1 is said to have launched a residential
project namely Siddharth Shila Apartments at Plot No. 24, Vaishali,
Ghaziabad, Uttar Pradesh. The appellant No. 2, K.L. Suneja is said to
be the Director of the appellant No. 1. On 01.08.1989, the respondent, a
Non-Resident Indian, applied for allotment of three flats in the said project
and pursuant thereto, the appellant No. 1 issued allotment letter in her
favour, purportedly allotting three residential flats bearing Nos. C-601,
C-602 and C-603 admeasuring 1375 sq. ft. each (including common
areas) for a consideration of Rs. 7,37,000/-, Rs, 7,35,625/- and Rs.
7,35,625/- respectively. The entire consideration was payable by the
respondent in 12 instalments. It has been the case of the appellants that
the respondent made payment up to 6th instalment but, defaulted thereafter
and did not make remaining payment despite numerous reminders.
5.2. On 15.10.2005, the respondent issued a notice to the appellants,
stating, inter alia, that even after 16 years, the appellants had kept the
allottees waiting despite having received more than 60% of the total
cost of the respective flats. It was also stated that she could make further
payment towards the remaining instalments but was having legal right to
know as to when the construction would be completed and the possession
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would be handed over; and without disclosing such essential facts,
retaining the deposited money amounted to deficiency in service in terms
of Section 2 of the Act of 1986. The respondent called upon the appellants
to furnish within 15 days a written undertaking supported by a progress
certificate from the architect concerned as to when the said flats would
be completed or else, she would be approaching the proper forum under
the relevant provisions of law against them. The relevant contents of
this notice read as under: -
"5) That it is further needless to mention here that an allottee like
my said clientess, who has already invested more than 60% of
the total cost of the respective flats, certainly can make further
payment towards the remaining instalments but at least the allottees
at large are having legal rights to know as to when the said flats
will be completed and the possession be handed over to them, and
without disclosing the same from your side, and keeping the money
collected amounts to deficiency in service as per Section 2 of the
Consumer Protection Act for which my said clientess shall have
right to invoke the jurisdiction of the competent forum.
6) That without prejudice to the above, my client is ready to make
the payment of balance instalments as per the statement of account
subject to the undertaking of proposed completion of the said flat
and further production of written progress certificate from the
architect concerned of yours because my clientess shall not be
kept in dark for period not known to her within which she is going
to take possession of the flat.
7) That it is further to mention here that as per the various landmark
pronouncements of National Commission as well as State
Commissions of various states, in the said facts and circumstances,
you are certainly liable to be prosecuted and also liable to the
damages and interest thereon.
In light of the above facts and circumstances, I do hereby call
upon you which I hereby do and call upon you, to furnish or produce
a written undertaking supported by a progress/completion
certificate from your concerned architect within which the said
flats shall be completed, within a period of 15 days from the date
of the present legal notice, failing which I have clear instructions
from my said clientess to invoke the proper forum under the
relevant provisions of law against you.
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
MERCHANT [DINESH MAHESHWARI, J.]
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Without prejudice to the above, my said clientess shall have other
legal rights against you as advised in law."
5.3. In reply to the aforesaid notice, the appellants stated details
of payment made by the respondent and it was alleged that it had been
a matter only of provisional allotment and no agreement as such was
executed between the parties; and the allotment had been cancelled due
to default on her part. After tabulating the payment made and the alleged
dues, it was also stated on behalf of the appellants that they were ready
to refund the amount by way of cheque but the respondent was seeking
refund in cash, which was unjustified. However, a cheque in the sum of
Rs. 10,68,031/- was sent towards refund with the said reply dated
08.11.2005 while stating, inter alia, as under: -
"2. From the aforesaid it will be apparent that not only did your
client not make the payments within time, but also failed to pay
the interest and thereafter stopped making any payments
whatsoever in spite of reminders. As in 2002 a sum of Rs
8,22,682.00 (Rupees Eight Lacs Twenty Two Thousand Six
Hundred Eighty Two only) was due from your Client and against
which your Client sent in early Feb. 2002 total sum of Rs 30,000/
- (Rupees Thirty Thousand only) and again in end of Feb. 2002 a
total sum of 45,000/- which was returned by my Clients since the
allotment stood cancelled due your Client is aware of the allotment
having stood cancelled, at least since the year 2002 and the notice
now got sent is with ulterior motives. No payments as falsely
alleged were even tendered in January, 2004 or after Feb. 2002.
In last your Client pursuant to the cancellation of the allotment
wanted the refunds in terms of the provisional Allotment of the
sum of Rs 10,68,031.00 (Rupees Ten Lacs sixty Eight Thousand
Thirty One) only in cash only which my Clients refused and offered
to pay the cheque for the said amount, however, your Client
pleaded with my Clients that they had not accounted for the
payments made to my Clients and as such could not take back the
Cheque in refund and thus were demanding the case However
my Clients did not want to be privy to the illegal acts of your client
and refused to comply with the demand of your client to pay the
cash. It is for this reason that the notice has been issued on totally
wrong facts and demands.
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3. All the other contents of your notice are incorrect and are denied
and my clients are along with this reply enclosing their Cheque
No. 357757 dated 07 November 2005 of Citibank NA New Delhi
for a sum of Rs 10,68,031.00 (Rupees Ten Lakhs Sixty Eight
Thousand Thirty One) only in favour of your client towards refund
of the amounts due to them under the Letter of Provisional
Allotment. Please further note that there never was any
Agreement between your Client and my Clients and in accordance
with the accepted practice or the trade your client had only made
a provisional booking when the project or my clients was at a
nascent stage and when there was no certainty and when no flats
were in existence. The said Provisional Allotment was to be
converted into an Agreements to sell which as per the Law. Where
the property is situated is required to be registered upon payments
being made by your client and since your client did not comply
with the terms or the Provisional Booking no such Agreement
came into being and the client of your client after 3 years of the
date when at least they admit to have become aware of the
cancellation is also barred by time.
4. You are requested to advise your client accordingly and to refrain
from any mis-conceived litigation. Upon cancellation of the
Provisional allotment no flat has been reserved for your client and
no such flat is in existence. The mis-conceived litigation if any
instituted by your client shall be defended by my Clients at the
cost and risk of your client."
5.4. On 30.11.2005, a rejoinder was sent on behalf of the
respondent to the reply aforesaid, while returning the cheque and while
objecting to the conduct of the appellants, in the following words: -
 "I would like to bring to your notice that your client wrote
letter dated 26.11.2001 in respect of flat No.(1) C-601 to my
clientess whereby accepted receipt of Rs.4,43,501/- out of total
amount of Rs.7,08,458/-, (2) C-602, receipt of Rs.4,46,912/- out
of total amount of Rs.7,17,114.40 and (3) C-603, receipt of
Rs.4,44,625/- out of total amount of Rs.7,32,147.50 and demanded
balance amounts of Rs.2,64,957/-, Rs.2,70,202.40 and
Rs.2,87,522.50 respectively. Photocopies of the aforesaid letters
are enclosed for your kind perusal. Thus more than 60% of the
total due amount has been paid by my clientess. Since there was
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
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no progress in the construction of the above said flats on part of
your client, my clientess had no option but to stop the further
payment. The cancellation of allotment without show cause notice
to my clientess and even non intimation of cancellation order is
illegal and thus amounts to illegal malafide intention on part of
your client. However, my clientess is still ready to make balance
amount if the possession of the above said three flats are handed
over to my clientess.
 It is wrong and denied that your client ever intimated the
stage of construction of the flats. My client had applied in the
year 1989 and after 16 years she is being told that her allotment
has been cancelled.
 My client has been cheated by your client with dishonest
intention and has misappropriated her hard money whereby causing
huge loss, mental agony to my clientess.
 The above said cheque is enclosed herewith and you are
requested to acknowledge its receipt.
 I, therefore, through this rejoinder call upon you to advise
your client to immediately hand over the physical possession of
the above said flats failing which my clientess shall be constrained
to initiate legal proceedings both civil and criminal before competent
court of law/forum and in that event your client shall be liable for
its cost, risk and consequences."
5.5. After such exchange of communications, the respondent
appears to have filed a civil suit, which was dismissed for want of
jurisdiction. Thereafter, she preferred the said complaints in the District
Forum. A copy of one such complaint has been placed on record and the
relief claimed therein could be usefully reproduced as under: -
"Therefore, in the facts and circumstances of the case the
Complainant most respectfully prays that this Hon'ble state Forum
may kindly be pleased.
(1)
To direct the respondent to give possession of the flat C601 to the complainant within one month;
(2)
To direct the opposite Parties to pay a sum of Rs. 14,00,000/
- (Fourteen lakh rupees only) as damages for the loss of
rent and mental agony and also direct the respondent to
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pay interest on 4,43,500/- @ of 18% per annum for 16 years
i.e. Rs. 10,758,00/- i.e. total sum of Rs. 24,758,00/-
(3)
To grant any other and further reliefs as may be deemed fit
and proper in the interest of justice.
(4)
To award exemplary costs in favour of the Complainant
and against the respondent."
5.6. The District Forum, while taking the three complaint cases
together, proceeded to reject the same while observing, inter alia, as
under:-
"7. Apart from it, the Complainant is also guilty of concealment of
the material fact from this Forum. OP has alleged that on the
same cause of action a case is pending before Civil Court at
Karkardooma Courts, Delhi and the Complainant has not denied
this fact. Moreover, complaint is also barred by limitation. The
Complainant is an NRI. She had invested her amount here in real
estate. The Complainant also filed two more complaints here
alongwith this complaint therefore as rightly objected by the OP
that all such activities of the Complainant were made with a view
to earn profit by investing her money in real estate. Thus,
Complainant tried to avail of the services of the OP for commercial
purpose. Whereas, the provisions of Consumer Protection Act,
1986 were made for the benefit of a Consumer. Thus, Complainant
does not fall within the category of consumer as defined under
section 2(d) of the Act. Therefore, taking the case of the
Complainant from any angle, we do not find any merit in her case
hence, we are constrained to dismiss the complaints. Copy of this
order be placed on all the files."
The State Commission awarding compound interest
6. The State Commission, however, did not agree with the
reasoning of the District Forum and held that the complaints made by
the respondent were maintainable in law. As noticed, those questions
relating to maintainability are not involved in these appeals and hence,
we need not dilate on the same.
6.1. The relevant aspect of the matter is that after having overruled
preliminary objections of the present appellants, the State Commission
observed that 60% of the total sale consideration was paid by the
M/S SUNEJA TOWERS PRIVATE LIMITED & ANR. v. ANITA
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complainant-respondent; that possession of the flats booked by her was
not handed over even after expiry of the agreed period; that the
complainant, having opted for the construction-linked plan, was to make
payment of the balance amount on delivery of possession; and the
allegation of her being in default was to be rejected because, on inspection
of the site, construction was not found as per schedule. Having said so,
the State Commission proceeded to consider the question as to how the
complainant was to be compensated for the monetary loss, and mental
and physical harassment suffered at the hands of opposite parties because
of non-delivery of the allotted flats. The relevant observations of the
State Commission read as under: -
"19. In these circumstances all the preliminary objections of the
OPs/respondents, since not maintainable are sequentially rejected.
Coming to the merit of the case, it is a fact that booking of three
flats was done. This is also indisputed that 60% of the total sale
consideration was paid to OPs. Possession of the flats so booked
were not handed over although the agreed period was over. The
complainant having opted for the construction linked plan had to
pay the balance amount on the delivery of the possession of the
flats. But on inspection of the site the construction in the project
was not found as per schedule. Finally the objection of the OP to
the effect that the complainant was defaulter in making the payment
cannot sustain since the complainant had opted for consideration
linked plan and she had to make the payment beyond 60% on
completion of the construction and thus this objection is also
overruled. In these circumstances the complaint deserves to be
accepted. Accordingly the orders passed by the District Forum
dismissing the complaint since not sustainable are set aside.
20. Having arrived at the said conclusion, the point for consideration
is as to how the Complainants are to be compensated for the
monetary loss, mental and physical harassment he has suffered
at the hands of OPs on account of non-delivery of the allotted
flat."
6.2. The State Commission, thereafter, examined various
connotations of the term "compensation" and observed that the
Commission or the Forum was entitled to award not only value of goods
or services but also to compensate a consumer for injustice suffered by
him. With reference to the decision in Ghaziabad Development
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Authority v. Balbir Singh: (2004) 5 SCC 65, it was observed that this
Court had indicated the factors to be kept in view while determining
adequate compensation; and in cases where possession was directed to
be delivered to the complainant, the compensation for harassment would
necessarily have to be less because that party was being compensated
by increase in the value of the property but, in cases where only money
was to be refunded, the party would be suffering a loss inasmuch as he
had deposited the money in the hope of getting a flat/plot and he was
deprived of the same, as also the benefit of price escalation. The State
Commission also observed that in such case (only of refund of money),
the complainant would suffer substantial loss on account of payment of
interest on the loans raised; depreciation in the money value; and
escalation in the cost of construction etc. The State Commission also
observed that in these proceedings, necessary orders regarding refund
of the deposited amount could be passed, notwithstanding the proceedings
in any other forum. The relevant observations of the State Commission
read as under: -
"21. The provisions of the Act enable a consumer to claim and
empower the Commission/Forum to redress any injustice done to
a consumer. The Commission or the Forum is entitled to award
not only value of goods or services but also to compensate a
consumer for injustice suffered by him. The word compensation
is of very wide connotation.