R.S.A.No.1926 of 2007 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH R.S.A.No.1926 of 2007 (O&M) Date of Decision 29.04.2009 Piare Lal and others ......Appellants VERSUS Haryana Urban Development Authority and another ......Respondents CORAM:- HON'BLE MR. JUSTICE A.N.JINDAL Present: Mr.G.I.Sharma, Advocate, for the appellants. Mr.Ajay Kansal, Advocate, for respondent No.1. ***** A.N.JINDAL, J(ORAL): The plaintiffs-appellants (herein referred as the 'appellants') filed a suit for declaration, challenging the validity of the notice No.23518 dated 29.11.2000, served by respondent-Defendant No.2 (herein referrred as 'defendant No.2') on the plaintiffs regarding the outstanding recovery of amount of Rs.13,25,000/- as arbitrary illegal, void and is not enforceable against the plaintiffs. The case, as set up by the plaintiffs is that they were allotted booth in question by defendant No.1-respondent (for short H.U.D.A.) in an open auction. The plaintiffs, being the highest bidders, had purchased the same at the cost of Rs.5,81,000/- vide allotment memo No.1896 dated 14.02.1991. The plaintiffs had deposited a sum of Rs.58,100/-, being the 10% at the fall of hammer and a sum of Rs.87,150/- were to be deposited R.S.A.No.1926 of 2007 (O&M) 2 within 30 days from the issue of the allotment letter, as per its terms and conditions, so as to make the deposit as 20% of the total cost and the balance amount was to be deposited without interest within 60 days from the date of issue of the allotment letter or in 10 half early instalments, carrying interest @ 10% per annum. However, the interest was to accrue from the date of offer of possession. The plaintiffs and other shop keepers suffered losses on account of the fact that the owners of nearby residential premises were using their premises for commercial purpose, therefore, they made a representation to defendant No.1 either to resume the residential premises or to waive off interest on the instalments, however, the defendant No.1 failed to take any steps. Anyway, after taking possession of the plot in question, the plaintiffs constructed a booth and applied for occupation certificate which was granted by defendant No.2 vide memo No.848 dated 29.01.1992. As such, the defendants were estopped from recovering extension fee. However, a notice raising the demand of Rs.6,10,112/- was issued to them with a further threat that if the outstanding amount was not deposited within 30 days, the site would be resumed. Instead of resolving the dispute, the defendant No.2 again issued a notice, raising a demand of Rs.10,29,987/- and extension fee of Rs.10,120/- as on 31.12.1998. Again after a lapse of more than 1½ years, defendant No.2 had issued a notice under Section 17(4) of the H.U.D.A. Act, for increasing the demand of Rs.13,25,000/- as on 31.08.2000 and called them to appear on 19.12.2000. Then on inquiry, they came to know that H.U.D.A. was charging 18% compound interest on delayed payment which is against the provisions of H.U.D.A. Act. Ultimately, the plaintiffs challenged the claim of the defendants in the Court. R.S.A.No.1926 of 2007 (O&M) 3 Upon written statement, the defendants submitted that the amount of Rs.13,25,000/- was being demanded on account of outstanding instalments and extension fee etc. and they are claiming such recovery under the terms and conditions and also pursuant to the provisions of H.U.D.A. Act. Replication has also been filed. On pleadings of the parties, the following issues were settled by the learned Trial Court:_ 1. Whether the notice No.23518 dated 19.11.2000 served by defendant No.2 upon the plaintiff for recovery of Rs.13,25,000/- is illegal, null and void in view of grounds taken in the plaint ? OPP 2. Whether the plaintiff is entitled to the relief as claimed for OPP 3. Whether the civil court has no jurisdiction to entertain the present suit ? OPD 4. Whether the plaintiff has not come to the Court with clean hands ? OPD 5. Relief. Both the parties led the evidence. Ultimately, the trial Court vide its judgment dated 21.08.2006 decreed the suit of the plaintiffs and the defendants were restrained from recovering the amount of Rs.13,25,000/- demanded vide order No.23518 dated 29.11.2000 or from resuming the plot from the plaintiffs illegally and forcibly. Against the judgment, H.U.D.A. preferred the appeal whereby the Appellate Court vide its judgment dated 23.12.2006 dismissed the appeal with the following modifications: (i)H.U.D.A. will be entitled to interest @ 10% per annum but R.S.A.No.1926 of 2007 (O&M) 4 outstanding amount will be calculated as indicated in para No.28 of this judgment. (ii)In case the plaintiffs failed to pay the amount, calculated and intimated to them by H.U.D.A., within a period of 2 months from the date of intimation, the defendant shall be at liberty to pay the same as per provisions of the H.U.D.A. Being dis-satisfied with the impugned judgment, the plaintiffs have preferred this appeal, challenging the claim of compound interest as indicated in para 28 of this judgment, which is reproduced as under:- “Certainly after each default the due amount was to be the amount of installment and the amount of interest at the rate of 10% payable on the same and hence, the total of the two became as the due principal amount. Calculated in that manner, HUDA will be entitled to interest @ 10% on the outstanding amount w.e.f. 14.08.1992 i.e. The date on which the third installment had fallen due but the plaintiffs had failed to pay the same.” While stressing hard over the illegality in the order passed by the Appellate Court whereby Court awarded compound interest, it was urged that it is settled by now that no amount on account of compound interest could be asked for on delayed payments. In this regard, reliance has been placed over the Division Bench Judgment of this High Court in case Mohan Dass versus Haryana Urban Development Authority 2007 (3) 1886 wherein the Division Bench while relying upon the Apex Court judgment delivered in case Gian Inder Sharma versus Haryana Urban Development Authority in C.W.P.No.16497 of 2001 decided on R.S.A.No.1926 of 2007 (O&M) 5 11.11.2000 and also the judgment of this Court delivered in case C.W.P.No.2278 of 1999 M/s Bhatia Brothers v. The Haryana Urban Development Authority and others decided on 14.02.2000 observed that H.U.D.A. can charge only simple interest. Not only this, H.U.D.A. was directed to frame a comprehensive policy and to employ the guidelines delivered in Gian Inder Sharma's Case (supra). Now it would be apt to refer the observations made in Gian Inder Sharma's Case (supra) which reads as under:- “We have considered the submissions made by the petitioner and learned counsel for the respondents. We are of the opinion that the respondent are not entitled to charge compound interest on the delayed payment of additional price of the plot in question. They can charge only simple interest at the rate of 15% per annum on the said amount. The case of the petitioner is squarely covered by Division Bench decision of this Court in M/s Bhatia Brothers' case (supra). Learned counsel for the respondents could not point to us any provision of law under the Act and the 1978 Regulations or any condition in the allotment letter, which authorized the respondents to charge compound interest on the delayed payment. As per clause 6 of the allotment letter, the respondents are entitled to charge 10% interest on the amount of installment. The contention of the petitioner that he is liable to pay simple interest at the rate of 15% per annum on the delayed payment of additional price of the plot in the question is totally justified. The respondents inspite of the decision of this Court are R.S.A.No.1926 of 2007 (O&M) 6 illegally demanding the compound interest on the aforesaid delayed payment from the petitioner. We find that action of the respondents in demanding compound interest from the petitioner is totally unreasonable and arbitrary and without any authority of law. Therefore, we direct that the respondents can charge only simple interest at the rate of 15% per annum from the petitioner on the delayed payment of additional price of the plot in the question is totally justified. The respondents inspite of the decision of this Court are illegally demanding the compound interest on the aforesaid delayed payment from the petitioner. We find that action of the respondents in demanding compound interest from the petitioner is totally unreasonable and arbitrary and without any authority of law. Therefore, we direct that the respondents can charge only simple interest at the rate of 15% per annum from the petitioner on the delayed payment of additional price of the plot in question. Since the petitioner has already deposited Rs.2,10,000/- under protest with the respondents towards the additional price, the respondents are directed to calculate the additional price with 15% simple interest and adjust the same towards the above payment made by the petitioner. If there is any excess amount, the same shall be refunded to the petitioner within a period of three months. It is, however, made clear that no penalty can be charged from the petitioner on account of delayed payment of additional price. However, if there is any other amount due against the petitioner, the same shall also be adjusted against R.S.A.No.1926 of 2007 (O&M) 7 the payment already made by him and after making adjustment, if any amount is found due towards him the same can be recovered form him.” I have also been informed that now a comprehensive policy has been framed by H.U.D.A., vide which the earlier policy with regard to charging of the compound interest has been dropped. Now, they are charging simple interest only. Thus, the observation, as given in para No.28 of the First Appellate Court Judgment, cannot be sustained. No other point has been raised by the appellants in order to assail the impugned judgment, rather they are ready to pay the amount outstanding against them alongwith simple interest @ 10% per annum as per the directions issued by the First Appellate Court. Resultantly this appeal is accepted and the directions as issued by the First Appellate Court, as mentioned in para No.28 of the judgment, are modified. Now the respondents would recover only simple interest at the rate of 10% per annum on the amount due as well as on the additional price of the plot if any. It is further made clear that amount if any paid by the appellants in excess towards interest, would be adjusted. Decree sheet be prepared accordingly. April 29, 2009 (A.N.JINDAL) mamta-II JUDGE