CWP No.3472 of 2002 -: 1 :- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH CWP No.3472 of 2002 Date of decision: February 20, 2009. M/s Nanu Ram Goyal Construction Co. Pvt. Ltd. ...Petitioner(s) v. State of Haryana & Ors. ...Respondent(s) CORAM:HON'BLE MR. JUSTICE SURYA KANT 1. Whether Reporters of local papers may be allowed to see the judgment ? 2. Whether to be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest? Present: Shri Jagdish Manchanda, Advocate for the petitioner. Shri Ravi Dutt Sharma, Deputy Advocate General, Haryana. Ms. Raminder Gadhoke, Advocate for respondent(s) No.2 to 4. ORDER Surya Kant, J. - (Oral): The petitioner seeks a direction to the respondents – HUDA authorities not to charge compound interest @ 18% per annum and charge simple interest @ 15% per annum on the delayed payments towards the sale price of SCO No.103, Sector 16, Faridabad. The above stated SCO site was allotted to M/s Ram Dharam Finance Leasing Ltd.. Faridabad vide allotment letter dated 11.1.1996. The petitioner purchased the said site from the original allottee and the same was CWP No.3472 of 2002 -: 2 :- re-allotted in petitioner's favour by HUDA vide letter dated 14.5.1998 (Annexure P-2). As is evident from the above mentioned order dated 14.5.1998, the petitioner gave an affidavit to the HUDA authorities “accepting the terms and conditions” of allotment letter issued in favour of M/s Ram Dharam Finance Leasing Ltd. It is also not in dispute that as per the terms and conditions of the original allotment, the allottee was liable to pay the balance sale price in installments together with interest @ 15% per annum. It was further stipulated that in case of delayed payments, the respondents shall be entitled to charge interest @ 18% per annum. There was admittedly some delay in payments of a few installments. The petitioner has been accordingly charged interest @ 18% per annum. The petitioner's grievance is that the interest ought to have been charged @ 15% and not 18%. The question as to what rate of interest is permissible to be charged from the allottees on delay payments by HUDA, is no longer res integra and the Hon'ble Supreme Court in HUDA v. Raj Singh Rana, AIR 2008 SC 3035, has held that in the absence of an agreed rate of interest, the HUDA would be entitled to charge interest keeping in view the provisions of Section 3 of the Interest Act, 1978. The HUDA's claim to charge compound interest appears to have been disapproved. A Division Bench of this Court in a recent decision dated 6.12.2008 rendered in CWP No.12126 of 2007 (Brij Lal Garg v. HUDA & Anr.) has further clarified that:- In view of the above, we are of the view that the writ petition deserves to be allowed and the impugned order CWP No.3472 of 2002 -: 3 :- dated 9.7.2007 (P.11) is liable to be set aside. The respondents cannot demand compound interest on the delayed payment which is held to be unreasonable and arbitrary nor they can ask for compound interest on the enhanced amount of compensation. Accordingly a direction is issued to the respondents to calculate interest on the delayed payment of instalments / additional price of the property in question by applying the current rate of interest which means the highest of the maximum rate at which interest may be paid on different classes of deposits by different classes of scheduled banks in accordance with the directions issued to the banking companies by the Reserve Bank of India under the Banking Regulation Act, 1949. It would necessarily exclude the rate of interest on the accounts maintained in saving or those maintained by charitable or religious institutions. It has come on record that the petitioner had already deposited the demanded amount under protest which shall be set of as per the law and calculations be made accordingly. If respondents find that excess payment has been made by the petitioner then the same be refunded to him within a period of two months from the date of receipt of copy of this order. We make it further clear that no penalty can be charged from the petitioner on account of delayed payment of instalments/ additional price. However, the respondents shall be entitled to deduct any other amount due to them. CWP No.3472 of 2002 -: 4 :- Following the above cited binding precedents and keeping in view the fact that the respondents cannot be permitted to charge compound interest @ 18% per annum when there is an agreed rate of interest, i.e., 15% per annum, the writ petition is allowed to the extent that the respondents shall re-calculate the interest element @ 15% and in case the petitioner has made any excess payment, the same shall be refunded to it within a period of two months from the date of receipt of a certified copy of this order. However, in case, the petitioner is liable to pay any additional amount towards interest, the petitioner shall also be liable to pay the same within a period of two months from the date a notice is issued to that effect. February 20, 2009. [ Surya Kant ] kadyan Judge