CWP No.13187 of 2008 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. DATE OF DECISION: 7.10.2010 Suchetra Mehta and Anr. ...Petitioners VERSUS Haryana Urban Development Authority & Others …Respondents CORAM HON'BLE MR.JUSTICE PERMOD KOHLI PRESENT: Mr.Kulbhushan Sharma, Advocate for the petitioners Mr.Mohnish Sharma,Advocate for Mr.Arun Walia, Advocate for respondents Permod Kohli, J. (Oral) Keeping in view the controversy involved and with the consent of learned counsel for the parties, this petition is disposed of at motion stage itself. The petitioners were allotted Booth Shop No.7, Sector 16-A, (Part-I), Faridabad in open auction by the Haryana Urban Development Authority (HUDA) vide allotment letter dated 18.8.1989 against a total sale consideration of Rs.1,82,000/-. Rs.18,200/- being 10% of the total price was paid by the petitioner at the time of auction and Rs.27,300/- being 15% of the total price was paid within 40 days of the issue of allotment letter and the balance amount was payble without interest within 60 days from the CWP No.13187 of 2008 2 date of allotment letter or in 10 half yearly instalments with interest at the rate of 10%. The possession of the shop was delivered to the petitioners on 7.4.1995. The petitioners have given the details of the amount paid which are as under:- 30.5.89 18.9.89 2.2.90 12.2.92 10.4.95 19.4.95 20.4.95 20.4.95 10.3.98 Total: Rs.18,200 Rs.27,300 Rs.20,475 Rs.20,000 Rs.200 Rs.1024 Rs.25000/- Rs.25000/- Rs.100,000/- Rs.2,35,975/- Not only this, the petitioners claim to have deposited further amount of Rs.3,56,487/- as against Rs.1,82,000/- being the total price of the booth in question. Vide the impugned order dated 17.7.2000 (Annexure P-2), the booth in question has been resumed allegedly for non-payment of an amount of Rs.3,48,746/- on account of balance instalments including interest and penalty upto 3.7.2000. The appeal preferred by the petitioner against the order of resumption also came to be dismissed vide order dated 7.11.2000 (Annexure P-3). The respondents in the reply submitted that the petitioners failed to pay the instalments, in accordance with the schedule of payment and an amount of Rs.3,20,000/- was demanded on account of unpaid instalments, including interest as also the penalty amounting to Rs.1,4,373/- vide demand notice dated 6.6.2000 and on failure of the petitioners to pay the amount, show-cause notices under Sections 17 (1) (2), (3) and (4) were issued and on failure of the petitioners to meet the entire demand, CWP No.13187 of 2008 3 resumption order has been passed. The details of the amount deposited by the petitioners as depicted in the writ petition are not disputed. The respondents have failed to justify the demand of Rs.3,48,746/-. The respondents have, however, given the details of the payment made by the petitioners alongwith statements of account in Annexure R-12. In the statement of accounts filed by the respondents alongwith Annexure R-12, the interest has been calculated at the rate of 18% and 14%. The statement of account is not clear about the payments made by the petitioners as depicted in the writ petition. However, it appears that the compound interest has been charged from the petitioners at the rate of 18% per annum. Petitioners seem to have paid the amount of sale consideration and some interest thereon against the total sale consideration of Rs.1,82,000/-. The petitioners have paid initially Rs.2,35,975/- and thereafter claims to have paid further amount of Rs.3,56,487/-. In any case the calculations are required to be made by the respondents. It has been held by this Court as also by the Hon'ble Supreme Court that resumption should be the last resort. In the present case, the resumption order is not justifiable particularly, in view of the payments having been made by the petitioners. In so far as the question of payment of interest is concerned, the Hon'ble Supreme Court in the case of Roochira Ceramics vs. Haryana Urban Development Authority, 2002(1) PLJ 109, while examining the claim of the HUDA for interest at the rate of 18% has held as under:- “4.Learned counsel, appearing for the appellant, urged that the consistent view of the High Court CWP No.13187 of 2008 4 has been that where an allottee has committed default in payment of instalment, the Authority was made to charge interest at the rate of 10% and not 18%. It is also urged that the judgment of the High Court has been upheld by this Court. Learned counsel appearing for the appellant, referred the judgment of the High Court of Punjab and Haryana passed in CWP No.12975/94 decided on 25.7.96 wherein the Division Bench of the High Court held that the Authority is entitled to charge interest at the rate of 10% and not 18% when there is default in payment of instalment. The Special Leave Petition No.23203/96 preferred bgy the Authority against the said judgment was dismissed on 9.12.96. The decision of the High Court of Punjab asnd Haryana in CWP No.16487/91 Harish Kumar Virja v. State of Haryana and another, which was followed in other cases, laid down that the Authority in cases of default in payment of instalments is entitled to charge interest at the rate of 10%. Learned counsel, appearing for the respondents, conceded that no special leave petition was filed against the said judgement and the said judgment has attained fanality. In view of the aforesaid decision, we are of the view that the respondents were entitled to charge interest @ CWP No.13187 of 2008 5 10% only and not 18%. Since the appellant had deposited interest @ of 18%, the Authority under law is required to refund the excess of the interest realised from the appellant. For the aforesaid reason, the judgment under appeal is set aside. The respondent-Authority is directed to refund excess interest realised from the appellant within three months from the date of service of certified copy of this order. 5.The appeal is allowed. There shall be no order as to costs.” Mr.Walia has referred to another judgment of the Hon'ble Supreme Court in the case of HUDA vs. Raj Singh Rana, 2009(1) RCR (Civil) 129. Even in this case, Hon'ble Supreme Court has emphasized the charging of interest at the prevalent bank rates, in accordance with the provisions of the Interest Act, 1978. The relevant observations are as follows:- “18. In the aforesaid circumstances, even though the rate of interest indicated in the allotment letter dated 22.3.1974 may not have application as far as payment of the additional price is concerned, the District Forum has erred on the site of reason and has allowed interest at the rate of 7 per cent per annum upon holding that the demand made by the appellant at the higher rate was contrary to the mutual agreement contained in the allotment CWP No.13187 of 2008 6 letter. In our view, even though a policy may have been adopted by the appellant for imposing a deterrent rate of interest on defaults committed by allottees in payment of their dues, such imposition has to be in keeping with the provisions of Section 3 of the Interest Act, 1978 and not in a unreasonable manner. It may perhaps be even more pragmatic if a condition regarding charging of interest at the prevailing banking rates were included in the allotment letters, having regard to the provisions of sub-section(3) of Section 3 of the said Act.” In view of the totality of the circumstances and the observations of the Hon'ble Supreme Court in respect of the charging of interest, this petition is disposed of with the following directions:- (i) The impugned orders dated 17.7.2000, 7.11.2000 and 17.4.2008 (Annexures P-2, P-3 and P-12 respectively) are hereby set aside. (ii)The respondents will calculate the simple interest at the rate of 10% per annum. Petitioners shall be liable to pay the interest so calculated; (iii)After adjusting the amounts paid by the petitioners, if any amount is still payable, the same shall be communicated to the petitioners within a period of one month from today. On receipt of such communication/demand from the respondents, the petitioners shall be liable to pay the entire outstanding balance amount so calculated by the respondents in the above manner within a period of one month thereafter. CWP No.13187 of 2008 7 (iv) On failure of the petitioners to pay such outstanding amount demanded by the respondents in the above manner, the order of resumption shall stand revived. In the event the amount deposited by the petitioners is more than the calculated amount, the respondents shall refund the same to the petitioners within a period of one month. (PERMOD KOHLI) JUDGE 7.10. 2010 MFK CWP No.10585 of 2010 8