Comment On Judgment

CASE COMMENT
Chief Administrator Huda & Anr vs. Shakuntla Devi
On 8 December, 2016
IN THE SUPREME COURT OF INDIA
CIVIL APPEAL No. 7335 of 2008
Introduction:
This case was associated with delivery of possession of plot which was delayed by the
development authority. Here it was decided that the purchaser suffered an injury because of
the delay in handing over the possession as there was obvious escalation in the cost of
construction. But it was also decided that at the same time the purchaser had surely benefited
by the increase in the cost of plot during the period of delay; and that as the State Consumer
Disputes Redressal Commission has criticized the conduct of the purchaser in intentionally
delaying the construction for 6 years but still awarded compensation, the award of interest
would have been sufficient to compensate the purchaser for the loss suffered by him because
of the delay in handing over the possession of the plot. Hence the bench decided that the
compensation of Rs. 15 lakhs awarded by the State Commission was excessive. A Supreme
Court bench comprising the Chief Justice of India at that time T.S. Thakur, Justice D.Y.
Chandrachud and Justice L. Nageswara Rao delivered this order.
Background:
In this case, the Respondent (purchaser) was allotted Plot No. 40, measuring 40 marlas in
Sector 8, Urban Estate, Karnal on 03.04.1987. Physical possession of the plot wasn't
delivered to her by the Appellants (HUDA) therefore the Respondent filed Original
Complaint No. 54 of 1997 before the State Consumer Disputes Redressal Commission.
The State Commission by its order dated 21.12.1998 decided that the Respondent suffered
because of the deficiency of service by the Appellants as there was delay in delivering
physical possession. The Appellants were ordered to deliver vacant physical possession of the
plot. The State Commission also directed HUDA to pay interest on the amount deposited by
the Respondent at the rate of 12% with effect from 03.04.1989 and to pay a sum of Rs.2 lakhs
as compensation on account of escalation in the cost of construction etc. The Appellants were
also directed to pay Rs.20, 000/- towards compensation for monetary loss and mental
harassment of the Respondent.
In appeal filed by HUDA, the National Consumer Disputes Redressal Commission restricted
the dispute only to the award of compensation of Rs.2 lakhs regarding the escalation in cost
of construction. The rest of the payments of compensation towards monetary loss and mental
harassment of Rs. 20,000/- and interest on the sum deposited by the Respondent were
confirmed. The National Commission referred the matter for re-consideration of
compensation for escalation of cost of construction in accordance with CPWD rates to State
Commission.
The State Commission reconsidering the matter permitted both sides to submit evidence
which would help it to calculate the compensation for escalation of construction cost as per
CPWD rates. The Respondent (purchaser) submitted evidence to prove that the escalation in
cost of construction between April, 1989 and January, 2000 would be Rs. 18, 67,000/-. The
material produced by the Respondent to prove rise in the cost of construction was accepted
by the State Commission which held that the Respondent was entitled for a sum of Rs. 18,
67,000/- as compensation. However, the State Commission also held that the Respondent did
not try to start construction till 2006 with a view to get more compensation. In light of this
she was awarded compensation of Rs. 15, 00,000/- in place of Rs. 18, 67,000/- towards
increase on the cost of construction.
The National Commission by an order dated 25.09.2007 dismissed Appeal filed by HUDA
and confirmed the order passed by the State Commission saying that the compensation
awarded by the State Commission was just and reasonable.
Analysis:
In appeal by HUDA, the Supreme Court said that the sine qua non for entitlement of
compensation is proof of loss or injury suffered by the consumer because of the negligence of
the opposite party. If the given conditions are satisfied computation of compensation must be
fair, reasonable and commensurate to the loss or injury. There is a duty on the Consumer
Forum to consider all relevant factors for deciding the amount of compensation to be paid.
The Supreme Court referred to the decision in Ghaziabad Development Authority v. Balbir
Singh1, where in similar circumstances, it was held that in cases where the
Commission/Forum has ordered delivery of possession, the party has already got a benefit.
The value of the land/flat would have gone up during the meantime. But even in cases where
delivery of possession has been directed there can be compensation for the harassment/ loss.
But such compensation should be decided after considering the facts of every case and after
determining the amount of harassment/loss which has been caused to the consumer.”
The Supreme Court noted that, in the present case, the State Commission commented on the
conduct of the Respondent in delaying the construction only to claim higher compensation. In
these circumstances, the Supreme Court held that the Respondent isn't entitled to such
compensation awarded by the State Commission and confirmed by the National Commission.
The Respondent suffered an injury because of the delay in delivering the possession as there
was definitely rise in the cost of construction. At the same time the Respondent has surely
benefited by the increase in the cost of plot from the period of 1989 to 2000. It said that the
decision of the State Commission is unreasonable because the State Commission despite
1
Appeal (civil) 7173 of 2002
criticizing the conduct of the Respondent in intentionally delaying the construction for 6
years awarded compensation to her. The apex court hence held that award of interest would
have been sufficient to compensate the Respondent for the loss suffered by him due to the
delay in delivering the possession of the plot and also the compensation of Rs. 15 lakhs
awarded by the State Commission is excessive.
Accordingly, the Order of the State Commission dated 05.07.2007 as confirmed by the
National Commission was set aside by the Supreme Court.
Conclusion:
In this case the SC held that for entitlement of compensation it's essential to prove loss or
damage. This explains that when aggrieved party is already benefited due to failure of
delivery of possession to him, he cannot get benefitted again excessively because of the
mental injury and harassment he suffered. The compensation must be fair, just and reasonable
according to the principles of natural justice.

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CASE COMMENT

Chief Administrator Huda & Anr vs. Shakuntla Devi

IN THE SUPREME COURT OF INDIA

CIVIL APPEAL No. 7335 of 2008

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