CASE LAW

GHAZIABAD DEVELOPMENT AUTHORITY VS. UNION OF INDIA AIR 2000

Key Issues:

The case addresses three primary legal issues arising from the allotment of plots under the Ghaziabad Development Authority’s (GDA) Indirapuram Scheme:

1. Compensation for Mental Agony:
   • Whether the claimants are entitled to compensation for the mental agony suffered due to the delay in possession of the allotted plots.
2. Payment of Interest in Absence of a Contract or Promise:
   • Whether, in the absence of any contract or promise by the GDA, the claimants are entitled to interest on the amount paid by them for the plots.
3. Rate of Interest:
   • If the claimants are entitled to interest, what should be the appropriate rate at which it is to be paid?

Key Facts:

1. Indirapuram Scheme by GDA:
   • The Ghaziabad Development Authority announced a scheme for the allotment of developed plots known as the Indirapuram Scheme.
   • The plot size reserved for the claimants was 35 square metres.
   • The estimated cost of the plot was 4,20,000 payable in specified instalments.
2. Delay in Possession:
   • The claimants were informed that there was a delay in the handing over of possession due to unavoidable reasons and incomplete development work.
   • The claimants had waited for an unreasonable length of time for possession, which prompted them to approach the MRTP Commission.
3. Claimants’ Approach to the MRTP Commission:
   • The claimants filed appeals before the MRTP Commission due to the delay and lack of possession.
   • They sought redressal for the delay, mental agony, and the refund of the amounts deposited, along with interest.

Legal Questions Raised:

1. Compensation for Mental Agony:
   The claimants sought compensation for the mental distress caused by the delay in possession of the allotted plots. They argued that the prolonged wait and lack of communication about the delay led to suffering.
2. Interest on Amount Paid:
   Since there was no formal contract or promise regarding the timeline for possession or refund, the question arose whether the Ghaziabad Development Authority should pay interest on the amount deposited by the claimants.
3. Rate of Interest:
   The MRTP Commission had directed the payment of 18% interest on the amounts due, but the question of whether this rate was appropriate, and what the correct rate of interest should be, was also raised.

Important Figures:

• Plot Size: 35 square metres
• Estimated Plot Cost: 4,20,000 (payable in instalments)
• Interest Rate Initially Ordered: 18% per annum
• Interest Rate Ordered by Court: 12% per annum
• Compensation for Mental Agony: 50,000 (as ordered by the MRTP Commission, later set aside by the court)

Final Order:

1. Compensation for Mental Agony:
   • The MRTP Commission’s direction to award 50,000 as compensation for mental agony was set aside by the court. The court did not find sufficient grounds to award such compensation.
2. Interest Payment:
   • The court modified the MRTP Commission’s direction regarding the interest rate.
   • The MRTP Commission had initially directed interest to be paid at 18% per annum on the amounts due.
   • The court reduced the interest rate to 12% per annum.
3. Refund and Alternative Flat:
   • The claimant was given the option to refuse the offered flat if it did not meet their requirements. In case of refusal, the claimant was entitled to a refund of the amounts deposited, with interest at 12% per annum.
   • An attempt was made to explore the possibility of satisfying the claim by allotting an alternative flat; however, the claimant rejected the offered flat, citing that it was located in a deserted area and was overpriced.
   • Refund with interest at 12% will apply, and the earlier directive for a higher interest rate (18%) was modified.

Takeaway

The court addressed key issues of compensation for mental agony, the payment of interest on amounts deposited, and the rate of interest to be applied in the context of the delay in handing over possession under the Ghaziabad Development Authority’s Indirapuram Scheme. The court ruled against compensation for mental agony, set a reduced rate of interest (12% per annum), and confirmed that the claimants were entitled to a refund with interest.