“For an award of compound interest, relevant factors shall have to be taken into account,” says Supreme Court
While hearing the M/s Suneja Towers Private Limited Vs Anita Merchant case, the Supreme Court stated that awarding compound interest with reference to Dr. Manjeet Kaur Monga’s case could only lead to unjust enrichment of the respondent. The matter was presented before the two-judge bench of the Supreme Court including Justice Sanjay Kumar and Justice Dinesh Maheshwari. The bench opined that “For an award of compound interest, relevant factors shall have to be taken into account which would include uncertainties of the market and several other imponderables.” Also, it has been determined that the proviso added to Clause (d) of Section 14(1) of the Consumer Protection Act of 1986 empowers the Forum to grant punitive damages in such circumstances as it deems fit. Moreover, it cannot be laid down in absolute terms that no such stipulation regarding compound interest was available in the Act of 1986, the same could never be granted by the Consumer Fora.
In this case, three complaints were filed by the complainant-respondent before the Consumer Disputes Redressal Forum-II alleging deficiency of service on the part of the present appellants for having failed to deliver the possession of three flats booked by her, even after the expiry of the agreed period. Despite the fact that she admittedly made a payment of 60% of the total sale consideration. The District Forum, in its order, dismissed the complaints so filed by the present respondent on various grounds including that she had tried to avail of the services of the builder for commercial purposes by booking three flats and thus, did not fall within the category of “consumer”. State Commission granted relief to the complainant in the manner that the appellants shall refund the amount deposited by her together with ‘compound interest at the rate of 14% from the date of deposit’. The National Commission also found no reason to interfere with the relief granted by the State Commission. The appellants then approached the top Court against a part of the common judgment delivered by the National Consumer Disputes Redressal Commission.
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The Supreme Court stated that the respondent does not appear justified in suggesting that the appellants gave up their contest to the claim of compound interest. The impugned orders passed by the State Commission and National Commission were disapproved. In addition to this, the amount already received by the respondent in the sum of Rs. 2,48,52,000 together with accrued interest was allowed to be retained by her but the appellants shall not be required to make any further payment to the respondent, whether towards refund or towards compensation or towards interest. While giving the judgment, the Supreme Court bench also highlighted that “The said case of Dr. Manjeet Kaur Monga had been of claiming compensation under the provisions of MRTP Act whereas the present one is a case of claiming compensation under the Consumer Protection Act, 1986. Hence, a comparison of the provisions of Section 14(1)(d) of the Act of 1986 and Section 12-B(3) of the MRTP Act.”
Along with this, the top Court also highlighted that “A judgment is an authority only in regard to its ratio which is required to be discerned, and a decision cannot be regarded as an authority in regard to its conclusion alone or even in relation to what could be deduced therefrom.” In this context, it was determined that the decision, in this case, cannot be read in support of the principle that compensation and/or punitive damages in terms of the Act of 1986 could also be by way of compound interest. The bench further added that “Not find ratio decidendi of Dr. Monga leading to the enunciation in favor of awarding compensation and/or punitive damages by way of compound interest, the substratum of the orders impugned is knocked to the ground.” The appeals in the case were then allowed by the two-judge bench of the Supreme Court.
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