M/S SUNEJA TOWERS PRIVATE LIMITED & ANR.  [APPELLANT(S)] Vs. ANITA MERCHANT [RESPONDENT(S)]

(CIVIL APPEAL NOS. 2892-2894 OF 2023 ARISING OUT OF SLP NOS. 8163-8165 OF 2022)

(2JB, DINESH MAHESHWARI and SANJAY KUMAR JJ., delivered by DINESH MAHESHWARI, J.)

Facts: Appeals preferred by special leave questioning a part of the common judgment and order dated passed by the National Consumer Disputes Redressal Commission in Revision Petition whereby the National Commission has declined to interfere in the common judgment and order passed by the State Consumer Disputes Redressal Commission in Appeals, which followed the dictum of the Hon’ble Supreme Court in Dr. Manjeet Kaur Monga’s case and awarded compound interest to the respondent.

Issue: Whether the Consumer Fora had been justified in awarding and approving compound interest at the rate of 14%?

Arguments on behalf of counsel for appellants: Mr. Ranjit Kumar

Learned senior counsel has contended in the first place that the Act of 1986 does not confer any power on the Consumer Fora established thereunder to award compound interest on the compensation amount; therefore, such awarding of compound interest cannot be countenanced. He has further submitted that wherever the legislature intended to confer the power to grant compound interest, an enabling provision has been incorporated in the statute, as held in Central Bank of India v. Ravindra (2002). Secondly, in the recent decisions, this Court has only awarded simple interest with the rates ranging from 6% to 9% p.a. in the cases of deficiency of service by the builders, relying on the rate of interest awarded in Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor: (2022). Thirdly, directions as issued in the present matter would result in unjust enrichment of the respondent. Fourthly, the respondent had neither demanded nor prayed for the relief of compound interest in the complaints filed before the District Forum, and the Consumer Fora could not have granted relief which had not been specifically prayed for, as held in Manohar Lal (D) by Lrs. v. Ugrasen (D) by Lrs. and Ors.: (2010). Fifthly, Dr. Monga’s case cannot be considered to be a binding precedent so far as the proposition with respect to compound interest is concerned. Lastly, it was submitted that awarding of compound interest without taking note of the facts of refund cheque issued by the appellants remains wholly unjustified.

Arguments on behalf of counsel for respondents: Mr. Sidharth Luthra

It has been contended that the appellants had neither been fair in their dealings nor consistent in their stand. Further, while placing strong reliance on the decision of this Court in Dr. Manjit Kaur Monga learned senior counsel has submitted that the said case relating to the same project and the same builder (the appellants) makes it clear that the appellants had duped the respective complainants by employing almost the same modus operandi. Further, provisions contained in Section 12-B(3) of the Monopolistic and Restrictive Trade Practices Legislation Act and Section 14(1)(d) of the Consumer Protection Act, 1986 are in essence identical, empowering the respective fora to award compensation though, the power to award compensation under the Act of 1986 is wider in scope. Further, it was submitted that the award of compound interest to the respondent does not call for any interference. Further, reliance was placed on the decision in Wallersteiner v. Moir (1975) which highlights the principles therein that compound interest should be awarded under the equitable jurisdiction of the Court where the wrongdoer utilizes the money retained for business purpose and thereby making the profit thereon.Further, relying on Dr. Monga’s case, it was submitted that ‘the inherent powers in the Court and principles of justice and equity are sufficient to enable an order directing payment of compound interest’. Lastly, it was submitted that in view of specific law in India that compound interest would be operated only if the statute or the contract provides for the same; and there being no such prescription in the statute or in the contract, awarding of compound interest cannot be said to be justified.

Held: The court, while allowing the present appeal, set aside the impugned orders passed by the State Commission and National Commission. The court also clarified that appellants shall not be required to make any further payment to the respondent, whether towards refund or towards compensation or towards interest, while holding that “proposition of awarding compound interest in these matters by the Fora exercising jurisdiction under the Consumer Protection Act ,1986 stands disapproved.” The court also observed 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.”