NCDRC: Allotee Failing to Make Payment to Authority within Reasonable Time Must Bear the Burden of Enhanced Compensation

NCDRC: Allotee Failing to Make Payment to Authority within Reasonable Time Must Bear the Burden of Enhanced Compensation

The New Delhi bench of the National Consumer Disputes Redressal Commission (NCDRC) bench comprising of C. Vishwanath (Presiding Member) and Subhash Chandra (Member) has observed that as the Complainant/Allotee did not pay the amount within thirty days to the Authority, it must bear the burden of enhanced compensation.

In the present case, the Army Welfare Housing Organisation’s (Complainant/Allotee) case is that they were given 5 acres of land in Ambala City by the Haryana Urban Development Authority (HUDA) in 1991, for a price of Rs.1,58,48,000/-. They received possession of the land in 1993 and made the final payment to HUDA in 1996.

However, in 1997, HUDA demanded an additional amount of Rs. 5097990.78 for enhanced compensation based on a court judgment dated 6 May, 1992 of Ld. Additional District Judge, Ambala. HUDA never informed the complainant about this additional amount before the final payment was made.

Consequently, the complainant paid the enhanced compensation as determined by the judgment. HUDA's demand came more than six years after the Court order and was higher than the compensation awarded. The complainant sent a legal notice seeking clarification of the inflated demand, but HUDA threatened to impose a penalty instead of providing an explanation. HUDA also charged for the land that was part of the green belt, which was illegal.

The complainant requested the exclusion of the green belt from the land allotment but received no response.

Instead, HUDA raised further demands in 2000, 2005, and 2008, which were paid under protest by the complainant. The total amount demanded by HUDA exceeded the actual cost of the land.

The complainant filed a complaint seeking a refund of the amounts paid, along with interest and costs.

According to HUDA, the complaint was not valid as the complainant would not qualify as a ‘consumer’ under the Consumer Protection Act. HUDA also claimed that the complaint was barred by limitation and that the complainant was legally obligated to pay the increased compensation as per the terms of the allotment letter and the HUDA Act.

It was further urged by HUDA that the Complaint is essentially a claim for monetary recovery, which should be pursued in a Civil Court instead of a Consumer Court. It was emphasized that the Complaint involved complex factual issues that are better suited for resolution in a Civil Court.

HUDA pointed out that as per Clause No. 22 of the allotment letter, disputes were 2to be resolved through arbitration, suggesting that the Complaint was barred by this clause and should not be entertained by the Consumer Commission.

The NCDRC at the outset stated that the complaint was well within the limitation period as per Section 12 of the Limitation Act, 1963 as it was filed just after the dismissal of the of the case under the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act).

Referring to the decision passed by Supreme Court in M/s Emaar MGF Land Limited vs. Aftab Singh (2019), wherein it was affirmed that an arbitration clause in an agreement does not bar the jurisdiction of Consumer Fora to entertain a Complaint. Furthermore, Section 3 of the Consumer Protection Act, 1986 explicitly states that the provisions of the Act are ‘supplementary to’ and not ‘derogatory to’ any other existing law, the NCDRC noted.

With respect to the payment of enhanced compensation and interest, the NCDRC referred to the case of Pankaj Aggarwal & Ors vs. State of Haryana & Anr (2015), wherein the Punjab & Haryana High Court declared that a corporation was empowered to recover the enhanced compensation from the allottee, as per the terms of the allotment letter.

Therefore, considering the provisions of the allotment letter, the Regulations, and the judgment, the NCDRC held that HUDA had the right to recover the enhanced compensation, awarded by the District Judge, from the Complainants.

The NCDRC noted that according to Clause 9 of the allotment letter, the Complainants were obligated to make the payment within 30 days. As the Complainant failed to pay withing the stipulated time frame, HUDA rightfully charged interest on the outstanding amount, the NCDRC held.

Therefore, the NCDRC was of the view that HUDA had charged enhanced compensation from the Complainant in accordance with the terms of the allotment letter and the relevant regulations.

Hence, the Complaint was dismissed.