Case Note & Summary
The dispute originated from a 1989 flat allotment in Ghaziabad where the original applicant died and was succeeded by her daughter-in-law, who continued payments. The developer issued an allotment letter in 1992 but delayed construction significantly, eventually cancelling the allotment in 2005 and offering a refund via pay order, which the complainant refused. The complainant filed a complaint under the Monopolies and Restrictive Trade Practices Act, 1969 alleging unfair trade practice, seeking possession or compensation. After the MRTP Act's repeal, the case was transferred to the Competition Appellate Tribunal (COMPAT), which found the developer guilty of unfair trade practice under Section 36-A(1) but declined to grant possession, instead awarding compound interest at 15% per annum on instalments from deposit dates until cancellation. Both parties appealed to the Supreme Court, which upheld the compensation formula but remanded the matter to consider post-cancellation interest and implead Citibank. On remand, the National Company Law Appellate Tribunal (NCLAT) directed compound interest on the principal amount from 1 May 2005 until 7 May 2016 when payment was made, plus pendente lite and future interest. The complainant argued for interest from the original deposit date in 1993, while the developer contested liability. The Supreme Court analyzed the restitutionary principles and equitable considerations, ultimately dismissing the appeals and upholding the NCLAT's order as appropriate compensation for the unfair trade practice, without extending the interest period further back.
Headnote
A) Consumer Protection - Unfair Trade Practice - Compensation under Section 12B MRTP Act - Monopolies and Restrictive Trade Practices Act, 1969, Sections 12B, 36-A(1)(i), (ii), (ix) - Developer falsely represented completion timeline and cancelled allotment after complainant paid instalments - COMPAT found unfair trade practice and awarded compound interest @15% per annum on instalments from deposit dates until cancellation - Supreme Court upheld compensation formula and remanded for consideration of post-cancellation interest (Paras 5-8). B) Civil Procedure - Transfer of Pending Cases - Effect of Repeal - Competition Act, 2002, Section 66 - MRTP Act repealed by Competition Act effective 1 September 2009 - Pending cases before MRTP Commission transferred to COMPAT (later NCLAT) - Court recognized continuation of proceedings under transitional provisions (Paras 4-5). C) Banking Law - Pay Order Liability - Interest on Unpaid Amounts - Not mentioned - Developer issued Pay Order for refund which complainant returned - Amount deducted from developer's account but not paid - Citibank re-credited amount after cancellation - NCLAT directed compound interest on principal from 1 May 2005 until 7 May 2016 when payment made - Court considered bank's liability but did not impose additional burden (Paras 6-9). D) Remedies - Compensation Calculation - Compound Interest as Restitution - Not mentioned - Complainant sought interest from deposit date (1993) until realization (2016) - NCLAT limited interest period from cancellation date (2005) to payment date (2016) - Supreme Court upheld NCLAT's approach as equitable, rejecting claim for extended period (Paras 10-12).
Issue of Consideration
Whether the complainant is entitled to compound interest on the principal amount from the date of deposit until realization, and whether the NCLAT's order directing compensation was correct
Final Decision
Supreme Court dismissed the appeals and upheld the NCLAT order directing compound interest @15% per annum on principal amount from 1 May 2005 until 7 May 2016, plus pendente lite and future interest
Law Points
- Unfair trade practice under MRTP Act
- Compensation under Section 12B
- Compound interest calculation
- Transfer of pending cases after repeal
- Restitutionary principles
