Case Note & Summary
The petitioner, Sayeed Shamshul Hasan, was a resident of Mumbai whose house was burnt during the riots of December 1992 and January 1993. The State of Maharashtra announced a rehabilitation scheme for riot-affected persons, and the Mumbai Housing and Area Development Board (MHADA) reserved units for them. After verifying eligibility, MHADA issued an allotment letter on 6 March 1997, allotting a tenement to the petitioner for an aggregate payment of ₹2,20,700. The petitioner paid the entire amount but could not do so within the stipulated period due to his financial distress caused by the riots. Consequently, MHADA issued a letter dated 10 August 1999 demanding interest of ₹68,226 for the delayed payment. The petitioner challenged this demand by filing a writ petition. The High Court admitted the petition on 24 December 1999 and granted interim relief subject to depositing one-third of the demand amount. The petitioner deposited that amount and later obtained possession of the tenement on 7 February 2000. The Court considered the facts and held that the demand for interest was unjustified because the allotment letter itself was issued in 1997, and the delay in payment was attributable to the petitioner's financial condition resulting from the riots. The Court quashed the impugned letter demanding interest and directed MHADA to refund any amount deposited towards interest, including the one-third deposited pursuant to the interim order, within four weeks. The petition was allowed with no order as to costs.
Headnote
A) Rehabilitation Law - Riot Affected Persons Scheme - Interest on Delayed Payment - MHADA - The petitioner, a riot-affected person, was allotted a tenement under a rehabilitation scheme. Despite paying the full purchase price, the respondent demanded interest for delayed payment. The Court held that the demand for interest was unjustified as the allotment letter was issued in 1997, and the delay was due to the petitioner's financial condition caused by the riots. The Court quashed the demand and directed refund of any amount deposited towards interest. (Paras 1-5)
Issue of Consideration
Whether the respondent No.1 (MHADA) is entitled to charge interest on the delayed payment of the purchase price of a tenement allotted to a riot-affected person under a rehabilitation scheme, when the allotment letter was issued later and the delay was due to the petitioner's financial distress caused by the riots.
Final Decision
The petition is allowed. The impugned letter dated 10 August 1999 demanding interest of ₹68,226 is quashed and set aside. The respondent No.1 is directed to refund the amount deposited by the petitioner towards interest, including the one-third deposited pursuant to the interim order, within four weeks. No order as to costs.
Law Points
- Rehabilitation scheme for riot affected persons
- interest on delayed payment
- allotment letter
- MHADA
- policy decision
- equity
Case Details
2011 LawText (BOM) (11) 25
Writ Petition No.2626 of 1999
P.B.Majmudar, Mrs.Mridula Bhatkar
Mr.Asif Iqbal I. Patel, for the petitioner; Mr.G.W.Mattos, AGP, for the respondents
Mumbai Housing and Area Development Board, The State of Maharashtra
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Nature of Litigation
Writ petition challenging a demand for interest on delayed payment of purchase price of a tenement allotted under a rehabilitation scheme for riot-affected persons.
Remedy Sought
Quashing of the letter dated 10 August 1999 demanding interest of ₹68,226 and refund of any amount deposited towards interest.
Filing Reason
The petitioner, a riot-affected person, was allotted a tenement by MHADA but could not pay the purchase price within the stipulated period due to financial distress caused by the riots. MHADA demanded interest for the delayed payment.
Previous Decisions
On 24 December 1999, the High Court admitted the petition and granted interim relief subject to depositing one-third of the demand amount.
Issues
Whether MHADA can charge interest on delayed payment of purchase price when the allotment letter was issued in 1997 and the delay was due to the petitioner's financial condition caused by the riots.
Submissions/Arguments
The petitioner argued that he paid the entire amount of ₹2,20,700 and obtained possession on 7 February 2000. He submitted that the demand for interest was unjustified as the delay was due to his financial condition resulting from the riots. He also stated that he deposited one-third of the demand amount pursuant to the interim order.
Ratio Decidendi
The demand for interest on delayed payment of purchase price of a tenement allotted under a rehabilitation scheme for riot-affected persons is unjustified when the allotment letter was issued later and the delay was due to the allottee's financial distress caused by the riots. Equity demands that such interest not be charged.
Judgment Excerpts
The petitioner is challenging a letter issued by the respondent No.1 dated 10-8-1999, thereby demanding an additional amount of `68,226/- by way of interest on the price of the tenament which was alloted to the petitioner by the respondent No.1.
The petitioner was residing in an old residence... however, in the riot of December 1992 and January 1993, the aforesaid house of the petitioner was burnt.
The respondent No.1 after verifying the eligibility of the petitioner, was given an allotment letter dated 06-03-1997 and it was held that he was eligible to get tenement/gala on aggregate payment of `2,20,700/-.
He submits that the petitioner has paid the entire amount and now the petitioner has been given possession of the said tenement on 07-02-2000 and is residing in the said tenement since then.
Considering the facts and circumstances of the case, the demand of interest is unjustified.
Procedural History
The petitioner filed Writ Petition No.2626 of 1999 in the High Court of Judicature at Bombay challenging the demand for interest. On 24 December 1999, the Court admitted the petition and granted interim relief subject to depositing one-third of the demand amount. The petitioner deposited that amount and later obtained possession of the tenement on 7 February 2000. The petition was finally heard and disposed of on 25 November 2011.
