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2001 DIGILAW 80 (JHR)

Ravi Nandkeolyar v. State Of Bihar

2001-02-01

M.Y.EQBAL

body2001
ORDER M.Y. Eqbal, J. 1. Heard Mrs. Sheela Prasad, learned counsel appearing for the petitioner and Mrs. I. Sen Choud-hary, learned counsel appearing for the respondent-Housing Board. 2. The petitioner has challenged the notice dated 29.12.1998 as contained in Annexure 5 to the writ application whereby the respondent-Housing Board has raised a demand of Rs. 2,22,580/-being the amount of compound interest payable in respect of allotment of MIG House. 3. The only question raised by the petitioner is as to whether in the facts and circumstances of the case charging of compound interest by the Board and raising of demand of Rs. 2,22,580/- is justified? 4. Pursuant to the notice issued by the Board for auction of the incomplete house at Harmoo, Ranchi, the petitioner applied and participated in the auction. He being the highest bidder, the Board decided to allot the said house at a total price of Rs. 1,17,000/-- Letter of allotment dated 22.10.1984 was accordingly issued in favour of the petitioner. The petitioner was handed over possession of the said house in the year, 1985 on payment of 25% of the total price and an agreement to that effect was executed by and between the petitioner and the Board on 15.4.1985. In terms of the agreement the petitioner was required to pay balance 75% of the total price of the house in six half yearly instalments together with interest at the rate of 14% per annum. Since the petitioner did not pay the entire instalments within time, the Board continuously charged interest and raised demand of Rs. 2,22,580/-. 5. In order to appreciate the case of the parties, I am again repeating the admitted facts of the case. The letter of allotment was issued in 1985. An agreement incorporating the terms and conditions of the allotment has been executed on 15.4.1985. One more important fact is that the petitioner paid the entire balance; 75% of the total price i.e., Rs. 87,000/- in 1992. Admittedly, petitioner has not paid interest which was, in fact, payable on 75% of the balance amount till the entire amount is paid to the Board. The only dispute as stated above is that whether the petitioner would be liable to pay compound interest or not? The liability to pay interest can be created either by the operation of law or by an agreement. Mrs. The only dispute as stated above is that whether the petitioner would be liable to pay compound interest or not? The liability to pay interest can be created either by the operation of law or by an agreement. Mrs. I Sen Choudhary put heavy reliance on paras 4 and 8 of the agreement which read as under :-- "That the settlee will pay to the Board without writing for any demand the remaining 75% cost of the said incomplete house with an interest fourteen percent (14% per annum) thereon chargeable from the date of delivery of possession....in six equated half yearly instalments of Rs. 18,410/- (Rs. Eighteen thousand four hundred ten) only tobe paid within the 15th day of following months on which the instalments becomes due." That interest @ 14% (fourteen percent) per annum shall be charged on all dues beginning from the date of the delivery of possession over the said complete house in case of first default in depositing any instalment interest shall be charge (c) 18% (eighteen per cent per annum) of the amount due. But, in case of default in depositing two consequtive instalments the allotment shall stand cancelled and all deposits, payments etc. made shall stand forfeited." 6. The aforesaid two clauses very clearly and specifically stipulate that the Board shall be entitled to realise 75% of the price of house together with interest @ 14% thereon which is chargeable from the date of delivery of possession in six equal half yearly instalments. Clause 8 of the agreement is penal clause which says that if the allottee fails to pay 75% balance amount in six half yearly instalments and makes default in payment of instalments then the rate of interest shall be increased from 14% to 18% per annum. Neither clause 4 nor clause 8 nor any other clause of the agreement lays down any condition that the Board shall be entitled to realise compound interest from the petitioner- allottee. I am, therefore, of the definite view that neither the letter of allotment nor the agreement empowers the Board to recover compound interest at the rate of 18% per annum from the allottee. However, the Board is entitled to realise interest @ 18% per annum on the amount that remains unpaid by the allottee. 7. I am, therefore, of the definite view that neither the letter of allotment nor the agreement empowers the Board to recover compound interest at the rate of 18% per annum from the allottee. However, the Board is entitled to realise interest @ 18% per annum on the amount that remains unpaid by the allottee. 7. In the instant case, as noticed above, since the petitioner failed to pay 75% of the total price within six half yearly instalment, the Board became entitled to charge penal interest @ 18% per annum on the total amount payable by the petitioner- allottee. Whatever amount was due in 1992 the Board shall be entitled to recover the said amount after deducting the amount already paid by the petitioner together with interest at the rate of 18% per annum. In that view of the matter, in my opinion, if the respondent-Board has charged compound interest at the rate of 18% per annum right from the date when 75% balance amount become payable by the petitioner, then the same cannot be said to be justified. The Board is, therefore, required to re-calculate the dues payable by the petitioner after charging 18% simple interest as indicated hereinabove. 8. Mrs. Indrani Sen Choudhary, learned counsel for the Board put reliance on the decision of the Supreme Court in the case of Ghaziabad Develp-ment Authority v. Sanchar Vihar Sahkari Avas Samittee Ltd., Ghaziabad, 1996 (9) Supreme Court Cases, 314, and submitted that the Board is entitled to recover compound interest. I have gone through the decision of the Apex Court in the case of Ghaziabad Development Authoritys case (supra). In that case certain plots were allotted by Ghaziabad Development Authority to the members of Sanchar Vihar Sahkari Avas Samiti under certain terms and conditions. Since the allottees violated the terms and conditions by defaulting in payment of instalments, the Authority decided to charge interest on the balance amount payable by the allottees in six half yearly instalments. The allottees raised objection that since the allottment was made under self financing scheme, the Authority could not charge interest and the same will be in violation of clause 3.50 of the Brochure. The allottees- complainants, therefore, prayed that the Authority would not be entitled to recover interest and penal interest on the instalments. The allottees raised objection that since the allottment was made under self financing scheme, the Authority could not charge interest and the same will be in violation of clause 3.50 of the Brochure. The allottees- complainants, therefore, prayed that the Authority would not be entitled to recover interest and penal interest on the instalments. Their lordships held :-- "In our opinion the Na tional Commission was not justified in dissecting clause 3.50 and column 9 of Table I of the brochure. The brochure published by the Authority has to be read together. It is true that clause 3.50 is silent about the liability of the applicant to pay the interest @ 15% on the balance amount but that clause in our opinion has to be read with Table I, column 9. This we say so because Table I sets out the details relating to the scheme, name and code, the property category, number of plots, approximate cost of the plots, payment plan/pay plan, registration amount, reservation amount, balance amount payment schedule etc. Since the complainant and its members have availed of the facility of payment of balance amount in the Self Financing Scheme in six half- yearly instalments and accordingly paid the interest with 15% per annum it would be too late in the day to say that in the Self-Financing Scheme they were not liable to pay interest on the balance amount as claimed by the Authority. If the members of the complainant were not agreeable to the payment of interest on the balance amount @ 15% as prescribed in column 9 of Table I, then they ought to have objected to the liability to pay the interest provided therein and should have raised the dispute at the appropriate time. Having acquiesced in the mode of payment in instalments as per column 9 of Table I in our opinion it would not be permissible for the complainant to raise a dispute as regards the payment of interest thereon." 9. As noticed above, neither any statutory rule of the Board nor any agreement provides that in the event of default in payment of installments by the allotted, the Board would be entitled to charge compound interest on the balance amount of installment. On the contrary, clause 8 of the agreement very specifically provides that in case of default penal interest shall be recovered at the rate of 18% p.a. 10. On the contrary, clause 8 of the agreement very specifically provides that in case of default penal interest shall be recovered at the rate of 18% p.a. 10. For the reasons aforesaid, this writ application is disposed of with a direction to the respondents-Board to re calculate the amount payable by the petitioner in the manner indicated herein- above and raise demand so that the petitioner shall pay the same within six weeks from the date of receipt of notice of demand. 11. Disposed of accordingly.