Supreme Court Reduces Compensation in HUDA Land Allotment Delay Case

The case of Chief Administrator, HUDA & Anr. vs. Shakuntla Devi involved a dispute over delayed possession of a residential plot allotted by the Haryana Urban Development Authority (HUDA) in Karnal. The Supreme Court, in its judgment on December 8, 2016, set aside the compensation awarded by the State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission, ruling that the respondent was not entitled to an escalated amount for the construction costs.

Background of the Case

The respondent, Shakuntla Devi, was allotted a residential plot (Plot No. 40) measuring 40 marlas in Sector 8, Urban Estate, Karnal, on April 3, 1987. Despite making full payment, including an enhancement fee as per the terms of the allotment, she was not given physical possession of the plot for several years. Frustrated by the delay, she filed a consumer complaint (Complaint No. 54 of 1997) before the State Consumer Disputes Redressal Commission, Union Territory, Chandigarh.

In her complaint, Shakuntla Devi claimed that the delay in handing over possession resulted in additional construction costs due to inflation. She sought several reliefs, including:

• Exemption from extension fees for delayed construction.
• Non-imposition of interest on the amount due since possession was delayed.
• Immediate delivery of the plot with completed development works.
• Compensation of ₹1,00,000 for mental agony.
• Reimbursement of ₹20,000 for litigation costs.
• Interest of 18% per annum on amounts deposited.
• ₹5,00,000 for escalation in construction costs.

Arguments by the Petitioner (HUDA)

• The respondent did not seek possession until July 16, 1997, despite the allotment being made in 1987.
• There was an outstanding amount of ₹28,000 that had not been paid by the respondent.
• The respondent had not submitted any building plans for approval, indicating she was not interested in constructing a house.

Arguments by the Respondent (Shakuntla Devi)

• She had paid all dues as per the allotment terms.
• HUDA was required to develop the area within two years, but even after a decade, the area lacked basic infrastructure.
• Construction costs had escalated significantly between 1988 and 1997.
• The delay in possession caused her financial hardship and mental distress.

Decisions of the Lower Consumer Forums

• State Commission (Order dated December 21, 1998): Held that HUDA was guilty of service deficiency for not handing over possession. It ordered:
• HUDA to deliver vacant possession within one month.
• Payment of 12% interest on the amount deposited by the respondent.
• ₹2,00,000 as compensation for escalation in construction costs.
• ₹20,000 as compensation for mental agony.
• National Commission (Appeal No. 154 of 1999): Affirmed the State Commission’s order but remanded the matter to determine compensation based on CPWD (Central Public Works Department) rates.
• State Commission (After Remand): Revised compensation for escalation in construction costs to ₹15,00,000, citing increased costs between April 1989 and January 2000.
• National Commission (Appeal No. 525 of 2007): Dismissed HUDA’s appeal and upheld ₹15,00,000 as reasonable compensation.

Supreme Court’s Judgment

The Supreme Court, comprising Chief Justice T.S. Thakur, Justice D.Y. Chandrachud, and Justice L. Nageswara Rao, set aside the compensation awarded by the lower forums, ruling that:

• While HUDA was liable for delayed possession, the compensation should be reasonable and proportionate.
• The respondent had benefited from an increase in property value from 1989 to 2000.
• Despite receiving possession in 2000, the respondent delayed construction until 2006, undermining her claim for escalated construction costs.
• Consumer protection laws aim to compensate for actual loss, not speculative gains.
• The ₹15,00,000 compensation awarded by the State Commission was excessive and lacked justification.

The Court concluded that the award of interest on deposited amounts was sufficient to compensate the respondent for HUDA’s delay. The Supreme Court allowed HUDA’s appeal and set aside the National Commission’s order.

Key Legal Takeaways

• Deficiency in Service: Development authorities must provide possession of allotted plots within a reasonable time.
• Reasonable Compensation: Courts must assess actual loss rather than speculative costs when awarding damages.
• Consumer Protection Act Interpretation: Compensation must be fair and commensurate with the injury suffered.
• Delay in Availing Benefits: A claimant who delays availing possession or utilizing property cannot seek excessive compensation.

Conclusion

The Supreme Court’s judgment in Chief Administrator, HUDA vs. Shakuntla Devi reaffirms that while consumers deserve protection against administrative delays, compensation should be awarded fairly and within reasonable limits. The ruling ensures that compensation for delays in possession does not turn into a windfall gain, thereby balancing the interests of both development authorities and allottees.

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Download Judgment: Chief Administrator, vs Shakuntla Devi Supreme Court of India Judgment Dated 08-12-2016.pdf