SECRETARY, BHUBANESWAR DEVELOPMENT AUTHORITY versus SUSANTA KUMAR MISHRA

Citation: [2009] 2 S.C.R. 149 · Decided: 30-01-2009 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

1 
[2009] 2 S.C.R. 149 
SECRETARY, BHUBANESWAR DEVELOPMENT 
A 
AUTHORITY 
V. 
SUSANTA KUMAR MISHRA 
Civil Appeal No. 605 Of 2009 
JANUARY 30, 2009 
. B 
[R.V. RAVEENDRAN AND J.M. PANCHAL, JJ.] 
Contract: Parties bound by terms of agreement - De-
mand for any qmount due in terms of the unchallenged terms C 
of agreement does not furnish a cause of action to approach 
the consumer forum - On facts, lease-cum-sale agreement 
executed in 1991, two years after the original date of allotment 
- Term of agreement was that lessee in case of default or de-
lay in payment of instalment dues would pay interest @ 15% 0 
p.a. from the date when same fell due - Lessee started pay~ 
ing instalments from 1991 - Development authority charged 
interest on the instalments amount for the period 1989-91 -
Justification of - Held: Justified - Charging of interest from 
the original date of allotment was in accordance with the agree-
E 
ment -Lessee not entitled to contend that the instalments 
should commence only prospectively 
Consumer Protection Act, 1986: s.2(c) - Deficiency in 
service - Refusal to execute sale deed by the Development 
Authority, ·until amount due was paid - Held: Does not amount F 
to deficiency in service. 
Interest: Interest on interest - When the defaulted instal-
ment is subjected to interest, the interest component of de-
faulted instalments is also subjected to interest - Charging of G 
such interest, on the interest part of the instalment, on default 
in payment of the instalment, at a reasonable rate from the 
date of default, cannot be termed as charging of compound 
interest in regard to entire dues. 
149 
H 
150 
SUPREME COURT REPORTS 
[2009] 2 S.C.R. 
A 
The appellant-authority allotted MIG house to the re-
spondent, as per letter of allotment dated 1.5.1991. A lease-
c um-sale agreement was entered between them on 
6.5.1991. The agreement stipulated the price of the house 
Jo be Rs.1.39. lacs. Aft.er deducting the amount paid by 
B· the lessee towards the price (on 29.6.1990), it permitted 
· the.lessee to pay the balance in 52 quarterly instalments 
of Rs.1957/70 each commencing from 1.9.1989. The said 
clause gave the option to the lessee to convert the lease 
into a sale on completion of payment of all the instalments 
C · by paying a commitment· charge of Rs.200/-. The agree-
ment also required the lessee to pay an annual rent of 
Rs.24/90 during the period of lease commencing from 
1.9.1989. Clause (6) of the agreement further stipulated 
that in the event of default in paying any instalment or 
0 
other dues on the due date, the lessee would pay interest 
@ 15% per annum on the defaulted instalments/dues from 
the date when the same fell due. 
' On execution of the Lease-cum-Sale Agreement, the 
respondent took possession of the house on 9.5.1991 and 
E commenced paying the instalments from June, 1991. He 
paid the last 12 instalments in a lump sum on 5.7.2001. 
The appellant by letter dated 1.12.2001 informed the re-
spondent that he was still due in a sum of Rs.57,175/-. On 
27 .12.2001, the respondent applied to the appellant for ex-
F ecutio·n and registration of a sale deed cl~iming that he · 
had paid all the instalments. The appellant informed the 
respondent that until the sum which was due was paid, 
the sale deed would not be executed. 
· Respondent filed complaint before District Forum, 
G which was dismissed holding that refusal to execute a 
sale deed until the amount ·due was paid, was not a defi-
ciency in service. State Commission partly allowed the 
appeal and directed the respondent to pay Rs.20,000/- to 
the appellant in full and final settlement of the dues and 
H directed the appellant to execute the sale deed on receipt 
' -
•• 
SECRETARY, BHUBANESWAR DEVELOPMENT 
151 
AUTHORITY V SUSANTA KUMAR MISHRA 
of such amount. The said decision was upheld by Na-
A 
~ 
tional Commission. 
In appeal to this Court, appellant-authority con-
tended that it charged interest strictly in accordance with 
the terms of the lease· agreement and that charging of in-
8 
terest @ 15% per annum on delayed instalments in terms 
of the agreement was not illegal. 
Allowing the appeal, the Court 
' ' 
l 
HELD: 1.1. There is no requirement in the lease-cum-
sale agreement to pay interest, if the instalments were paid c 
on the due dates. Only if the lessee committed default in 
paying any instalment or other dues, interest at 15% per 
annum was payable by the lessee, on the defaulted 
, instalments/dues 

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