Anita Bhandari vs N.D.M.C. And Anr.
2002 Latest Caselaw 869 Del

JUDGMENT

C.K. Mahajan, J.

Rule.

1. The short question arising for determination in this petition is whether the Estate Officer under the Public Premises Act was empowered to award interest exceeding the current rate of interest within the meaning of the Interest Act, 1978 and whether the Addl. District Judge was right in upholding the quantum of damages and interest with modification from 24% to 20%.

2. The petitioner assails the orders dated November 16, 1998 passed by the Estate Officer declaring the petitioner as an unauthorised occupant and directing him to pay damages and interest @ 24% per annum and the order dated August 18, 2001 passed by the Addl. District Judge upholding the damages @ Rs. 22.50 per sq. ft. per month for the period 10.4.1992 to 8.8.1995 and modifying the order to the extent that interest @ 20% instead of 24% per annum w.e.f. 10.4.1992 to 8.8.1995 was payable by the petitioner.

3. Briefly states the facts are that the petitioner was allotted an office unit bearing No. 45, Palika Bazar, R.K. Ashram Marg, New Delhi vide license deed dated 10.4.1987 at a monthly license fee of Rs. 4,619.35 for a period of five years. The license expired on 9.4.1992. The license fee was enhanced for a further period of five years @ Rs. 7,668/- per month following Resolution No. 25 dated 27.12.1989. The petitioner did not accept the said rate but continued to occupy the premises. On 17.7.1995, the petitioner requested the respondents to take vacant possession of the unit. Respondent No. 1 took possession on 8.8.1995. The petitioner failed to pay arrears of license from August 1987 to 9.4.1992 amounting to Rs. 16,989/-. Besides, damages were also not paid for the period 10.4.1992 to 8.8.1995. Consequently, proceedings were initiated under Section 7 of the Public Premises Act against the petitioner. Notice was served under Section 7(3) of the Act. Evidence was recorded. The Estate Officer passed the order on 17.11.1995 directing the petitioner to pay damages @ Rs. 22.30 per sq. ft. per month for the period 10.4.1992 to 8.8.1995, besides arrears of license fee amounting to Rs. 16,989/- up to 9.4.1992 and simple interest on the arrears @ 20% per annum up to 30.11.1992 and thereafter @ 24% per annum up to October 1998.

4. The petitioner preferred an appeal before the learned Add. District Judge against the order of the Estate Officer. The award of damages @ Rs. 22.50 per sq. ft. per monthly for the period from 10.4.1992 to 8.8.1995 was upheld and with regard to interest the order was modified to the extent that interest @ 20% was payable instead of 24% from 120.4.1992 to 8.8.1995.

5. Relying on Sub-section (2A) of Section 7, it was contended that under the said provision interest on the arrears of license fee and damages would be awarded as "prescribed" and the Addl. District Judge failed to appreciate that no rate of interest is prescribed under the rules framed there under. It was contended that the rules framed in accordance with Section 18 of the Act do not prescribe any rate of interest. The Estate Officer had no power to award any interest whatsoever. The District Judge acted without jurisdiction and with material irregularity in exercise of its jurisdiction and therefore, the order is liable to be set aside.

6. Counsel for the respondent contended that the Estate Officer was empowered under the Act to award interest in arrears of rent and damages.

7. The dispute is limited to the question of award of interest on the amount of arrears of license fee and damages payable by the petitioner. The only question urged was whether the Estate Officer had power and jurisdiction to order payment of interest at the rate of 24% under Section 7(2A) of the Act read with the Section 2(b) of the Interest Act, 1978.

8. Section 7(2A) of the Public Premises Act reads as under:-

"While making an order under Sub-section (1) or Sub-section (2), the Estate Officer may direct that the arrears of rent or, as the case may be, damages shall be payable together with simple interest at such rate as may be prescribed, not being a rate exceeding the current rate of interest within the meaning of the Interest Act, 1978 (14 of 1978).

Section 2(b) of the Interest Act, 1978 reads as under:-

"Current rate of interest" means the highest of the maximum rates at which interest may be paid on different classes of deposits (other than those maintained by charitable or religious institutions) by different classes of scheduled banks in accordance with the directions given or issued to banking companies generally by the Reserve Bank of India under the Banking Regulation Act, 1949 (10 of 1949).

9. On a reading of the aforesaid sections, it is quite clear that the Estate Officer could award interest not exceeding the rate of interest as defined in Section 2(b) of the Interest Act.

10. Section 7(2A) of the Public Premises Act which was inserted by an amending Act of 1980 circumscribes the powers of the Estate Officer so far as the maximum rate of interest is concerned. The maximum rate of interest awardable is the 'current rate of interest' as defined in the Interest Act. The Interest Act defines the expression "current rate of interest" by Section 2(b).

11. The introduction of changing rate of interest indicated the intention of the Legislature to charge interest from the defaulters if he remains in arrears of rent or damages. The introduction of the rate of interest further indicates that there should be some penalty levied on a person who is irregular in payment of rent or damages. However, the Legislature intended to provide for charging rates of interest at par with the rates of interest charged by the banks and other commercial and recognised institutions instead of charging interest at exorbitant rates. It is in this connection that the words "current rate of interest" assumes greater significance.

12. Admittedly, the Estate Officer is fully empowered to award interest but for the "maximum" rate of interest. The Estate Officer under the aforesaid provision has to look into the Interest Act. A conjoint reading of Sub-section 2(A) of Section 7 of the Public Premises Act and Sub-section (b) of Section 2 of the Interest Act makes it clear that the Estate Officer can charge interest at the highest of the maximum rate at which interest may be paid by the scheduled banks in accordance with the instructions of the Reserve Bank of India under the Banking Regulations Act, 1949. The Estate Officer cannot charge anything beyond this.

13. It is not the petitioner's case that rate of interest has not been prescribed as envisaged in Sub-section (2A) of Section 7. Even if rate has not been prescribed, the Estate Officer cannot travel beyond the maximum rate of interest as stipulated in Section 2(b) of the Interest Act. Even if that was to be the contention, the same stand settled by a judgment of this Court in Appejay Surrendra Park Hotels Limited v. New Delhi Municipal Council and Anr. .

14. The law makers while inserting Sub-section (2A) in 1980 put fetters on the powers of the Estate Officer with regard to the maximum rate of interest to the maximum rate of interest which he can charge and as such the Estate Officer is not vested with any discriminatory powers in this regard. His powers are limited and he has to act within his limitation. It is also relevant in this context to note that the aforesaid Sub-section (2A) of Section 7 of the Public Premises Act contains no reference to the Interest Act except the maximum rate of interest and therefore it is not necessary to look to other provisions contained in the Interest Act by the Estate Officer.

15. Learned counsel for the respondents, however, contends that Section 3 of the Interest Act 1978 is also applicable to the petitioner's case. Whether or not Section 3 is applicable, it is necessary to see whether the Estate Officer exercised its powers under the Public Premises Act or under the Interest Act or under both. In the instant case by virtue of the powers vested in him under Section 7 of the Public Premises Act and in exercise of his powers under Sub-sections (1) and (2) thereof has passed orders directing the petitioner to pay the arrears of rent and damages within the time allowed.

16. Coming back to the question of interest, Sub-section (2A) is required to be examined intimately/closely. The said Sub-section (2A) provides, as stated above, that while making an order under Section 5(a) or (2), the Estate Officer may direct that arrears of rent or, as the case may be, damages shall be payable with simple interest at such rate as may be prescribed not being a rate exceeding the current rate of interest within the meaning of the Interest Act, 1978. The examination of the such clause makes it abundantly clear without any ambiguity that the Estate Officer exercised his powers under the Public Premises Act alone while ordering payment of interest and not under the Interest Act. Thus the contention of the respondent that Section 3 of the Interest Act is applicable is without any force and is not tenable.

17. Sub-section (2A) while giving powers to the Estate Officer to order payment of interest on arrears on rent and damages restricts his powers so far the upper limit of the rate of interest is concerned. With regard to payment of the interest by the defaulter, the Estate Officer is fully empowered to pass orders that the arrears of rent or damages shall be paid by the defaulter with simple interest and at such rates as may be prescribed which cannot exceed the current rate of interest within the meaning of the Interest Act. Thus the Estate officer can pass orders for payment of interest by the defaulter at a rate which may be lower than or if at par with the current rate of interest within the meaning of the Interest Act the Estate Officer is not vested with any powers to award interest which is more than the current rate of interest under the Interest Act. As to what is current rate of interest, the Estate Officer is required to look to its definition contained in Section 2(b) of the Interest Act. Apparently, the rate of interest at the rate of 24% exceeds the maximum rate in terms of Section 2(b) of the Interest Act and is beyond the powers of the Estate Officer to direct the petitioner to pay the same.

18. In light of the aforesaid discussion, I am of the firm view that the order of the Estate Officer dated November 16, 1998 to the extent of payment of interest at the rate of 24% is not sustainable and is modified with directions that he shall direct the petitioner to pay interest at the highest of the maximum rate at which the interest is paid on different classes of deposits by the scheduled banks in accordance with the directions given by the Reserve Bank of India as stipulated in Section 2(b) of the Interest Act. The Estate Officer shall calculate the interest within a period of one month and the petitioner shall pay the same within a period of two months thereafter.

19. Consequently, the order of the Addl. District Judge is also set aside.

20. Petition disposed of with the aforesaid directions.