Laxmi Coop. Group Housing Society ... vs Registrar Coop. Society & Ors.
2010 Latest Caselaw 3123 Del

 *           IN THE HIGH COURT OF DELHI AT NEW DELHI

 +                        W.P.(C) No. 3693/1994

                                       Reserved on : 2nd July, 2010

                                       Pronounced on: 6th July, 2010


 LAXMI COOP. GROUP HOUSING SOCIETY LTD. ...... Petitioner

                                Through:        None.


                                VERSUS


 REGISTRAR COOP. SOCIETY & ORS.                            ....Respondents

                                Through:        None.
 CORAM:
 HON'BLE MR. JUSTICE SANJAY KISHAN KAUL
 HON'BLE MR. JUSTICE VALMIKI J.MEHTA

 1.   Whether the Reporters of local papers may be
      allowed to see the judgment?

 2.    To be referred to the Reporter or not?


 3.   Whether the judgment should be reported in the Digest?


 %                              JUDGMENT


 VALMIKI J. MEHTA, J

1.    The present writ petition has been filed under Articles 226 and 227

of the Constitution of India by the petitioner society against the orders of

W.P.(C) 3693/1994                                                 Page 1 of 6
 the Delhi Cooperative Tribunal dated 25.4.1994 and 6.6.1994.           The

respondent No.3 had initiated Arbitration proceedings under Section 60

of the Delhi Cooperative Societies Act against the excess interest claimed

by the society/petitioners herein and the ward and maintenance charges

claimed by the petitioner society/petitioners herein and the ward and

maintenance charges claimed by the petitioner society. The arbitration

petition was however dismissed on 21.6.1993 and in the appeal before the

Tribunal, the Tribunal remanded the matter back to the arbitrator setting

aside the Arbitration Award dated 21.6.1993. The arbitrator however

again dismissed the claim of the respondent No.3 herein vide order dated

21.2.1994.    An appeal was preferred before the Delhi Cooperative

Tribunal which was partly accepted by the Tribunal by an order dated

25.4.1994 wherein the respondent No.3 was entitled to refund of excess

charges paid by the respondent No.3 over and above 3% penal interest. A

review was filed against the order by the petitioner herein which was

dismissed vide order dated 6.6.1994. It is these two orders which are

sought to be challenged by the petitioner herein.

2.    There are two main issues in the present case. The first is with

regard to the rate of interest to be charged upon the respondent No.3, who

was admittedly a persistent defaulter as he had made repeated defaults in

paying monies towards construction of the flats.       The second issue
W.P.(C) 3693/1994                                                Page 2 of 6
 pertains to the watch and ward and maintenance charges claimed by the

petitioner society with respect to the flat till the possession of the same

was handed over to respondent No.3.

3.    This case is effective No.2 on the „Regular List‟ but no one has

appeared on behalf of the parties and the case was dismissed for non-

prosecution on 3.2.2009 and was thereafter restored on 25.8.2009. We

have therefore perused the record and are proceeding to pronounce this

judgment.

4.    We feel that the present petition is liable to be partly allowed.



5.    So far as the first issue is concerned, the Delhi Cooperative

Tribunal has rightly observed that the actions of the society to claim a

higher rate of interest cannot be sustained inasmuch as there is a statutory

provision which covers the field and as per which penal interest can only

be charged at 3% above the normal rate. The relevant portion of the

decision of the Delhi Cooperative Tribunal and with which we agree is as

under:-

      "4. I find that it is a fact that the appellant had been a
      persistent defaulter and he had failed to make the payments
      on demands issued to him. For this he is liable to pay
      interest together with the penal interest. At the same time,
      I am constrained to observe that the rate of penal interest at
      the rate of 24% per annum over and above the normal
      interest can, by no stretch of imagination, be held to be
W.P.(C) 3693/1994                                                  Page 3 of 6
       justified. It is totally exhorbitant and excessive and is also
      against the bye-laws of the respondent-society as also of
      the Act and the rules framed thereunder. The prescribed
      rate of penal interest is not more than 3% per annum. (Do
      this maximum calling of penal interest at 3% need any
      upward review by now in view of the changing/changed
      situations? That is for the Registrar, Cooperative Societies
      to consider and decide).            The arguments of the
      representative of the respondent-society that this rate of
      interest having been approved by the General Body
      through its resolution does not have the sanction of law.
      After all, the General Body has also to function in keeping
      with the provisions of the bye-laws, the Act and the Rules
      on the subject. I, therefore, hold that at present the penal
      interest could be charged at the rate of 3% per annum only
      over and above the ordinary rate of interest and the
      decision to the contrary taken by the learned Arbitrator
      does not hold good. The appellant is entitled for refund of
      the amount charged over and above the 3% penal interest."


6.    However, so far as the second issue is concerned we feel that the

Delhi Cooperative Tribunal has clearly erred. The Delhi Cooperative

Tribunal has held that there is a double jeopardy if the respondent No.3 is

called upon to pay the interest on the delayed payments and also for the

watch and ward and maintenance of the flat. We feel that this reasoning

is clearly perverse because interest towards balance payment of a flat is a

totally different claim than the actual expenses which are incurred

towards watch and ward and maintenance of a flat which respondent no.1

could not take possession because of his own defaults in not making the

balance payment. Once the respondent No.3 himself failed to make

W.P.(C) 3693/1994                                                  Page 4 of 6
 payment and therefore could not take possession of the flat, such flat had

to be looked after and maintained and for which the society had to incur

the necessary charges towards watch and ward and maintenance. There is

no element of double jeopardy as is the finding of the Delhi Cooperative

Tribunal. Clearly, this portion of the decision of the Delhi Cooperative

Tribunal is against the law and besides being perverse would lead to

grave injustice to the society when it has been forced to incur expenditure

on account of respondent No.3 who admittedly persistently defaulted in

making payment of his dues.

7.    Accordingly we partly accept this petition by restoring the decision

in the Award dated 21.2.1994 whereby the respondent No.3 has been

directed to pay charges at the rate of Rs.50 per day for delay till taking

possession of the flat by the respondent No.3 and which are the charges

towards watch and ward and maintenance of the flat. The writ petition is

however dismissed with respect to the challenge to the finding that the

society will not be entitled to claim interest at 24% per annum over and

above the normal interest and we hold that it can only claim 3% interest

over the normal rate of interest.




W.P.(C) 3693/1994                                                Page 5 of 6
 8.    The petition is accordingly partly allowed leaving the parties to

bear their own costs.



                                       VALMIKI J. MEHTA, J.

JULY 06 , 2010 SANJAY KISHAN KAUL, J ib