Delhi High Court
Dhani Ram (Thrs Lrs) vs Delhi Development Authority & ... on 13 April, 2018
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on : 12th January, 2018
Date of decision : 13th April, 2018
+ RFA 754/2016
DHANI RAM (THRS LRS) . .... Appellant
Through: Mr. Anand Yadav and Ms. Anita
Tomar, Advocates. (M: 9810126454)
versus
DELHI DEVELOPMENT AUTHORITY & ORS. ..... Respondents
Through: Mr. Rajiv Bansal, Senior Advocate
and Mr. Niharika Ahluwalia,
Advocate. (M: 9818099957)
AND
+ RFA 771/2016
TARA CHAND (THR LRS) ......Appellant
Through: Mr. Anand Yadav, Advocate.
(M: 9810126454)
versus
DELHI DEVELOPMENT AUTHORITY & ORS ......Respondents
Through: Mr. Rajiv Bansal, Sr. Advocate along
with Ms. Niharika Ahluwalia & Ms.
Vasudha Trivedi, Advocates.
(M: 9818099957)
CORAM:
JUSTICE PRATHIBA M. SINGH
JUDGMENT
Prathiba M. Singh J,
1. The present appeals arise out of a suit for damages filed by the
Appellants/Plaintiffs (hereinafter „Plaintiffs‟) against the Delhi
Development Authority (hereinafter „DDA‟), its Senior officers and two
members of the Delhi Police (Defendants 8 and 9). It is the case of the
Plaintiffs that land measuring 3 bighas 8 biswas comprised in Khasra No.
156, village Naharpur, Delhi (hereinafter `suit property') is their ancestral
property and a portion of the said land was also built up. DDA acquired
large portions of land in the surrounding areas, but the suit property was left
out of the acquisition as the same was built up area. By a policy dated 16th
February, 1977, DDA decided to regularize both residential and commercial
structures. The land belonging to the Plaintiffs continued to remain their
property and was later on adjusted in the portion of Sector 7 of Rohini
Development Scheme prepared by the DDA. The entire village of Nahapur
was notified as a development area under Section 12 of the Delhi
Development Act, 1957 (hereinafter, „DDA Act‟) but was later de-notified
vide notification dated 22nd June, 1987. Thus, the DDA ceased to have any
jurisdiction on the land.
2. On 18th June, 1988 at about 12:30 p.m., the staff of the DDA
including the Defendant nos. 3 to 7 and the police officials, suddenly came
to the spot and without any notice demolished and damaged the building of
the Plaintiffs constructed on the suit property. It is the Plaintiffs' case that
the land never belonged to the DDA and the DDA had illegally trespassed
into the land. The Plaintiffs filed a suit seeking the following reliefs:
"a) A decree for payment of Rs.8,00,000/- be passed
in favour of the plaintiffs against the defendants and
the defendants be held liable to pay the said amount
jointly severally.
b) The defendants be directed to restore the buildings
of the plaintiff demolished by them and, in the
alternative, the defendants be restrained from
interfering with the restoration of the buildings to their
original condition by the plaintiffs themselves.
c) Interest pendentilite and till date of payment @
Rs.18.00 % per annum be awarded to the plaintiffs
against the defendants.
d) Cost of the suit be awarded to the plaintiff against
the defendants."
The officers involved in the drive were also made parties to the suit. The
Defendants submitted in the written statement that the said land was
properly acquired by the DDA and hence there was no encroachment. The
Plaintiffs' structure was an unauthorized structure.
3. The following issues were framed in the suit:
"1. Whether the building of the plaintiff was
legally demolished by the defendants? (OPP)
2. If Issue no.1 is not provided, to what amount of
damages, if any, are the plaintiffs entitled? (OPP)
3. Relief."
4. The Plaintiffs led the evidence of the following seven witnesses -
PW1-Sh. C.B. Verma, PW2-Sh. Subhash, Patwari, PW3-Sh. Amit Sharma,
PW4-Sh. Ved Singh, PW5-Sh. Satya Prakash, PW6-Sh. Mukund Lal Aneja
and PW7-Sh. Surat Singh. The DDA examined the following three
witnesses - DW1-Sh. Ram Kumar Yadav, DW2-Sh. Satbir Kaushik and
DW3-Sh. Baljeet Singh Rathi. The Trial Court has summarised their
respective testimonies in para 9 of the impugned order.
5. On Issues 1 and 2, the Trial Court observed that the DDA conceded
that the suit land was a private land and was not acquired by the DDA.
Exhibit - C1 is an exhibited document of the official notings of the DDA
obtained under RTI and filed before the Court. As per Exhibit - C1, Sh.
S.K. Mahto Director, Land and Management DDA confirmed that the
structure which was demolished on 18th June, 1988 was partly located in the
acquired land Khasra No. 157 and partly located in Khasra No. 156 which
was the unacquired land. Thus, the DDA admitted that all the four shops of
the Plaintiffs in Khasra No. 156 which was subject to demolition was part of
un-acquired land. Subsequently, an inquiry was also undertaken within the
DDA and the file notings dated 17th October, 1988 also concluded that the
owners need to be compensated. The relevant extracts of Exhibit-C1 are set
out below:
"Shri Surat Singh r/o 33, Naharpur in his
representation (at page 54/c) to the L.G. has stated
that structures situated on acquired land of Kh.No.156
of village Naharpur were demolished by DDA.
It is a fact that fresh unauthorised constructions in
village Naharpur were demolished by Demolition
Squad of the D.P. Branch on 18.6.88. One such
structure was situated partly on un-acquired land
falling in Kh. No.156 and partly on acquired land of
Kh.No.157 of village Naharpur. The details of the
area covered by the unauthorised structure are as
under :-
1. Area of the structure 12‟x80‟ (108 sq.yds
falling on the acquired approx.) of Kh.No157
land. of village Naharpur.
2. Area of the structure 80‟ x 18‟ (160 sq.yds.)
situated on un-acquired of Kh.No.156 of village
land Naharpur.
Since the structure was situated partly on acquired
and partly on un-acquired land, as a result of
demolition the portion of the structure on un-acquired
land was also demolished. In this connection it may be
mentioned that the structure was constructed without
getting the building plans sanctioned from the
Competent Authority. However, no notice was issued
against the defaulters. Since the unauthorised
structure was demolished without due process of law,
the owners are to be compensated. It is, therefore,
proposed that we may restore the possession of the
site to the owners. According to the revenue records
the land where the portion of the structure was
situated was on Kh.No.156 min. [marked as A to A1 in
TCR] Of Naharpur, it belongs to Sh.Dhani Ram, Tara
Chand, Smt. Ved Wati and Vimla daughters of Sh.
Thani Ram. It is, however, to be decided whether the
owners can be compensated for the super-structure
which they had constructed without getting the
building plans passed from the competent Authority
which is M.C.D. in this case. The factual position
given in this case is after consulting DD (NC), NT.
Sd/-
(R.D. Saklani)
A.C (Lands) Director
(Lands Management)
17.10.88
Demolition was beyond jurisdiction.
But at the same time structure was
unauthorised.
Sd/-
17.10.(88)"
Marked B to B1 in TCR
"Suggested by the V.C. please get the loss assessed by
Engineering staff for determining the amount of
compensation to be paid.
Sd/-
7.11.88"
Marked C to C1 in TCR
"The issue of alternative allotment is to be taken by
DLM/Commissioner (Land) because this is a policy
matter.
Sd/-
26.12"
6. The Trial Court after considering the pleadings and evidence held that
the stand of the DDA was clear in Exhibit C-1 to the effect that the shops of
the Plaintiffs which were demolished were in the un-acquired land. The
relevant extracts of the impugned judgement referring to the findings of the
said Inquiry Report are set out below:
"13. At the very outset I may observe that in so far as
this limited aspect is concerned, the DDA has, before
this Court, conceded that as per their own record, the
suit land was a private land and not acquired or put at
disposal of the DDA. In order to cut short the
controversy between the parties, at the final stage an
RTI reply and notings of the file of the DDA was
placed before this Court which notings are Ex.C-1,
which nothings and official file reflects the official
stand of the department/ DDA and had been admitted
by both the Plaintiffs and the DDA and not disputed by
anyone. Sh. S.K. Meena, Director (Land and
Management), DDA has made a categorical statement
to this effect that the said notings Ex.C-1 reflect the
official stand of the department/ DDA and as per the
official stand of the Defendant/ DDA so reflected in
Ex.C-1 (notings on the official record of the DDA) and
also duly confirmed by the Director (Land and
Management), DDA Sh. S.K. Meena, the super
structure which was demolished on 18.06.1988 by the
Demolition Squad of IP Branch was situated partly on
the acquired land i.e. Khasra No. 157 of village
Naharpur measuring 12' x80' (108 square yards) and
partly on unacquired land i.e. Khasra No. 156 of
village Naharpur measuring 80' x18' (160 square
yards which is the suit land).
14. Secondly, it is also an admitted case that
since the structures were situated partly on the
acquired land and partly on un-acquired land as a
result of demolition the portion of the structure on un-
acquired land was also demolished and hence the DDA
has admitted that all the four shops of the Plaintiffs
which were subjected to demolition by the Defendant/
DDA were on the un-acquired land.
15. Thirdly, it is also established from the
notings of the DDA that in order to justify the
demolition action, the concerned officers of the
Defendant/ DDA though admitting that the shops were
on unacquired land yet claimed that since the
construction had been made on the land without
getting the building plan sanctioned from the
competent authority hence there was no illegality. This,
I may observe, is only a desperate attempt on the part
of the officials to justify their illegal acts since no
demolition action could have been undertaken under
the given circumstances without issuing a Show Cause
as per law and the Director (Lands and Management)
Sh. R.D. Saklani was also of the same view that since
no notice was issued against the defaulters, the
unauthorized structure was demolished without due
process of law, which fact is reflected from the official
note Ex.C-1.
16. Fourthly, it is also an admitted case of the
Defendant/ DDA that the competent authority/ DDA
was of the view that the owners were required to be
compensated and the possession of the site was to be
restored since as per the land revenue records the land
where the portion of the structure was situated was on
Khasra No. 156 Min of Naharpur which belonged to
Dhani Ram, Tara Chand, Smt. Ved Wati and Vimla
daughters of Dhani Ram i.e. Plaintiffs before this
Court. It is this which brings the controversy before
this Court to a closure and clinches the issue and I
hold that there is no dispute that the demolition action
dated 18.06.1988 on the suit land was in fact carried
out on the unacquired land of the Plaintiffs and the
said action was without following the procedure of
law, a fact which is also admitted by the Defendant/
DDA as borne out from their own record and notings
Ex.C-1. In fact the Local Commissioner Sh. C.B.
Verma Advocate (PW l) appointed by the Court has
also similarly proved this aspect that the suit land does
not form a portion of the land, so acquired by the
Government. He has duly proved his proceedings and
report which are Ex.PW1/A and Ex.PW1/B respectively
and the land/ revenue records so relied upon by the
Local Commissioner have also been proved by the
Patwaris i.e. Subhash (PW2), Satya Prakash (PW5) &
Mukundlal Aneja (PW6) and Kanoongo Ved Singh
(PW4) which evidence confirms the stand of the
Plaintiff.
17. Lastly, in so far as the aspect of damages/
compensation is concerned, it is evident from the
notings of the DDA Ex.C-1 that the case was taken up
with senior officers and the Vice Chairman DDA had
taken a decision that the owners need to be
compensated, hence the Engineering Staff was directed
to determine the amount of compensation but despite
the same the file was never processed for determining
the extent of compensation or to grant an alternative
allotment of land."
The above findings of the Trial Court are not under challenge before this
Court and the DDA has accepted the same. Thus, the said findings have
attained finality.
7. In so far as damages are concerned, the Plaintiffs have sought a sum
of Rs.8,00,000/- as damages. The Plaintiffs produced a Government
approved valuer to prove damages on that behalf. The Trial Court notices
that the valuer was not cross-examined except for some suggestions which
were put to him.
8. In so far as DDA is concerned, Sh. Ram Kumar Yadav who was
produced as DW-1 deposed that no damage was caused to the Plaintiffs. His
cross-examination could not be completed and hence his testimony was
discarded by the Trial Court. The DDA thereafter, led the evidence of Sh.
Satbir Kaushik as DW-2 who also denied that any damage was caused. The
said witness confirmed that he had no personal knowledge of the demolition
drive.
9. On the issue of damages, the Trial Court considered the evidence and
held as under:
"21. On the one hand, despite the directions of the
senior officers/ Vice Chairman the Defendant/ DDA
failed to calculate the extent of compensation, whereas
on the other hand the Plaintiffs have placed on record
the report of the government approved valuer which
has not been duly controverted. According to the said
report Ex.PW3/1, there were sixteen shops of RCC roof
with rolling shutters, complete with electrical work and
three shops constructed upto roof level which were
demolished and for removing the malba at the site a
sum of Rs.30,000/- would be required. Further, the
total cost of construction together with the cost of
removing the malba is only Rs.6,08,550/- only. In
addition to that the Plaintiffs have explained that they
have suffered the rental loss to the extent of Rs. Four
Lacs, but they are claiming damages to the tune of Rs.
Eight Lacs only."
10. On the basis of the above findings, the Trial Court granted a decree
for the sum of Rs. 8,00,000/- along with the future interest at 8% per annum
from the date of decree till realization. The Plaintiffs did not press any relief
against the police officers who were impleaded as D-8 and D-9.
11. The Plaintiffs thereafter moved an application seeking
amendment/clarification in the order dated 4th June, 2016 as the Trial Court
had not granted any pendente lite interest. The Trial Court after hearing
arguments in the said application dismissed the same on 6th August, 2016.
12. In the present appeal, the prayer of the Plaintiffs is that pendente lite
interest ought to have been granted by the Trial Court at 18% per annum
from the date of the suit till realisation. Thus, the only question in this
appeal is whether the Plaintiffs are entitled to pendente lite interest from the
date of filing of the suit and if so at what rate.
13. The DDA has accepted the judgment of the Trial Court and has also
called upon the Plaintiffs to receive the compensation awarded by the Trial
Court vide letter dated 4th January, 2017. It is the submission of the
Plaintiffs that a statutory notice dated 29th July,1988 was served upon the
DDA under Section 53B of the DDA Act. Upon the expiry of six months
and upon not receiving any response, a suit was filed by the Plaintiffs in
December 1988, claiming recovery of Rs.8,00,000/- along with the pendente
lite interest till the date of payment at 18%. It is further submitted that the
matter remained pending for about 27 years and the DDA's own inquiry has
concluded that the demolition was wrongly carried out on private land. The
Vice Chairman of DDA has himself approved the proposal of compensation
to be paid. It is further submitted on behalf of the Plaintiffs that the
Plaintiffs had duly served a statutory notice and despite the same it
continued to defend its illegal actions. In order to save its officials, DDA
continued to insist that the demolition was rightly carried out. Even in the
written statement, it was not disclosed by the DDA that the competent
authority had approved the payment of compensation to the Plaintiffs. Due
to the deliberate mis-statements by the DDA, the litigation continued to
remain pending for 27 years. Counsel for the Plaintiffs relates on the
following judgments - State Bank of India Vs. Shri Ghulam Nabi and
Another AIR 1998 J & K 46, M/s Bharat Agencies Vs. State of M P and
Others 1998 AIHC 4203, Boda Ram Vs. Devi Das.Hari Chand AIR 1936
Lahore 668, Thakur Umed Singh Vs. Amolak Chand AIR 1963 Rajasthan
93, Thazhathe Purayil Sarabi & Ors Vs. Union of India & Anr. AIR 2009
SC 3098, M/s Jagdish Rai & Bros. Vs. Union of India AIR 1999 SC 1258
and B. Shivananda Vs. Andhra Bank Ltd. & Anr (1994) 4 SCC 368.
14. On the other hand, the DDA submits that the Trial Court has
exercised its discretion rightly and has chosen not to grant pendente lite
interest. DDA further submits that there were several adjournments taken
by the Plaintiffs and the delay before the Trial Court is not attributable
solely to it. It further submits that the application for review was rightly
rejected by the Trial Court. DDA relies upon the following judgments -
Mahabir Prashad Rungta Vs. Durga Datta - (1961) 3 SCR 639-AIR 1961
SO 990, The State of Madhya Pradesh and Others Vs. M/s. Nathabhai
Desaibhai Patel - (1972) 4 SCO 396, United Bank of India Vs. Rashyam
Udyog and Others etc. - AIR 1990 Gal 146 [MANU/WB/0022/1990] and
State of Punjab Vs. Darshan Singh - (2004) 1 SCC 328. It is further
submitted by DDA that the Plaintiffs have still not taken the compensation
money despite the letters and the cheque having been prepared and issued to
them as per the Trial Court judgement.
15. Before going into the issue of award of interest, the Court wishes to
note the conduct of the DDA in this case. The written statement was
originally filed by DDA by taking a categorical stand that there was no
construction on Khasra No. 156. In fact the DDA denied demolishing any
structure on the land bearing Khasra No. 156 and allegations were leveled
upon the Plaintiffs that the Plaintiffs were trying to encroach upon the land
bearing Khasra No. 157. DDA further contended that Khasra No. 156 lies
outside the Lal Dora and therefore it cannot be said to be part of the village
'Abadi'. The DDA sought to justify the actions of its officials by contending
that they were within their right to demolish and remove any unauthorized
construction. In effect the written statement made allegations that the
Plaintiffs encroached upon this land, leading to a long drawn trial. A local
commissioner was appointed by the Trial Court, who demarcated Khasra
No. 157 and 156. The findings of the local commissioner are set out below:
"The Field No. 156 was thus correctly demarcated and
the whole of the demolition has been occasioned in this
No. Khasra. The DDA‟s Naib Tehsildar said that part
of the construction was also in Khasra No. 157 which,
on one more all-bound measurement, proved to be a
fallacy and I showed him that it was the debris which
has fallen on some part of Khasra No. 157 which
appears to have been pulled down that way as also no
part of debris on the Southern side of demolition has
fallen on any part of Khasra No. 157 and the original
constructed wall on both sides is in a length side of
nine Gathas from Pacca wall along Khasra No. 155-
153."
16. It was only in 2016 when Exhibit-C1 was brought on record that it
was revealed to the Trial Court that the competent authority had already
directed payment of compensation. When the Court had appointed a local
commissioner who had carried out the demarcation, the DDA sought to file
objections against the same, but finally on 20th January 1992, an injunction
was granted restraining DDA from interfering with or obstructing the
Plaintiffs in restoring the building in Khasra No 156. The Plaintiffs have
restored the building in Khasra No. 156. The Plaintiffs' evidence was closed
as far back on 23rd May, 2006. The Trial Court also directed DDA to
explore the possibility of settlement in the matter on 11th May, 2015.
However, the DDA refused that there is no possibility of settlement. On 8th
January, 2016, the following order is passed by the Trial Court.
"Heard arguments. Ld. Counsel for the plaintiff
submits that before filing of the suit in the year 1989, a
representation had been made to the then L. G. / Vice
Chairman, DDA wherein the L. G. / Vice Chairman,
DDA had conceded to the grant of compensation for
wrong demolition of the suit property as the Khasra
number of the suit property had been left out and was
not part of the land transferred to the DDA. Ld.
Counsel for the DDA submits that there is no such
proceedings and if any, he will try to locate in his
office. Ld. Counsel for the DDA is directed to place on
record the relevant documents confirming the
acquisition of land of the plaintiff after demarcation of
the same which shows that it is in Khasra No. 157/2
after which the compensation was granted to the
plaintiff and the possession taken over and subsequent
transfer to the DDA.
In so far as the plaintiff is concerned, he will
highlight the relevant documents showing that the land
in question falls in Khasra No. 156 and has been left
out from the acquisition, particularly in the light of
communication dated 06.01.1981 of the DDA in which
the then Lt. Governor / Vice Chairman, DDA had
subsequently decided that the built up residential area
around village abadi prior to 30.6.1977 may be left
from awards for the present, in terms of Government of
India letter dated 16.2.1977 as subsequently notified
vide their dated 6.12.1978.
Both the parties seek a longer date for the said
purpose. Ld. Counsel for the DDA seeks a date in the
first week of March to which the counsel for plaintiff
has no objection. In this background, be listed for
clarifications as aforesaid and arguments for
4.3.2016."
A perusal of this order shows that the DDA even at this stage continued to
behave in a completely unfair manner and did not agree that there was a
decision by the Vice Chairman to grant compensation. Thereafter, on 4th
March, 2016, the DDA again misled the Court and did not bring to the
notice of the Court, the decision of its competent authority/Vice Chairman.
17. Finally, on 27th April, 2016, the copy of the reply received under RTI
was filed by the Plaintiffs. It contained the file noting dated 17th October,
1988. The Director (Lands Management) of the DDA had proposed that
they should restore the property to the site owner and also compensate the
owner for the illegal demolition. Order dated 27th April, 2016 is extracted
hereinbelow:
"Heard part oral arguments. Copy of RTI reply filed
by the plaintiff. Copy is supplied. According to which
the Director (Land Management) vide noting dated
17.10.1988 had proposed that they should restore the
possession of the site to the owners and also
accordingly compensate the owners for illegal
demolition which had taken place unacquired land
pertaining to Khasra No. 156. Ld. Counsel for the
defendant / DDA submits that he seek necessary
instructions from the department. Let the competent
officer of defendant to appear along with the relevant
record containing the noting in question on next date.
Be listed for part heard oral arguments on
01.06.2016."
18. On 1st June, 2016, the Trial Court directed the presence of the Deputy
Director of DDA. On the said date the file noting is taken on record by the
Trial Court and the following order is passed:
"The officer of the DDA has brought the departmental
file and placed on record the noting of Sh. R.D.
Saklani, Director (Lands and Management) which is
present on page 3 of the file which is Ex-C1. He
submits that the stand of the Department/DDA is
clearly reflected from the notice at portion marked A to
A1, B to B1 and C to C1. He further submits that since
the competent authority was of the view that the
demolition of the super structure was improper, hence
the competent authority/ Vice Chairman had directed
the Engineering Staff to determine the amount of
compensation to be fixed. He has also submitted that
the issue relating to the alternative allotment of four
shops was also taken up but in the meanwhile the
present suit was filed and no final decision as regards
the extent of compensation could be taken and the issue
of alternative allotment is also left open as per the
official records. He has confirmed that as on date the
possession of the suit land is with the plaintiffs and the
aspect of compensation has not been decided by the
department, which this Court may decided and the suit
may accordingly be disposed off. His statement to this
effect is recorded separately.
The LRs of the plaintiffs are also present in the Court
who also made a joint statement to the effect that since
the possession of the suit property has been restored
and there is no further obstructions, they are not
pressing the said relief of restoration and alternative
allotment [prayer clause 22 (b) of the plaint) as
against the DDA either in the present suit or with the
Department and they confine themselves only to the
relief of compensation and the interest/costs thereof.
Heard oral arguments. Be listed for orders for
04.06.2016."
19. On the same day statement of S.K. Meena Director DDA was
recorded to the following effect:
"I have brought the departmental file pertaining to the
present case. The noting of Sh, R,D, Saklani, Director
(Lands Management) is present on page 3 of the file
which is now Ex.C-1. The stand of the Department/
DDA is clearly reflected from the notice at portion
marked A to Al, B to B1 and C to Cl, Since the
competent authority was of the view that the demolition
of the super structure was improper, hence the
competent authority/ Vice Chairman had directed the
Engineering Staff to determine the amount of
compensation to be fixed. The issue relating to the
alternative allotment of four shops was also taken up
but in the meanwhile the the present suit was filed and
no final decision as regards the extent of compensation
could be taken and the issue of alternative allotment is
also left open as per the official records. As on date the
possession of the suit land is with the plaintiffs. The
aspect of compensation has not been decided by the
department and this Hon'ble Court may decided the
same. Suit may accordingly be disposed off,"
Under these circumstances, the suit was decreed for Rs.8,00,000/-.
20. From the facts, it is clear that the DDA has not been candid with the
Court as it misrepresented the facts by not placing on record the file notings
of 17th October 1988. This necessitated a long drawn trial as admittedly the
demolition was illegal and unlawful. A perusal of Exhibit-C1 which is the
file noting dated 17th October 1988 shows that the competent authority i.e
Director (Lands Management) had taken a decision that the owners need to
be compensated and the engineering staff was directed to determine the
amount of compensation. Despite this being the position, the DDA did not
reveal this to the Court and actively misled the Court.
21. The Plaintiffs waited for many years to receive the compensation and
prosecuted the suit diligently. The demolition was admittedly illegal and
unlawful. The DDA itself had taken a decision to pay compensation. The
statement of the Director (Lands Management) clearly records that the
competent authority/Vice Chairman has decided to grant the compensation.
In so far as grant of interest is concerned, Section 34 of Code of Civil
Procedure is clear. The said provision is extracted below:
"34. Interest-(1) Where and in so far as a decree is for
the payment of money, the Court may, in the decree,
order interest at such rate as the Court deems
reasonable to be paid on the principal sum adjudged,
from the date of the suit to the date of the decree, in
addition to any interest adjudged on such principal
sum for any period prior to the institution of the suit,
with further interest at such rate not exceeding six per
cent, per annum as the Court deems reasonable on
such principal sum from the date of the decree to the
date of payment, or to such earlier date as the Court
thinks fit :
Provided that where the liability in relation to the sum
so adjudged had arisen out of a commercial
transaction, the rate of such further interest may
exceed six per cent, per annum, but shall not exceed
the contractual rate of interest or where there is no
contractual rate, the rate at which moneys are lent or
advanced by nationalised banks in relation to
commercial transactions.
Explanation I.--In this sub-section, "nationalised
bank" means a corresponding new bank as defined in
the Banking Companies (Acquisition and Transfer of
Undertakings) Act 1970 (5 of 1970).
Explanation II.--For the purposes of this section, a
transaction is a commercial transaction, if it is
connected with the industry, trade or business of the
party incurring the liability.
(2) Where such a decree is silent with respect to the
payment of further interest on such principal sum from
the date of the decree to the date of payment or other
earlier date, the Court shall be deemed to have refused
such interest, and a separate suit therefore shall not
lie."
22. The law on this is settled by the Supreme Court in Jagdish Rai v.
UOI AIR 1999 SC 1258, as under:
"... interest under Section 34 CPC is a matter of
procedure and ought to be granted in all cases when
there is a decree for money unless there are strong
reasons to decline the same...."
23. The above position is reiterated in Thazhathe Purayil Sarabi & Ors.
v. Union of India & Anr. AIR 2009 SC 3098 where the Supreme Court held
as under:
"16. It is, therefore, clear that the Court while
making a decree for payment of money is entitled to
grant interest at the current rate of interest or
contractual rate as it deems reasonable to be paid on
the principal sum adjudged to be payable and /or
awarded, from the date of claim or from the date of the
order or decree for recovery of the outstanding dues.
There is also hardly any room for doubt that interest
may be claimed on any amount decreed or awarded for
the period during which the money was due and yet
remained unpaid to the claim ants.
17-18 The Courts are consistent in their view that
normally when a money decree is passed, it is most
essential that interest be granted for the period during
which the money was due, but could not be utilized by
the person in whose favour an order of recovery of
money was passed. As has been frequently explained
by this Court and various High Courts, interest is
essentially a compensation payable on account of
denial of the right to utilise the money due, which has
been, in fact utilized by the person withholding the
same. Accordingly, payment of interest follows as a
matter of course when a money decree is passed. The
only question to be decided is since when is such
interest payable, on such a decree. Though, there are
two divergent views, one indicating that interest is
payable from the date when claim for the principal sum
is made, namely, the date of institution of the
proceedings in the recovery of the amount, the other
view is that such interest is payable only when a
determination is made and order is passed for recovery
of the dues. However, the more consistent view has
been the former and in rare cases interest has been
awarded for periods even prior to the institution of
proceedings for recovery of the dues, where the same is
provided for by the terms of the agreement entered into
between the parties or where the same is permissible
by statute."
24. In C.K. Sasankan v. Dhanalakshmi Bank Limited (2009) 11 SCC 60,
the Supreme Court further held:
"12. According to the provisions of Section 34 of
the Code interest is to be awarded at a reasonable rate
and on the principal amount. It is needless to point out
that although the amount of interest from the date of
filing of the suit till the date of the decree and
thereafter till realisation is in the discretion of the
Court as is confirmed by the use of the word `may' but
such discretion has to be exercised by the Court
properly, reasonably and on sound legal principles
and not arbitrarily and while doing so the Court is also
to consider the parameter, scope and ambit of Section
34 of Code.
13. The aforesaid scope and ambit of Section 34
of the Code has been the subject of discussion in many
cases of this Court.
14. We are inclined to refer to the decision
in Clariant International Ltd. v. Securities & Exchange
Board of India, where it was held by this Court that the
interest can be awarded in terms of an agreement or
statutory provisions and it can also be awarded by
reason of usage or trade having the force of law or on
equitable considerations but the same cannot be
awarded by way of damages except in cases where
money due is wrongfully withheld and there are
equitable grounds therefore, for which a written
demand is mandatory. It was further held that in
absence of any agreement or statutory provision or a
mercantile usage, interest payable can be only at the
market rate and such interest is payable upon
establishment of totality of circumstances justifying
exercise of such equitable jurisdiction. It was also held
that in ascertaining the rate of interest the Courts of
law can take judicial notice of both inflation as also
fall in bank rate of interest. The bank rate of interest
both for commercial purposes and other purposes has
been the subject-matter of statutory provisions as also
the judge-made laws. In the said case reference was
made to the decisions in Kaushnuma Begum v. New
India Assurance Co. Ltd., H.S. Ahammed Hussain v.
Irfan Ahammed and United India Insurance Co. Ltd. v.
Patricia Jean Mahajan and it was observed that even
in cases of victims of motor vehicle accidents, the
Courts have upon taking note of the fall in the rate of
interest held 9% interest to be reasonable. Direction to
pay such rate of interest is also found to be reasonable
and fair as the Plaintiff was deprived to utilize and roll
its money in commercial transaction and kept out of it
due to wrongful withholding of the same by the
Defendant.
15. Considering the facts and circumstances of
the present case, we find that the rate of interest as
awarded for pendente lite and future interest is
exorbitant and thus we direct that pendente lite and
future interest at the rate of 9% shall be paid which is
found to be just, proper and reasonable. The appeal
stands allowed to the aforesaid extent."
25. In Union Bank of India v. Rashyan Udyog and Ors AIR 1990 Cal
146 relied upon by the DDA, the Court notices that when the Trial Court
does not apply its mind to the question of interest and has not awarded
interest by the exercise of discretion, interest is liable to be granted.
26. The Plaintiffs had rightly approached the Trial Court under Section
152 of CPC but the Trial Court refused to exercise its discretion.
27. The conduct of DDA in this case of not having disclosed to the Court
the decision of competent authority, in fact, makes the DDA liable to higher
rate of interest. The decision goes back to 17th October 1988 and ought to
have been communicated to the Plaintiffs and compensation ought to have
been awarded. Even when the Plaintiffs gave an advance notice prior to
filing of the suit, the DDA did not disclose the decision which was in its
own records. It continued to mislead the Court deliberately and with
impunity. The demolition in this case took place on 18th June, 1988 and the
decision of competent authority is dated 17 th October, 1988. The statutory
notice was served on 29th July, 1988 and the suit was filed on 16th
December, 1988. The Plaintiffs have been made to fight this litigation for
almost 30 years. Under the facts and circumstances, it is directed that
interest is liable to be paid to the Plaintiffs. The decree is modified and it is
directed that Plaintiffs are held entitled to recovery of damages of
Rs.8,00,000/- from the Defendant along with pendente lite interest at 12%
simple interest per annum from the date of filing of the suit till the date of
payment of compensation. Due to the conduct of DDA, it is directed that
the Plaintiffs shall also be paid costs of Rs.1,00,000/- by the DDA.
28. The appeals are allowed in the above terms. Payment as per the
decree be made within 10 weeks. Decree sheet be drawn accordingly.
PRATHIBA M. SINGH
JUDGE
APRIL 13, 2018/uj
