Brief Facts:
On 27.09.2019, SC directed the State Government to pay an amount of Rs.25 lakhs as interim compensation to each of the flat-owners who were evicted at the time of demotion, within a period of four weeks. A Committee headed by Justice K. Balakrishnan Nair was constituted to look after the payment of the amounts to each flat-owners. The Committee has determined only the amount to which the flat-owners are entitled for the building portion of each apartment, as the undivided share in the land has been retained by the respective flat-owners. Based on the amount that was determined by the Committee, while 25 lakhs have already been paid by the State Government as interim compensation, the balance amount was to be paid by the builder to the flat-owners. Apart from the refund of the principal amount that was paid by the flat-owners to the builders which has already been paid except to the residents of Holy Faith H2O, the flat-owners are also seeking interest on such principal amount. On behalf of the flat-owners, it was submitted that they have invested their life earnings in the flats which have now been demolished. Resultantly, they have lost their place of residence and in view of the price escalation, they are not in a position to purchase a similar accommodation for the amounts they have invested in these building complexes. In addition, after vacating the flats which were demolished later, the flat owners have to bear the expenditure towards rent to stay in an alternate accommodation.
SC’s Observations:
After hearing both the sides SC looked into the case of Central Bank of India v. Ravindra, where SC observed that a person is entitled for compensation for the deprivation of the money due to the creditor which was not paid, or, in other words, was withheld from him by the debtor after the time when payment should have been made, in breach of his legal rights, and interest was a compensation whether the compensation was liquidated under an agreement or statute. It was also held that interest was really compensation for the use of the money which the purchaser was deprived of, and that the fact that the obtaining of possession by the purchaser on deposit of the purchase price was a consideration relevant in deciding whether or not the purchaser would be entitled to interest on the purchaser price as claimed.
SC stated that in the present case, possession of the flats was handed over to the flat-owners between 2009-2013 and admittedly, the flat owners were in possession of the flats since 2009-2013 till 2019 when they were asked to vacate the flats for the demolition of the buildings. There is no dispute that the amount of Rs.25 lakhs has been paid as interim compensation by the State Government in 2019 itself. It is also admitted that except Holy Faith builder, the other builders have also paid the balance amount to which the flat-owners were entitled.
SC Held:
After evaluating submissions made by both the parties the SC held that “It is no doubt true that the flat-owners were paid only the amount that was invested by them at the time of purchase of flats. However, it is relevant to take into account the fact that the flat owners had the benefit of staying in the flats for a period of 8-9 years on an average and also that the land belongs to the flat-owners as joint owners the market value of which has increased substantially. It is also to be noted that flats that were taken possession of in the years between 2009-2013 would have depreciated in value. Therefore, in view of the position as stated above, we are of the considered view that the flat-owners are not entitled for any interest on the amounts paid by them to the builders.”
Case Title: The Kerala State Coastal Zone Managaement Authority Member Secretary v. Maradu Municipality & Ors.
Bench: J. L. Nageswara Rao and J. B. R. Gavai
Citation: MA No. 1808-1809 of 2019
Decided on: 13th May, 2022
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