HC: Failure to provide basic amenities no ground to refuse payment of instalment

Compound interest cannot be charged over 18 per cent interest from the allottees, HC tells HUDA

In a crucial judgment, the Punjab and Haryana High Court on Tuesday ruled that lack of basic amenities by Haryana Urban Development Authority (HUDA) is no ground for an allottee to refuse payment of installment.

Also, a division bench has made it clear that HUDA cannot charge compound interest on 18 per cent interest from allottees in default of payment of installment.

"The rate of interest at the rate of 18 percent cannot be compounded as there is no provision either in the Act or in the Regulations or in the circular for compounding of such interest," a division bench comprising Justice Hemant Gupta and Justice R N Raina on Tuesday ruled.

The Bench further ruled that "lack of amenities cannot be made a ground for not making the payment of installments in terms of the letter of allotment". Holding this, the division bench on Tuesday set aside an order by a single bench and allowed an appeal filed by HUDA.

The dispute in the bunch of cases was about the levy of interest, compound interest and the penalty for not making the payment of installments in terms of the conditions of letter of allotment. Senior lawyer Anupam Gupta, appearing on behalf of HUDA, had challenged the order by a single bench.

The allottees, who were allotted commercial properties in Panchkula by HUDA in 1986, had challenged the levy of interest from HUDA and had alleged that since basic amenities were not made available at the site, HUDA was unfair in charging interest from the date of grant of possession.

The allottees had contended that the water connection and the sewerage connections were sanctioned to the petitioner on January 19, 1988 and November 9, 1989 respectively, whereas the Damp Proof Course (DPC) Certificate was issued on February 9, 1988. "The interest on installments of the deferred payment of the sale consideration alone is chargeable from the date of offer of possession," the allottees had averred.

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