Delay In Executing Conveyance Deed Attributable To Development Authority, Cannot Ask For Interest On Premium Payment From Allottee: Allahabad HC

While granting relief to a 75-year-old woman, the Allahabad High Court has held that when the delay in executing the conveyance deed was due to issues between the State Government and the Uttar Pradesh State Industrial Development Authority (UPSIDA), interest on payment of the remaining premium amount cannot be imposed on the allotee.

Case Background

Petitioner made an application for plot in the scheme of residential plot in 'Saraswati-Hi Tech City Naini, Allahabad' launched by UPSIDA. In the allotment letter issued to the petitioner, the cost of the land was fixed at Rs. 36 lakhs and 25% of the total premium of plot after adjusting registration amount was to be deposited within 30 days.

Instead of depositing the prescribed 25%, petitioner deposited 80% of the premium amount. Since possession was not granted to the petitioner till July 2017. She approached the Real Estate Regulatory Authority which directed UPSIDA to hand over the possession without any direction regarding the interest or penalty. An appeal was filed before the RERA appellate authority which remained pending.

In 2019, allotees were given an option by UPSIDA to quit the project and take back their deposits @6% interest or continue with the project and pay their dues in accordance with the allotment orders. The State Government executed Conveyance deeds in favour of UPSIDA only in 2021 and thereafter, in 2022, UPSIDA informed the petitioner and other allottees that it would execute the sale deed with 12% interest on the balance payment. Petitioner approached the High Court against this demand of UPSIDA.

High Court Verdict

The Court called for the personal affidavit of the Chief Executive Officer of UPSIDA wherein it was stated that since the allotees are bound by the contract, they are liable to pay interest even if the delay was on the part of UPSIDA. UPSIDA took a stand that it was giving 2% rebate on 14% interest and therefore, petitioner was liable to pay 12% interest. In another affidavit, UPSIDA took a stand that even though it had deposited the entire cost of land with the State Government, there was delay in execution of conveyance deeds.

Since the delay in executing the sale deed was on part of UPSIDA, the Court held that UPSIDA could not be allowed to take advantage of its own wrong by charging interest from allottees who had deposited money in time in terms of the allotment letter.

Applying the principle of “commodum ex inijuria sua nemo habere debet” (no party can be allowed to take advantage of its own fault), the bench comprising of Justice Mahesh Chandra Tripathi and Justice Prashant Kumar held that

“According to the terms of the allotment letter, the petitioner was required to pay 25% of the total premium amount within 30 days of the allotment, following which UPSIDA was obligated to execute the lease deed in favour of the allottee. In this instance, despite the petitioner having paid 80% of the premium amount, UPSIDA failed to execute the “Conveyance Deed” or hand over possession until January 25, 2021, due to internal issues within UPSIDA. Consequently, it is unjustifiable for UPSIDA to impose an interest rate of 14%, later reduced to 12%, for the period of delay, which is solely attributable to UPSIDA, caused by its own actions.”

The Court held that once UPSIDA had offered an interest rate of 6% to those who had deposited certain money and wanted to withdraw from the contract, it could not have imposed 12% to 14% interest on those who had stayed in the contract. It was held that the delay of 4 years in acquiring the land from the State due to internal issues was solely attributable to UPSIDA and not the petitioner.

“A party cannot be permitted to “blow hot and cold”, “fast and loose” or “approbate and reprobate” at the same time. This rule is applied to do equity, however, it must not be applied in a manner as to violate the principles of right and good conscience. Therefore, UPSIDA cannot take unjust benefit from its own delay and must rectify the interest rate accordingly.”

The Court further observed that there was no provision in the allotment letter which allowed UPSIDA to levy such interest. Accordingly, the Court directed that UPSIDA may only charge 6% interest on the remaining amount.

Case Title: Smt. Madhubala Jaiswal v. Real Estate Appellate Tribunal And 2 Others [WRIT - C No. - 15996 of 2022]

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