H.U.D.A v. RAJ SINGH RANA

per cent per annum up to 31.3.1987, 15 per cent per an- A num up to 15.1.1988, compound interest@ 15 per cent up to 31.8.2000 and thereafter again simple interest@ 15% per annum up to 31.8.2001. The respondent paid the amount under protest. Respondent then filed a complaint before the District Consumer Disputes Redressal Forum B for refund of Rs.35,200/-, as excess amount of interest charged over and above the rate of interest at 7 % as stipu- lated in the allotment letter. It also sought interest @ 12 % on the refund amount from the date the interest amount was demanded until repayment. The District Forum al- c lowed the compliant and held that the appellant could charge interest @ 7% p.a. It directed the appellant to re- fund the extra amount charged to the complainant/respon- dent with interest@ 7 % from the date of the complaint till ~ - its refund. The State Commission upheld the order. The National Commission· also upheld the order as to the rate of interest and held that the appellant was not entitled to charge compound interest @ 15 % p.a. from 16.1.1988 to 31.8.2000. Hence the present appeal. Allowing the appeal, the Court D E HELD: 1.1 The concept of levying or allowing inter- est is available in almost all statutes involving financial deals and commercial transactions, but the provision em- powering Courts to allow interest is contained in the In- terest Act, 1978. Section 3 of the Act, inter alia, provides F that in any proceeding for the recovery of any debt or dam- ages or in any proceeding in which a claim for interest in respect of debt or damage already paid is made, the Court may, if it thinks fit, allow interest to the person entitled to the debt or damages or to the person making such claim, G as the case may be, at a rate not exceeding the current rate of interest, for the whole or part of the periods indi- .cated in the said Section. What is important is the men- tion of allowing the interest at a rate not exceeding the current rate of interest. Where there is an agreement be- H . -+ \ 1036 SUPREME COURT REPORTS [2008] 10 S.C.R. A tween the parties to payment of interest at a certain stipu- lated rate, the same will have the precedence over the provision contained in sub-section (1) of s. 3. [Paras 10 and 11] [1045-A,B,C & D] B

1.2 Section 34 CPC provides that where and insofar 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, till the date of the decree in addition to any interest adjudged on such principal sum for any pe- c riod prior to the institution of the suit, with further interest at such rate not exceeding 6 % p.a. as the court may deem reasonable on such principal sum from the date of the decree till the date of payment or to such earlier date as the court thinks fit. [Para 12] [1045-F,G,H; 1046-A] D E F G

1.3 The rates of interest charged by the appellant, pur- portedly in accordance with their policy decisions, appear to have been influenced by the provisions of the Interest Act and also CPC on the supposition that the payment of additional price on account of enhancement of compen- sation was not covered by the provisions of the allotment letter relating to payment of interest. The views expressed by the District forum have been accepted by the State and National Commissions. [Para13] [1046-A,B & C]

1.4 It was the duty of the Consumer Fora to consider the circumstances of the case and keep in mind the pro- visions of s. 3 of the Interest Act in awarding the high rate of interest, without linking. the same to the current rate of interest. The rates of interest fixed· by the Courts must not be arbitrary and should take into account the current bank rates which in recent years have shown a tendency to slide downwards. [Paras 15 and 17] [1047-D; 1048-F] -1 __.. 't- --"'-. ~ r Ghaziabad Development Authority vs. Balbir Singh 2004 (5)SCC 65; HUOA vs. Prem Kumar Agarwal and another 2008 H (1) SCALE 484; Bihar State Housing Board vs. Arun Dakshy T--~ H.U.D.A. v. RAJ SINGH RANA 1037