Court case(2004) 5 SCC 65

The Ghaziabad Development Authority, a statutory housing body, had allotted plots and houses to members of the public under its schemes and had then delayed or failed to deliver possession, in some cases cancelling allotments or offering refunds. A large number of allottees, including the respondent Balbir Singh, complained to the consumer fora. In many such cases the National Commission had directed the Authority to refund the deposits with interest at a uniform rate of eighteen per cent per annum, or to deliver possession and pay compensation. The Authority appealed to the Supreme Court against a batch of these orders, contending that the fora had awarded compensation mechanically without regard to the facts of each case.

The Supreme Court (S.N. Variava J.) held that the power of the consumer fora to award compensation is wide and is meant to make good the loss or injury caused by the deficiency, including mental agony and harassment, as recognised in Lucknow Development Authority v. M.K. Gupta. But the compensation must be just and reasonable and based on the facts of each case: the forum must find what loss or injury the consumer suffered and compensate for it. A uniform rate of interest cannot be applied mechanically to all cases; where the consumer is given possession, compensation for the delay may suffice, while where only a refund is ordered the interest should reflect the loss actually suffered. The Court repeated that where public authorities are made to pay because of the misconduct of their officers, responsibility should be fixed and the amount recovered from those officers.