SC directs ‘Newtech developers’ refund amount to respective home buyers, for failure to hand over possession

Newtech Promoters and Developers Pvt. Ltd. Vs State of U.P (Supreme Court)

The submission of the appellants/promoters is that under Section 40(1) of the Act only the interest or penalty imposed by the authority can be recovered as arrears of land revenue and no recovery certificate for the principal amount as determined by the authority can be issued. If we examine the scheme of the Act, the power of authority to direct the refund of the principal amount is explicit in Section 18 and the interest that is payable is on the principal amount in other words, there is no interest in the absence of a principal amount being determined by the competent authority. Further the statute as such is read to mean that the principal sum with interest has become a composite amount quantified upon to be recovered as arrears of land revenue under Section 40(1) of the Act.

It is settled principle of law that if the plain interpretation does not fulfill the mandate and object of the Act, this Court has to interpret the law in consonance with the spirit and purpose of the statute. There is indeed a visible inconsistency in the powers of the authority regarding refund of the amount received by the promoter and the provision of law in Section 18 and the text of the provision by which such refund can be referred under Section 40(1). While harmonising the construction of the scheme of the Act with the right of recovery as mandated in Section 40(1) of the Act keeping in mind the intention of the legislature to provide for a speedy recovery of the amount invested by the allottee along with the interest incurred thereon is self­-explanatory. However, if Section 40(1) is strictly construed and it is understood to mean that only penalty and interest on the principal amount are recoverable as arrears of land revenue, it would defeat the basic purpose of the Act.

Taking into consideration the scheme of the Act what is to be returned to the allottee is his own life savings with interest on computed/quantified by the authority becomes recoverable and such arrear becomes enforceable in law. There appears some ambiguity in Section 40(1) of the Act that in our view, by harmonising the provision with the purpose of the Act, is given effect to the provisions is allowed to operate rather running either of them redundant, noticing purport of the legislature and the above­stated principle into consideration, we make it clear that the amount which has been determined and refundable to the allottees/home buyers either by the authority or the adjudicating officer in terms of the order is recoverable within the ambit of Section 40(1) of the Act.

The upshot of the discussion is that we find no error in the judgment impugned in the instant appeals. Consequently, the batch of appeals are disposed off in the above terms. However, we make it clear that if any of the appellant intends to prefer appeal before the Appellate Tribunal against the order of the authority, it may be open for him to challenge within 30 days from today provided the appellant(s) comply with the condition of pre­deposit as contemplated under the proviso to Section 43(5) of the Act which may be decided by the Tribunal on its own merits in accordance with law. No costs.

Please become a Premium member. If you are already a Premium member, login here to access the full content.