K.L.Suneja & Anr Vs Dr (Mrs)Manjeet Kumar Moga (D) through her LR & Anr(Supreme Court)
Date-31st January 2023
Sub- Liability to pay interest by the developer when the disputed amount is returned by way of Pay order.

An interesting question arose in this case where an apartment buyer was returned the money paid by her by way of a Pay-order by the developer instead of giving the flat. This was disputed by the flat allottee as she was willing to pay the remaining amount but for the completion of construction and complaint was made to MRPT alleging the unfair trade practice. Upon repeal of MRTP, the matter travelled upto Competition Commission and thereafter to National Company Law Appellate Tribunal(NCLAT) where it was held that the flat buyer was entitled to interest from the date of payment (in the year 1993) to 2016(when ultimately the pay order was encashed, even though the pay order was made in the year 2005). In an appeal before Supreme Court, the developer argued that once the pay order was made by it in the year 2005, there was no liability to pay interest from that date in view of the settled principles of law that if the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it. This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation to ensure that the amount payable is placed at the disposal of the person entitled to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker’s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or ‘payment’ is complete. The court accepted developer’s argument and held that the flat buyer was not entitled to interest from 2005 in which year the pay order was made though it was encashed in the year 2016.
However, Before parting with this case, the court was of the opinion that all courts and judicial forums should frame guidelines in cases where amounts are deposited with the office / registry of the court / tribunal, that such amounts should mandatorily be deposited in a bank or some financial institution, to ensure that no loss is caused in the future. Such guidelines should also cover situations where the concerned litigant merely files the instrument (Pay Order, Demand Draft, Banker’s Cheque, etc.) without seeking any order, so as to avoid situations like the present case. These guidelines should be embodied in the form of appropriate rules, or regulations of each court, tribunal, commission, authority, agency, etc. exercising adjudicatory power.

Ignorance of law is no excuse. In this case if the flat buyer would have been diligent enough to foresee such a situation, she would not had been put to loss of huge interest.

Ramesh Patodia
01-02-2023