SC guidelines for purchasing property in auction sale

New Delhi, Mar 22 (UNI) The Supreme Court has held that a person purchasing property in an auction sale or getting it on lease basis is not a consumer and cannot approach the consumer court. A bench comprising Justices R V Raveendran and Markandey Katju while allowing the appeal of Chandigarh administration against the judgement of National Consumer Disputes Redressal Commission also ruled that the purchaser or lessee cannot withhold the payment of instalment on the ground that the basic amenities have not been provided by the auction seller. Justice Raveendran, writing the 36-page judgement for the bench, also noted that the administration is entitled to charge penal interest as per the terms and conditions stipulated in the auction sale. The apex court in its judgement also noted that ''Section 7 of the Act empowers the Central Government to levy such fees and taxes as it may consider necessary (which shall be in addition to any fee or tax for the time being leviable under any other law) in respect of any site or building on the transferee or the occupier thereof for the purpose of providing, maintaining or continuing any amenity at Chandigarh. This provision clearly demonstrates that providing amenities is not linked to auction of plots on lease basis and the premium paid is not for providing any amenity. The Central government is required to provide amenities by levying fees and taxes in respect of sites/plots on the transferees/occupiers thereof''. The apex court, while dismissing the complaints of the auction purchaser/lease rights holder filed in the National Commission, also noted ''therefore it is evident that a lessee/successful bidder cannot seek rescheduling of the installments of the premium or postponement of accrual of the interest payable as per rules. The equated instalment includes interest only up to the dates stipulated as due dates. When the instalments are not paid on the due dates the lessees become liable to pay penal interest at 24 per cent per year from the due date to the date of actual payment''. The apex court, however, made it clear that the administrators can charge interest only at the rate of 12 per cent under rules 12 (3 A) of the Leasehold rules as was prescribed on the date of auction and it cannot be enhanced without amending the rules and allowed the successful bidder to claim refund of the excess interest paid by them. The Chandigarh administration had auctioned 74 residential sites and 71 commercial sites in different sectors of Chandigarh granting the lease for 99 years in 1996. The bidder refused to pay the further instalments till basic amenities such as roads, sewerage, ground water, street lights electricity and parking space were provided. National Commission granted some relief to the leaseholders vide orders stated February 21, 2005 and February 21, 2007. The apex court, however, made it clear that purchaser of flats from private builders, and developers or local development authorities are consumers.

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