No Compensation For Mental Agony

Courts in this country are conservative while awarding compensation to victims of negligence and deficiency in service. At the other end of the world, US lawyers are inventing new heads for seeking damages from the negligent. Mental agony is passe. One of the latest heads is the alleged loss of hedonistic pleasure, if one loses a limb in an accident.

The Supreme Court of India this month in fact scored out mental agony as a ground for claiming compensation is certain cases. You might have paid for a flat and dreamed for years to live in it. But if the house is not completed due to the negligence of the builder, the court says that you do not suffer mental agony or harassment.

 

The court was dealing with an appeal against the rulings of the National Consumer Commission, the Monopolies & Restrictive Trade Practices Commission and the Allahabad high court. Several persons had applied for plots or built-up apartments from the government housing authority. But having lost their patience after waiting for long, they moved these legal forums which found the authority negligent and passed various orders against it.

Some asked for their payments to be returned with 18 per cent interest. The MRTP awarded Rs 50,000 to one of the applicants for suffering mental agony. Burdened with these adverse judgments, the authority appealed to the Supreme Court (Ghaziabad Development Authority vs Union of India).

The authority has succeeded on two points. Firstly, mental agony is not a count on which compensation can be demanded. Secondly, the interest should not be too high or low; 12 per cent should be the norm in such cases.

The Supreme Court looked at the contract for sale of the houses from the point of view of the Contract Act. The broad objective underlying assessment of damages is to put the aggrieved party monetarily in the same position as far as possible in which it would have been if the contract had been performed.

Such losses which could have been contemplated by the parties when they entered into the contract can be compensated. This rules out damages for injury to feelings, mental distress, anguish, annoyance and the host of subject heads which are the delight of the tort lawyers. These classes of suffering might still be good in other contexts, like accident injuries or medical negligence, but as far as your dream house is concerned, mental harassment is ruled out by the court.

The Supreme Court has not long ago awarded compensation for "mental harassment" in a similar case (Lucknow Development Authority vs M K Gupta, 1994). The National Consumer Commission had awarded Rs 10,000 for mental harassment arising from a public authority not delivering a house it had promised. On appeal, the apex court upheld the award because it found that there was "malafide" on the part of the officials of the authority. Therefore, the order was against the individual officers who were responsible for the harassment.

After the Ghaziabad Authority judgment, the onus on the person who claims damages for harassment is steep. He has to prove mala fide ( like demand for underhand payments to the officials) before the consumer forum, MRTP or the high court. The housing development authorities can now get away with refund of the amount paid with 12 per cent interest after years of inaction or arbitrary behaviour. Even the penal interest is paid from the public fund.