Chapter: 3.1.10 Supreme Court on Housing Construction and related questions

Supreme Court on Housing Construction and related questions:

LUCKNOW DEVELOPMENT AUTHORITY V/S M.K.GUPTA, CIVIL APPEA L NO. 6237 OF 1990

Q.1. Whether statutory authorities are amenable to Consumer Protection Act 1986?
HELD: YES. Any attempt to exclude services offered by statutory or official bodies to the common man would be against the provision of the Act and the spirit behind it.

Q.2. Whether having a construction or building activity carried on by a private or statutory body was 'Service' within the meaning of Consumer Protection Act prior to its amendment?
HELD: YES. A flat with a leaking roof, or cracking wall or substandard floor is denial of service. Similarly when a statutory authority undertakes to develop land and form a housing scheme, it, while performing its statutory duty, renders service to society in general and individuals in particular The provisions of the Act, namely Lucknow Development Act, Delhi Development Act or Bangalore Development Act, clearly provides for preparing plans, development of land, and framing of schemes etc. therefore if such authorities undertake to construct buildings or allot houses or building sites to citizens of states, then it amounts to rendering of service. The 'work facility' was already there in the definition of 'Service 'even prior to the 1993 amendment.

Q.3. Whether jurisdiction of Consumer Fora is ousted because the service is related to immovable property?
HELD: NO. Whether the Respondents were justified in their complaint and if such 'act' or omission could be held to be denial of service in the Act should be examined. But the jurisdiction of the commission could not be ousted because, even though it was service, it related to immovable property.

Q.4. Consumer Protection Act, 1986 is a beneficiary legislation.
HELD: In fact the law meets the long felt necessity of protecting the common man from such wrongs for which the remedy under the ordinary law for various reasons has became illusory. Various legislations and regulations permitting the state to intervene and protect the interest of the consumer have became a heaven for the unscrupulous and as the enforcement machinery either does not move or it moves ineffectively and inefficiently and for reasons which are not necessary to be stated. The importance of the Act lies in promoting the welfare of society by enabling consumers to participate directly in the market economy. It attempts to remove the helplessness of consumers which they face against powerful businesses, described as 'Network of Rackets' or society in which 'PRODUCERS HAVE SECURED POWER to ROB THE REST" and the might of public bodies which are degenerating into store houses of inaction where papers do not move from one desk to another as matter of duty and responsibility but for extraneous consideration; leaving the common man helpless, bewildered and shocked. The malady is becoming so rampant, widespread and deep that the society instead of bothering, complaining and fighting it, is accepting it as part of life. The enactment in these unbelievable yet harsh realities appears to be a silver lining, which may in course of time succeed in checking the rot.

Q.5 Who is a consumer?
HELD: The word consumer is a comprehensive expression. It extends from a person who buys any commodity to consume either an eatable o otherwise from a shop, business house, corporation or store, fair price shop or to use private or public services. In the Oxford Dictionary a consumer is defined as a purchaser of goods or services. In Black's Law dictionary it is explained to mean who consumes. The 'Act' defines CONSUMER as under:

2(1) (d) CONSUMER means any person who:
Buys any goods for consideration which has been paid or promised I partly paid or partly promised, or under any system of deferre payment and includes any user of such goods for consideration paid promised or partly paid and partly promised or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose

b) Hires or avails of any services for consideration which has been paid or promised or partly paid and partly promised or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails the services for the consideration paid or promised or under any system of deferred payment when such services are availed of with the approval of the first mentioned person.

EXPLANATION:
For the purpose of sub-clause (I) 'Commercial Purpose' does not include use by a consumer of goods bought and used by means of self-employment.

Q.6 What is the meaning of the word 'Service'?
HELD: The concept of service is very wide. How it should be understood and what it means depends on the context in which it is used. It may mean any benefit or any act promoting interest or happiness.

Sec.2 (o) of the 'Act' defines 'Service' as follows:
"Service means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or loading or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or made a contract of personal service."

The clause is very wide and extends to any or all actual or potential users. No distinction can be made on the ground of private or public or statutory bodies.

Q.7 Whether compensation can be awarded both in respect of value of goods and services and also in respect of injustice suffered by the complainant for harassment and agony. Whether the said amount should be realized from the statutory authority or from those who were responsible for it?
HELD: The Commission or the Forum is entitled to award not only the value of goods or services but also to compensate a consumer for injustice suffered by him. It may constitute actual loss and may extend to physical, mental or even emotional suffering. When the court directs payment of compensation or damages against the State, the ultimate sufferer is the common man. It is the taxpayer's money that is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with the law. It is therefore necessary that when the commission is satisfied that a complainant is entitled for compensation for harassment or mental agony or oppression (after careful scrutiny), should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behavior.

While dismissing all the appeals filed by the Lucknow Division Authority, the Supreme Court directed that the amount of compensation of Rs.10,000/- awarded by the Commission for mental harassment shall be recovered from such officers proportionately from their salary. The Supreme Court awarded a cost of Rs. 5,000/-to the contesting respondents, for each case. However, the aforesaid legal position being laid down by National Commission was reviewed by the apex court in a landmark full bench decision DR. J. J MERCHANT & ORS. v. SHRINATH CHATURVEDI 2002(4), ALL MR 605 (S.C). The apex Court not only held that Consumer Redressal Agencies are capable of and are entitled to decide complicated cases but also that long pendency of a case is no good ground for rejecting a complaint with a direction to approach civil court.