Construction P. Ltd. etc. etc. Vs. Union of India & Ors. etc.
[Civil Appeal Nos.
4432-4450 of 2012 arising out of S.L.P. (C) Nos.3499-3517 of 2011]
J U D G M E N T
T.S. THAKUR, J.
short question that falls for determination in these appeals by special leave
is whether the appellant-company was, in the facts and circumstances of the
case, offering any ‘service’ to the respondents within the meaning of the
Consumer Protection Act, 1986 so as to make it amenable to the jurisdiction of
the fora established under the said Act. Relying upon the decision of this
Court in Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243, the High
Court has answered the question in the affirmative and held that the respondents
were ‘consumers’ and the appellant was a ‘service’ provider within the meaning of
the Act aforementioned, hence amenable to the jurisdiction of the fora under the
undisputed facts in the context of which the question arises have been summed
up by the High Court in the following words: “Indisputable facts are that the
opposite party promoted ventures for development of lands into house-sites and
invited the intending purchasers through paper publication and brochures to join
as members. The complainants responded and joined as members on payment of fees.
It is also indisputable that the sale and allotment of plots were subject to
terms and conditions extracted supra.
The sale is not open
to any general buyer but restricted only to the persons who have joined as
members on payment of the stipulated fee. The members should abide by the terms
and conditions set out by the seller. The sale is not on "as it is where
it is" basis. The terms and conditions stipulated for sale of only
developed plots and the registration of the plots would be made after the
sanction of lay out by the concerned authorities. The sale price was not for the
virgin land but included the development of sites and provision of
The opposite party
has undertaken the obligations to develop the plots and obtain
permissions/approvals of the lay outs. The opposite party itself pleaded in its
counters that the plots were developed by spending huge amounts and subsequent
to the amounts paid by the complainants also plots were developed. It pleaded that
huge amounts were spent towards protection of the plots from the grabbers and developed
roads, open drains, sewerage lines, streetlights etc. It is therefore, manifest
that the transaction between the parties is not a sale simplicitor but coupled with
obligations for development and provision of infrastructure. Inevitably, there
is an element of service in the discharge of the said obligations.”
Lucknow Development Authority’s case (supra) this Court while dealing with the
meaning of the expressions ‘consumer’ and ‘service’ under the Consumer
Protection Act observed that the provisions of the Act must be liberally
interpreted in favour of the consumers as the enactment in question was a
beneficial piece of legislation. While examining the meaning of the term
‘consumer’ this Court observed: “……….. The word 'consumer' is a comprehensive expression.
It extends from a person who buys any commodity to consume either as eatable or
otherwise from a shop, business house, corporation, store, fair price shop to
use of private or public services.
In Oxford Dictionary
a consumer is defined as, "a purchaser of goods or services". In
Black's Law Dictionary it is explained to mean, "one who consumes.
Individuals who purchase, use, maintain, and dispose of products and services.
A member of that broad class of people who are affected by pricing policies, financing
practices, quality of goods and services, credit reporting, debt collection, and
other trade practices for which state and federal consumer protection laws are
enacted.” The Act opts for no less wider definition.”
this Court while examining the true purport of the word ‘service’ appearing in
the legislation observed: “It is in three parts. The main part is followed by inclusive
clause and ends by exclusionary clause. The main clause itself is very wide. It
applies to any service made available to potential users. The words 'any' and
'potential' are significant. Both are of wide amplitude. The word 'any' dictionarily
means 'one or some or all'. In Black's Law Dictionary it is explained thus, "word
'any' has a diversity of meaning and may be employed to indicate 'all' or 'every'
as well as 'some' or 'one' and its meaning in a given statute depends upon the context
and the subject-matter of the statute".
The use of the word
'any' in the context it has been used in Clause (o) indicates that it has been used
in wider sense extending from one to all. The other word 'potential' is again
very wide. In Oxford Dictionary it is defined as 'capable of coming into being,
possibility'. In Black's Law Dictionary it is defined as "existing in
possibility but not in act. Naturally and probably expected to come into
existence at some future time, though not now existing; for example, the future
product of grain or trees already planted, or the successive future
installments or payments on a contract or engagement already made."
In other words
service which is not only extended to actual users but those who are capable of
using it are covered in the definition. The clause is thus very wide and
extends to any or all actual or potential users. But the legislature did not
stop there. It expanded the meaning of the word further in modern sense by
extending it to even such facilities as are available to a consumer in
connection with banking, financing etc. Each of these are wide-ranging
activities in day to day life. They are discharged both by statutory and private
bodies. In absence of any indication, express or implied there is no reason to hold
that authorities created by the statute are beyond purview of the Act.
When banks advance loan
or accept deposit or provide facility of locker they undoubtedly render
service. A State Bank or nationalised bank renders as much service as private bank.
No distinction can be drawn in private and public transport or insurance
companies. Even the supply of electricity or gas which throughout the country is
being made, mainly, by statutory authorities is included in it. The legislative
intention is thus clear to protect a consumer against services rendered even by
statutory bodies. The test, therefore, is not if a person against whom
complaint is made is a statutory body but whether the nature of the duty and function
performed by it is service or even facility.” (emphasis supplied)
the context of the housing construction and building activities carried on by a
private or statutory body and whether such activity tantamounts to service
within the meaning of clause (o) of Section 2(1) of the Act, the Court
observed: “As pointed out earlier the entire purpose of widening the definition
is to include in it not only day to day buying and selling activity undertaken by
a common man but even such activities which are otherwise not commercial in nature
yet they partake of a character in which some benefit is conferred on the consumer.
Construction of a house or flat is for the benefit of person for whom it is
constructed. He may do it himself or hire services of a builder or contractor.
The latter being for consideration
is service as defined in the Act. Similarly when a statutory authority develops
land or allots a site or constructs a house for the benefit of common man it is
as much service as by a builder or contractor. The one is contractual service and
other statutory service. If the service is defective or it is not what was
represented then it would be unfair trade practice as defined in the Act. Any
defect in construction activity would be denial of comfort and service to a
consumer. When possession of property is not delivered within stipulated period
the delay so caused is denial of service.
Such disputes or
claims are not in respect of Immovable property as argued but deficiency in
rendering of service of particular standard, quality or grade. Such deficiencies
or omissions are defined in Sub-clause (ii) of Clause (r) of Section 2 as
unfair trade practice. If a builder of a house uses substandard material in
construction of a building or makes false or misleading representation about
the condition of the house then it is denial of the facility or benefit of
which a consumer is entitled to claim value under the Act.
When the contractor
or builder undertakes to erect a house or flat then it is inherent in it that he
shall perform his obligation as agreed to. 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 frame housing scheme, it, while
performing statutory duty renders service to the society in general and
individual in particular.” (emphasis supplied)
Court further held that when a person applies for allotment of building site or
for a flat constructed by development authority and enters into an agreement
with the developer or a contractor, the nature of the transaction is covered by
the expression ‘service’ of any description. The housing construction or building
activity carried on by a private or statutory body was, therefore, held to be
‘service’ within the meaning of clause (o) of Section 2(1) of the Act as it
stood prior to the inclusion of the expression ‘housing construction’ in the definition
of ‘service’ by Ordinance No.24 of 1993.
the light of the above pronouncement of this Court the High Court was perfectly
justified in holding that the activities of the appellant- company in the
present case involving offer of plots for sale to its customers/members with an
assurance of development of infrastructure/amenities, lay-out approvals etc.
was a ‘service’ within the meaning of clause (o) of Section 2(1) of the Act and
would, therefore, be amenable to the jurisdiction of the for a established under
Having regard to the nature
of the transaction between the appellant- company and its customers which
involved much more than a simple transfer of a piece of immovable property it is
clear that the same constituted ‘service’ within the meaning of the Act. It was
not a case where the appellant-company was selling the given property with all
advantages and/or disadvantages on “as is where is” basis, as was the position in
U.T. Chandigarh Administration and Anr. v. Amarjeet Singh and Ors. (2009) 4 SCC
It is a case where a
clear cut assurance was made to the purchasers as to the nature and the extent
of development that would be carried out by the appellant-company as a part of
the package under which sale of fully developed plots with assured facilities
was to be made in favour of the purchasers for valuable consideration. To the
extent the transfer of the site with developments in the manner and to the extent
indicated earlier was a part of the transaction, the appellant-company had indeed
undertaken to provide a service. Any deficiency or defect in such service would
make it accountable before the competent consumer forum at the instance of consumers
like the respondents.
Court in Bangalore Development Authority v. Syndicate Bank (2007) 6 SCC 711,
dealt with the nature of the relief that can be claimed by consumers in the
event of refusal or delay in the transfer of the title of the property in
favour of the allottees/purchasers and observed: “Where full payment is made
and possession is delivered, but title deed is not executed without any
justifiable cause, the allottee may be awarded compensation, for harassment and
mental agony, in addition to appropriate direction for execution and delivery of
it to say that the legal position on the subject is fairly well-settled by the
pronouncements of this Court and do not require any reiteration. The High Court
has correctly noticed the said pronouncements and applied them to the facts of
the case at hand leaving no room for us to interfere with the answer given by
it to the solitary question raised by the appellant-company.
the result, these appeals are hereby dismissed but in the circumstances without
any order as to cost.
(GYAN SUDHA MISRA)