The Apex Court observed that the statutory Boards and Development Authorities which are allotting sites with the promise of development are amenable to the jurisdiction of consumer forum in case of deficiency of services.Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3122 OF 2006
Haryana State Agricultural Marketing Board
... Appellant
vs.
Bishamber Dayal Goyal and Ors.
Respondents
Dated;March 26, 2014.
Pinaki Chandra Ghose, J.
1. The present appeal has been filed assailing the order dated
April 13, 2005 passed by the National Consumer Disputes
Redressal Commission (hereinafter referred to as “the National
Commission”) in Revision Petition Nos. 534-537 of 2005,
affirming the order dated November 10, 2004 passed by the
State Consumer Disputes Redressal Commission, Chandigarh
Page 1
2
(hereinafter referred to as “the State Commission”), which
further confirmed the order dated September 20, 2001 passed
by the District Forum.
2. The facts of the case briefly are as follows :
a) By a notification dated November 16, 1971, the Haryana State
Government under Section 7 of the Punjab Agricultural Produce
Markets Act, 1961 (hereinafter referred to as ‘the said Act’),
notified the area of New Grain Mandi, Adampur as Market Area.
Subsequently, in the year 1974, the areas/limits were further
extended by five kilometers. In 1980, the State Government
notified a sub-market yard of New Grain Mandi, Adampur. The
Colonization Department of the State by a letter dated January
24, 1986, transferred the said area to the Haryana State
Agricultural Marketing Board, the appellant herein.
b) The respondents herein were allotted plots by the appellant,
being plot Nos. 17, 7, 16 and 14 upon depositing the 25% of
the price of the said plots. The method of payment and the
consequences for non-payment of any instalment would appear
from the allotment letter dated July 25, 1991. Admittedly, the
respondents did not pay the instalments in terms of the
allotment letters. The grounds mentioned by the respondents
for non-payment of such instalments were the failure on the
part of the appellant to provide basic amenities such as
sewerage, electricity, roads etc. at the said Adampur Mandi
Area.
c) On non-payment of the instalments, the appellant called upon
the respondents to make the balance payments, being 75% of
the cost with interest and penalty charges as prescribed in the
said allotment letter. The respondents did not pay the same
and filed a complaint before the District Forum alleging
deficiency of services, failure to notify the Adampur Mandi as
Market Area and failure to develop and provide basic amenities
in the said locality. The appellant opposed the complaint on
the ground that the respondents failed to make the payments
of the instalments and further that one of the complainants
was not dealing with the sale and purchase of agricultural
produce by himself and instead had sublet the shop to
someone else.
d) The District Forum appointed a Senior Member of the Forum as
the Local Commissioner to inspect the said area and to file a
report. The Local Commissioner filed a report stating that the
area was developed with civic amenities and platforms were
constructed in front of the shops. However, it is admitted that
the complainant is not in a position to run the business in the
market area as the same has not been notified by a notification
and/or order declaring it as a sub-yard for the purpose of
running the business. The District Forum held by order dated
March 4, 1998 that the notification dated October 31, 1980 is
not applicable since the land
was auctioned in 1991 and
further, the same was not in the ownership of the appellant and
no business was transacted by the complainant at the Adampur
Mandi. The District Forum held that since no notification was
issued declaring the said area as sub-yard, it amounts to
deficiency of service and the appellant was directed to
withdraw the demand notice and further directed not to charge
any interest on the instalments. The appellant filed first appeal
before the State Commission, being First Appeal No.362 of
1998. The State Commissioner by order dated March 3, 1998
remanded the matter to the District Forum holding that the
appointment of Local Commissioner, Shri Arya, being a
member of the District Forum vitiated the proceedings.
e) Thereafter, the District Forum took up the matter and
appointed an Advocate - Mr. G.L. Balhara - as the Local
Commissioner, to make an inspection and to file a report. The
appellant herein on April 20, 2000, once again issued demand
notices to the respondents demanding the payments. The main
contention of the respondents being the complainants was that
although the area was not notified by the appellant-Board as a
market area, they were unable to conduct any grain business in
the shops for which they had purchased the said plots; and
further alleged that no basic amenities, i.e., sewerage, roads,
parao, electricity etc. had been provided by the Board, and that
there were no boundary walls and gates of the market area
which were a necessity in such Mandi; furthermore, there were
heaps of debris lying around the shops. In these circumstances,
the plots allotted were redundant.
f) The appellants contended that the complainants are not
consumers
and
there
is
no
deficiency
of
service.
The
respondents failed to construct the booths in two years’ time
even after getting the licences. Furthermore, the respondents
are not dealing with the agricultural produce instead they have
sublet the plots in question to other persons. According to the
appellants, the amenities of sewerage, water supply and
electricity were provided and construction of a platform was
also done by them. An Additional Mandi was established,
according to the appellant, by the Colonization Department and
subsequently transferred to them in 1986. The Colonization
Department, in 1980, duly notified the same. The District
Forum after perusing the report dated April 25, 2000 filed by
the Local Commissioner – Mr. Balhara, Advocate -- held that it
is admitted by both the parties that the Additional Mandi has
no boundary walls and gates and that there has been no
notification by the appellant-Board,
further no auction has
been made by the respondents and the debris are lying around
the shops. In these circumstances, the District Forum by order
dated September 20, 2001 held that it is admitted that due to
the omission of the appellant, no business could be done in the
Mandi and the boundary walls which are essential for the
business, were not provided. It is further held that the
notification dated October 31, 1980 has no manner of
application since the land was transferred to the appellant in
1986 and the shops were auctioned in 1981.
The District
Forum further held that due to the omission of the appellant,
the complainants/respondents herein were deprived of doing
the grain business for which the plots were purchased and in
the absence of the notification of the area as a sub-yard, the
District Forum held that there was a grave deficiency of
service. The Forum awarded the respondents interest at 12%
per annum on the entire deposited amount after two years
from the date of issuance of allotment letters to the
respondents till the development and notification of the area in
question is not done. The respondents were directed to deposit
the remaining balance amount and the appellant-Board was
directed not to levy any charge, penalty or interest on the
same. However, the Forum refused to allow the compensation
as prayed by the respondents and directed the appellants to
develop the area within a month.
g) Being aggrieved, the appellant went in appeal before the State
Commission. Cross-appeals were also filed by the respondents
before the State Commission, seeking enhancement of the rate
of interest from 12% to 18% per annum and further sought
compensation. On November 10, 2004, both the appeals were
dismissed. The State Commission upheld the order of the
District
Forum
holding
that
the
report
of
the
Local
Commissioner did not raise any objection with regard thereto
nor placed any notification before the District Forum. In these
circumstances, the appellant herein filed a revision petition
before the National Commission resulting in dismissal, hence,
the matter has come up in appeal before us.
3. It is the case of the appellant that all the three fora below have
erred in fact and in law by omitting to take into consideration
the fact that the payment of instalments towards the cost by
the respondents was unconditional. It was further contended
that it was not subject to fulfilment of any condition on the part
of the appellant as a pre-requisite. Moreover, all the three fora
lost sight of the fact that under Section 8 of the Act, after
creation of a sub-market yard by notification under Section 7(2)
of the said Act, no person could be allowed to trade in
agricultural produce without licence and they had to apply for
the same under Section 9 of the said Act, and further to obtain
a licence under Section 10 of the said Act.
4. It is not in dispute that the respondents duly applied for licence
under Section 9 and which was granted under Section 10
permitting them to trade in agricultural produce in the sub-
market yard from their allotted shops under Section 8, which
was possible only when there was a notification under Section
7(2) to invoke notifying the sub-market yard, according to the
appellant, the same was notified by a Notification dated
October 31, 1980 passed by the predecessor-in-interest of the
appellant and the same is still subsisting and remained in force
after the transfer of the area to the appellant in 1986.
Therefore, according to the learned counsel appearing in
support of this appeal, all the fora failed to take any note
thereof. It was further pointed out that there was no question
of any deficiency in service. According to the learned counsel,
the area of Adampur Mandi was developed in the year 1992 by
the Haryana Public Health Department by providing all basic
amenities like sewerage, drainage, electricity, roads etc. in the
said area. It was further pointed out that the report of the Local
Commissioner would show that all the developmental works
except construction of the boundary walls have been carried
out by the appellant-Board. It was further submitted that the
sanctioning of the business licence under Section 10 of the said
Act pre-supposes that the State Government notified the said
area as a market area. It is further contended that the
respondents are using the plots allotted to them without paying
the instalments as ought to have been done by them.
5. Per contra, it is submitted by Mr. N.S. Dalal, learned counsel for
the respondents, that no developed infrastructure has been
provided by the appellant and the first two courts below have
come to the conclusion on the basis of the facts placed before
them. Since there is a concurrent finding on such facts, it is
submitted that this appeal should be dismissed. Learned
counsel further submitted that the Local Commissioner – Mr.
Balhara – in the presence of both the parties carried out the
local inspection and the report of the said Commissioner would
show that the facts mentioned therein have been approved by
both
the
parties.
It
was
pointed
out
that
the
Local
Commissioner had mentioned that no infrastructure has been
provided, there is no platform, no boundary walls and heaps of
debris are lying there, meaning thereby the purpose for which
the Mandi was created could not be carried out or used or even
started or accomplished. In the absence of basic infrastructure
and amenities to run a grain market the purpose for which the
shops were allotted, is totally frustrated. The report of the Local
Commissioner was not challenged by the appellant at any point
of time. It was further pointed out that the appellant never
relied on the said notification before the District Forum or
before the State Commission nor even before the National
Commission. Therefore, the grounds tried to be raised by the
learned counsel for the appellant cannot have any bearing on
the matter. It is further contended that the District Forum as
well as the State Commission have recorded how there could
have been notification by the appellant when the land itself
Page 11
12
came to the appellant in the year 1986. Therefore, there
cannot be any reason to believe that the notification was
issued earlier under the ownership of the appellant. It is further
stated that no explanation has been given by the appellant
about the conduct of non-developing the area in question by
them. On the contrary, the respondents relied on the doctrine
of legitimate expectations to have a proper area to continue
with their business.
6. The
appellant-Board
has
contended
before
us
that
the
respondents are not consumers but we must keep it on record
that the Board never challenged the jurisdiction of the
consumer forum. We would reiterate that the statutory Boards
and Development Authorities which are allotting sites with the
promise of development, are amenable to the jurisdiction of
consumer forum in case of deficiency of services as has already
been decided in U.T. Chandigarh Administration & Anr. v.
Amarjeet Singh & Ors.1; Karnataka Industrial Areas and
Development Board v. Nandi Cold Storage Pvt. Ltd. 2. This Court
1
2
(2009) 4 SCC 460
(2007) 10 SCC 481
Page 12
13
in Narne Construction (P) Ltd. v. Union of India
3
referred to its
earlier decision in Lucknow Development Authority v. M.K.
Gupta
4
and duly discussed the wide connotation of the terms
“consumer” and “service” under the consumer protection laws
and reiterated the observation of this Court in Lucknow
Development Authority v. M.K. Gupta (supra) which is provided
hereunder :
“5. In 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: (LDA case, SCC pp. 256-57,
para 6):
“...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 the 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....”
7. Though in the present case providing of amenities is not a
condition precedent as per the terms of the allotment letters.
However, the allotments were made when the plots were in the
3
4
(2012) 5 SCC 359
(1994) 1 SCC 243
Page 13
14
development stage on the condition that they be used only for
auction and trading of grains, therefore, the present auction is
different from a free public auction or an auction on “as is
where is basis”. In such a scenario the appellant board as
service provider is obligated to facilitate the utilization and
enjoyment of the plots as intended by the allottees and set out
in the allotment letter. In Municipal Corporation, Chandigarh &
Ors. v. Shantikunj Investment (P) Ltd.& Ors. 5, wherein the
allottees refused to pay instalments towards the cost of the
allotted plots, this Court while deciding the same held (at para
38) as under:
“We make it clear that though it was not a condition
precedent but there is a obligation on the part of the
Administration to provide necessary facilities for full
enjoyment of the same by allottees”
In the aforementioned case, the Court remitted many of the cases
back to the High Court for limited adjudication of facts to
determine where the basic facilities have not been provided and
5
(2006) 4 SCC 109
Page 14
15
held that though the allottees were incorrect unilateral action of
not paying the instalments yet penal interest and penalty will be
levied as per the facts of each case. Thus, the allottees were
entitled to proportionate relief.
In Haryana State Agricultural
Marketing Board v. Raj Pal 6, wherein the appellant was involved
and the certain allottees refused to pay instalments towards the
allotted plots in the new grain market at Karnal-Pehowa Road at
Nighdu in the Karnal District, citing lack of amenities provided by
the Board, the Court while dismissing the case of the Board
referred to the following decisions in Municipal Corporation,
Chandigarh & Ors. v. Shantikunj Investment (P) Ltd. and Ors.
(supra) and UT Chandigarh Administration & Anr. v. Amarjeet
Singh & Ors. (supra) as under :
“13. In Municipal Corpn., Chandigarh v. Shantikunj
Investment (P) Ltd., this Court held: (SCC p. 128, para
38)
“38. ... We make it clear that though it was not a
condition precedent but there is obligation on the
part of the Administration to provide necessary
facilities for full enjoyment of the same by the
allottees. We therefore, remit the matter to the
High Court for a very limited purpose to see that
6
(2011) 13 SCC 504
Page 15
16
in cases where facilities like kutcha road,
drainage, drinking water, sewerage, street
lighting have not been provided, then in that
case, the High Court may grant the allottees
some proportionate relief. Therefore, we direct
that all these cases be remitted to the High Court
and the High Court may consider that in case
where kutcha road, drainage, sewerage, drinking
water facilities have been provided, no relief
shall be granted but in case any of the facilities
had not been provided, then the High Court may
examine the same and consider grant of
proportionate relief in the matter of payment of
penalty under Rule 12(3) and interest for delay in
payment of equated installment or ground rent
or part thereof under Rule 12(3-A) only. We
repeat again that in case the above facilities had
not been granted then in that case consider
grant of proportionate relief and if the facilities
have been provided then it will not be open on
the part of the allottees to deny payment of
interest and penalty. So far as payment of
installment is concerned, this is a part of the
contract and therefore, the allottees are under
obligation to pay the same. However, so far as
the question of payment of penalty and penal
interest in concerned, that shall depend on the
facts of each case to be examined by the High
Court. The High Court shall examine each
individual
case
and
consider
grant
of
proportionate relief.”
14. Referring to the said decision, this Court in UT
Chandigarh Admn. v. Amarjeet Singh observed as
follows: (SCC pp. 682-83, para 46)
“46. As noticed above, in Shantikunj, the auction
was of the year 1989. The lessee had
approached the High Court in its writ jurisdiction
Page 16
17
in the year 1999 seeking amenities. Even in 2006
when this Court heard the matter, it was alleged
that the amenities had not been provided. It is in
those peculiar facts that this Court obviously
thought it fit to give some reliefs with reference
to penal interest wherever amenities had not
been provided at all even after 17 years. In fact,
this Court made it clear while remanding to the
High Court that wherever facilities/amenities had
been provided before the date of the judgment
(28-2-2006), the lessees will not be entitled to
any reliefs and where the facilities/amenities had
not been granted even in 2006, the High Court
may consider giving some relief by proportionate
reduction in [the] penal interest. This direction
was apparently on the assumption that in case of
penalty, the court can grant relief in writ
jurisdictions.”
In Haryana State Agricultural Marketing Board v. Raj Pal (supra),
the Court upheld the principles as laid down in Shantikunj Case
(supra) and Amarjeet Singh Case (supra) and held that allottees
cannot postpone the payment of instalments on the grounds that
some of the amenities were not provided and the Court setting
aside the penal and compound interest levied by the Board and in
consonance with the Allotment Rules of 1997, levied only simple
interest.
8. In the present case, the inaction on the part of the appellant in
providing the requisite facilities for more than a decade clearly
establishes deficiency of services as the respondents were
prevented from carrying out the grain business. However, the
respondents were also incorrect in refusing to pay the
instalments and violating the terms of the instalment letter.
Thus, considering the surrounding circumstances wherein the
appellant has been unable to develop the area for more than
two
decades
and
the
resultant
loss
suffered
by
the
respondents, we are of the opinion that in the present
situation, there is a need for proportionate relief as the levy of
penal interest and other charges on the respondents will be
grossly unfair.
9. In these circumstances, we do not find that any grounds have
been made out by the appellant to interfere with the order
passed by the National Commission. We have minutely
examined the order passed by the District Forum as well as the
State Commission, and we have noticed that adequate relief
has been granted even to the respondents/complainants by
awarding interest @ 12 per cent per annum on the entire
deposited amounts. Hence, we do not find any merit in the
appeal and the same is accordingly dismissed. There shall,
however, be no order as to costs.
.................................J.
(Gyan Sudha Misra)
New Delhi;
.........................J.
March 26, 2014.
Ghose)
.........
(Pinaki Chandra
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