TMI Blog1994 (11) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... n of law that arises for consideration in these appeals, directed against orders passed by the National Consumer Disputes Redressal Commission (referred hereinafter as National Commission), New Delhi is if the statutory authorities such as Lucknow Development Authority or Delhi Development Authority or Bangalore Development Authority constituted under State Acts to carry on planned development of the cities in the State are amenable to Consumer Protection Act, 1986 (hereinafter referred to as 'the Act') for any act or omission relating to housing activity such as delay in delivery of possession of the houses to the allottees, non-completion of the flat within the stipulated time, or defective and faulty construction etc. Another aspect of this issue is if the housing activity carried on by the statutory authority or private builder or contractor came within the purview of the Act only after its amendment by the Ordinance No. 24 in 1993 or the Commission could entertain a complaint for such violations even before. 2. How the dispute arose in different appeals is not of any consequence except for two appeals which shall be adverted to later, for determining right and power of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a silver lining, which may in course of time succeed in checking the rot. A scrutiny of various definitions such as 'consumer', 'service', 'trader', 'unfair trade practice' indicates that legislature has attempted to widen the reach of the Act. Each of these definitions are in two parts, one, explanatory and the other expandatory. The explanatory or the main part itself uses expressions of wide amplitude indicating clearly its wide sweep, then its ambit is widened to such things which otherwise would have been beyond its natural import. Manner of construing an inclusive clause and its widening effect has been explained in Dilworth v. Commissioner of Stamps' as under: "'include' is very generally used ininterpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute, and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural, import, but also those things which the definition clause declares that they shall include." It has been approved by this Court in Regional Director, Employees State Insurance Corpn. v. High Land Coffee Works of P.F.X. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of goods or deficiency in service. 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. It reads as under: consumer' means any person who,- (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under: "goods' means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;" It was therefore urged that the applicability of the Act having been confined to moveable goods only a complaint filed for any defect in relation to immoveable goods such as a house or building or allotment of site could not have been entertained by the Commission. The submission does not appear to be well founded. The respondents were aggrieved either by delay in delivery of possession of house or use of substandard material etc. and therefore they claimed deficiency in service rendered by the appellants. Whether they were justified in their complaint and if such act or omission could be held to be denial of service in the Act shall be examined presently but the jurisdiction of the Commission could not be ousted (sic merely) because even though it was service it related to immoveable property. 4. What is the meaning of the word 'service'? Does it extend to deficiency in the building of a house or fl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 modem 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dies does not appear to have any substance. A government or semi-government body or a local authority is as much amenable to the Act as any other private body rendering similar service. Truly speaking it would be a service to the society if such bodies instead of claiming exclusion subject themselves to the Act and let their acts and omissions be scrutinised as public accountability is necessary for healthy growth of society. 6. What remains to be examined is if housing construction or building activity carried on by a private or statutory body was service within the meaning of clause (o) of Section 2 of the Act as it stood prior to inclusion of the expression 'housing construction' in the definition of "service" by Ordinance No. 24 of 1993. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Bangalore Development Act clearly provide for preparing plan, development of land, and framing of scheme etc. Therefore if such authority undertakes to construct building or allot houses or building sites to citizens of the State either as amenity or as benefit then it amounts to rendering of service and will be covered in the expression 'service made available to potential users'. A person who applies for allotment of a building site or for a flat constructed by the development authority or enters into an agreement with a builder or a contractor is a potential user and nature of transaction is covered in the expression 'service of any description'. It further indicates that the definition is not exhaustive. The inclusive clause succeeded in widening its scope butnot exhausting the services which could be covered in earlier part. So any service except when it is free of charge or under a constraint ofpersonal service is included in it. Since housing activity is a service it was covered in the clause as it stood before 1993. 7. In Civil Appeal No. 2954 filed by a builder it was urged that inclusion of 'housing construction' in clause (o) and 'avail' in clause (d) in 1993 wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of its jurisdiction under the Act could award compensation and ifsuch compensation could be for harassment and agony to a consumer.Both these aspects specially the latter are of vital significance in the present day context. Still more important issue is the liability of payment. That is, should the society or the tax payer be burdened for oppressive and capricious act of the public officers or it be paid by those responsible for it. The administrative law of accountability of public authorities for their arbitrary and even ultra vires actions has taken many strides. It is now accepted both by this Court and English Courts that the State is liable to compensate for loss or in' jury suffered by a citizen due to arbitrary actions of its employees. In State of Gujarat v. Memon Mahomed Haji Hasam AIR 1967 SC 1885 : (1967) 3 SCR 938 the orderof the High Court directing payment of compensation for disposal of seized vehicles without waiting for the outcome of decision in appeal was upheld both on principle of bailee's 'legal obligation to preserve the property intact and also the obligation to take reasonable care of it ... to return it in the same condition in which it was seized' and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding line between the so-called sovereign and proprietary or commercial functions for determining the liability of the State' (SCC p. 695, para 20). In any case the law has always maintained that the public authorities who are entrusted with statutory function cannot act negligently. As far back as 1878 the law was succinctly explained in Geddis v. Proprietors of Bann Reservoir (1878) 3 AC 430 thus: "I take it, without citing cases, that it is now thoroughly well established that no action will lie for doing that which the Legislature has authorised, if it be done without negligence, although it does occasion damage to anyone; but an action does lie for doing what the Legislature has authorised, if it be done negligently." Under our Constitution sovereignty vests in the people. Every limb of the constitutional machinery is obliged to be people oriented. No functionary in exercise of statutory power can claim immunity, except to the extent protected by the statute itself. Public authorities acting in violation of constitutional or statutory provisions oppressively are accountable for their behaviour before authorities createdunder the statute like the commission or the courts en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 on July 29, 1988. Since the entire payment was made in July 1988 the flat was registered on August 18, 1988.Thereafter the appellant by a letter dated August 23, 1988 directed its Executive Engineer-VII to hand over the possession of the flat to the respondent. This information was given to him on November 30, 1988, yet the flat was not delivered as the construction work was not complete. The respondent approached the authority but no steps were taken nor possession was handed over. Consequently he filed a complaint before the District Forum that even after payment of entire amount in respect of cash down scheme the appellant was not handing over possession nor they were completing the formalities and the work was still incomplete. The State Commission by its order dated February 15, 1990 directed the appellant to pay 12% annual simple interest upon the deposit made by the respondent for the period January 1, 1989 to February 15, 1990.The appellant was further directed to hand over possession of the flat without delay after completing construction work up to June 1990. The Commission further directed that if it was not possible for the appellant to complete the construction then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l action by servants of the Government' (Salmond and Heuston on the Law of Torts). Misfeasance in public office is explained by Wade in his book on Administrative Law thus: "Even where there is no ministerial duty as above, and even where no recognised tort such as trespass, nuisance, or negligence is committed, public authorities or officersmay be liable in damages for malicious, deliberate or injurious wrong-doing. There is thus a tort which has been called misfeasance in public office, and which includes malicious abuse of power, deliberate maladministration, and perhaps also other unlawful acts causing injury." (p. 777) The jurisdiction and power of the courts to indemnify a citizen for injury suffered due to abuse of power by public authorities is founded as observed by Lord Hailsham in Cassell Co. Ltd. v. Broome 1972 AC 1027 (1972) 1 All ER 801 on the principle that, an award of exemplary damages can serve a useful purpose in vindicating the strength of law'. An ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities. That is provided by the rule of law. It acts as a check on arbitrary and capricious exercise of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 938 the House of Lords invoked the principle of ubi jus ibi remedium in favour of an elector who was wrongfully prevented from voting and decreed the claim of damages. The ratio of this decision has been applied and extended by English Courts in various situations. In Roncarelli v. Duplessis (1959) 16 DLR 2d 689 the Supreme Court of Canada awarded damages againstthe Prime Minister of Quebec personally for directing the cancellation of a restaurant-owner's liquor licence solely because the licensee provided bail on many occasions for fellow members of the sect of Jehovah's Witnesses, which was then unpopular with the authorities. It was observed that, 'what could be more malicious than to punish this licensee for having done what he had an absolute right to do in a matter utterly irrelevant to the Alcoholic Liquor Act? Malice in the proper sense is simply acting for a reason and purpose knowingly foreign to the administration, to which was added here the element of intentional punishment by what was virtually vocation outlawry.' In Smith v. East Elloe Rural District Council 1956 AC 736: (1956) 1 All ER 855 the House of Lords held that an action for damages might proceed against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing nor the financial strength to match the inaction in public oriented departments gets frustrated and it erodes the credibility in the system. Public administration, no doubt involves a vast amount of administrative discretion which shields the action of administrative authority. But where it isfound that exercise of discretion was mala fide and the complainant is entitled to compensation for mental and physical harassment then the officer can no more claim to be under protective cover. When a citizen seeks to recover compensation from a public authority in respect of injuries suffered by him for capricious exercise of power and the National Commission finds it duly proved then it has a statutory obligation to award the same. It was never more necessary than today when even social obligations are regulated by grant of statutory powers. The test of permissive form of grant is over. It is now imperative and implicit in the exercise of power that it should be for the sake of society. When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to be empowered to take possession of the area vested in it under Section 3. Section 8 contemplated the payment of compensation to the owner or owners of the acquired property. 2. Simultaneously on the same day, the President, in exercise of power conferred under Article 143(1) of the Constitution referred the following question to this Court for its opinion: "Whether a Hindu temple or any Hindu religious structure existed prior to the construction of the Ram Janma Bhumi-Babri Masjid (including the premises of the inner and other courtyards of such structure) in the area on which the structure stood?" The Presidential reference sets out the nature of dispute, the location of its area and the adverse consequence thereof and then proceeds to state that with a view to maintenance of public order and communal harmony in the country in the area vested in the Central Government by virtue of the acquisition, it is necessary to seek this Court's opinion on the question referred under Article 143(1). The Ordinance has since become an Act. 3. On receipt of the Presidential reference this Court gave detailed directions by its order dated January 27, 1993. In that order this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing. That question directly arises in thewrit petition filed under Article 32 of the Constitution. The Union of India has, therefore, prayed under Article 139-A for a transfer of the proceedings or issue raised in the two suits pursuant to the grant of the amendment applications as well as the five writ petitions pending in the Lucknow Bench of the High Court. 6. On August 10, 1993 when the transfer petition came up for hearing before a Bench comprising the learned Chief Justice and Mohan, J. the first respondent, the petitioner of the Writ Petition No. 552 of 1993 Dr Ismail Farooqui stated that he had no objection to the transfer but others had. When the petition came up for hearing before this Bench on September 21, 1993 none of the other petitioners to the writ petitions pending in the High Court was present to object to the transfer. The only objection, if any, came from Mr Abdul Mannan, learned counsel representing the plaintiff in Suit No. 4 of 1989. His submissions were twofold, namely, (i) the suits had progressed for several years in the High Court and it would be unwise to abate them since the question of title will have to be gone into in any case for determining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndment the wage-ceiling for coverage under the Employees State Insurance Act, 1948 (the Act) was enhanced from Rs 1600 to Rs 3000 per month. The amendment was challenged before the High Court on various grounds. While upholding the validity of the amendment a learned Single Judge of the High Court directed that the notification should be enforced Arising out of SLP (C) Nos. 5194-95 of 1993 with effect from November 1, 1992 instead of April 1, 1992. The judgment of the learned Single Judge was upheld by the Division Bench of the High Court. 3. We have heard learned counsel for the parties. We are of the view that the High Court fell into patent error in postponing the date of the operation of the notification. The notification, amending the Rules, was a legislative act.The amendment of the Rules being a delegated legislation; the High Court could not have interfered with the date of operation of the notification. 4. We set aside the direction given by the High Court regarding the postponement of the enforcement of the notification and we direct that the notification dated March 27, 1992 shall be operative from April 1, 1992. 5. We, however, leave it open to the respondents to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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