avtar singh

Consumer Protection Act, 1986 – s. 2(1)(d), (g), (o) and s. 12 – Chandigarh Allotment of Land to Co-operative House Building Societies Scheme, 1991 – Envisaging allotment of land by Chandigarh Administration to Co-operative House Building Societies through Chandigarh Housing Board – Construction of multistoried structures/dwellings for members of Societies – Non-allotment of land to Societies – Complaint by members u/s. 12, for refund of 10% earnest money forfeited by the Board and 18% interest paid by them – Maintainability of – Held: Complaint is maintainable – Members of the Societies were the real and ultimate beneficiaries – Provisions in the Scheme regulated the relationship of the Societies with their members and also made them jointly and severally responsible for payment of the earnest money etc. – By making applications for allotment of land, Societies would be deemed to have hired or availed services of Chandigarh Administration and the Board in relation to housing construction, thus, members covered by definition of `consumer’ u/s. 2(d)(ii) and had right to file such complaint – Even though Finance Secretary decided to refund the earnest money, Board did not refund the forfeited portion of the earnest money to the members of the Societies, thus, amounted to deficiency in service – 1952 Act, 1973 Rules and 1991 Scheme does not provide for levy of 18% interest on the delayed payment of earnest money – Chandigarh Administration and Board had no right to refuse refund of 18% interest – Thus, National Commission and State Commission justified in directing refund of the amount of interest – Board directed to refund the amount due to complainant within the stipulated period – Chandigarh Allotment of Land to Co-operative House Building Societies Scheme, 1991 – Capital of Punjab (Development and Regulation) Act, 1952 – Chandigarh Lease Hold of Sites and Buildings Rules, 1973. The Chandigarh Administration framed the `Chandigarh Allotment of Land to Co-operative House Building Societies Scheme, 1991′ through Chandigarh Housing Board for allotment of land to Co-operative House Building Societies. Fifty three Societies challenged the 1991 Scheme. The High Court dismissed the writ petition. In terms of the order of the High Court the members of the Societies paid the balance earnest money and 18% interest, however, the Board did not take effective steps for allotment of land to the Societies. Respondent No.1 and others-members, applied through their respective Societies for refund of the amount paid by them. The Secretary of the Board sent a letter to the Finance Secretary, Chandigarh Administration for its decision However, the Chief Accounts Officer of the Board suo motu remitted the amount of earnest money to the Societies after deducting 10% in accordance with the memo dated 9.6.1993 issued by the Finance Secretary, Meanwhile, the Finance Secretary issued a memo dated 9.3.2000 directing that full earnest money would be refunded to the societies/and its members, however, the interest on the earnest money would not to be refunded. The members of the Societies filed complaints under the Consumer Protection Act, 1986 against the action of the Board to forfeit 10% earnest money and the direction given by the Finance Secretary not to refund 18% interest. The District Forum held that the forfeiture of 10% earnest money in terms of the memo dated 9.6.1993 and non-refund of 18% interest were contrary to the 1991 Scheme and the 1973 Rules and amounted to deficiency in service and unfair trade practice. The State Commission held that the Finance Secretary could not have used the power for giving directions in violation of the Rules and the Scheme; that the memo dated 9.6.1993 was contrary to clause 8 of the 1991 Scheme; that once the Finance Secretary had issued instructions vide memo dated 9.3.2000 that full refund of earnest money would be made to the Societies/and its members the Board should have refunded the remaining amount to the complainants and its failure to do so amounted to deficiency in service; that the instructions issued by the Finance Secretary not to refund 18% interest deposited by the members of the Society did not have any legal sanction. The State Commission directed the Board to refund the amount to the complainants along with interest @ 8% p.a. However, the State Commission set aside the direction given by the District Forum for payment of interest from the amount of earnest money. The National Commission upheld the order passed by the State Commission. Therefore, the appellants filed the instant appeals. The question which arose for consideration in these appeals were whether the members of the Societies, who would have been benefited by allotment of land under the 1991 Scheme were `consumer’ within the meaning of Section 2(d) of the Act; and whether the District Forum had the jurisdiction to entertain the complaints filed by the members of the Societies for refund of 10% earnest money forfeited by the Board and 18% interest paid by them. =Dismissing the appeals, the Court HELD: 1.1 Even though the Chandigarh Allotment of Land to Co-operative House Building Societies Scheme, 1991 was ostensibly framed for allotment of land to the Co-operative House Building Societies through the agency of the Chandigarh Housing Board for construction of multistoried structures (dwelling units/flats) for their members and the Chandigarh Administration and the Board had nothing to do with the members of the Societies, but a careful reading of various clauses of the Scheme and the directives given by the Finance Secretary from time to time leave little room for doubt that the members of the Societies were the real and ultimate beneficiaries. The provisions contained therein not only regulated the relationship of the Societies with their members, but also made them jointly and severally responsible for payment of the earnest money etc. The Finance Secretary and the Board issued directions from time to time for payment of the earnest money and interest by the members of the Societies. If the scheme had nothing to do with the members of the Societies, then it would not have contained provisions to regulate their eligibility and entitlement to get dwelling units to be constructed on the land allotted by the Board and made them jointly and severally responsible for payment of the premium etc. and the Finance Secretary would not have issued directions vide memos dated 9.6.1993 and 9.3.2000 in the matter of refund of earnest money and interest. The Board too would not have entertained the request made by the members of the Societies for refund of the earnest money and remitted the amount to the Societies after deducting 10%. Thus, even though no formal contract had been entered into between the Chandigarh Administration and the Board on the one hand and the members of the Societies on the other hand, the former exercised sufficient degree of control over the latter. [Paras 27 and 28] [129-B-C; 131-A-F] 1.2 By making applications for allotment of land, the Societies would be deemed to have hired or availed services of Chandigarh Administration and the Board in relation to housing construction. If the scheme had been faithfully implemented and land had been allotted to the Societies, their members would have been the actual and real beneficiaries. Therefore, they were certainly covered by the definition of `consumer’ under Section 2(d) (ii) of the Consumer Protection Act, 1986, the second part of which includes any beneficiary of the services hired or availed for consideration which has been paid or promised or partly paid and partly promised. The members of the Societies had every right to complain against illegal, arbitrary and unjustified forfeiture of 10% earnest money and non-refund of 18% interest and the District Consumer Forum did not commit any jurisdictional error by entertaining the complaints. [Para 28] [131-F-H; 132-A-B] Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243; Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65, relied on. 1.3 The submission that the Board had deducted 10% earnest money and declined to refund 18% interest to the members of the Societies strictly in accordance with the directives given by the Finance Secretary and in the absence of challenge to memos dated 9.6.1993 and 9.3.2000, the complainants were not entitled to any relief, is meritless and cannot be accepted. In terms of clause 8 of the 1991 Scheme, a Society would have become entitled to refund of the earnest money without any deduction if it were to cancel the demand before allotment of land. This is also the spirit of Rule 8 of the Chandigarh Lease Hold of Sites and Building Rules, 1973 which were made applicable to the land allotted under the scheme. [Para 29] [132-B-D] 1.4 Rule 8 shows that an application for allotment of site or building by way of lease can be entertained only if it is accompanied by 10% of the premium as earnest money. The allottee is required to deposit 15% of the premium within 30 days of allotment. The balance amount is to be paid in accordance with Rule 12. An applicant who refuses to accept allotment within 30 days is entitled to refund of the amount paid by him. If the applicant neither refuses to accept the allotment nor deposits 15% of the premium, the Estate Officer can forfeit the whole or part of the earnest money. The provision relating to refund of the premium/earnest money or forfeiture of the whole or part thereof gets attracted only after the allotment is made and not before that. [Para 30] [133-E-G] 1.5 On examining para V(i) of memo dated 9.6.1993 issued by the Finance Secretary in the light of the plain language of Rule 8 of the 1973 Rules and clause 8 of the 1991 Scheme, it becomes clear that the concerned officer exceeded his brief when he directed that 10% of 25% of the premium/earnest money should be deducted if the members sought refund of the earnest money on any ground whatsoever. By giving the said directive, the concerned officer attempted to teach a lesson to the members of the Societies who had filed writ petition and succeeded in persuading the High Court to restrict payment of the earnest money to 10%. However, he must have realized the folly committed by issuing a direction in complete disregard of the spirit of Rule 8(5) of the 1973 Rules and clause 8 of the 1991 Scheme and this must have been the reason why he made amendments by incorporating clause 7 in memo dated 9.3.2000 for full refund of the earnest money without forfeiting 10%. Unfortunately, it proved to be a half hearted attempt by the Finance Secretary to redeem the wrong done earlier because while directing refund of the earnest money without any deduction, he used the expression `will henceforth’ in clause 7, which gave leverage to the Board to decline the request of the members of the Societies for full refund of the earnest money on the ground that 15% had already been remitted to the Societies for being paid to their members before the issue of memo dated 9.3.2000. Once the Finance Secretary took the corrective step, which was in consonance with the spirit of Rule 8(5) of the 1973 Rules and clause 8 of the 1991 Scheme, the Board should have refunded the balance 10% amount to all the members who had applied for refund on finding that land had not been allotted to the Societies and they might have to wait for indefinite period to get the flats. [Para 30] [133-G-H; 134-A-F] 1.6 On receipt of the applications made by the members of the Societies for refund of the earnest money and interest, the Secretary of the Board wrote letter dated 11.12.1998 to the Finance Secretary seeking his guidance in the matter. However, before the latter could take a decision, the Chief Accounts Officer of the Board remitted the amount of earnest money to the Societies after deducting 10% with a direction that the same be paid to their members. The Board did not explain why its officers did not wait for the decision of the Finance Secretary and why the Chief Accounts Officer exhibited undue haste in remitting the amount of earnest money to the Societies after deducting 10%. In any case, after the Finance Secretary decided that earnest money would be refunded to the Societies and their members without any deduction, the Board should have refunded forfeited portion of the earnest money to the members of the Societies and its failure to do so certainly amounted to deficiency in service. [Para 31] [134-G-H; 135-A-B] 1.7 The Capital of Punjab (Development and Regulation) Act, 1952 and the Chandigarh Lease Hold of Sites and Buildings Rules, 1973 do not provide for levy of 18% interest on the delayed payment of earnest money or a portion thereof. The 1991 Scheme also did not provide for levy of such interest. Notwithstanding this, the members of the Societies had to pay 18% interest because while dismissing the writ petition, the High Court observed that the Societies who had deposited 10% of the sale consideration and found eligible for allotment or were allotted sites would be liable to pay the balance 15% with a further interest at the rate of 18% per annum. However, there was nothing either in the interim or the final order of the High Court from which it could be inferred that the Chandigarh Administration or for that reason the Board was authorised or empowered to refuse refund of 18% interest to the members who did not seek allotment of flat. If the final order passed by the High Court is read in conjunction with interim order dated 11.5.1992, it becomes clear that the Societies were to deposit the remaining amount with interest at the rate of 18% per annum only if they were to accept allotment of flats under the Scheme. Although, the writ petitions were filed by the Societies, the language of the interim order passed by the High Court shows that the judges were thinking of imposing liability of 18% interest only on those members who were to accept allotment of flats to be constructed by the Societies. The members of the Societies did not get an opportunity to accept the allotment because even after deposit of full earnest money and 18% interest, the Board did not allot land to the Societies on which they could construct dwelling units/flats. The Finance Secretary misinterpreted the orders of the High Court and issued wholly arbitrary and unjust directive to the Board not to refund 18% interest to the members of the Societies who had applied for refund before allotment of land by the Board. The Chandigarh Administration and the Board had no right to refuse refund of 18% interest and absence of direct challenge to clause 11 of memo dated 9.3.2000 was not sufficient to legitimize indirect forfeiture of that amount and the State Commission did not commit any error by directing refund of the amount of interest by treating it to be a case of deficiency in service and the National Commission rightly declined to interfere with the order of the State Commission. The Board is directed to refund the amount due to the complainants within the period stipulated. [Paras 32 and 33] [135-C-H; 136- A-E] Case Law Reference: (1994) 1 SCC 243 Relied on. Para 28 (2004) 5 SCC 65 Referred to. Para 28 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8203 of 2010. From the Judgment & Order dated 12.7.2007 of the National Consumer Disputes Redressal Commission in R.P. No. 734 of 2004. WITH C.A. 8204, 8205, 8206, 8207, 8208, 8209, 8210, 8211, 8212, 8213, 8214, 8215, 8216, 8217, 8218, 8219, 8220, 8221, 8222, 8223, 8224, 8225, 8226 & 8227 of 2010. Rachana Joshi Issar, Nidhi Tiwari for the Appellant. Anil Nag, S.S. Khetarpal, H.K. Chaturvedi, Syed Ahmad Saud, M.M. Abbasi, Shakil Ahmed Syed for the Respondent.

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. OF 2010 (Arising out of SLP(C) No. 21740 of 2007) Chandigarh Housing Board … Appellant Versus Avtar Singh and others … Respondents WITH C.A. No. ________ of 2010 [arising out of SLP(C) No.831/2008] C.A. No. ________ of 2010 [arising out of SLP(C) … Continue reading →