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Home > SC > Civil Law > Consumer Protection Act > TAMIL NADU HOUSING BOARD & Ors. Vs. SEA SHORE APARTMENTS OWNERS WELFARE ASSOCIATION



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TAMIL NADU HOUSING BOARD & Ors. Vs. SEA SHORE APARTMENTS OWNERS WELFARE ASSOCIATION

Posted on 01 May 2009 by jyoti

Title

TAMIL NADU HOUSING BOARD & Ors. Vs. SEA SHORE APARTMENTS OWNERS WELFARE ASSOCIATION



Coram

C.K. THAKKER, P. SATHASIVAM



Act

Consumer Protection Act



Subject

Consumer Protection Act, 1986; Ss.2 (1)(0) and 12:

Services - Housing construction - Construction of flats by Housing Board on land acquisitioned by State Government - Agreement of sale-purchase of flats entered into between respondent-allottees and Housing Board - Ultimate cost of flats subject to amount of compensation to be rewarded for the land acquisitioned - Issuance of allotment letters demanding certain additional amount - Challenged by allottees by filing Complaints - State Consumer Commission observed that raising of demand of additional amount by the Board improper and illegal - Affirmed by National Commission holding that demand of additional amount made on non-existing grounds - On appeal, Held: Flats in question developed on land acquired by State Government - Compensation as awarded to land owners enhanced in a reference proceedings - Enhanced compensation affirmed by Supreme Court - In terms of agreement, allottee-purchasers agreed to pay the final price of flats as would be fixed by the Board - Thus, the Board did not act unfairly/unreasonably - However, the averments made by the allottees in the counter affidavit filed in Supreme Court were unnecessary - All the complaints remitted to State Commission to decide issues/disputes in accordance with law - Contract - Consent.

Consumer Protection Act - State Undertakings/Instrumentalities - Exclusion of service offered by them from application of the Act - Attempt for - Held: Must be discouraged as it would be against the spirit of the Act, a benevolent legislation.

Consumer Redressal Commission - Disputes relating to deficiency in service - Consumer Disputes Redressal Commission - Jurisdiction of - Held: The Commission has jurisdiction to decide disputes relating to deficiency in service as services in terms of s.2(1)(o) of the Act includes housing construction as well.

Words and Phrases:

`Services' - Meaning of in the context of S.2(1)(o) of the Consumer Protection Act.

State of Tamil Nadu acquired a vast peace of land and transferred it to appellant No.1, Tamil Nadu Housing Board, for execution of the south Madras Neighbourhood Development Scheme. The Board proposed to construct different types of flats under its High Income Group Scheme. In order to assess demand from public, it issued an advertisement inviting applications for registration under the Scheme. The Board conducted draw for allotment of flats on October 15,1993 and issued provisional allotment letters giving tentative cost to successful applicants. Allotment letters indicating the final cost of the flats were issued by the Board in the year 1994. Later, an agreement was entered into between the Board and the allottees that ultimate cost of the flat was subject to the outcome in the land acquisition proceedings and possession of flats was given to all the allottees. Thereafter the allottees were asked to pay additional amount, to which they objected by filing representations to the Board. The Board, however, did not give any response. Even subsequent representations were not responded by the Board. Aggrieved, the allottees filed complaints before the State Consumer Commission under Section 12 of the Consumer Protection Act, 1986 for direction to the Board to return the additional amount so demanded and paid by the members with interest thereon; that the Board to collect the instalments in 15 years as per the order of allotment issued earlier; and to pay compensation of rupees one lakh for the loss sustained and mental agony suffered by its members. The State Commission allowed all the complaints quashing the demand made by the Board. Appeals filed by the Board against the order of the State Commissions were dismissed by the National Commission. Hence the present appeals filed by the Board.

Appellant-Board contended that the Commissions were clearly in error in invoking the provisions of the Consumer Protection Act and in observing that there was `deficiency in service'; that dispute in the instant case related to fixation and determination of price of flats. Such dispute cannot be resolved in terms of provisions under the Act, and therefore, the Consumer Commission has no power/authority/jurisdiction to inquire into, deal with and decide such questions. Even otherwise, only civil court can enter into disputed questions of fact on the basis of evidence adduced by the parties; that from the facts it was clearly established that in the year 1991, the Board formulated a scheme and tentative price of the flat was fixed. In view of overwhelming response, the scheme was changed from seven types to fifteen types flats. Increase in plinth area was made, in ground area as also payment of excess compensation to land owners. All the applicants whose names had been registered in 1991 were informed about the revised price, the period within which the amount was to be paid and the reasons for fixation of higher price; that at the time of registration, it was clearly indicted that for those who opted to make payment in instalments, the period of repayment was 13 years. However, when applications for allotment were called for, the period was indicated as 15 years, and it was accepted by the allottees; and in connection thereto agreements were signed by the allottees giving necessary undertakings. It was thereafter not open to the allottees to challenge fixation of price of flats by the Board. They were estopped from doing so under the doctrine of promissory estoppel; and that when complaints were filed before the State Forum, a counter-affidavit was filed on behalf of the Board wherein it was asserted that there were reasons for increase of price.



Citation

2008 AIR 1151, 2008(1 )SCR370 , 2008(3 )SCC21 , 2008(1 )SCALE201 ,



Head Notes

Allowing the appeals, the Court

HELD: 1.1 From the record, it is clear that in 1982, a huge land was acquired by the State under the Land Acquisition Act for public purpose, for the purpose of development of area by executing a Scheme known as South Madras Neighbourhood Scheme. Amount of compensation was paid to the land-owners as per the award but it was enhanced in a reference proceedings. The Board came up to this Court, but the enhanced compensation was confirmed. It is also clear from the Scheme initially prepared, which was subsequently finalized, there was difference in plinth area as also ground area. So far as price is concerned, in 1991, when the names of applicants were registered, it was clarified that the price indicated was `tentative price' and it was subject to `final price' being fixed by the Board. When the scheme was altered from seven types to fifteen types flats, then also it was stated that the amount shown was merely "tentative selling price". The intending purchasers, therefore, were aware of the fact that the final price was to be fixed by the Board. In fact an agreement to that effect was executed by all prospective allottees wherein they agreed that they would pay the amount which would be finally fixed by the Board. (Para -11) [382-G; 383-A, B, C, D]

1.2 In terms of clause 18 of the agreement entered into between the parties and signed by all the allottees, it is expressly agreed between both the parties that after the finalization of the total cost of construction of flat and the value of the land in accordance with the award of compensation declared by the Tribunals and Courts the Purchaser shall pay to the Vendor on demand before the registration of the Sale Deed the difference between the amount already paid by the purchaser and the price amount finally fixed by the Chairman, the Vendor. In the circumstances, it cannot be said that the allottees were not aware of the above condition and they were compelled to make payment and thus were treated unfairly or unreasonably by the Board. (Paras - 12 & 13) [383-D, E, F, G]

2.1 The observations made by this Court in the decided case of Lucknow Development Authority vs. M.K. Gupta* make it clear that when private undertakings are taken over by the State or its Instrumentalities, any attempt to exclude the services offered by such statutory bodies to the common-man from the application of the Consumer Protection Act must be discouraged. It would be against the spirit behind the benevolent legislation. At the same time, however, it cannot be overlooked that `price fixation' depends on several factors. Normally, therefore, it would not be appropriate to enter into adequacy of price.
(Para - 20) [387-C, D, E]

*Lucknow Development Authority vs. M.K. Gupta, (1994) 1 SCC 243; Premji Bhai Parmar & Ors. vs. Delhi Development Authority & Anr., (1980) 2 SCC 129; Bareilly Development Authority vs. Ajai Pal Singh, (1989) 2 SCC 116; R.D. Shetty vs. International Airports Authority, (1979) 3 SCC 489 and Chief Administrator, PUDA vs. Shabnam Virk, (2006) 4 SCC 74 - relied on.

2.2 The State Commission as well as National Commission ought to have considered all the aspects. Even if they were of the view that after the amendment of the Consumer Protection Act in 1993 and in the light of inclusion of `housing construction' within the meaning of `service' in clause (o) of Section 2(1), the Commission had jurisdiction to deal with and decide disputes relating to deficiency in service under the Act which included the issues raised, it was obligatory on them to consider whether the controversy raised in the proceedings with regard to fixation of price would be justiciable on the facts and in the circumstances of the case, particularly in the light of the contentions raised by the Board that there was increase in plinth area, ground area and payment of enhanced compensation to land owners. They were also required to consider that the Board does not have land of its own and the land was acquired under the Land Acquisition Act by paying compensation as determined in accordance with the provisions of that law. (Para - 27) [392-A, B, C, D]

2.3 The Commissions also could not ignore the fact that when the advertisement was issued for the purpose of registration of intending purchasers of flats, they were clearly intimated that the price shown was merely a `tentative price'. Again, when the scheme was altered the intending purchasers were informed that the price was tentative and they would have to pay price finally determined by the Board. They consented and entered into an agreement by giving an undertaking that they would pay the price determined by the Board. (Para - 27) [392-D, E]

2.4 It was open to the allottees not to pay the additional amount demanded by the Board and not to take possession. By agreeing to pay the amount and by paying such amount and taking possession, now they want to go behind the concluded contract between the parties. All these questions were required to be gone into by the State Commission as also by the National Commission. The orders passed by both the Fora are, therefore, liable to be set aside. All the complaints are remitted to the State Commission to decide them in accordance with law after hearing the parties. Since the original complaints were filed in 1995, the State Commission will give priority to the cases and decide them as expeditiously as possible. (Paras - 27 & 30) [392-G; 393-A; 394-A, B]

3. While supporting the orders passed by the State Consumer Commission and the National Consumer Commission, the allottees have made certain averments in the counter-affidavit filed in this Court. These averments made against the officials of the Housing Board were unnecessary. (Para - 28) [393-B, C]

4. It is clarified that no opinion has been expressed one way or the other on the controversy raised by the parties. All the observations made by this Court are limited for the purpose of holding that the State Commission as also National Commission ought to have dealt with and decided the contentions raised by the Housing Board. Therefore, as and when the complaints will be placed for hearing before the Commissions, they will be decided strictly on their own merits without being inhibited by those observations. (Para - 31) [394-B, C, D]

V. Krishnamurthy, H. Harish Kumar, Dr. R. Prakash and P.N. Ramalingam for the Appellants.

M.N. Rao, K.K. Mani, C.K.R. Linin Shekar and Mayur R. Shah for the Respondent.



Judgment Made On

01/09/2008

CASE NO.:
Appeal (civil) 7907-7913 of 2003

JUDGMENT:
J U D G M E N T


C.K. Thakker, J.


1. The present appeals are filed against
an order passed by the State Consumer Disputes
Redressal Commission, Madras (State
Commission for short) on July 24, 1995 in
Original Petition Nos. 143-149 of 1995 and
confirmed by the National Consumer Disputes
Redressal Commission, New Delhi (National
Commission for short) on February 25, 2002 in
First Appeal Nos. 500-506 of 1995.
2. Shortly stated the facts are that the
Tamil Nadu Housing Board (hereinafter referred
to as the Board) was constituted under the
Tamil Nadu Housing Board Act, 1961 (Act 17 of
1961). The primary object of creation of the
Housing Board was to acquire land in the
neighbourhood areas of developed cities at a
reasonable price and to construct tenements,
houses and flats thereon for providing
residential accommodation to needy people of
different income groups and categories. In the
year 1982, vast piece of land admeasuring
about 28 acres of Thiruvamiyer, Chennai was
acquired by the State of Tamil Nadu under the
Land Acquisition Act, 1894 for a public
purpose, viz. for the development of the area
known as South Madras Neighbourhood Scheme. On
February 27, 1991 the Board approved a
proposal to construct seven different types of
flats. It proposed to construct 102 flats
under its High Income Group Scheme (HIG
Scheme for short). In order to assess demand
from public, an advertisement was issued by
the Board on March 21, 1991 inviting
applications for registration under the title
Avail a chance of owning your own flat in
Thiruvanmiyur Extension, Madras. Seven types
of flats were mentioned in the said
advertisement along with plinth area,
tentative price, initial deposit, monthly
instalment, repayment period, amount of
deposit for registration, etc. It was stated
that pursuant to the said advertisement
applications were made by interested persons.
There was overwhelming demand and several
persons applied. The record reflects that
finally instead of seven types of flats,
fifteen types of flats were constructed under
HIG Scheme. The Board issued letters on August
13, 1993 to the applicants asking them whether
they were willing to purchase flats. Necessary
details of the type, design, plinth area,
tentative selling price and other particulars
were supplied. Draw was conducted on October
15, 1993 and provisional allotment letters
were issued on October 19, 1993. Tentative
cost was specified in the letter which was to
be paid within a period of 21 days. Final
allotment order was made on August 9, 1994
wherein final cost of the flat was mentioned.
An agreement was entered into between the
Housing Board and allottees on August 22,
1994. In the said agreement, it was mentioned
that it was agreed between the parties that
the ultimate cost of the total construction of
the flat was subject to the outcome in the
award of compensation in land acquisition
proceedings pending adjudication and the final
amount will be fixed on that basis which will
be paid by the members. Thereafter possession
of flats was given to all allottees. The
members were then asked to pay additional
amount. The respondent-Sea Shore Apartments
Owners Welfare Association [Association for
short] felt that the demand made and amount
recovered by the Housing Board was neither
legal nor proper. It could not have demanded
more amount. The amount which was fixed
earlier was already paid and the members of
the Association were not treated fairly. It,
therefore, made representation on December 26,
1994 against the additional amount. In the
said representation, the Association asked the
Board to give reasons for enhancement of price
of flats as also for reduction of period of
payment of instalments from 15 years to 13
years. The Board, however, did not reply to
the said letter. Even subsequent letter was
not responded. Seven complaints were,
therefore, filed by the allottees before the
State Commission on May 26, 1995 under Section
12 of the Consumer Protection Act, 1986
(hereinafter referred to as the Act).
Prayers were made in the complaints to direct
the Board and its officers to return the
escalation amount paid by the members of the
Association with interest thereon; to restrain
the Board and its officers from insisting on
payment of excess amount as demanded; to
direct the Board to collect the instalments in
15 years as per the order of allotment issued
earlier; to pay compensation of rupees one
lakh for the loss sustained and mental agony
suffered by the members of the Association and
to pay costs of the complaints. It was also
stated that the complainants had claimed
relief for those members also whose names had
been given in the Annexure to the complaints.
3. A reply was filed by the Board
controverting averments made and allegations
levelled in the complaints. It was stated
that under the Demand Assessment Scheme, the
price mentioned in the advertisement was only
tentative. Originally, the proposal was for
construction of seven types of flats but
because of great demand, it was finalized into
fifteen types of flats. It was also stated
that the construction cost was increased
because of increase in ground area, plinth
area and also because of payment of excess
compensation to the land owners whose lands
had been acquired for the purpose of
construction of flats. It was contended that
if the allottees were really aggrieved over
the increase in cost, they could have well
surrendered the flats. But they did not do so.
They accepted the increase in price and took
over possession of property. It was also
contended that the Consumer Forum had no
jurisdiction to deal with and decide the
matters relating to fixation of price of flats
and on that ground also, the complaints were
not maintainable. It was submitted that the
demand of price could not be said to be
illegal, fanciful or otherwise unreasonable
and the complaints were liable to be
dismissed.
4. The State Commission considered the
rival contentions of the parties and held that
there had been deficiency in service on the
part of Board inasmuch as there was illegal
demand by the Board of additional amount which
was neither legal nor proper. The Commission
observed that when the possession was sought
to be given to the allottees, they had no
option, but to take possession of the flats
and that is how possession was taken over by
the members and the said circumstance could
not go against them. According to the State
Commission, the complaint of the complainant-
Association that escalation was unjust,
unwarranted and illegal was well founded and
ought to be upheld. According to the State
Commission, three-fold defence put forward
by the Board had no basis whatsoever. In the
opinion of the State Commission, the defences
as to (i) increase in the plinth area, (ii)
increase in the area of land, and (iii)
payment of excess amount of compensation to
the land owners were vague and no particulars
were furnished. No details were supplied as to
excess payment of compensation. It was also
not clear whether the entire excess amount of
compensation paid to the land owners was in
respect of land on which flats were
constructed by the Board and allotted to the
members of the Association. It was not open
to the Board, commented the State Commission,
to demand from members of the Association, the
entire amount which it had paid to the land
owners towards enhanced compensation. The
State Commission also held that the Board had
no right to reduce the period of recovery of
amount by instalments from 15 years to 13
years and the said action was illegal.
Accordingly, all the complaints were allowed
and the demand made by the Board was quashed
and set aside. Refund of amount was also
ordered.
5. Being aggrieved by the order passed by
the State Commission, the Board approached the
National Commission. The National Commission
by a short order dated February 25, 2002
dismissed all the appeals observing inter alia
that the State Commission recorded that not a
scrap of paper has been filed by the opposite
party to show that there was any land
acquisition proceedings before any court in
respect of the lands in question. According
to the National Commission, the action of the
Board in increasing price was on non existing
grounds and hence the demand was not legal.
The appeals were accordingly dismissed.
6. The Board has challenged these
decisions by filing present appeals. On
November 25, 2002, notice was issued. On
September 15, 2003, leave was granted after
hearing the parties. Operation of the impugned
order was also stayed subject to the
appellants depositing the disputed amount in
the Court within a period of four weeks from
the date of the order. The Registry was
directed to invest the said amount. The
matters were thereafter ordered to be posted
for hearing. That is how the matters are
before us.
7. We have heard the learned counsel for
the parties.
8. The learned counsel for the Board
strenuously urged that the Commissions were
clearly in error in invoking the provisions of
the Act and in observing that there was
deficiency in service. According to the
learned counsel, dispute in the instant case
related to fixation and determination of price
of flats. Such dispute cannot be resolved
under the Act. Consumer Commission has no
power, authority or jurisdiction to inquire
into, deal with and decide such questions.
Even otherwise, in view of allegations and
counter-allegations and assertions and
retractions, only civil court can enter into
disputed questions of fact on the basis of
evidence adduced by the parties and Commissions
exercising summary power were in error in
encroaching the jurisdiction of civil court
which could not have been done.
9. It was also submitted that from the
facts it was clearly established that in 1991
what was done by the Board was to formulate a
scheme and tentative price was fixed. In view
of overwhelmed response, the scheme was changed
from seven types to fifteen types flats. There
was increase in plinth area, in ground area as
also payment of excess compensation to land
owners. It was, therefore, clearly stated in
1993 to all the applicants whose names had been
registered in 1991 about the revised price, the
period within which the amount was to be paid
and the reasons for fixation of higher price.
It was also stated that at the time of
registration in 1991, it was clearly indicted
that for those who opted to make payment in
instalments, the period of repayment was 13
years. In 1993, however, when applications for
allotment were called for, the period was
indicated as 15 years. The said mistake was
rectified at the time of final allotment. With
an open eye, it was accepted by the allottees
and agreements were signed by them giving
undertakings. It was thereafter not open to
the allottees to challenge fixation of price of
flats by the Board. They were estopped from
doing so under the doctrine of promissory
estoppel. It was also submitted that when
complaints were filed before the State Forum, a
counter-affidavit was filed on behalf of the
Board wherein it was asserted that there were
three-fold reasons for increase of price; viz.,
(i) increase in plinth area, (ii) increase in
ground area, and (iii) payment of enhanced
compensation to land owners. In view of the
above pleas and defences, the State Commission
ought to have dismissed the complaints. The
State Commission, however, failed to do so.
But even otherwise, the State Commission did
not consider all the defences in their proper
perspective and held that the Board was not
entitled to claim additional amount and issued
certain directions including refund of amount
with interest. Obviously, the Board was
aggrieved and it approached the National
Commission. But the National Commission also,
without considering the points raised by the
Board confirmed the order passed by the State
Commission and dismissed the appeals. Both the
orders, therefore, are not in consonance with
law and are liable to be set aside.
10. The learned counsel for the
complainants supported the order passed by the
State Commission and confirmed by the National
Commission. He submitted that the State
Commission has considered all the contentions
raised by the Board and after perusing the
materials placed before it, recorded a finding
that none of the three defences raised by the
Board was well-founded and hence could not be
upheld. It was a pure finding of fact based on
evidence. The National Commission affirmed the
order passed by the State Commission observing
that the findings recorded by the State
Commission were findings of fact and they did
not call for interference. Such order cannot
be said to be illegal or otherwise unreasonable
which can be interfered with in exercise of
discretionary jurisdiction of this Court under
Article 136 of the Constitution and the appeals
may be dismissed.
11. Having heard the learned counsel for
the parties, in our opinion, all the appeals
should be allowed. From the record, it is clear
that in 1982, a huge land admeasuring about 28
acres at Thiruvanmiyur Extension, Chennai was
acquired by the State under the Land
Acquisition Act for public purpose, namely, for
the purpose of development of area known as
South Madras Neighbourhood Scheme. Amount of
compensation was paid to the land-owners as per
the award but it was enhanced in reference
proceedings. The Board came up to this Court,
but the enhanced compensation was confirmed.
It is also clear from the Scheme initially
prepared, i.e. seven types scheme and fifteen
types scheme which was subsequently finalized,
there was difference in plinth area as also
ground area. So far as price is concerned, in
1991, when the names of applicants were
registered, it was clarified that the price
indicated was tentative price and it was
subject to final price being fixed by the
Board. In any case when the scheme was altered
from seven types to fifteen types flats, it was
stated that the amount shown was merely
tentative selling price. The intending
purchasers, therefore, were aware of the fact
that the final price was to be fixed by the
Board. In fact an agreement to that effect was
executed by all prospective allottees wherein
they agreed that they would pay the amount
which would be finally fixed by the Board.
12. Clause 18 of the agreement entered
into between the parties and signed by all
allottees is extremely important and reads
thus;
It is expressly agreed between both
the parties that after the finalizatin
of the total cost of construction of
flat and the value of the land in
accordance with the award of
compensation declared by the Tribunals
and Courts the Purchaser shall pay to
the Vendor on demand before the
registration of the Sale Deed the
difference between the amount already
paid by the purchaser as per clause 2
above and the price amount finally
fixed by the Chairman the Vendor.

13. In the circumstances, it cannot be
said that the allottees were not aware of the
above condition and they were compelled to make
payment and thus were treated unfairly or
unreasonably by the Board.
14. The State Commission in the impugned
order observed that it was the case of the
Board that excess amount of compensation was
awarded to the land owners. It proceeded to
state that the excess compensation had been
awarded in respect of lands covered by other
schemes in the neighbourhood and the Board
attempted to shift the burden of the excess
amount on the allottees of Thiruvanmiyur
Extension Scheme. It also stated that no
evidence was produced by the Board to show that
there was any land acquisition proceeding
before any court in respect of land covered by
HIG Scheme No. 102 (though Clause 18 of the
agreement extracted hereinabove expressly
refers to such proceedings). It also observed
that an affidavit was filed by the Secretary of
the Complainant-Association that HIG Scheme No.
102 was not involved in any land acquisition
proceedings before any court and the said
averment has not been rebutted by the Board.
(It may, however, be stated that in the reply
filed by the Board before the State Commission,
it was asserted that one of the reasons for
increase in cost was due to excess amount of
compensation allowed to the land-owners). The
State Commission observed that all the three
defences raised by the Board were delectably
vague, without any particulars as to how much
escalation was due to plinth area, how much was
due to increase in the land area and how much
was due to payment of enhanced compensation to
land owners. It went on to state that the cost
of enhanced compensation and increased area
must also have been taken into consideration
in fixing the tentative selling price. The
action of the Board, in the opinion of the
State Commission was, therefore, unjust and
arbitrary.
15. It was also held that reduction of
period of payment of balance amount from 15
years to 13 years by monthly instalments
amounted to deficiency in service and that
part was, therefore, illegal. Accordingly, the
following directions were issued by the State
Commission;
1.It is declared that the opposite
parties are entitled to claim from
the members of the complainant
Association for the flats allotted
to them under No.102 HIG Scheme at
Thiruvanmiyur Extension only the
selling price mentioned in Ex.A2(a)
containing the particulars of this
Scheme.

2. The opposite parties are directed
to refund to the members of the
complainant Association who have
made full payment, the excess
amount collected with interest
thereon at 12% from the date of
collection till payment.

3. In respect of the Members of the
Complainant Association who have
opted for payment in instalments,
the opposite parties are directed
to re-schedule the balance of
payment as per Ex.A2 (a) in monthly
instalments for 15 years instead of
13 years and adjust the excess
payment made if any, towards future
instalments.

4. The opposite parties are also
directed to pay a consolidated sum
of Rs.7,000/- as costs to the
Complainant Association at the rate
of Rs.1,000/- per complaint.

16. The National Commission, without
discussing the evidence on record as also
contentions raised by the Board, conclusions
arrived at and reasons weighed with the State
Commission, confirmed the findings by a brief
order.
17. As observed earlier, it was contended
by the Board before the State Commission and
National Commission that fixation of price of
flats cannot fall within the purview of the
Commission. It is, no doubt, true that housing
construction had been included in the
definition of service in clause (o) of
Section 2(1) of the Act by the Consumer
Protection (Amendment) Act, 1993 [Act 50 of
1993]. But it was submitted that the fixation
of price cannot be made subject matter of
dispute and Consumer Commission could not deal
with the question as to adequacy of price. A
specific contention was raised by the Board
before the State Commission and National
Commission, but it was decided against the
Board though according to the Board, the point
was covered by earlier decisions of the
National Commission itself.
18. The learned counsel for the Board
referred to a decision of the National
Commission in Gujarat Housing Board v. Akhil
Bhartiya Grahak Panchayat & Ors., (1996) 1 CPJ
103. Considering the provisions of the Act,
the National Commission held that the Consumer
Commission had no jurisdiction to go into the
question of pricing of houses and plots, sold
or allotted on hire purchase system by the
Development Authority or Housing Board. The
Commission relied upon its earlier decision in
Gujarat Housing Board v. Datania Amritlal
Fulchand & Ors., (1993) 3 CPJ 351.
19. True it is that in Lucknow Development
Authority v. M.K. Gupta, (1994) 1 SCC 243, this
Court stated;
When private undertakings are taken
over by the government or corporations
are created to discharge what is
otherwise State's function, one of the
inherent objectives of such social
welfare measures is to provide better,
efficient and the cheaper services to
the people. Any attempt, therefore, to
exclude services offered by statutory
or official bodies to the common man
would be against the provisions of the
Act and spirit behind it. It is indeed
unfortunate that since enforcement of
the Act there is a demand and even
political pressure is built up to
exclude one or the other class from
operation of the Act. How ironical it
is that official or semi-official
bodies which insist on numerous
benefits, which are otherwise
available in private sector, succeed
in bargaining for it on threat of
strike mainly because of larger income
accruing due to rise in number of
consumers and not due to better and
efficient functioning claim exclusion
when it comes to accountability from
operation of the Act. The spirit of
consumerism is so feeble and dormant
that no association, public or private
spirited, raises any finger on regular
hike in prices not because it is
necessary but either because it has
not been done for sometime or because
the operational cost has gone up
irrespective of the efficiency without
any regard to its impact on the common
man. In our opinion, the entire
argument found on being statutory 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 scrutinized as public
accountability is necessary for
healthy growth of society.
20. The above observations make it clear
that when private undertakings are taken over
by the State or its Instrumentalities, any
attempt to exclude the services offered by such
statutory bodies to the common-man from the
application of the Act must be discouraged. It
would be against the spirit behind the
benevolent legislation. At the same time,
however, it cannot be overlooked that price
fixation depends on several factors. Normally,
therefore, it would not be appropriate to enter
into adequacy of price.
21. It may be profitable at this stage to
refer to a decision of this Court in Premji
Bhai Parmar & Ors. v. Delhi Development
Authority & Anr., (1980) 2 SCC 129. The
petitioner in that case purchased a plot
offered by the respondent-Authority and after
payment of price took possession thereof.
Subsequently, however, he filed a petition
under Article 32 in this Court contending that
the surcharge collected by the authority was
illegal and violative of Article 14. Dismissing
the petition, this Court held that the remedy
sought by the petitioner to reopen the
concluded contract with a view to getting back
a part of the purchase price paid and benefit
taken was not proper.
22. The Court stated;
Conceding for this submission that
the Authority has the trappings of a
State or would be comprehended in
'other authority' for the purpose of
Article 12, while determining price of
flats constructed by it, it acts
purely in its executive capacity and
"is bound by the obligations which
dealings of the State with the
individual citizens import into every
transaction entered into the exercise
of its constitutional powers. But
after the State or its agents have
entered into the field of ordinary
contract, the relations are no longer
governed by the Constitutional
provisions but by the legally valid
contract which determines rights and
obligations of the parties inter se.
No question arises of violation of
Article 14 or of any other
constitutional provision when the
State or its agents, purporting to act
within this field, perform any act. In
this sphere, they can only claim
rights conferred upon them by contract
and are bound by the terms of the
contract only unless some statute
steps in and confers some special
statutory power or obligation on the
State in the contractual field which
is apart from contract".

23. The Court went on to state;

The principal contention canvassed on
behalf of the petitioners is that the
treatment meted to them by the
Authority is discriminatory inasmuch
as no surcharge was levied on flats in
MIG scheme constructed and allotted
prior to November 1976 and after
January 1977. MIG flats involved in
these petitions were constructed and
were available for allotment in
November 1976 and the lots were drawn
in January 1977. There is one more MIG
scheme at Munirka where the allotment
took place at or about the same time
but in which case no surcharge was
levied. The contention is that once
for the purpose of eligibility to
acquire a flat, the criterion is
grounded in income brackets, MIG, LIG,
et et. those in the same income
bracket form one class even for the
purpose of determining disposal price
of flat allotable to them irrespective
of situation, location or other
relevant determinants which enter into
price calculation and therefore, in
the same income group there cannot be
differentiation by levying of
surcharge in some cases and charging
only the cost price in other cases and
that the discrimination is thus writ
large on the face of the record
because by levying surcharge in case
of petitioners they have been treated
unequally and with an evil eye. It is
difficult to appreciate how Article 14
can be attracted in the circumstances
hereinabove mentioned. Cost price of a
property offered for sale is
determined according to the volition
of the owner who has constructed the
property unless it is shown that he is
under any statutory obligation to
determine cost price according to
certain statutory formula. Except the
submission that the Authority has a
proclaimed policy of constructing and
offering flats on 'no profit no loss'
basis which according to Mr. Nariman
has a statutory flavour in the
regulations enacted under the Act, the
Authority is under no statutory
obligation about its pricing policy of
the flats constructed by it. When the
flats were offered to the petitioners
the price in round figure in respect
of each flat was mentioned and
surcharge was not separately set out
and this price has been accepted by
the petitioners. The obligation that
regulations are binding on the
Authority and have provided for a
statutory price fixation formula on
'no profit no loss' basis will be
presently examined but save this the
Authority is under no obligation to
fix price of different flats in
different schemes albeit in the same
income group at the same level or by
any particular statutory or binding
formula. The Authority having the
trappings of a State might be covered
by the expression 'other authority' in
Article 12 and would certainly
be precluded from according
discriminatory treatment to persons
offering to purchase flats in the same
scheme. Those who opt to take flats in
a particular income-wise area-wise
scheme in which all flats came up
together as one project, may form a
class and any discriminatory treatment
in the same class may attract Article
14. But to say that throughout its
course of existence the Authority
would be bound to offer flats income-
group-wise according to the same price
formula is to expect the Authority to
ignore time, situation, location and
other relevant factors which all enter
the price structure. In price fixation
executive has a wide discretion and is
only answerable provided there is any
statutory control over its policy of
price fixation and it is not the
function of the Court to sit in
judgment over such matters of economic
policy as must be necessarily left to
the Government of the day to decide.
The experts alone can work out the
mechanics of price determination;
Court can certainly not be expected to
decide without; the assistance of the
experts.

24. Again, in Bareilly Development
Authority v. Ajai Pal Singh, (1989) 2 SCC 116,
the Authority (BDA) constructed plots for
persons belonging to different income grups.
The terms and conditions contained in the
brochure empowered the BDA to revise the cost
of price and to enhance the rate of flats. The
petitioners got themselves registered for
allotment of flats. Notices were issued by the
BDA intimating the petitioners regarding the
costs of flats and the rate of instalments. The
said action was challenged under Article 226 of
the Constitution. The High Court of Allahabad,
placing reliance on R.D. Shetty v.
International Airports Authority, (1979) 3 SCC
489 held that the BDA acted arbitrarily and
unreasonably in unilaterally enhancing the cost
of flats and the rate of instalments and
directed the BDA to redetermine the issue. The
BDA approached this Court.
25. Allowing the appeal, setting aside the
judgment of the High Court and distinguishing
International Airports Authority, this Court
observed;
Even conceding that the BDA has the
trappings of a State or would be
comprehended in 'other authority' for
the purpose of Article 12 of the
Constitution, while determining price
of the houses/flats constructed by it
and the rate of monthly instalments to
be paid, the 'authority' or its agent
after entering into the field of
ordinary contract acts purely in its
executive capacity. Thereafter the
relations are no longer governed by
the constitutional provisions but by
the legally valid contract which
determines the rights and obligations
of the parties inter-se. In this
sphere, they can only claim rights
conferred upon them by the contract in
the absence of any statutory
obligations on the part of the
authority (i.e. BDA in this case) in
the said contractual field.
(emphasis supplied)

26. Recently, in Chief Administrator, PUDA
v. Shabnam Virk, (2006) 4 SCC 74, the allottee
had filed an affidavit clearly indicating that
she would undertake to abide by all the terms
and conditions of allotment letter and the
amount indicated therein for allotment of a
house. There was nothing to show that the
increase was possible only when there was
increase in the cost of construction. It was
held by this Court that the allottee was liable
to pay amount as stipulated in the allotment
letter. It was observed;
It is to be noted that the respondent
herself had accepted in the
undertaking that she accepted the
allotment of the house and undertook
to abide by all the terms and
conditions of the allotment letter. It
is not in dispute that in the
allotment letter the figure as
demanded has been reflected. That
being so the respondent was liable to
pay the amount as stipulated in the
allotment letter.
As there is no dispute that the
respondent had in fact filed an
affidavit clearly indicating that she
undertook to abide by all the terms
and conditions of the allotment
letter, the amount indicated in the
allotment letter was the amount in
respect of the allotment of the house.
We find nothing in the quoted clause
to show that the increase was possible
only when there was an increase in the
cost of construction. The clause
quoted above does not reflect any such
intention of the parties.
27. In our considered opinion, the State
Commission as well as National Commission ought
to have considered all these aspects. Even if
they were of the view that after the amendment
of the Act in 1993 and in the light of
inclusion of housing construction within the
meaning of service in clause (o) of Section
2(1), the Commission had jurisdiction to deal
with and decide disputes relating to deficiency
in service under the Act which included the
issues raised, it was obligatory on them to
consider whether the controversy raised in the
proceedings with regard to fixation of price
would be justiciable on the facts and in the
circumstances of the case, particularly in the
light of the contentions raised by the Board
that there was increase in plinth area, ground
area and payment of enhanced compensation to
land owners. They were also required to
consider that the Board does not have land of
its own and the land was acquired under the
Land Acquisition Act by paying compensation as
determined in accordance with the provisions of
that law. The Commissions also could not
ignore the fact that when the advertisement was
issued for the purpose of registration of
intending purchasers of flats, they were
clearly intimated that the price shown was
merely a tentative price. Again, when the
scheme was altered the intending purchasers
were informed that the price was tentative and
they would have to pay price finally determined
by the Board. They consented and entered into
an agreement by giving an undertaking that they
would pay the price determined by the Board.
When the question of giving possession of flats
came up, the Board informed them to pay the
remaining amount so that possession could be
delivered to them. They made such payment and
obtained possession. It was, therefore,
contended by the Board that the allottees were
estopped from raising the contention that
additional amount could not have been recovered
from them. It was open to the allottees not to
pay the additional amount demanded by the Board
and not to take possession. By agreeing to pay
the amount and by paying such amount and taking
possession, now they want to go behind the
concluded contract between the parties. In our
considered opinion, all these questions were
required to be gone into by the State
Commission as also by the National Commission.
The orders passed by both the Fora are,
therefore, liable to be set aside.
28. Before we part with the matter, we may
refer to one more aspect. After the Board
approached this Court and notice was issued,
the respondent-Association filed a counter-
affidavit in this Court through Secretary of
the Association. In the said affidavit, the
orders passed by the State Commission and
affirmed by the National Commission were sought
to be supported. One may appreciate allottees
taking such stand supporting the orders which
were passed in their favour. But while doing
so, certain averments and remarks have been
made which were not necessary for determining
the question. For instance in paragraph 12 of
the affidavit-in-reply, it was stated;
A public undertaking like the Housing
Board has not only to act fairly, but
also openly it cannot suppress vital
documents and play the game of hide and
seek. We have given to ourselves a
democratic Constitution. Accountability
and transparency are the pillars of
democracy. There must be sun shine in
the corridors of power. It is lamentable
that the bureaucrats of the Housing
Board are still living in the atmosphere
of British Raj and accountability and
transparency are anaethima to them.

29. In paragraph 16 of the counter,
similar allegations have been levelled. It was
stated that an instrumentality of State is
expected to conduct its affairs in transparent
manner, but the Board failed to do so. At
another place, it was said that service
oriented body like the Housing Board cannot act
like private bodies and take a Shylockean
attitude. In our opinion, all those
observations could have been easily avoided.
Since we are setting aside both the orders and
remitting the cases to the State Commission for
deciding afresh in accordance with law, it
would not be appropriate to say anything more
on this. Let the matter rest there.
30. For the foregoing reasons, all the
appeals are allowed. The order passed by the
State Commission and confirmed by the National
Commission is set aside. All the complaints are
remitted to the State Commission to decide them
in accordance with law after hearing the
parties. On the facts and in the circumstances
of the case, there shall be no order as to
costs. Amount if any, deposited by the
appellant-Board in this Court may be refunded
to the Board with accrued interest thereon.
Since the original complaints were filed in
1995, the State Commission will give priority
to the cases and decide them as expeditiously
as possible preferably before June 30, 2008.
31. At this stage, we may clarify that we
should not be understood to have expressed any
opinion one way or the other on the controversy
raised by the parties. All the observations
made by us hereinabove are limited for the
purpose of holding that the State Commission as
also National Commission ought to have dealt
with and decided the contentions raised by the
Housing Board. Therefore, as and when the
complaints will be placed for hearing before
the Commissions, they will be decided strictly
on their own merits without being inhibited by
those observations.
32. Ordered accordingly.



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