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Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     09 January 2014

Do co-operative housing societies and consumer courts

A couple of days back there was report that a Consumer Forum in Mumbai ordered a Co-operative Housing Society to pay damages to a member for loss suffered due to leakage from an upper floor.

This is not the first time Consumer Fora and the State Consumer Commission in Maharashtra have held that Co-operative Housing Societies are “service providers”. I just failed to understand logic. A group of consumers who need accommodation for themselves come together and purchase or construct homes. After construction, flats are allotted to the individual consumer members. After the members have occupied the flats they need  common services such as waste collection, sweeping common areas and many other things. The members elect a Managing Committee from among themselves, who collect “subscripttion” from members and pay to the respective persons or agencies. Here the Society is not a service agency.

Let us consider another similar case.

A group of consumers want to purchase for themselves vegetables in bulk at the cheaper whole-sale price rather than at a higher price from the local vendor. They entrust the exercise to one among themselves. Each individual pays his share to the leader depending on what vegetables and how much quantity he wants. The leader purchases the vegetables in bulk from the whole sale market. He then distributes them among the consumers including himself and also render account to each of the members. He does not take any remuneration for himself. Is the leader a vegetable vendor, definitely not? He has no commercial interest in the transaction, he does not do the job for profit and vegetable vending is not his vocation. It is similar in the case of a Co-operative Housing Society as well.

The members of the MC are consumers themselves like the other members and they do a voluntary service. Other consumer members are also eligible to be elected as Managing Committee members. Operating the Society is not the vocation of the MC members. They have their own vocations to earn their livelihood. They find time at considerable sacrifice to serve the members without any remuneration. A Co-operative Housing Society is a body of consumers who serve themselves. Some consumer courts have held that they are service providers because they collect maintenance charges from the members. This is wrong. They collect these charges only to reimburse to outsiders who render the actual services. Under Section 2(o) of the Consumer Protection Act, 1986, a service rendered free of cost is not a service for the purpose of the Act. The subscripttions collected from the members are not income for the purpose of the Income Tax Act as the principle of mutuality comes into play.

In the instant case the court has asked the Society to compensate the aggrieved member. The real culprit, who is the member upstairs, is let off scot free.  If the consumer court was not competent to take to task the recalcitrant member, it should not have admitted the case saying lack of jurisdiction and advised the parties to go to competent civil court.

Now if the aggrieved member goes about repairing the leakage, he may have to enter the upper floor also. What if the upper floor member does not allow him? The consumer court will not be able to compel him as it has no jurisdiction over him. The repair work may cause damage to the upper floor also. The upper floor member may cite that as a reason. If the upper floor member should be compelled to co-operate, facing eviction otherwise, only a civil court can order that. In any case a court should not venture into something, for which it does not have powers to give full justice.

What does the Forum expect the Society to do?  The Managing Committee has neither the powers not the where-with-all to physically enter the upper flat or evict the member to carry out the work. The police will not act on their complaint. They can file a case in the Co-operative court and sit quiet allowing the case to take its own time.

Who is to pay the damages and penalty ordered by the consumer court? Is the MC members themselves to pay?  The MC will collect the amount from the Society members including the member, who is to receive the amount.

 

Appeal should be made against orders like this to the National Commission or even to the Supreme Court to decide the issue once and for all.



Learning

 24 Replies

Hemant Agarwal (ha21@rediffmail.com Mumbai : 9820174108)     09 January 2014

INTROSPECT
1.  Society has no provisions for collecting "Subscripttion Charges".  A service cannot be subscribed, but only availed.


2.  What the Society collects is called as  "Service /Maintenance Charges".  Society is liable for payment of Service Tax, subject to various parameters.  The preamble of a Society is to provide "Common Services and Amenities".


3.  Members do not pay directly to the vendors, wherein it could be argued that they avail services directly from the vendors.  Members pay to the society and avail of the services which is provided by the Society and not by the vendors.  Availing of vendor services and them making them available to the members, is a Service-in-Mutuality.


4.  The Consumer Court is competent to initiate Criminal Proceedings as well.  The Society is very well covered under the Income Tax and liable to pay income tax, subject to various parameters.  A Society is covered under the state "Profession Tax" and is liable to pay Profession Tax, even if the Society provides mutual services among themselves.  Society is liable for VAT, Octroi, Service Tax, Sales Tax and a host of other taxes, as applicable, without any reference to "mutuality" or "cooperative" and the law does not exempt any Society, in the guise of "mutuality" or whatever.


Keep Smiling .... Hemant Agarwal
https://hemantagarwal21.blogspot.in/?view=sidebar

1 Like

Hemant Agarwal (ha21@rediffmail.com Mumbai : 9820174108)     09 January 2014

INTROSPECT
1.  Society has no provisions for collecting "Subscripttion Charges".  A service cannot be subscribed, but only availed.


2.  What the Society collects is called as  "Service /Maintenance Charges".  Society is liable for payment of Service Tax, subject to various parameters.  The preamble of a Society is to provide "Common Services and Amenities".


3.  Members do not pay directly to the vendors, wherein it could be argued that they avail services directly from the vendors.  Members pay to the society and avail of the services which is provided by the Society and not by the vendors.  Availing of vendor services and them making them available to the members, is a Service-in-Mutuality.


4.  The Consumer Court is competent to initiate Criminal Proceedings as well.  The Society is very well covered under the Income Tax and liable to pay income tax, subject to various parameters.  A Society is covered under the state "Profession Tax" and is liable to pay Profession Tax, even if the Society provides mutual services among themselves.  Society is liable for VAT, Octroi, Service Tax, Sales Tax and a host of other taxes, as applicable, without any reference to "mutuality" or "cooperative" and the law does not exempt any Society, in the guise of "mutuality" or whatever.


Keep Smiling .... Hemant Agarwal
https://hemantagarwal21.blogspot.in/?view=sidebar

1 Like

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     01 February 2014

There is no use of responding this post.  You have given the above kind of views in articles as well as in response to other posts of others. You go on repeating what you say without rebutting what I said point by point.

If you have objection for the word "subscripttion", you can give some other name for the collection made from the members.

I did not say that a co-operative housing society is not covered under income-tax. Read my sentence carefully and exactly and then rebut it word by word. Do you know what is mutuality?

You rebut at least one or two of my points specifically.

V. VASUDEVAN (LEGAL COUNSEL)     31 March 2014

There is a confusion as to the right of remedy of a member of a cooperative society under the Consumer Protection Act; more confusion on the liability as to whether it would fall squarely on the MC Members - MC Members in most of the Housing Societies do not receive remuneration and work on honorary basis. Equally societies does not run on profit motive but on mutual interest as rightly pointed out.  However, as far as the responsibility of  the seepage, leakage and structural defects the bye laws categorically enumerates the category of leakage and who is responsible to rectify such mistakes.. Bye law 160 is reproduced for clarity;- 

The following repairs and maintenance of the property of the society shall be carried out by the society at its

costs:

 

(i) All internal roads, (ii) Compound walls, (iii) External water pipe lines, (iv) Water pumps,(v) Water storage tanks, (vi) Drainage lines, (vii) Septic tanks, (viii) Stair cases, (ix) Terrace and parapet walls, (x) Structural repairs of roofs of all flats, (xi) Stair-case lights, (xii)


Street         lights,        (xiii)        Outside         walls        of        th e

building/buildings, (xiv) All leakages of water including leakages due to rain water, and leakages due to external common pipe line and drainage line, (xv) Electric lines up to main switches in the flats (xvi) Lifts, (xvii) The damaged ceiling and plaster thereon in the top floor flats, on account of the leakage of the rain water through the terrace.(xviii) Generators,(xvix)

Security Appliances ( CC TV, Intercom, Group Mobile,


56

 

Siren Bell) (xx) Rain Water Harvesting,(xxi) Sewerage, Storm water Drain & Water Treatment Plant (xxii) Common areas not specifically allotted ,Swimming Pool, Gym, Sauna Bath, Coffee House (xxiii) Common Parking Space (xxiv) Solar and alternate energy

resources. (xxv) Garden (xxvi) Community hall


 

( b)


All the repairs, not covered by the bye-law No. 160(a) shall be carried out by the members at their cost. The

expenditure of the internal leakage due to toilet, sink

etc. should be borne by concerned flat holders, with the

consent of the society. 

Dorai Raj (NIL)     01 April 2014

The point raised by Dr. Ramani is whether disputes between a member of a Housing Co-op.  Society against the Society represented by its Managing Committee / Governing Body fall within the ambit of the consumer fora and, if so, how?

 

To answer the issue involved requires understanding of the whole gamut of the formation and registration of the co-op. society, its aims (Memorandum and Articles of Association like a company), powers and liabilities of the governing body, etc.

 

The prime object of a Group Co-op. Housing Society is to provide houses / flats to its Members who are share-holders.  To acquire land, to appoint architects, builders, contractors, etc. to complete the project of building the houses, flats, to maintain the common services, among others, is the responsibility of the society’s governing body.  The project involves crores of rupees.  The possibility of the governing body being corrupt in building sub-standard houses / flats cannot be ruled out.  Construction and provision of houses / flats is service-oriented activity within the meaning of section 2 (o) of the C.P. Act which reads:  "service" means service of any descripttion which is made avail­able to potential users and includes, but not limited to, …..  housing construction If, as a result and consequence of sub-standard construction of a flat leading to a damage, harm, injury to another member’s flat, does it not amount to deficiency in service?  The answer to the question whether a member of a co-op. society is a consumer within the meaning of the Act can be found in the definitions of the words, “consumer” {S. 2 (d) (ii)}, “consumer dispute” {S. 2 (e)}and “person” {S. 2 (m) (iii)}.  A “person” includes a co-op. society.  Consumer dispute means a dispute where the person (a co-op. society) against whom a complaint has been made … A consumer means any person who hires or avails of any services for consideration.  Payment of maintenance charges every month is a consideration.  The managing committee or the governing body who is responsible for providing the service of maintaining the sub-standard flat in good repairs to prevent damage to another flat because of its sub-standard construction, can thus be held liable under the C.P. Act.   There are decisions of the National Commission to uphold this view.

 

If Dr. Rakani is a member of the governing body of the co-op. society by any chance, she will do well to study the bye-laws of the co-op. society and the Co-operative Societies Act to understand the powers of the Managing Committee and the General Body as to how to raise funds to satisfy the award passed by the Consumer Forum and to meet such unexpected contingencies.  Let us assume for a moment that Dr. Ramani has a flat in the society which collapses (God forbid) because of sub-standard construction.  What is her position?  Does she not have any remedy against the society?  Having invested her life’s savings to own her dream house, should she stand in the street?  Definitely NOT.  Undoubtedly the C. P. Act will come to her rescue.

 

Of course, there is a provision for reference to arbitration of disputes among the members inter se and between a member and the society.  At the same time by virtue of section 3 of the Act which says “The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force” the jurisdiction of the consumer courts is not barred.

 

 

The analogy made by Dr. Ramani of a co-op. society with a body of vegetable venders / buyers appears odd.

Dorai Raj (NIL)     01 April 2014

Dr. Ramani has been misspelt inadvertently by a typographical mistake as Rakani.  Pl. forgive me and correct it.  I am sorry for the mistake.  I am 83 and has a poor eye sight.

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     06 April 2014

 

 

The point raised by Dr. Ramani is whether disputes between a member of a Housing Co-op.  Society against the Society represented by its Managing Committee / Governing Body fall within the ambit of the consumer fora and, if so, how?

 To answer the issue involved requires understanding of the whole gamut of the formation and registration of the co-op. society, its aims (Memorandum and Articles of Association like a company), powers and liabilities of the governing body, etc.

 The prime object of a Group Co-op. Housing Society is to provide houses / flats to its Members who are share-holders. Agreed

  To acquire land, to appoint architects, builders, contractors, etc. to complete the project of building the houses, flats, to maintain the common services, among others, is the responsibility of the society’s governing body.

 

The Model Byelaws say the following:

 

 

General Body Meeting to be the supreme authority

 

Subject to the provisions of the Act, the Rules and the Byelaws of the Society, the final authority shall vest in its General Body Meeting, summoned in such manner as is specified in these byelaws.

Management of the Society to vest in the Committee.

 

The Management of the affairs of the Society shall vest in the Committee duly constituted in accordance with the provisions of Act, the Rules and the Byelaws of the Society.

 

Exercise of powers by the Committee

 

Subject to the directions given or regulation made by a meeting of the General Body of the Society the Committee shall exercise all powers expressly conferred on it and discharge all functions entrusted to it under byelaw No.137.

 

 Thus the General Body Meeting of which you are the member is the Supreme Authority and not the Managing Committee.

 Most members want a care-free life without trying to bother how the Society is run,  who runs it for them and what trouble they take to run them. For them the Secretary of the Society is the face of the Society and considers him as their land-lord or adversary, who is to be blamed for everything. They don’t want to stand for elections and take upon themselves the responsibility of running the Society. The Secretary is only a volunteer and not your paid servant.

 The project involves crores of rupees.  The possibility of the governing body being corrupt in building sub-standard houses / flats cannot be ruled out. 

 If the Governing Body is corrupt the matter should come under Criminal Law and not the Consumer Protection Law.

 Construction and provision of houses / flats is service-oriented activity within the meaning of section 2 (o) of the C.P. Act which reads:  "service" means service of any descripttion which is made avail­able to potential users and includes, but not limited to, …..  housing construction If, as a result and consequence of sub-standard construction of a flat leading to a damage, harm, injury to another member’s flat, does it not amount to deficiency in service? 

 Why did you stop Section 2(o) at housing construction? You should read the Section further but does not include any service provided free of charge or under a contract of personal service.” The Managing Committee members are volunteers and they give their service free of charge. Suppose they are paid salaries then also they are not “service providers” because their service will come under “personal service”. If the Managing Committee members are paid commission as a percentage of the cost of construction you can certainly haul them to the Consumer Court. But they are not paid commission.

 The answer to the question whether a member of a co-op. society is a consumer within the meaning of the Act can be found in the definitions of the words, “consumer” {S. 2 (d) (ii)},

 This section says “hires or avails of any services for a consideration. The MC members do not give their services for any consideration. They give for free.

 “consumer dispute” {S. 2 (e)}and “person” {S. 2 (m) (iii)}.  A “person” includes a co-op. society.  Consumer dispute means a dispute where the person (a co-op. society) against whom a complaint has been made. A consumer means any person who hires or avails of any services for consideration.  Payment of maintenance charges every month is a consideration.

 Under Section 2(d) a consumer is a “person”, under Section 2(e) a service provider is a person. Now which person does Section 2(m) refer to? The word has different meanings depending upon the context. Please do not confuse.

 You are confused here on the legal meaning of the word “consideration”. The maintenance charges paid, are not considerations to the Managing Committee members. They do not take anything from that for themselves. Please see the attachment. The maintenance charges are transferred to outside service providers. The expenses incurred are shared among members. Under the Income-Tax Act the amounts paid by the Society members to the Society is not an income. Receipts from outside like bank interest only  are income. 

 The managing committee or the governing body who is responsible for providing the service of maintaining the sub-standard flat in good repairs to prevent damage to another flat because of its sub-standard construction, can thus be held liable under the C.P. Act.   

 The Managing Committee is not responsible for sub-standard construction. The builder and any agency appointed for quality control only should be held responsible for sub-standard construction. In many cases persons directly buy the flats from the builders and societies and Managing Committees come into existence only much later.

 There are decisions of the National Commission to uphold this view.

 Please give me the relevant National Commission judgments.

 If Dr. Rakani is a member of the governing body of the co-op. society by any chance, she will do well to study the bye-laws of the co-op. society and the Co-operative Societies Act to understand the powers of the Managing Committee and the General Body as to how to raise funds to satisfy the award passed by the Consumer Forum and to meet such unexpected contingencies.  Let us assume for a moment that Dr. Ramani has a flat in the society which collapses (God forbid) because of sub-standard construction.  What is her position?  Does she not have any remedy against the society?  Having invested her life’s savings to own her dream house, should she stand in the street?  Definitely NOT.  Undoubtedly the C. P. Act will come to her rescue.

  Incidentally I am “he” and not “she”. Let us not challenge each other on our knowledge of the Act, the Rules and the byelaws. Please take it from me that I have come here equipped with sufficient knowledge. You are resorting to rhetoric to picture how the Managing Committee, the demon, is throwing the poor hapless members into the street for their own enjoyment, enjoyment of what, I do not know.

Shall I give you another picture? Those who offer their services and get elected to the Managing Committee are dedicated volunteers. They have to work like other members to earn their livelihood. But still they take time off their work to serve the Society and to contend with selfish recalcitrant members. As for instance some of them make unauthorized alterations and convert their ground floor flats into shops with the connivance of the Municipality. In order to revert and restore the flat, the Secretary has to find time out of his busy schedule in his own office,  hire lawyers and go to court. He will have to go on attending hearings in the court, which can continue indefinitely with no end in sight. The lawyer goes to court because it is his profession and he earns his fees for that. The judge comes to the court and he is paid his salary. The recalcitrant member comes to court to advance his business in the unauthorized shop. The Secretary goes to court to give good living conditions to the members of his Society. He is not paid for that.

 Of course, there is a provision for reference to arbitration of disputes among the members inter se and between a member and the society.  At the same time by virtue of section 3 of the Act which says “The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force” the jurisdiction of the consumer courts is not barred.

 I have not said that Consumer Protection Act cannot be applied because there are other laws.

 I only say that the provisions of the Consumer Protect Act do not apply to Managing Committee members of a Co-operative Housing Society.

 As said in the Geeta the service of the Managing Committee is like this

 ब्राह्मण्यादाया कर्माणि संगम  त्यक्तवा सुखानी य: 

लिप्यसे नस: पापेन पद्मपतरमिवांबसा

 They work for the Society without taking anything in return 

 The analogy made by Dr. Ramani of a co-op. society with a body of vegetable venders / buyers appears odd.

 I did not refer to vegetable vendors. Why do you confuse and do not apply your mind?  I compared a group of vegetable consumers to the group of Society members. In one case they want accommodation and the other they want vegetables. If you see the attachment, the parallel will be clear

 

 

 

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     06 April 2014

 

 

 

These are my point by  point response to what Mr. Dorai Raj says.

 The point raised by Dr. Ramani is whether disputes between a member of a Housing Co-op.  Society against the Society represented by its Managing Committee / Governing Body fall within the ambit of the consumer fora and, if so, how?

 To answer the issue involved requires understanding of the whole gamut of the formation and registration of the co-op. society, its aims (Memorandum and Articles of Association like a company), powers and liabilities of the governing body, etc.

 The prime object of a Group Co-op. Housing Society is to provide houses / flats to its Members who are share-holders. Agreed

  To acquire land, to appoint architects, builders, contractors, etc. to complete the project of building the houses, flats, to maintain the common services, among others, is the responsibility of the society’s governing body.

The Model Byelaws say the following:

General Body Meeting to be the supreme authority

 

Subject to the provisions of the Act, the Rules and the Byelaws of the Society, the final authority shall vest in its General Body Meeting, summoned in such manner as is specified in these byelaws.

Management of the Society to vest in the Committee.

 

The Management of the affairs of the Society shall vest in the Committee duly constituted in accordance with the provisions of Act, the Rules and the Byelaws of the Society.

 

Exercise of powers by the Committee

 

Subject to the directions given or regulation made by a meeting of the General Body of the Society the Committee shall exercise all powers expressly conferred on it and discharge all functions entrusted to it under byelaw No.137.

 

Thus the General Body Meeting of which you are the member is the Supreme Authority and not the Managing Committee.

 Most members want a care-free life without trying to bother how the Society is run,  who runs it for them and what trouble they take to run them. For them the Secretary of the Society is the face of the Society and considers him as their land-lord or adversary, who is to be blamed for everything. They don’t want to stand for elections and take upon themselves the responsibility of running the Society. The Secretary is only a volunteer and not your paid servant.

 The project involves crores of rupees.  The possibility of the governing body being corrupt in building sub-standard houses / flats cannot be ruled out. 

 If the Governing Body is corrupt the matter should come under Criminal Law and not the Consumer Protection Law.

 Construction and provision of houses / flats is service-oriented activity within the meaning of section 2 (o) of the C.P. Act which reads:  "service" means service of any descripttion which is made avail­able to potential users and includes, but not limited to, …..  housing construction If, as a result and consequence of sub-standard construction of a flat leading to a damage, harm, injury to another member’s flat, does it not amount to deficiency in service? 

 Why did you stop Section 2(o) at housing construction? You should read the Section further but does not include any service provided free of charge or under a contract of personal service.” The Managing Committee members are volunteers and they give their service free of charge. Suppose they are paid salaries then also they are not “service providers” because their service will come under “personal service”. If the Managing Committee members are paid commission as a percentage of the cost of construction you can certainly haul them to the Consumer Court. But they are not paid commission.

 The answer to the question whether a member of a co-op. society is a consumer within the meaning of the Act can be found in the definitions of the words, “consumer” {S. 2 (d) (ii)},

 This section says “hires or avails of any services for a consideration. The MC members do not give their services for any consideration. They give for free.

 “consumer dispute” {S. 2 (e)}and “person” {S. 2 (m) (iii)}.  A “person” includes a co-op. society.  Consumer dispute means a dispute where the person (a co-op. society) against whom a complaint has been made. A consumer means any person who hires or avails of any services for consideration.  Payment of maintenance charges every month is a consideration.

 Under Section 2(d) a consumer is a “person”, under Section 2(e) a service provider is a person. Now which person does Section 2(m) refer to? The word has different meanings depending upon the context. Please do not confuse.

 You are confused here on the legal meaning of the word “consideration”. The maintenance charges paid, are not considerations to the Managing Committee members. They do not take anything from that for themselves. Please see the attachment. The maintenance charges are transferred to outside service providers. The expenses incurred are shared among members. Under the Income-Tax Act the amounts paid by the Society members to the Society is not an income. Receipts from outside like bank interest only  are income. 

 The managing committee or the governing body who is responsible for providing the service of maintaining the sub-standard flat in good repairs to prevent damage to another flat because of its sub-standard construction, can thus be held liable under the C.P. Act.   

 The Managing Committee is not responsible for sub-standard construction. The builder and any agency appointed for quality control only should be held responsible for sub-standard construction. In many cases persons directly buy the flats from the builders and societies and Managing Committees come into existence only much later.

 There are decisions of the National Commission to uphold this view.

 Please give me the relevant National Commission judgments.

  If Dr. Rakani is a member of the governing body of the co-op. society by any chance, she will do well to study the bye-laws of the co-op. society and the Co-operative Societies Act to understand the powers of the Managing Committee and the General Body as to how to raise funds to satisfy the award passed by the Consumer Forum and to meet such unexpected contingencies.  Let us assume for a moment that Dr. Ramani has a flat in the society which collapses (God forbid) because of sub-standard construction.  What is her position?  Does she not have any remedy against the society?  Having invested her life’s savings to own her dream house, should she stand in the street?  Definitely NOT.  Undoubtedly the C. P. Act will come to her rescue.

  Incidentally I am “he” and not “she”. Let us not challenge each other on our knowledge of the Act, the Rules and the byelaws. Please take it from me that I have come here equipped with sufficient knowledge. You are resorting to rhetoric to picture how the Managing Committee, the demon, is throwing the poor hapless members into the street for their own enjoyment, enjoyment of what, I do not know.

Shall I give you another picture? Those who offer their services and get elected to the Managing Committee are dedicated volunteers. They have to work like other members to earn their livelihood. But still they take time off their work to serve the Society and to contend with selfish recalcitrant members. As for instance some of them make unauthorized alterations and convert their ground floor flats into shops with the connivance of the Municipality. In order to revert and restore the flat, the Secretary has to find time out of his busy schedule in his own office,  hire lawyers and go to court. He will have to go on attending hearings in the court, which can continue indefinitely with no end in sight. The lawyer goes to court because it is his profession and he earns his fees for that. The judge comes to the court and he is paid his salary. The recalcitrant member comes to court to advance his business in the unauthorized shop. The Secretary goes to court to give good living conditions to the members of his Society. He is not paid for that.

 Of course, there is a provision for reference to arbitration of disputes among the members inter se and between a member and the society.  At the same time by virtue of section 3 of the Act which says “The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force” the jurisdiction of the consumer courts is not barred.

 I have not said that Consumer Protection Act cannot be applied because there are other laws.

 I only say that the provisions of the Consumer Protect Act do not apply to Managing Committee members of a Co-operative Housing Society.

 As said in the Geeta the service of the Managing Committee is like this

 ब्राह्मण्यादाया कर्माणि संगम  त्यक्तवा सुखानी य: 

लिप्यसे नस: पापेन पद्मपतरमिवांबसा

 They work for the Society without taking anything in return 

 The analogy made by Dr. Ramani of a co-op. society with a body of vegetable venders / buyers appears odd.

 I did not refer to vegetable vendors. Why do you confuse and do not apply your mind?  I compared a group of vegetable consumers to the group of Society members. In one case they want accommodation and the other they want vegetables. If you see the attachment, the parallel will be clear

 

 

 

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     06 April 2014

I forgot this attachment earlier.


Attached File : 141837091 the consumer group is the society.docx downloaded: 196 times

Dorai Raj (NIL)     08 April 2014

 

Dr. Ramani, you seem to have some obsessions.  You think you are the only person capable of applying your mind and others are not.  Secondly, you think you are equipped with all knowledge unlike others.  Thirdly you think the presiding officers of the Consumer Fora, including the State Commissions and National Commission which are presided over by Judges qualified to be appointed as High Court and Supreme Court Judges, are wrong in holding that co-op. societies are amenable under the C. P. Act. 

The be all and end all of this forum is to share knowledge and be of help.  This is not a place to show off one’s supercilious attitude or to look down upon others.  The views – right or wrong – expressed here should not be belittled as being rhetoric, confusing, born out of lack of application of mind.  If any view is not acceptable to you, just ignore it.  No one can thrust his views on you.  It is up to you to gain from others’ views or not. 

Everyone knows how a co-operative venture works.  You need not harangue about it.

Now my comments on the points raised by you.

 

Your point

Thus the General Body Meeting of which you are the member is the Supreme Authority and not the Managing Committee.

Most members want a care-free life without trying to bother how the Society is run,  who runs it for them and what trouble they take to run them. For them the Secretary of the Society is the face of the Society and considers him as their land-lord or adversary, who is to be blamed for everything. They don’t want to stand for elections and take upon themselves the responsibility of running the Society. The Secretary is only a volunteer and not your paid servant.

 

My comment:

Of course, it is true the General Body is supreme.  At the same time, it is the Managing Committee which is vested with the powers of carrying on with the day-to-day affairs of the Society.  As you are well aware, the powers of the General Body and the Managing “Committee are defined in th bye-laws of the Society.  Are you by any chance the Secretary or somebody and unable to meet the demands of the members?  If so there is no point in fretting and fuming if you cannot discharge your duty.  You have an option to resign.

 

Your point

Why did you stop Section 2(o) at housing construction? You should read the Section further but does not include any service provided free of charge or under a contract of personal service.” The Managing Committee members are volunteers and they give their service free of charge. Suppose they are paid salaries then also they are not “service providers” because their service will come under “personal service”. If the Managing Committee members are paid commission as a percentage of the cost of construction you can certainly haul them to the Consumer Court. But they are not paid commission.

 

My Comment

You are under an illusion that it is the Managing Committee member (the Secretary or the President) against whom a consumer complaint is filed personally.  It is a misconception and case of confusion worse confounded!  The Society is an impersonal entity and it has to be represented through somebody who is generally the President or the Secretary.  You will do well to study some orders of the National Commission to understand what constitutes “service provided free of charge” and “contract of service” and “contract for service”.  The National Commission has held that even government hospitals where free medical services are provided could not be construed as providing free service within the meaning of the C. P. Act.  You assume that the Managing Committee is a separate entity, not connected in any way with the Co-op. society.  The bye-laws will enlighten you.  The maintenance charges the Members pay go to the Society’s kitty and not to the Treasurer’ pocket.  When the Society collects maintenance charges, it is the responsibility of the Society, through its Managing Committee, to provide the services the Members are entitled to.  As Secretary you may be paid or not.  You are acting as an agent of the Society.  But you do represent the Society.  As simple as that.  Keep an open mind and you will understand.  I have already said that the maintenance charges are the consideration for the Society to provide the services.  What constitutes consideration has been aptly expounded by the Supreme Court in Regional Provident Fund Commissioner vs. Shiv Kumar Joshi - (2000) 1 SCC 98.  For your benefit I quote: . . . . . The word 'consideration' has not been defined either under the scheme or the Act. Black's Law Dictionary defines 'consideration' thus: Consideration is not to be confounded with motive, consideration means something which is of value in the eye of the law, moving from the plaintiff, either for benefit of the plaintiff or of detriment to the defendant. In volume 17 of Corpus Juris Secundum (pp.420-421 and 425) the import of 'consideration' has been described thus: Various definitions of consideration are to be found in the textbooks and judicial opinions. A sufficient one, as stated in Corpus Juris and which has been quoted and cited with approval is, 'a benefit to the party promising, or a loss or detriment to the party to whom the promise is made....". At common law every contract not under seal requires a consideration to support it, that is, as shown in the definition above, some benefit to the promisor, or some loss or detriment to the promisee... There is a sufficient consideration for a promise if there is any benefit to the promisor or any detriment to the promisee. It may be laid down as a general rule. in accordance with the definition given above, that there is a sufficient consideration for a promise if there is any benefit to the promisor or any loss or detriment to the promisee. The gist of the term 'consideration' and its legal significance has been clearly summed up in Section 2(d) of the Contract Act which defines 'consideration' thus: When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promise to do or to abstain from doing, something such acton, abstinence or promise is called a consideration for the promise. Webster's Third New Intenational Dictionary (Unabridged) defines 'consideration' as: Something that is legally regarded as the equivalent or return given or suffered by one for the act or promise of another. . . . . .

 

Your point

 The Managing Committee is not responsible for sub-standard construction. The builder and any agency appointed for quality control only should be held responsible for sub-standard construction. In many cases persons directly buy the flats from the builders and societies and Managing Committees come into existence only much later

My comment

The Managing Committee can be held squarely responsible.  It is the MC which       appoints the architects, contractors, builders, and oversees, supervises the execution of the project.  It cannot wash its hands of responsibility if any deficiency or defect is found.  Of course, you have a variety of remedies.  You can choose the forum for finding an inexpensive and speedy redressal.  Nobody forces you to go to the consumer forum only.  The MC can also proceed against the contractor or whosoever it may be and hold it responsible.

Initially you raised a point that the Society may not have enough funds to satisfy the award of the consumer court.  Here is a decision of the National Commission.  This will answer your query: 

https://164.100.72.12/ncdrcrep/judgement/00RP91410.html 

Given below are some decisions of the National Commissions for your benefit.  There are a catena of decisions of National Commission.  But I have given only two:

https://164.100.72.12/ncdrcrep/judgement/00RP330407.htm

https://164.100.72.12/ncdrcrep/judgement/00120306093344962RP43062010.htm 

There are some more points you have raised which I consider as frivolous and unimportant.  Thank you for pointing out that you are a he. 

Whether you like it or not, the C. P. Act is given a liberal interpretation by the Supreme Copurt to bring within its ambit as many cases as possible to promote social welfare and justice.

 

 

 

 

 

 

 

2 Like

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     16 April 2014

Dr. Ramani, you seem to have some obsessions.  You think you are the only person capable of applying your mind and others are not.  Secondly, you think you are equipped with all knowledge unlike others.  Thirdly you think the presiding officers of the Consumer Fora, including the State Commissions and National Commission which are presided over by Judges qualified to be appointed as High Court and Supreme Court Judges, are wrong in holding that co-op. societies are amenable under the C. P. Act. 

The be all and end all of this forum is to share knowledge and be of help.  This is not a place to show off one’s supercilious attitude or to look down upon others.  The views – right or wrong – expressed here should not be belittled as being rhetoric, confusing, born out of lack of application of mind.  If any view is not acceptable to you, just ignore it.  No one can thrust his views on you.  It is up to you to gain from others’ views or not. 

Everyone knows how a co-operative venture works.  You need not harangue about it.

Now my comments on the points raised by you.

 

I have very little knowledge. I did not know even the meanings of the words “supercilious” and “harangue”. I had to look into the dictionary to know their meanings. Now I know their meanings. I am not qualified for those words.

 

I do not think anything about the presiding officers of Consumer Fora, including the State Commission and the National Commission  which are presided over by judges qualified to be appointed as High Court and Supreme court  Judges. When I give my critical comments I do not look as the person who gave the judgment or presented his arguments in a court, but at what the judgment or the argument says. This is lawyer’s forum and this is the appropriate place to debate on them

 

You are not objectively arguing but casting adjectives on me.

 

Your point

Thus the General Body Meeting of which you are the member is the Supreme Authority and not the Managing Committee.

Most members want a care-free life without trying to bother how the Society is run,  who runs it for them and what trouble they take to run them. For them the Secretary of the Society is the face of the Society and considers him as their land-lord or adversary, who is to be blamed for everything. They don’t want to stand for elections and take upon themselves the responsibility of running the Society. The Secretary is only a volunteer and not your paid servant.

 

My comment:

Of course, it is true the General Body is supreme.  At the same time, it is the Managing Committee which is vested with the powers of carrying on with the day-to-day affairs of the Society.  As you are well aware, the powers of the General Body and the Managing “Committee are defined in th bye-laws of the Society.  Are you by any chance the Secretary or somebody and unable to meet the demands of the members?  If so there is no point in fretting and fuming if you cannot discharge your duty.  You have an option to resign.

 

 The General Body is supreme.  And who is the General Body? It is the General Body of members, which includes the Complainant. The Complainant is a consumer. And the Society (or the General Body) is a Group of Consumers of which the Complainant is a part. How can one make a Complaint against oneself?

 

Your point

Why did you stop Section 2(o) at housing construction? You should read the Section further but does not include any service provided free of charge or under a contract of personal service.” The Managing Committee members are volunteers and they give their service free of charge. Suppose they are paid salaries then also they are not “service providers” because their service will come under “personal service”. If the Managing Committee members are paid commission as a percentage of the cost of construction you can certainly haul them to the Consumer Court. But they are not paid commission.

 

My Comment

You are under an illusion that it is the Managing Committee member (the Secretary or the President) against whom a consumer complaint is filed personally.  It is a misconception and case of confusion worse confounded!  The Society is an impersonal entity and it has to be represented through somebody who is generally the President or the Secretary.  You will do well to study some orders of the National Commission to understand what constitutes “service provided free of charge” and “contract of service” and “contract for service”.  The National Commission has held that even government hospitals where free medical services are provided could not be construed as providing free service within the meaning of the C. P. Act.  You assume that the Managing Committee is a separate entity, not connected in any way with the Co-op. society.  The bye-laws will enlighten you.  The maintenance charges the Members pay go to the Society’s kitty and not to the Treasurer’ pocket.  When the Society collects maintenance charges, it is the responsibility of the Society, through its Managing Committee, to provide the services the Members are entitled to.

 

The words “kitty” and “pocket” are used when the money goes for one’s own utilization as the way  one likes and one is not accountable to the giver.  But whatever members pay to the Society have to be not only wholly transferred to the Service Providers, but the Society has to render account to each member of the money collected from him down to the Rupee or Paisa. The Society can take nothing for itself.  A service provider like, say, a bus service, does not have to render account to a passenger as to how the ticket money was spent. If he gives account, it would contain the element of profit.

 

As Secretary you may be paid or not.  You are acting as an agent of the Society.  But you do represent the Society.  As simple as that.  Keep an open mind and you will understand.  I have already said that the maintenance charges are the consideration for the Society to provide the services.  What constitutes consideration has been aptly expounded by the Supreme Court in Regional Provident Fund Commissioner vs. Shiv Kumar Joshi - (2000) 1 SCC 98.  For your benefit I quote: . . . . . The word 'consideration' has not been defined either under the scheme or the Act. Black's Law Dictionary defines 'consideration' thus: Consideration is not to be confounded with motive, consideration means something which is of value in the eye of the law, moving from the plaintiff, either for benefit of the plaintiff or of detriment to the defendant.  In volume 17 of Corpus Juris Secundum (pp.420-421 and 425) the import of 'consideration' has been described thus: Various definitions of consideration are to be found in the textbooks and judicial opinions. A sufficient one, as stated in Corpus Juris and which has been quoted and cited with approval is, 'a benefit to the party promising, or a loss or detriment to the party to whom the promise is made....". At common law every contract not under seal requires a consideration to support it, that is, as shown in the definition above, some benefit to the promisor, or some loss or detriment to the promisee... There is a sufficient consideration for a promise if there is any benefit to the promisor or any detriment to the promisee. It may be laid down as a general rule. in accordance with the definition given above, that there is a sufficient consideration for a promise if there is any benefit to the promisor or any loss or detriment to the promisee. The gist of the term 'consideration' and its legal significance has been clearly summed up in Section 2(d) of the Contract Act which defines 'consideration' thus: When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promise to do or to abstain from doing, something such acton, abstinence or promise is called a consideration for the promise. Webster's Third New Intenational Dictionary (Unabridged) defines 'consideration' as: Something that is legally regarded as the equivalent or return given or suffered by one for the act or promise of another. . . . . .

 

Why beat about the bush on the meaning of a simple word “consideration”? The word is used whenever there is reference to a transaction. It may be the contract Act, Income-tax Act and many other such Acts including Consumer Protection Act. As you can see I am a Scientist and did not have to come across that word neither in my studies nor in my profession thereafter. Once upon a time a cousin of mine preparing for CA was staying with me. I found the word in his B. Com.  text book.  It is a word occurring in our day to day life. A meal given in a restaurant is for consideration. The consideration is the price you pay.  But a meal served to invitee  in a marriage has no counter-flow of consideration. Now don’t ask me to refer to Black’s Law Dictionary or to Corpus Juris Secundum. You are now trying to overawe me with your scholarship. It was not the other way about.  Actually you are engaged in harangue.  As I said the Society only collects from its members whatever it passes on to service providers without retaining anything in its “kitty”. If it had collected more and retained the excess in its “kitty”, it would have been called consideration for the service. If the Society takes any consideration for its Service to its members, such consideration would have been liable income-tax.  As the Society does not take any consideration for its service to its members income received from its own members is exempted from Income Tax. The Society is only c channel. But interest income received from an outside entity like a Bank is taxable. Am I clear?

Your point

 The Managing Committee is not responsible for sub-standard construction. The builder and any agency appointed for quality control only should be held responsible for sub-standard construction. In many cases persons directly buy the flats from the builders and societies and Managing Committees come into existence only much later

My comment

The Managing Committee can be held squarely responsible.  It is the MC which       appoints the architects, contractors, builders, and oversees, supervises the execution of the project.  It cannot wash its hands of responsibility if any deficiency or defect is found.  Of course, you have a variety of remedies.  You can choose the forum for finding an inexpensive and speedy redressal.  Nobody forces you to go to the consumer forum only.  The MC can also proceed against the contractor or whosoever it may be and hold it responsible.

Initially you raised a point that the Society may not have enough funds to satisfy the award of the consumer court.  Here is a decision of the National Commission.  This will answer your query: 

https://164.100.72.12/ncdrcrep/judgement/00RP91410.html 

Given below are some decisions of the National Commissions for your benefit.  There are a catena of decisions of National Commission.  But I have given only two:

https://164.100.72.12/ncdrcrep/judgement/00RP330407.htm

https://164.100.72.12/ncdrcrep/judgement/00120306093344962RP43062010.htm 

There are some more points you have raised which I consider as frivolous and unimportant.  Thank you for pointing out that you are a he. 

Whether you like it or not, the C. P. Act is given a liberal interpretation by the Supreme Copurt to bring within its ambit as many cases as possible to promote social welfare and justice.

 

I am not able to click into your links. If ever I am able to I shall study them and give my reply.

 

 

 

Dorai Raj (NIL)     17 April 2014

Let us skip the trivia and get down to brass tacks.  The issue raised by Dr. Ramani is this: It defies logic that co-op. housing societies come under the Consumer Protection Act.  

 

 It is settled law, as of now, that co-op. housing societies are service providers falling within the purview of the C. P. Act.  As everyone is aware, this decision of the National Commission is binding on the State Commissions / District Fora, as precedent, unless and until it is overturned by the Apex court.  Similarly the decision of a State Commission is binding on the District Forums.

 

Sometimes it so happens that the judiciary interprets and lays down the law contrary to the intention of the legislature.  As a result difficulties arise in the law’s implementation.  The only remedy lies in amending the law suitably.  The C.P. Act has thus been amended a couple of times.  A third amendment is in the offing.  As long as the law is not amended, what the judiciary says is the law.  

 

Dr. Ramani has two options — 1) He can approach the Supreme Court for an authoritative ruling in his favour; or 2) He can get the Consumer Protection Act amended in such a way that co-op. housing societies are exempted from the purview of the C. P. Act.  Until it is done, Dr. Ramani has to accept the fait accompli.

 

By the way, I have simply reproduced the relevant passage from the S. C. judgment as to the definition of the expression ‘consideration’.  If you, Dr. Ramani, disagree or have any dispute, you have to take it up with the S. C.  which has referred to Black’s Law Dictionary and to Corpus Juris Secundum.  The credit goes to the Supreme Court for “trying to over awe me (read you) with your (read its) scholarship” — misplaced outburst!    

 

Payment of income-tax by the society has nothing to do with payment of ‘maintenance charges’ by the members to the society.  The question of payment of income-tax by the society has to be considered in light of the aims, objects and activities as enshrined in the bye-laws of the co-op. society.  Under section 80P of the Income Tax Act, the co-op. housing society is liable to pay income-tax under certain circumstances.  However, this issue requires a separate discussion and should not be mixed up with the present topic. 

 

I have tried my level best to convince you that payment of or even a promise to pay ‘maintenance charges’ is valid consideration for a member to be a ‘consumer’ and to seek redressal under the C. P. Act.  You are trying to mix up extraneous issues and refuse to be convinced.  I cannot help it. 

 

 

 

   

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     27 April 2014

Dear Mr. Dorairaj,

 You have strayed far away from the subject, which we were debating. Dr. Ramani was not the subject of debate here. Let me request you to come back into the subject. I sum up and reiterate below my contention on the subject.

 Please note that I have not said that co-operative societies are not amenable under the C. P. Act. I say and I repeat that co-operative housing societies (CHS) do not come under the definition of “service providers” and members of CHSs are not “consumers” under the Act. A co-operative store or a co-operative bank can come under the definition of “service providers” or any other definition, collectively referred to as Opposite Party in the Act.

 

In judgments which have held a CHS as a service provider, the Societies’ lawyers have failed their clients. I am not obsessed. But probably you are right in what you say are my obsessions.   I am not a lawyer and the Advocates act would not allow me to represent a party before a court of law. But if ever I get and am given an opportunity to represent a CHS before a consumer court the following shall be my arguments.

 

A Co-operative Housing Society is an association of consumers only. There is no consumer vs. service provider relationship within the association either between the members or between a member and the Society. The Society as a whole deals with service providers, who are outside. The Society internally collects money from its members and pays the service providers without retaining anything for its own. Even if anything remains in the kitty that also belongs to the members only. It is to be returned to the members either as credits or as benefits. One cannot have a transaction with oneself.

 

2.      The amounts collected by the Society from its members are not considered as income for the purpose of the Income-tax Act as the principle of mutuality comes into play. Wherever an amount collected from one side with the whole intention of paying on the other side without retaining anything by the intermediary it is called mutuality. If part of the amount is retained and is not accounted to the paying party, it is called “profit”. Then there is no mutuality and the “profit” is taxable. A CHS may have income other than what it collects from its members, such as bank interest. Such incomes are taxable.

 

3.      Section 2(d) (i) and (ii) of the Act gives definition of a “consumer” thus

Any person (i) who buys any goods (ii) hires or avails of any services for a consideration -------.

“Consideration” here means compensation. If the Society collects some additional amount from its members over and above what is to be transmitted to the other side and retains to itself as “service charges”, such excess collected would amount to “consideration” and the member of a CHS would have come under the definition “consumer” under the Act.

 

Section 2(o) of the Act gives definition of “service”

“Service” means service of any descripttion which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supplying electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.

Thus the service provided by a CHS is not covered under the definition of “service” under the Act.

 

The above are laws enacted by an Act of Parliament and no court of law can give any interpretation which is not meant by the Parliament. If the Parliament, in its wisdom, feels that a Co-operative Housing Society should be brought under the Consumer Protection Act, it can amend the law and introduce a clause like this.

 

“Notwithstanding anything stated elsewhere in this Act, a member of a Co-operative Housing Society shall be a “consumer” and the Co-operative Housing Society, service provider for the purpose of this Act.”

 Those who want to haul up Co-operative Housing Societies should wait until such amendment is passed.

 

 

 

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer)     27 April 2014

Regarding the last post of Mr. Dorairaj

This is a lawyer's forum and we debate here law including judgments of courts. We have a democratic right to discuss everything. You are talking of implementation. I may go to any court from the District Consumer Forum to Supreme Court if I am myself affected. It is even possible that I may settle for a lower court judgment because Supreme Court is far away and expensive.

Again I say that this is an academic debate. I have not come here because I have a case and that I need advice or assistance. I am a scientist and for me law is also science. I want to discuss here whether it results in any concrete action or not. Supreme Court also blunders often. Here is an example:

There was a dispute between ONGC and a Co-operative (not necessarily a housing) Society in Surat. ONGC wanted to lay an underground water pipeline through the premises of the Society. The latter objected to it.

There is a law which empowers ONGC to lay pipeline through private premises to carry minerals. ONGC approached the Supreme Court under this law. The contention of the Surat society was that water was not a mineral.

The Supreme Court judges looked into the dictionary for the meaning of the word "mineral". The definition which they got was that "a mineral is an inorganic chemical occurring in nature". They went further and concluded that water is an "inorganic chemical" occurring in nature. They ordered the Surat society to allow ONGC to lay the pipeline. 

Let us go by the judgment. ONGC wanted the law to lay pipelines to carry oil. But oil is an organic chemical and not an inorganic chemical. So under the Supreme Court order ONGC cannot lay a pipeline to carry oil. What do you say?

The correct definition of a mineral is " A mineral is a natural resource occurring in nature in fixed quantities and gets progressively depleted on extraction. A mineral can be organic or inorganic. Water does not get exhausted on drawing. It gets annually recharged by the natural water cycle.

You may argue that ONGC is a public body and the Supreme Court was right in giving the order to the Society in public interest.  But here the question is law and not public interest.

I can give any number of instances like the above.

Anyway I wish to thank you for actively responding to my post. Sadly the legal community has totally ignored my post. I find that most of them are interested only in juicy gossip in Family Law cases.


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