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Saturday, November 2, 2019

HUDA vs. Sunita, (2005) 2 SCC 479. - Over Ruled In the case of HUDA vs. Sunita, (2005) 2 SCC 479. - Over Ruled This Court therein held that "the National Consumer Disputes Redressal Commission (hereinafter referred to as “NCDRC”) had no jurisdiction to adjudicate the legality behind the demand of “composition fee” and “extension fee” made by HUDA, as the same being statutory obligation, does not qualify as “deficiency in service”. We hold that" the determination of the dispute concerning the validity of the imposition of a statutory due arising out of a “deficiency in service”, can be undertaken by the consumer fora as per the provisions of the Act." The decision of this Court in the case of Sunita (supra), "wherein it was held that NCDRC has no jurisdiction to adjudicate the legitimacy of the aforementioned statutory dues, was rendered without considering any of the previous judgments of this Court and the objects of the Act." Consequently, the law laid down in the aforesaid case does not hold good before the eyes of law, and is thereby overruled.

HUDA vs. Sunita, (2005) 2 SCC 479. - Over Ruled

In the case of HUDA vs. Sunita, (2005) 2 SCC 479. - Over Ruled
This Court therein held that "the   National   Consumer   Disputes   Redressal   Commission
(hereinafter   referred   to   as   “NCDRC”)   had   no   jurisdiction   to adjudicate the legality behind the demand of “composition fee” and “extension   fee”   made   by   HUDA,   as   the   same   being   statutory obligation, does not qualify as “deficiency in service”.


We hold that" the determination   of   the   dispute   concerning   the   validity   of   the
imposition of a statutory due arising out of a “deficiency in service”, can be undertaken by the consumer fora as per the provisions of the Act."

The decision of this Court in  the case of  Sunita (supra), "wherein it was held that NCDRC has no jurisdiction to adjudicate the legitimacy of the aforementioned statutory dues, was rendered without considering any of the previous judgments of this Court and the objects of the Act." 
Consequently, the law laid down in the aforesaid case does not hold good before the eyes of law, and is thereby overruled.


REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
    SLP (C)   NO. 4272 OF 2015
PUNJAB URBAN PLANNING AND                    …PETITIONER
DEVELOPMENT AUTHORITY (NOW GLADA)
VERSUS
VIDYA CHETAL                                        …RESPONDENT
WITH
    SLP (C) NO. 5237 OF 2015
PUNJAB URBAN DEVELOPMENT                 …PETITIONERS
AUTHORITY AND ANOTHER
VERSUS
RAM SINGH                      …RESPONDENT
    JUDGMENT
    N.V. RAMANA, J.
1. The reference before us arises out of the order dated 13.07.2018,
passed by a two­Judge Bench of this Court, wherein they expressed
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doubt as to the correctness of the judgment rendered in the case of
HUDA vs. Sunita, (2005) 2 SCC 479. This Court therein held that
the   National   Consumer   Disputes   Redressal   Commission
(hereinafter   referred   to   as   “NCDRC”)   had   no   jurisdiction   to
adjudicate the legality behind the demand of “composition fee” and
“extension   fee”   made   by   HUDA,   as   the   same   being   statutory
obligation, does not qualify as “deficiency in service”.
2. It is pertinent herein to note the opinion expressed by the twoJudge Bench regarding the decision in the case of  Sunita (supra)
while passing the referral order:
“We are, prima facie, of the view that this sixparagraph   order,   which   does   not,   prima   facie,
contain   any   reason   for   the   conclusion   reached,
requires   a   relook   in   view   of   the   fact   that   the
Consumer   Protection   Act,   1986   is   a   beneficent
legislation”
3. The counsel on behalf of the petitioner submitted that the order
in  the case of  Sunita  (supra) is well reasoned, as it validly holds
that the NCDRC lacks jurisdiction to decide the legitimacy behind
the demand of “composition fee” and “extension fee”. Relying on the
aforesaid holding, the counsel further stated that “statutory dues”
cannot be claimed as “deficiency in services”. Lastly, the learned
counsel   submitted   that   although   the   Consumer   Protection   Act,
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1986 (hereinafter referred to as “the Act”) is beneficial in nature,
demanding   a   liberal   construction,   the   same   cannot   be   used   to
extend the ambit of the Act by bringing in remedies or benefits
which were not intended by the legislature.
4. On the contrary, the learned senior counsel appointed by this
Court   as   amicus   curiae   to   assist   and   appear   on   behalf   of   the
respondent claimed that the order passed in the case of  Sunita
(supra), is an aberration in a series of long­standing judgments by
this   Court.   The   learned   amicus   curiae   thereafter   placed   strong
reliance   upon   the   judgments   of   this   Court   in  Lucknow
Development  Authority  v.  M.K.  Gupta,  (1994)  1 SCC  243,  and
Ghaziabad   Development   Authority   v.   Balbir   Singh,   (2004)   5
SCC 65, wherein it was held that the NCDRC has the jurisdiction to
protect consumers against defective services rendered even by a
statutory   body.   Further,   the   learned   amicus   curiae,   while
supporting the view that the Sunita case (supra) was per incuriam,
has   taken   us   through   various   judgments   of   this   Court   in   this
regard and submitted that the statutory authorities come under the
ambit of the Act.
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5. Heard the learned counsel appearing on behalf of the petitioner
and the learned amicus curiae in this case. The precise question
raised before us is whether the law laid down by this Court in the
case of  Sunita  (supra)  is valid. We may note that the validity of
interpretation furthered in the case of Sunita (supra) hinges on the
interpretation of Section 2(1)(d), 2(1)(e), 2(1)(f), 2(1)(g) and 2(1)(o) of
the Act.
6. At the outset, we must remind ourselves that answer to majority
of legal questions before Courts essentially lie in the process of
interpretation.1
 This Court in Commissioner of Customs (Import),
Mumbai   v.   Dilip   Kumar   and   others,   (2018)   9   SCC   40,   had
emphasized   that   the   purpose   of   interpretation   is   to   find   the
legislative intent of an Act. It is established by umpteen number of
cases in India and abroad that beneficial or remedial legislation
needs to be given ‘fair and liberal interpretation’ [refer Om Prakash
v. Reliance General Insurance and Anr., (2017) 9 SCC 724]. In
this regard we may note that, the liberal construction, extends the
letter to include matters within the spirit or purpose.2
1  Justice Felix Frankfurter, Some Reflections on Reading of Statutes, Columbia Law
Review, VOL. 47, Issue 4, PP. 527­546
2 Sutherland, Statutes and Statutory Construction, §5505 (Callaghan, 1943).
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7. Having observed the law on beneficial interpretation, we need to
observe the concerned statutory provisions of the Act:
Section 2 (1) (g) “deficiency”­ means any fault,
imperfection, shortcoming or inadequacy in the
quality, nature and manner of performance which
is required to be maintained by or under any law
for the time being in force or has been undertaken
to be performed by a person in pursuance of a
contract or otherwise in relation to any service.
Thus, meaning of deficiency is explained as any fault, imperfection,
shortcoming   or   inadequacy   in   quality,   nature   and   manner   of
performance   of   any   service   or   supply   of   goods,   in   terms   of
standards   set   by   the   parties   themselves   through   contract   or
otherwise, or imposed by the law in force. The basis for application
of   the   consumer   laws   hinges   on   the   relationship   between   the
service provider and consumer. The usage of ‘otherwise’ within the
provision subsumes other modes of standard setting alternative
instruments other than contracts such as laws, bye­laws, rules and
customary practices etc.
8. Service is defined under Section 2(1)(o) of the Act, which reads as
under:­
(o)  “service”  means   service   of   any   description
which   is   made   available   to   potential users   and
includes,   but   not   limited   to,   the   provision   of
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facilities   in   connection   with   banking,   financing
insurance,   transport,   processing,   supply   of
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;
This definition is not exhaustive rather the legislature has left the
task   to   expound   the   provision   on   a   case   to   case   basis   to   the
judiciary. The purpose of leaving this provision open ended, without
providing an exhaustive list indicates the requirement for a liberal
interpretation. Broadly speaking, it is inclusive of all those services
performed   for   a   consideration,   except   gratuitous   services   and
contract of personal services. Moreover, aforesaid provision reflects
the legislative intent of providing impetus to ‘consumerism’. It may
be noted that such a phenomenon has had a benevolent effect on
the   Government   undertakings,   wherein   a   new   dynamism   of
innovation, accountability and transparency are imbibed.
9. On perusal of the impugned precedent, it may be noted that it
does not provide clear­cut reasoning for the view held by the Court,
except to the extent of pointing out that statutory obligations are
not   encompassed   under   the   Act.   Such   broad   proposition
necessarily required further elaboration, as there is a possibility of
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over­inclusivity. Further, there is no gainsaying that all statutory
obligations   are   not   sovereign   functions.   Although   all   sovereign
functions/services   are   regulated   and   performed   under
constitutional/statutory instruments, yet there are other functions,
though   might   be   statutory,   but   cannot   be   called   as   sovereign
functions. These sovereign functions do not contain the consumerservice   provider   relationship   in   them   and   are   not   done   for   a
consideration. Moreover, we need to be mindful of the fact that
sovereign functions are undergoing a radical change in the face of
privatization   and   globalization.   India   being   a   welfare   State,   the
sovereign   functions   are   also   changing.   We   may   note   that   the
government in order to improve the quality of life and welfare of its
citizens, has undertaken many commercial adventures.
10. Sovereign functions like judicial decision making, imposition of
tax, policing etc, strictly understood, qualify for exemption from the
Act,   but   the   welfare   activities   through   economic   adventures
undertaken  by  the Government  or statutory  bodies  are  covered
under   the   jurisdiction   of   the   consumer   forums.   Even   in
departments   discharging   sovereign   functions,   if   there   are   subunits/wings   which   are   providing   services/supply   goods   for   a
consideration and they are severable, then they can be considered
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to come within the ambit of the Act. [refer to Standard Chartered
Bank Ltd. v. Dr. B. N. Raman, (2006) 5 SCC 727]
11. Having   observed   the   provisions   and   the   interpretation   of
pertinent provisions, we need to refer to  Lucknow  Development
Authority Case (supra), wherein this Court was concerned with the
question as to the amenability of statutory authorities like Lucknow
Development Authority, for development of plots, to the Consumer
Protection Act, 1986.
12. This Court in  Lucknow  Development   Authority   Case  (supra)
elaborated the meaning of ‘Consumer’, as occurring under Section
2(1)(b), in the following manner:­
“3……The   word   ‘consumer’   is   a   comprehensive
expression. It extends from a person who buys any
commodity   to   consume   either   as   eatable   or
otherwise from a shop, business house, corporation,
store,   fair   price   shop   to   use   of   private   or   public
services.

It is in two parts. The first deals with goods and the
other   with   services.   Both   parts   first   declare   the
meaning   of   goods   and   services   by   use   of   wide
expressions. Their ambit is further enlarged  by use
of   inclusive   clause.   For   instance,   it   is   not   only
purchaser of goods or hirer of services but even those
who use the goods or who are beneficiaries of services
with approval of the person who purchased the goods or
who hired services are included in it.”
(emphasis supplied)
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13. Further, this Court elaborated on the meaning of the ‘service’ in
the following manner:­
“4.   What is the meaning of the word ‘service’? Does it
extend to deficiency in the building of a house or flat? Can
a   complaint   be   filed   under   the   Act   against   the
statutory authority or a builder or contractor for any
deficiency in respect of such property.
…..
It   is   in   three   parts.   The   main   part   is   followed   by
inclusive clause and ends by exclusionary clause. The
main   clause   itself   is   very   wide.   It   applies   to   any
service  made  available  to  potential  users.  The  words
‘any’ and ‘potential’ are significant. Both are of wide
amplitude. The word ‘any’ dictionarily means ‘one or
    some or all’. In     Black's Law Dictionary it is explained
thus, “word ‘any’ has a diversity of meaning and may
be   employed   to   indicate   ‘all’   or   ‘every’   as   well   as
‘some’   or   ‘one’   and   its  meaning   in   a   given   statute
depends  upon  the  context  and  the  subject­matter  of
the statute”. The use of the word ‘any’ in the context
    it   has   been   used   in   clause   (  o)   indicates   that   it   has
been used in wider sense extending from one to all.

The   legislative   intention   is   thus   clear   to   protect   a
consumer   against   services   rendered   even   by   statutory
bodies.   The   test,   therefore,   is   not   if   a   person   against
whom complaint is made is a statutory body but whether
the nature of the duty and function performed by it is
service or even facility.”
(emphasis supplied)
Thereafter,   this   Court   answered   the   relevant   question   in   the
following manner:­
“5. This takes us to the larger issue if the public
authorities   under   different   enactments   are
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amenable   to   jurisdiction   under   the   Act.  It   was
vehemently   argued   that   the   local   authorities   or
government   bodies   develop   land   and   construct
houses   in   discharge   of   their   statutory   function,
therefore,   they   could   not   be   subjected   to   the
provisions of the Act. …
… 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 the
spirit behind it. … A government or semi­government
body or a local authority is as much amenable to the
Act   as   any   other   private   body   rendering   similar
service. Truly speaking it would be a service to the
society   if   such   bodies   instead   of   claiming
exclusion   subject  themselves  to  the  Act  and   let
their acts and omissions be scrutinised as public
accountability is necessary for healthy growth of
society.
6. What   remains   to   be   examined   is   if   housing
construction   or   building   activity   carried   on   by   a
private   or   statutory   body   was   service   within   the
meaning of clause (o) of Section 2 of the Act as it
stood prior to inclusion of the expression ‘housing
construction’   in   the   definition   of   “service”   by
Ordinance No. 24 of 1993. … So any service except
when it is free of charge or under a constraint of
personal  service   is  included  in   it.  Since  housing
activity is a service it was covered in the clause
as it stood before 1993.

8…..Under  our  Constitution  sovereignty  vests   in
the   people.   Every   limb   of   the   constitutional
machinery   is   obliged   to   be   people   oriented.   No
functionary   in   exercise   of   statutory   power   can
claim   immunity,  except  to  the  extent  protected
by the statute itself. Public authorities acting in
violation of constitutional or statutory provisions
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oppressively  are  accountable   for  their  behaviour
before authorities  created  under the statute like
the   commission   or   the   courts   entrusted   with
responsibility  of  maintaining   the   rule  of   law.  …
Therefore,   when   the   Commission   has   been   vested
with   the   jurisdiction   to   award   value   of   goods   or
services and compensation it has to be construed
widely   enabling   the   Commission   to   determine
compensation for any loss or damage suffered by a
consumer which in law is otherwise included in wide
meaning of compensation.
(emphasis supplied)
14. Coming back to the Sunita case (supra), this Court held that the
NCDRC had no jurisdiction to adjudicate the legality behind the
demand   of   composition   or   extension   fee   by   a   developmental
authority. This Court observed that the statutory obligations of a
developmental authority and the plot holder under the authority’s
statutory   framework   cannot   be   construed   as   acts   or   omissions
resulting in a “deficiency in service”. In view of the law laid down by
us, the interpretation provided by the Sunita case (supra) cannot
be   sustained   as   the   service   provided   by   the   petitioner   herein
squarely comes under the ambit of ‘service’.
15. We   do   understand   that   the   confusion,   which   arose   from   the
aforesaid situation, is that the authority does have the power to levy
certain  statutory fee. However,  that  itself does not  prohibit  the
Consumer forums from evaluating the legality of such exactions or
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fulfilment of conditions by the authority before such exaction. In
broad terms, non­fulfilment of conditions or standards required,
amounts to ‘deficiency in services’ under the Act. Having said that,
out of abundant caution, we note that the legality does not extend to
the   challenge   of  vires  of   a   rule   prescribing   such   fee.   Such
contentions are best agitated before the Constitutional Courts.
16. On a different note, if the statutory authority, other than the core
sovereign duties, is providing service, which is encompassed under
the   Act,   then,   unless   any   Statute   exempts,   or   provides   for
immunity, for deficiency in service, or specifically provides for an
alternative forum, the Consumer Forums would continue to have
the jurisdiction to deal with the same.3 We need to caution against
over­inclusivity and the tribunals need to satisfy the ingredients
under Consumer Protection Laws, before exercising the jurisdiction.
17. Moreover,   we   also   need   to   note   that   the  distinction   between
statutory liability which arise generally such as a tax, and those
that may arise out of a specific relationship such as that between a
service provider and a consumer, was not considered by this Court
in  the case of  Sunita  (supra). For instance, a tax is a mandatory
imposition by a public authority for public purpose enforceable by
3 Section 3 of the Act.
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law;   and   is   not   imposed   with   respect   to   any   special   benefit
conferred, as consideration, on the tax payer. There is no element of
quid   pro   quo  between   the   tax   payer   and   the   public   authority.
However,   the   above   is   not   the   only   form   of   due   charged   by   a
statutory   authority.   In   a   catena   of   judgments,   this   Court   has
recognized   that   certain   statutory   dues   may   arise   from   services
rendered by a statutory authority. In the case of  Commissioner,
Hindu   Religious   Endowments,   Madras   v.   Sri   Lakshmindra
Thirtha Swamiar of Sri Shirur Mutt, 1954 SCR 1005,  a seven
Judge­Bench of this Court held that­
“46. Coming now to fees, a “fee” is generally
defined  to  be  a  charge   for  a   special   service
rendered   to   individuals   by   some
governmental   agency.  The   amount   of   fee
levied   is   supposed   to   be   based   on   the
expenses   incurred   by   the   Government   in
rendering the service, though in many cases
the costs are arbitrarily assessed. Ordinarily,
the fees are uniform and no account is taken of
the varying abilities of different recipients to pay
[ Vide Lutz on Public Finance, p. 215]. These are
undoubtedly some of the general characteristics,
but as there may be various kinds of fees, it is
not possible to formulate a definition that would
be applicable to all cases.
47. …The distinction between a tax and a fee
lies primarily in the fact that a tax is levied
as a part of a common burden, while a fee is
a payment for a special benefit or privilege.
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Fees   confer   a   special   capacity,   although   the
special advantage, as for example in the case of
registration   fees   for   documents   or   marriage
licences, is secondary to the primary motive of
regulation in the public interest [Vide Findlay
Shirras on Science of Public Finance, Vol. I, p.
202]. Public interest seems to be at the basis of
all impositions, but in a fee, it is some special
benefit which the individual receives.”
(emphasis supplied)
18. A five Judge Bench of this Court, in the case of Kewal Krishan
Puri and Anr. v. State of Punjab and Anr.,  (1980) 1 SCC 416,
also took note of the fact that certain statutory dues can arise from
a quid pro quo relationship between the authority and an individual
upon whom the liability falls.
“23. …(6) That the element of quid pro quo
may not be possible, or even necessary, to be
established with arithmetical exactitude but
even   broadly   and   reasonably  it   must   be
established  by  the  authorities  who  charge
the fees that the amount is being spent for
rendering  services  to  those on whom  falls
the burden of the fee.”
(emphasis supplied)
19. Therefore,   it   is   a   clearly   established   principle   that   certain
statutory dues, such as fees, can arise out of a specific relation.
Such statutory dues might be charged as a  quid pro quo  for a
privilege conferred or for a service rendered by the authority. As
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noted above, there are exactions which are for the common burden,
like taxes, there are dues for a specific purpose, like cess, and there
are dues in lieu of a specific service rendered. Therefore, it is clear
from the above discussion that not all statutory dues/exactions are
amenable to the jurisdiction of the Consumer Forum, rather only
those exactions which are exacted for a service rendered, would be
amenable to the jurisdiction of the Consumer Forum.
20. At the cost of repetition, we may note that those exactions, like
tax, and cess, levied as a part of common burden or for a specific
purpose, generally may not be amenable to the jurisdiction of the
Consumer Forum. However, those statutory fees, levied  in lieu of
service provided, may in the usual course be subject matter of
Consumer Forum’s jurisdiction provided that there is a ‘deficiency
in service’ etc.
21. We   may   also   refer   to   the   case   of  Ghaziabad   Development
Authority  (supra)  wherein   this   Court,   relying   upon  Lucknow
Development  Authority  case  (supra), held that the power of the
Consumer forum extends to redressing any injustice rendered upon
a   consumer   as   well   as   over   any  mala   fide,   capricious   or   any
oppressive act done by a statutory body. The relevant para of the
judgment reads as under:
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“6.   ….Thus,   the   law   is   that   the   Consumer
Protection   Act   has   a   wide   reach   and   the
Commission  has   jurisdiction  even   in  cases  of
service   rendered   by   statutory   and   public
authorities.   Such   authorities   become   liable   to
compensate for misfeasance in public office i.e. an
act which is oppressive or capricious or arbitrary
or negligent provided loss or injury is suffered by
a citizen.

Where there has been capricious  or arbitrary
or negligent exercise or non­exercise of power
by   an   officer   of   the   authority,   the
Commission/Forum has a statutory obligation
to   award   compensation.   If   the
Commission/Forum   is   satisfied   that   a
complainant   is   entitled   to   compensation   for
loss   or   injury   or   for   harassment   or   mental
agony   or   oppression,   then   after   recording   a
finding   it   must   direct   the   authority   to   pay
compensation   and   then   also   direct   recovery
from   those   found   responsible   for   such
unpardonable behaviour.
(emphasis supplied)
22. Therefore, in line with the law laid down by us, we hold that the
determination   of   the   dispute   concerning   the   validity   of   the
imposition of a statutory due arising out of a “deficiency in service”,
can be undertaken by the consumer fora as per the provisions of
the Act. The decision of this Court in  the case of  Sunita (supra),
wherein it was held that NCDRC has no jurisdiction to adjudicate
the legitimacy of the aforementioned statutory dues, was rendered
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without considering any of the previous judgments of this Court
and the objects of the Act. Consequently, the law laid down in the
aforesaid case does not hold good before the eyes of law, and is
thereby overruled.
23. The reference stands answered accordingly. The instant special
leave   petitions   may   be   placed   before   an   appropriate   Bench   for
considering   the   case   on   merits   after   obtaining   orders   from   the
Hon’ble Chief Justice of India.
  .........................J.
    (N.V. RAMANA)
                                      ........................J.
                                             (MOHAN M. SHANTANAGOUDAR)
        ........................J.
         (AJAY RASTOGI)
NEW DELHI;
SEPTEMBER 16, 2019.
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