Lucknow Development Authority v. M.K. Gupta
Supreme Court of India, 5 November 1993, 2 judges
Statutory development authorities that allot plots or build houses render 'service' under the Consumer Protection Act, 1986, even before the 1993 amendment, and consumer fora may award compensation for harassment, to be recovered from the officers responsible.
Facts
The Lucknow Development Authority allotted the respondent a Middle Income Group flat in Gomti Nagar by draw of lots in April 1988. He paid the full price in July 1988 and the flat was registered, but possession was not given because construction was incomplete. On his complaint, the State Commission awarded 12% interest and directed completion or refund of the cost of deficient work. The National Commission rejected the Authority's objection to jurisdiction, awarded the architect's estimate of the cost of completion and Rs. 10,000 as compensation for harassment and mental agony. The Authority appealed. Connected appeals by other development authorities and a private builder raised the same question of jurisdiction over housing construction.
Questions before the Court
- Whether statutory authorities such as development authorities are amenable to the Consumer Protection Act, 1986 for acts or omissions in housing activity.
- Whether housing construction was 'service' under Section 2(o) of the Act before the words 'housing construction' were added by Ordinance No. 24 of 1993.
- Whether the Commission can award compensation for harassment and mental agony, and who should bear it.
What the Court held
- The Act is social benefit oriented legislation and must be construed in favour of the consumer. The jurisdiction of the Commission is not ousted because the deficiency in service relates to immovable property.
- A government or semi-government body or local authority is as amenable to the Act as a private body rendering similar service. The test is whether the nature of the duty and function performed is service or facility, not whether the body is statutory.
- Building activity by a builder or a statutory authority is service. Delay in delivering possession or defective construction is deficiency in service. Housing was covered before 1993; the 1993 amendment only clarified the position.
- 'Compensation' is of wide meaning and includes compensation for injustice suffered, such as harassment and mental agony. Where such compensation is awarded for capricious or oppressive acts of public servants, the department should pay it and recover it from the officers responsible.
- All appeals were dismissed. The Lucknow Development Authority was directed to fix responsibility within six months and recover the Rs. 10,000 from the officers concerned proportionately from their salary.
Why it matters
The judgment holds that public authorities providing housing and similar facilities are within the consumer protection law, reads 'service' widely to cover potential users, and treats housing construction as service even before the 1993 amendment. It also directs that compensation for harassment caused by public servants be recovered from the officers responsible, distinguishing Kasturilal on the ground that such services are not sovereign functions.
In the Court's words
Copied from the official judgment; each passage links to its page.
“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 scrutinised as public accountability is necessary for healthy growth of society.”
“When the contractor or builder undertakes to erect a house or flat then it is inherent in it that he shall perform his obligation as agreed to. A flat with a leaking roof, or cracking wall or sub-standard floor is denial of service. Similarly when a statutory authority undertakes to develop land and frame housing scheme, it, while performing statutory duty renders service to the society in general and individual in particular.”
“Any other construction would defeat the very purpose of the Act. The Commission or the forum in the Act is thus entitled to award not only value of the goods or services but also to compensate a consumer for injustice suffered by him.”
Provisions interpreted
- Section 2(o) (service), Consumer Protection Act, 1986
- Section 2(d) (consumer), Consumer Protection Act, 1986
- Sections 11, 16 and 21 (jurisdiction and compensation), Consumer Protection Act, 1986
Related judgments
- Distinguishes Kasturilal Ralia Ram Jain v. State of Uttar Pradesh (1964)“the ratio of Kasturi Lal (supra) could not stand in way of the Commission awarding compensation” (page 17)
- Followed in Indian Medical Association v. V.P. Shantha (1995)
Case and bench
- Parties
- Lucknow Development Authority v. M.K. Gupta
- Case
- Civil Appeal No. 6237 of 1990
- Decided
- 5 November 1993
- Bench
- Kuldip Singh, R.M. Sahai
- Opinions
- Unanimous. The judgment of the Court was delivered by R.M. Sahai J.
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