1994 (11) TMI 364 - SC - Service Tax

Determination of right and power of the Commission to award exemplary damages and accountability of the statutory authorities - act or omission relating to housing activity -Ascertaining the Jurisdiction of the District Forum or State or National Commission to entertain a complaint under the Consumer Protection Act 1986 (Act) - Words consumer and service - compensation for harassment and agony - HELD THAT - The Act aims to protect the economic interest of a consumer as understood in commercial sense as a purchaser of goods and in the larger sense of user of services. The common characteristics of goods and services are that they are supplied at a price to cover the costs and generate profit or income for the seller of goods or provider of services. But the defect in one and deficiency in other may have to be removed and compensated differently. The former is normally capable of being replaced and repaired whereas the other may be required to be compensated by award of the just equivalent of the value or damages for loss. The respondents were aggrieved either by delay in delivery of possession of house or use of substandard material etc. and therefore they claimed deficiency in service rendered by the appellants. Whether they were justified in their complaint and if such act or omission could be held to be denial of service in the Act shall be examined presently but the jurisdiction of the Commission could not be ousted (sic merely) because even though it was service it related to immoveable property. As pointed out earlier the entire purpose of widening the definitions is to include in it not only day to day buying of goods by a common man but even such activities which are otherwise not commercial but professional or service-oriented in nature. The provisions in the Acts namely Lucknow Development Act Delhi Development Act or Bangalore Development Act clearly provide for preparing plan development of land and framing of scheme etc. Therefore if such authority undertakes to construct building or allot houses or building sites to citizens of the State either as amenity or as benefit then it amounts to rendering of service and will be covered in the expression service made available to potential users . A person who applies for allotment of a building site or for a flat constructed by the development authority or enters into an agreement with a builder or a contractor is a potential user and nature of transaction is covered in the expression service of any description . It further indicates that the definition is not exhaustive. The inclusive clause succeeded in widening its scope butnot exhausting the services which could be covered in earlier part. 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. The judgment comprehensively analyzes the applicability of the Consumer Protection Act 1986 to statutory authorities involved in housing activities the jurisdiction of Consumer Forums and Commissions the definition and scope of service and the liability of public authorities.

Issues Involved:
1. Applicability of the Consumer Protection Act, 1986 to statutory authorities for housing activities.
2. Jurisdiction of Consumer Forums and Commissions under the Act.
3. Definition and scope of "service" under the Act.
4. Liability of public authorities under the Act.
5. Retrospective applicability of the 1993 amendment to the Act.
6. Award of compensation for harassment and agony by the Commission.
7. Liability for payment of compensation by public authorities or responsible officers.

Detailed Analysis:

1. Applicability of the Consumer Protection Act, 1986 to Statutory Authorities for Housing Activities:
The judgment addresses whether statutory authorities like the Lucknow Development Authority, Delhi Development Authority, or Bangalore Development Authority, constituted under State Acts for planned city development, are amenable to the Consumer Protection Act, 1986 for issues like delayed possession, non-completion, or defective construction of houses. It concludes that these authorities are indeed subject to the Act for any act or omission related to housing activities.

2. Jurisdiction of Consumer Forums and Commissions under the Act:
The judgment clarifies the jurisdiction of District Forums, State Commissions, and the National Commission under Sections 11, 16, and 21 of the Act, respectively. It states that these bodies can entertain complaints depending on the valuation of goods or services and compensation claimed. The right to approach these bodies vests in consumers for unfair trade practices, defects in goods, or deficiencies in services.

3. Definition and Scope of "Service" under the Act:
The term "service" under Clause (o) of Section 2 of the Act is defined broadly to include any service made available to potential users, including housing construction. The judgment emphasizes that the term covers both actual and potential users and extends to services provided by statutory bodies. It concludes that housing construction or building activities by private or statutory bodies fall within the definition of "service" under the Act.

4. Liability of Public Authorities under the Act:
The judgment rejects the argument that public authorities performing statutory functions are exempt from the Act. It asserts that statutory bodies providing services to the public are as much subject to the Act as private entities. The judgment stresses the importance of public accountability and the need for statutory bodies to be subject to scrutiny under the Act.

5. Retrospective Applicability of the 1993 Amendment to the Act:
The judgment addresses whether the inclusion of "housing construction" in the definition of "service" by the 1993 amendment applies retrospectively. It concludes that the amendment was added by way of abundant caution and that housing construction was already included within the definition of "service" prior to the amendment. Therefore, the amendment does not materially affect vested rights or obligations in respect of past transactions.

6. Award of Compensation for Harassment and Agony by the Commission:
The judgment affirms the Commission's power to award compensation for harassment and agony suffered by consumers. It emphasizes that compensation includes both actual loss and emotional suffering. The judgment underscores the importance of awarding compensation to address social evils and improve public administration.

7. Liability for Payment of Compensation by Public Authorities or Responsible Officers:
The judgment addresses the issue of who should bear the liability for compensation awarded by the Commission. It concludes that while the public authority should initially pay the compensation from public funds, it should recover the amount from the responsible officers proportionately. This approach ensures accountability and deters oppressive and capricious behavior by public servants.

Conclusion:
The judgment comprehensively analyzes the applicability of the Consumer Protection Act, 1986 to statutory authorities involved in housing activities, the jurisdiction of Consumer Forums and Commissions, the definition and scope of "service," and the liability of public authorities. It affirms the power of the Commission to award compensation for harassment and agony and delineates the responsibility for payment of such compensation. The judgment underscores the importance of public accountability and the need for statutory bodies to be subject to scrutiny under the Act.

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