PUDA vs. VIDYA CHETAL

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION   SLP (C)      N O . 4272 O F  2015   UNJAB RBAN LANNING ND ETITIONER P  U  P  A                     …P D EVELOPMENT  A UTHORITY  (N OW  GLADA) V ERSUS IDYA HETAL ESPONDENT V  C                                         …R W ITH     SLP (C) N O . 5237 O F  2015    UNJAB RBAN EVELOPMENT ETITIONERS P  U  D                  …P A UTHORITY  A ND  A NOTHER V ERSUS AM INGH ESPONDENT R  S                      …R   JUDGMENT     N.V. R AMANA , J.   1. The reference before us arises out of the order dated 13.07.2018, Signature Not Verified Digitally signed by SATISH KUMAR YADAV Date: 2019.09.16 16:40:57 IST Reason: passed by a two­Judge Bench of this Court, wherein they expressed 1 doubt as to the correctness of the judgment rendered in the case of (2005) 2 SCC 479 This Court therein held that HUDA vs. Sunita,   .  the   National   Consumer   Disputes   Redressal   Commission (hereinafter   referred   to   as   “ NCDRC ”)   had   no   jurisdiction   to adjudicate the legality behind the demand of “ ” and composition fee “ 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 two­ Judge Bench regarding the decision in the case of  Sunita   ( supra ) while passing the referral order: “ We are, prima facie, of the view that this six­ paragraph   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, 2 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 , (2004) 5 Ghaziabad Development  Authority v. Balbir Singh 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. 3 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 (supra)   is valid. We may note that the validity of   Sunita   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. At the outset, we must remind ourselves that answer to majority 6. of legal questions before Courts essentially lie in the process of 1 interpretation.  This Court in  Commissioner of Customs (Import), ,   (2018)   9   SCC   40,   had Mumbai   v.   Dilip   Kumar   and   others 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 2 letter to include matters within the spirit or purpose.   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). 4 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:­

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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 6 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 consumer­ service   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   sub­ units/wings   which   are   providing   services/supply   goods   for   a consideration and they are severable, then they can be considered 7 to come within the ambit of the Act. [ refer to  Standard Chartered ,  (2006) 5 SCC 727] Bank Ltd. v. Dr. B. N. Raman 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   (supra) Lucknow Development Authority Case   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 8 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     it is explained   Black's Law Dictionary   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 9 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 10 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    (supra)  cannot Sunita case 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 11 fulfilment of conditions by the authority before such exaction. In broad terms, non­fulfilment of conditions or standards required, amounts to ‘  under the Act. Having said that, deficiency in services’ 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. On a different note, if the statutory authority, other than the core 16. 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 3 the jurisdiction to deal with the same.  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. 12 law;   and   is   not   imposed   with   respect   to   any   special   benefit conferred, as consideration, on the tax payer. There is no element of between   the   tax   payer   and   the   public   authority quid   pro   quo   . 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 a seven Thirtha Swamiar of Sri Shirur Mutt , 1954 SCR 1005,    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 . 13 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 (1980) 1 SCC 416, Puri and Anr. v. State of Punjab and Anr. ,   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 14 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. We   may   also   refer   to   the   case   of   21. 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: 15

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 16 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. 17