HOUSING AND CONSUMER · Housing and Consumer 3 deposit amount without interest was unreasonable and ordered payment of interest at 18 per cent pa. In appeal, the National Commission

HOUSING AND CONSUMER

INDIAN INSTITUTE OF PUBLIC ADMINISTRATIONNEW DELHI

KNOW YOUR

RIGHTS!

RAVINDRA BANA


RAVINDRA BANA

INDIAN INSTITUTE OF PUBLIC ADMINISTRATIONNEW DELHI

ii

Printed by New United Process, A-26, Naraina Indl. Area, Ph-II, New Delhi-110028

First Edition: 2006

Revised Edition: 2018

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ISBN: 81-86641-86-6

Sponsored by : Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution, Government of India.

Published by : Centre for Consumer Studies, Indian Institute of Public Administration, New Delhi.


RAVINDRA BANA

The preamble of the Consumer Protection Act, 1986 (hereinafter referred to as the Act) reflects the legislative intention, namely, "to provide for the better protection of the interest of consumers". The ordinary law of the land had provided the protection to the common man, but for various reasons, the said protection had become illusory. Various legislations and regulations providing for the said protection of the interests of the consumers had become insufficient as the enforcement machinery either did not move or it moved ineffectively and very slow. The importance of the Act lies in its promoting welfare of the society. It is a bold attempt to remove the helplessness of a consumer which he faces against powerful business, the might of Public Bodies which, as a matter of fact, proved to be a storehouse of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous considerations, leaving the common man helpless and shocked. The tragedy is that the melody is becoming so widespread and deep that the society instead of complaining and fighting for it, has started accepting it as a part of life. A bare perusal of the various terms in the definition clause, such as 'Consumer', 'Service', 'Trader', 'Unfair Trade Practice', demonstrate the legislative intent to widen the reach of the Act. The provisions of the Act thus have to be construed in favour of consumers to achieve the purpose of enactment, as it is a social, benefit oriented-legislation directed towards achieving public benefit.

The word "Consumer" is a comprehensive expression in the Act. Similarly, the definition of "Service" under section 2(1) (o) is very wide and clearly includes, inter alia, the "Housing Construction", The Apex court while dealing with the issue of housing in Lucknow Development Authority vs M. K. Gupta1 has observed, inter alia, as under: “The entire purpose of widening the definition is to include in it

not only day-to-day buying and selling activity undertaken by a common man, but even such activities which are otherwise not commercial in nature, yet they partake of a character in which some benefit is conferred on the consumer… Similarly, when a statutory authority develops land or allots a site or constructs a house for the benefit of a common man, it is as such, “service" as by a builder or contractor... When possession of the property is not delivered within stipulated period, the delay so caused is denial of "service".

2 Housing and Consumer

Such disputes or claims are not in respect of the immovable property as argued, but "deficiency in rendering of service" of particular standard, quality or grade…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. A Development Authority while developing the land or framing a scheme for housing discharges statutory duty, the purpose and objective of which is service to the citizens. A person who applies for allotment of building site or for a flat constructed by the Development Authority or entered into an agreement with a builder or a contractor is a potential user and the nature of construction is covered in the expression "service" of any description."The Act requires provider of service to be more objective and care

taking and it is still more in public service. When private undertakings are taken over by the Government or Corporations or are created to discharge what is otherwise State's function and the objective of such social welfare is to provide better, efficient and cost effective services to the people. 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.

The expression "Housing Construction" in the definition of "service" inserted by Ordinance No. 14 of 1993 demonstrates the entire purpose of widening the definition, which are otherwise not commercial in nature, yet they partake of a character in which some benefit is conferred on the consumer. Construction of a house or a flat can be achieved by a person either by doing it himself or by hiring services of a builder or contractor, later being for consideration and is a service as defined in the Act.

In the case of S.P. Dhavaskar vs Housing Commissioner, Karnataka Housing Board & Vice Versa, the complainant had made a deposit of Rs. 1.66 lakh with the Housing Board for a house proposed to be built by the Board. He was told that the construction will be completed within two years from March, 1987. In March, 1992 he was informed that the construction was not upto the expected level because of the use of low cost technology and that the houses constructed developed distress and might not long and suggested that the complainant might take back the amount of deposit without interest or opt for a new house in lieu of the house already allotted. The complainant made a claim of Rs. 4.65 lakhs which was rejected. The State Commission held that the act of the Housing Board amounted to a deficiency in service and returning

Housing and Consumer 3

deposit amount without interest was unreasonable and ordered payment of interest at 18 per cent pa. In appeal, the National Commission upheld the order of the State Commission. Similarly in the case of Ganesh Lal vs Shyam2 Supreme Court held that sale of plot of land simpliciter and not involving “housing construction” is not a service as such a consumer dispute under the Consumer Protection Act.

Similarly, when a statutory authority develops land or allots a site or constructs a house for the benefit of a common man, it is as much service as by a builder or a contractor. The one is contractual service and the other statutory service. Any defect in construction activity would be denial of comfort and service to a consumer under the Act.

However, in Bangalore Development Authority vs Syndicate Bank case3 the Supreme Court dealt with the nature of the relief that can be claimed by consumers in the event of refusal or delay in the transfer of the title of the property in favour of the allottees/purchasers and observed: “Where full payment is made and possession is delivered, but title

deed is not executed without any justifiable cause, the allottee may be awarded compensation, for harassment and mental agony, in addition to appropriate direction for execution and delivery of title deed.” Court has left the question open where the contract is for sale of a

house as contrasted from contract for construction of a house whether element of service is there or not.

Similarly in the case of Tamil Nadu Housing Board vs Sea Shore Apartments Owners Welfare Association4 there was an allegation of deficiency in service in housing construction, owing to the demand of additional price by housing board. The Supreme Court held that the price quoted in initial advertisement issued for registration of intending purchasers was tentative price and since, on alteration of the scheme, the plinth area and ground area increased, the demand of additional price could not be considered to be arbitrary, and hence it was not deficiency in service. In the case of Fakirchand vs Uppal Agency5 Appellant entered into a collaboration agreement with the respondent for construction of an apartment building and for sharing of the constructed area; there were several shortcomings in the construction and the violations of sanctioned plan and the appellant asked for rectification. The Supreme Court held that a complaint will be maintainable where the owner/holder of a land who has entrusted the construction of a house to a contractor, has a complaint of deficiency of service with reference to the construction


and where the purchaser or intending purchaser of an apartment/flat/ house has a complaint against the builder/developer with reference to construction or delivery or amenities. It further held that where the builder commits breach of his obligations, the owner has the right to enforce specific performance and/or claim damages by approaching the Civil Court or he can approach the Forum under Consumer Protection Act, for relief as consumer, against the builder as a service-provider. The Commission held that in collaboration agreement between owner and builder there is no element of rendering service by the builder.

In the case of Sujit Kumar Banerjee vs Rameshwaran6 in a complaint against a builder, the Supreme Court relied on Faqir Chand Gulati vs Uppal Agencies Pvt Ltd., (2008) 10 SCC 345, and held that the agreement between parties was not a joint venture agreement but an agreement for construction of residential building and delivery of agreed percentage of constructed area to land owners. It further held that the appellant is a consumer and the respondent builders are service providers, so the complaint was maintainable.

Similarly in the case of RSIDC vs Diksha7 National Commission held that complainant is not a consumer therefore the complaint is not maintainable. However, the complainant is given liberty to pursue the matter before any other forum or civil court, except the consumer court. Similarly in the case of Narne vs Union of India8 the court held that transaction between parties is not a sale simpliciter but coupled with obligations for development and provision of infrastructure. The High Court rightly held that element of service exists in such transactions. In light of legal position settled by earlier decisions of Supreme Court, held, no interference is warranted. Finally, in the case of UPSIDC vs Shyam Rani9 complainant was allotted industrial plot. The Commission held that allotment of industrial plot was not for earning livelihood by means of self-employment and in such circumstances, complainant does not fall within the purview of consumer under Section 2(i)(d) of the C.P. Act and on this count also complaint was liable to be dismissed and learned State Commission has committed error in allowing complaint.

Instances of deficiency in service at the hands of Housing Boards, State Development Authorities and Builders, etc.

The consumers can approach the Redressal Forums for deficiency in service at various stages of housing such as booking of plot; Deposit of price; Pricing; Refund of the amount deposited; Poor construction at the hands of the builders or the Development Housing Authorities; Delay


in the delivery of possession of the flat or the plot; Development of the plots; Cancellation of the plot; Allotment of non-existent sites; Purchase through open auction of the flat or plot; Allotment of an alternative plot in lieu of the original allotment possession of which could not be given to the allottee for one reason or the other; Plots sold without approval of the layout plans; Houses under the Co-operative Group Housing Societies; Compensation, etc.

In Ameer Singh vs Delhi Development Authority10 the complainant was allotted a plot by DDA and he paid its full price. The possession of the plot was not delivered to him, as the same plot was allotted to the someone else. However, the complainant was allotted another plot after two years in the same locality. The Delhi State Commission held that if on account of mistake on the part of the officials and DDA the complainant could not be delivered possession of the plot allotted to him then complainant is not liable to pay the enhanced price of the other plot allotted to him later. The commission further ordered that the complainant was also entitled to compensation on account of delayed delivery of the plot at the rate of 15 per cent per annum on the amount deposited by him initially till the date plot was allotted. Supreme Court has from time-to-time come up with the crystal clear clarity through judicial pronouncements for the consumer’s interest like in the case of Poonam Verma vs DDA11 Supreme Court has held registration under one scheme is not automatic in subsequent scheme. Similarly in the case of DDA vs Shayamsundar12 National Commission has held that court cannot add anything to or improve upon terms of contract. Earnest money to be refunded as agreed.

(a) Booking of Plots The applications are sought from public by the Development

Authorities through an advertisement, which provides for application forms to be accompanied by application fees, followed by the draw of lots. The applicants are thousands in number and the application fee is returned to the unsuccessful applicants by the Authority and the delay in returning the application fees to the applicants was subject matter of litigations. The Apex Court in HUDA vs K.K. Goel13 held that a period of nine months to a year is justifiable period to return the application fee without any interest, but if it can be demonstrated that the delay on the part of the Authorities in refunding the application fee was unreasonable, the courts have awarded interest notwithstanding that the brochure inviting the applications clearly provided that no interest would be paid by the Development Authorities.


Similarly, the name of the applicant not being considered at the time of the draw notwithstanding that the applicant had fulfilled all the requirements of the advertisement was held to be a ”deficiency in service" as such, an applicant had a right for consideration of his application along with similarly situated persons and if at the appropriate time his name had been considered and allotted a plot, he would have been able to raise construction thereon with the resources at his disposal. It was held that by unduly and unlawfully denying him the opportunity of allotment, a reasonable and just compensation was required to be fixed and paid.14 In the case of Urban Improvement Trust, Bikaner vs Mohan Lal15 Special Leave Petition was filed before the Supreme Court under Article 136 of the Constitution. The petitioner allotted a Plot (A-303) measuring 450 sq ft under its Karni Nagar Scheme to the respondent in the year 1991. Respondent paid the allotment price (lease premium) of Rs. 3,443 in 1992 and took possession in 1997. In the year 1998, the petitioner-Trust allotted to respondents and delivered possession of the adjacent strip measuring 150 ft. The Trust without notice to the respondent and without resorting to any acquisition proceedings, laid a road in the said plot. The layout map prepared and made available by the Trust in the year 2002 did not show the existence of Plot A-303 or its adjoining strip.

Feeling aggrieved, the respondent met the officers of the Trust and complained to them. He also gave a written complaint seeking restoration of the plot. As there was no response, he approached the District Consumer Forum in 2005, praying for restoration of the plot or for allotment of an alternative site and award of damages of Rs. 200,000.

The District Forum disposed of the complaint directing refund of the allotment price paid with interest at nine per cent per annum. The State Commission allowed the appeal filed by the respondent and directed allotment of an alternative plot and also awarded Rs. 5,000 as compensation. The National Commission dismissed the revision petition filed by the petitioner Trust. Special leave was sought to challenge the said order of the National Commission.

The Supreme Court held that decision of the State Commission rejecting the above contentions is just and reasonable. The Supreme Court further held that the petitioner did not offer any explanation for its negligence or action of taking over allotted plot without notice, acquisition, or consent of respondent. The National Commission was justified in not interfering with the said decision.


(b) Deposit of Price Usually allotment is governed by the terms and conditions of

allotment and providing for the consequences for the breach of such terms and conditions and the courts have held that the forfeiture of the earnest money is the willful breach of the terms by the allottee, is justifiable. In the case of Municipal Corporation Chandigarh vs Shantikunj Investment Private Limited16 Court held that no specific promise on the part of the administration that providing of facilities shall be condition precedent before allotment of plots. No obligation as per the terms and conditions of the lease or by the Act or the Rules.

In the case of Navjot Khanna vs Chandigarh Housing Board17 the Commission held that the complainants were not entitled to any relief for the interest charged by the Housing Board on the balance consideration. Accordingly, State Commission partly allowed the complaint and directed the Housing Board to pay interest @ 16.5 per cent on the amount of Rs. 2,70,000 deposited by the complainants. Rs. 1,00,000 were awarded towards compensation for mental agony in addition to Rs. 20,000 as costs.

In the case of J.P. Mittal and Ors. vs Haryana Housing Board and Ors.18 Commission has held that any grievance of the purchaser/lessee who purchases the site in an open auction cannot be termed as a 'Consumer Dispute' and the Consumer Fora have no jurisdiction to entertain and decide any complaint.

(c) PricingIt is now well settled that the question of pricing of a plot is beyond

the purview of the court. It has been held that it is the experts alone who can work out the mechanics of price determination and that the executive has a wide discretion and that the court should not normally interfere on the question of pricing and, if at all, it should be with the aid of the experts in the field. The National Commission in a recent judgment19 has gone into this issue in detail noticing all the judicial pronouncements. While noticing the broad principle laid down by judicial pronouncements the Hon’ble Court referred to the case of D.G. vs DDA20 where the Supreme Court has held that the escalation of prices charged by the Development Authority would not amount to an unfair trade practice. The National Commission in this case has held that the Commission can look into the parameters of escalation, which are solely based on terms and conditions given in the brochure, in that such an exercise would not amount to interfering in the pricing per se.21 In the


case of Kartar Singh vs Delhi Development Authority22 the Commission has held that the price is determined by the Board in accordance with the procedure evolved by it and there is no statutory control over the fixation of the price and the same cannot therefore be interfered with. The pricing of flats built by the public authority or plot developed by the authorities is not a consumer dispute.

In the case of Tamil Nadu Housing Board vs R. Muthukrishna23 the Commission held that out right purchase is no element of service. There cannot be escalation in tentative price when no escalation in acquisition proceedings.

In the case of Maharashtra Housing Society vs M.H. Dange24 the State Commission held that the issue of pricing does not fall within the ambit of C.P. Act25 but the dispute in hand is not only regarding pricing but is also regarding the defects in construction which certainly is a consumer dispute in view of Section 2(l)(o) of the Consumer Protection Act.26

(d) Refund of the amount deposited Normally the terms and conditions of the allotment govern the

requests of the allottees for the refund of the amount, which could be for various reasons. One could be that the allottee does not want to go ahead paying the remaining installments, in this case some amount as postulated in the allotment letter is deducted and the balance is returned. However, if the request for refund is made by the allottee on the ground that there has been a considerably long delay in development or handing over of the possession of the plots, the National Commission in such cases has held that the allottee would be refunded the whole amount along with 18 per cent interest .

In the case of Southwestern Railway Housing vs K. Velajudhar Commission27 held that refund with interest as no layout plan prepared. Similarly in the case of Manju vs HUDA28 Commission held that without surrender applicant cannot pray for re-allotment. In the case of DLF vs Abdul Aziz29 Commission held that forfeiture of part payment allowed as per the clause of agreement between the parties.

(e) Poor Construction at the hands of the builders or the Development Authorities

The Hon'ble Commission has in several cases issued directions after arriving at a finding that the quality of construction of the flats was poor and that the Housing Board did not fulfil its promise held out in the


brochure. The National Commission in addition to issuing directions for removal of defects in the construction has granted compensation as well.30 In the case of Sudha Anand vs PUDA31 Commission held that firstly, no eyebrows were raised by her about deficiency in construction when she took possession of flat on 20th August, 1998. Secondly, after the purchasing flat on a hire purchase basis and being quite conversant with quality of the construction, it was not open to her to raise grievance about deficiency in construction, particularly when transaction was as was held by State Commission not an outright sale.

Similarly in the case of S. Qualivets vs I.V. Prithvi32 Commission held that it is a matter of grave injustice that the complainant should have taken the building without any flaw. Moreover, the period of more than one decade has elapsed. The order of the District Forum has not yet been complied with. Justice delayed is not only justice denied, it is also justice circumvented, justice mocked and the system of justice undermined. Commission dismissed the revision petition and imposed further punitive costs in the sum of Rs. one lakh payable by the petitioner/OP to the respondent/complainant. It further directed that this amount and the amount granted by the District Forum to be paid within 90 days from the receipt of this order, otherwise, it will carry interest at the rate of nine per cent pa from the expiry of 90 days, till its realisation. The defects be removed within 90 days from the receipt of this order, otherwise, the petitioner/OP will be liable to pay Rs. 500 per day, as penalty, to the complainant, till compliance. In the case of Orissa Housing Board vs Santosh Kumar Commission33 has held that the Respondents shall be entitled to interest at the rate of nine per cent pa on the said amount, from the date of delivery of possession to them.

(f) Delay in the delivery of possession of flats and the delay in development of the plots

The National Commission has vide its judgment dated August 31, 2001 in the matter of HUDA vs Darsh Kumar34 has dealt with this aspect in extenso and after examining the various judicial pronouncements has categorically held that when an allottee gives an application that he needs a plot of land to build a house for his residence, he is not guided by any commercial considerations. In most cases, his income would be stationary while inflation rises over the years. Further that there are stringent conditions while allotting a plot including requirement of filing affidavit that the allottee has no other residential plot or house in his/her name or in the name of his/her spouse and, thus the applicant is struck. He has no other place to go and has to wait for years for allotment


of the plot so that he can build house for his residence. Psyche of an individual is always to move from rental accommodation to his own house. The Commission has observed that the allottee is in Catch-22 situation, inasmuch as, he has deposited his savings to buy a plot and has legitimate expectations that a plot of land would be allotted to him within a reasonable period and he cannot go elsewhere since his money is blocked with the Authority. It would be too much to expect that an allottee would go in for another piece of land elsewhere since his money is blocked. Further by passage of time, prices have rocketed taking judicial notice of the escalation, not only in the cost of land, but also in the cost of construction, the National Commission concluded that in such circumstances, award of interest at the rate of 18 per cent pa on the amount deposited by the allottee would be equitable as it will take into consideration the escalation of cost of construction as well. The Hon’ble Supreme Court of India in an appeal filed against the aforesaid judgment modified the order of the National Commission and held that the compensation cannot be at a uniform rate and if compensation has to be awarded for escalation in the cost of construction, it must be done under that head after taking into consideration the amount of delay. Such compensation can be fixed on the basis of indexes of the bodies like CPWD or PWD. Thus the Supreme Court has laid down the law in Ghaziabad Development Authority vs Balbir Singh35 that since what is being awarded is a re-expense for the loss or injury it, therefore, necessarily has to be based on the finding of loss or injury and has to co-relate with the amount of loss or injury and the award of compensation must be made under different, separate heads and must vary from case to case depending upon facts of each case and no hard and fast rule can, therefore, be laid down.

Similarly in the case of HUDA vs Raj Pathak36 Commission held that the petitioner/authority, therefore, has been deficient to the extent that there has been a delay of about three years in handing over physical possession of the plot and for this lapse, while setting aside the order of the State Commission, National Commission awarded a lumpsum compensation of Rs. 40,000 and the petitioner/authority was directed to pay within a period of two months, failing which it will attract interest at the rate of nine per cent pa till payment.

Similarly in the case of S.K. Aggarwal vs Lucknow Development Authority37 Commission held that for delay caused due to late delivery of possession, due to the status quo order passed by the High Court during the dispute between the land owner and development authority, the complainant was entitled to compensation.


(g) Cancellation of plot Cancellation of plots can be ordered for breach of terms of the

allotment on the part of the allottee depending on the facts of each case, however, it has been now held that in case the plots are cancelled because of the cancellation of the scheme itself, in that case, the allottee would be entitled to interest on the amount deposited by the allottee at the time of refund of the said amount by the Development Authorities as decided by the National Commission in Chandigarh Housing Board vs Surinder Pal38. In the case of HUDA vs Bishen Dev39 Commission notice after 31 years for resumption on account of non-payment of an installment-quashed.

Similarly in the case of Ashoka Investments vs United Towers40 for seeking possession of flats which were not given to opposite party after receiving entire sale consideration, Commission ordered to refund the amount of Rs. 4,95,000, being the total sale consideration, to the complainant, with interest at the rate of nine percent pa, till the date of refund/compliance. The said amount be paid to the complainant, immediately. No costs were awarded.

(h) Allotment of non-existent site The allotment of a non-existent site has been held to be a "deficiency

in service". However, in such cases, the courts have issued directions that the complainants are entitled to an alternative site and for this negligence the allottee ought not to suffer and for the delay caused on re-allotment, the allottee is entitled to compensation in the form of award of interest on the amount deposited by the allottee.41

(i) Purchase through open auction of the flat or plotIn a case where the allotment of the plot has been made for the

highest bidder in a public auction, the National Commission, following its decision in the earlier case Nita Singla & ors vs Dr. Kripal Singh42

has held that a highest bidder in a public auction of a plot cannot be said to be a case of "hiring of services" in as much as, such a transaction has arisen out of auction sale which tantamount to outright sale of immovable property and there is no arrangement of hiring of service for consideration between the parties.43

In the case of HUDA vs S.K. Khosla44 Commission held that opposite parties being the highest bidder on as and where basis and no assurance was given by the opposite party as service provider. Wherein it has been made clear that any grievance of the purchaser/


lessee who purchases the site in an open auction cannot be termed as a Consumer Dispute and the Consumer Fora have no jurisdiction to entertain and decide any complaint. The respondent/complainant may seek exemption/condonation of the time spent before the Consumer Fora to seek remedy before the Civil Court, if so advised. The statutory amount of Rs. 25,000 deposited at the time of filing of the present appeal be refunded to the appellants against proper receipt and due verification as per rules after the expiry of period of appeal and revision, if any, filed in this case. Similarly in the case of HUDA vs Satish Hans45 upholding the order of National Commission the Apex Court said that the complainant being an auction purchaser could not at all qualify as a consumer. Where allottee moves appellant authority or avails remedy available, he cannot thereafter move District Forum and/or State or National Commission.

In the case of Nanhe vs UOI46 Commission held a case of sale is not on 'as it is where it is' basis. The commission also held that when a person applies for allotment of building site or for a flat constructed by development authority and enters into an agreement with the developer or a contractor, the nature of the transaction is covered by the expression 'service' of any description. The housing construction or building activity carried on by a private or statutory body was, therefore, held to be 'service' within the meaning of Clause (o) of Section 2 (1) of the Act as it stood prior to the inclusion of the expression 'housing construction' in the definition of 'service'. In the case of DDA vs Parveen Kumar47 Commission held that in case of sale by auction no service is rendered as the purchaser is in full knowledge of what is being bid for as such consumer made a bid with eyes wide open as it was a case of “as is where is”.

In a recent case decided by National Commission in Bhanwar Lal vs Rajasthan Housing Board48 where the plot was sold by open auction, National Commission refused to grant any relief to the auction purchaser when he complained of an encroachment and existing of an electric pole on the site of the ground that the bidder had full knowledge of these facts at the time of making a bid.

(j) Allotment of alternative plot in lieu of original allotment The National Commission in its judgment dated August 31, 2001

in the matter of Haryana Urban Development Authority (HUDA) vs R.P. Chawla has categorically held that the applicant/allottee cannot be burdened with any additional cost in addition to the original cost of


the plot, in-as much as, the alternative plot is being allotted in lieu of the original allotment and has necessarily to be on the same terms and conditions as the original allotment. The Hon'ble Commission has further awarded, interest at the rate of 18 per cent p.a. for the delay in handing over possession of the alternative plot.49 In the case of Chandigarh Housing Board vs Ramesh Kumar50 Commission held that the appellant could not charge more price and directed refund of Rs. 72,862 to the respondent. It was also held that respondent was also entitled to the refund of Rs. 6,120 charged by the appellant. State Commission has granted a sum of Rs. 4,000 as compensation for harassment caused to the respondent and also awarded cost amounting to Rs. 5,000. State Commission had also awarded interest at the rate of 18 per cent pa on the amount of Rs. 72,186.

Similarly in the case of Haryana Urban Development Authority vs Raje Ram51 re-allottees filed complaints after the transfer of the plots in their names on the ground of delay in receiving possession. The Supreme Court held that re-allottees could not be treated at par with the original allottees who had to face harassment and mental agony on account of the delay in possession. The original allottees had accepted the delay and the re-allottees were aware that time was not of the essence of the contract. Hence, relying on HUDA vs Darsh Kumar [III (2004) CPJ 499 (SC)], the Supreme Court held that the re-allottees were not entitled to interest on the deposited amounts.

In the case of HUDA vs Nishtha Singh52 Commission held that since allotment of original plot was made to respondent as early as on September 20, 2001, subsequent to which, there was reallotment of alternative plot on January 10, 2008, for this time lag, respondent had a good cause for grant of interest on her deposit in terms of direction of Fora below. The petitioner while recasting the cost of the plot will give credit of this interest amount on the complainant's deposit and inform him about the balance amount to be paid within four months from the date of receipt of this order. The complainant, thereafter will pay the balance amount due in three months whereupon the petitioner would handover the plot within two weeks and effect the necessary registration. The revision petition is disposed of in these terms.

Similarly in the case of Haryana Urban Development Authority vs Dr. Maya Vaid53 the complainant alleged that the plot allotted to him by HUDA was of an odd shape and in excess of the area applied for. The Commission held that HUDA was clearly at fault as it had allotted a plot of irregular shape, and ordered it to return the money to the purchaser


on the excess area as well as pay interest on the amount for the delay of seven years.

In the case of Lucknow Development Authority vs Salim Ahmed54 Commission held that allotment was cancelled for non-payment of installment. Proof of receipt for demand not proved. Commission ordered that alternate plot be alloted at the same price as the original allotment.

In the case of Pushpa Goel vs Ghaziabad Development Authority55 Commission held that higher price for alternative plot was paid under protest. The Consumer can agitate the charging of higher rate later on after taking possession of the alternative plot.

“Similarly in the recent case decided by the National Commission in C.G. Groth vs Sanjay56, it has been held that alternative plot has to be on original price.

(k) Plots sold without approval of Lay out PlansWhere the plot has been sold by the authorities without taking proper

approval of the layout plans and as a result of which the possession could not be delivered to the allottees, the Commission has held such an act on the part of the Authority falling clearly in the category of “deficiency in service” on the part of the Authority. In another case, where subsequent to allotment of the plots, the Supreme Court had banned the construction activity in five km radius of Badkhal Lake and the complainant’s plot fell within the said Supreme Court directions and as such, the Commission directed HUDA to refund the amount along with interest, holding that the complainants/allottees were entitled to compensation.

(l) Housing under the Co-operative Group Housing SocietiesThe National Commission in a recent judgment has now held that

the members of the Co-operative Societies fall within the definition of “consumer” for the purposes of the Consumer Act and Section 93 of the Societies Act does not bar the jurisdiction of District Forum assuming jurisdiction in the matter.57 In the case of Sunil J. Verma vs City Industrial Development Corporation58 Commission held that the claim for compensation on account of non-formation of co-operative society against the development authority is not a deficiency in service.

(m) Compensation It is now accepted by the Hon'ble Supreme Court of India that the


State is liable to compensate for loss or injury suffered by a citizen due to arbitrary actions of its employees. The law has always maintained that the public authorities that are entrusted with statutory function cannot act negligently. Under the Constitution of India, no functionary in exercise of statutory power can claim immunity except to the extent protected by the statute itself and the public authorities acting in violation of constitutional or statutory provisions are accountable for their behaviour. The term 'compensation' is a very wide connotation and in legal sense it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult, or injury or loss. Under the Act, the Commissions have been vested with the jurisdiction to award value of the goods or services and compensation and it has to be construed widely, enabling Commissions to determine compensation for the loss or damage suffered by a consumer.59

The question as to whether an allottee of the land belonging to a Government Development Authority can avoid payment of price on the ground that the plot has not been developed by the Authority in accordance with the conditions of allotment, has been the subject matter of several judicial adjudications.60 In one of the latest cases61 the said question has been dealt in detail. The plot in question in the said case had been sold by open auction, which was further subject to the terms and conditions embodied in the allotment letter, which had provided that after paying the 10 per cent amount of the plot at the time of the bid and the 15 per cent within one month of the acceptance of the bid, the remaining part could be paid in equal instalments over a period of time. The allottee did not make the payment of the instalments, which in turn resulted in the initiation of proceedings for resumption of the plot under the Act and the rules and the plot was actually resumed. The allottee challenged the resumption by way of filing a writ in the High Court contending, inter alia, that the Authority could not levy interest of any kind on the delayed payment because the development works had not been completed and further then the allottee was entitled not to make the payment or delay the payment of the instalments on the ground of non-availability of amenities at the site as the development work was not complete.

The development authority on the other hand, controverting the allegation of the allottee, submitted that all the development works had been completed much before the offer of the possession and the allottee’s plea of lack of development was an after thought because no such objection was raised at the time of taking possession and further


that after having constructed the building without any hindrance or obstruction from any quarter, the allottee was estopped from raising the plea of lack of development and that in such circumstances, the resumption of the plot because of the allottee’s persistent failure to pay the dues of the instalments in accordance with the conditions of allotment was valid and justified. The Division Bench of the High Court following the judgments of the High Court and the Supreme Court, rejected the contention raised by the allottee and held that the allottee was not entitled to withhold the payment of the balance price of the plot on the pretext of non-development of the area or lack of amenities. The same view is held by Hon’ble Supreme Court in Prashant Kumar vs GDA.62

The National Commission in the case of Delhi Development Authority (DDA) vs Smt. Renu Gupta63 has held that where an allottee has paid the whole price of the shop to the DDA but the shop is not equipped with electricity and water in such a situation DDA cannot be permitted to take a plea that providing of electricity and water was the responsibility of Delhi Vidyut Board and Municipal Corporation of Delhi respectively and as such, DDA was held to be guilty of deficiency in providing service to the allottee. The National Commission, while rejecting the contention of DDA as commented on the helplessness of a citizen who is to suffer even when whole of the price of the premises has been paid and that in the facts of this case, a citizen was harassed too much at the hands of the agencies and relying on the judgment of the Supreme Court in the case of Lucknow Development Authority vs M.K. Gupta commented on the conduct of such authority and directed the DDA to immediately provide the services.

The National Commission in the case of Ghaziabad Development Authority (GDA) vs Gurudutt Pandey64 has decided the issue as to whether a consumer dispute could be raised in respect of deficiency in service on part of GDA even after taking possession of the flat. The main contention of the GDA before the National Commission was that after having taken possession of flat, the complaint under Consumer Protection Act could not have been filed, as at that time it could not be said that there was any consumer dispute existing between the complainant and the GDA. Rejecting the said contention, the National Commission has held that it is only when possession is taken and a consumer starts moving, then he would know the deficiencies, particularly those which are latent in the construction of the house and it is a dangerous proposition to content that right of consumer gets wiped out on his taking possession of the house.


The National Commission has held that in a case where the builder has completed only 65 per cent of the complex as promised to the applicants, the builder is liable to refund the entire money with interest to the applicants as it squarely falls in the category of ‘deficiency in service’.65

In GDA vs Vinod Kumar Sharma,66 the National Commission has held that if the possession is not delivered because of an order staying the handing over of possession passed by a competent court, in such a case, the applicant will not be entitled to any interest on the amount deposited by him, in as much as, the stay order passed by the competent court had restrained the builder and as such, he could not be held responsible for the delay for the period during which the said stay order passed by the court was in operation.

It will not be out of place to mention here that an ordinary citizen or a common man is hardly equipped to match the might of the State or its instrumentalities or even big builders. If public functionary is found to have acted oppressively or maliciously, which results in harassment and agony, then such an exercise of power is in fact the abuse of such a power and no law provides protection against it. He who is responsible for it, must suffer and in many cases, therefore, the award of compensation for harassment by public authorities not only compensates the individual, satisfies him personally, but it definitely helps in curing social evil and it may result in improving the work culture and change in the outlook. In certain cases, merely awarding the interest on the amount deposited by the applicants with a view to compensate such applicants in respect of the escalation of the cost of construction, may not really remove the grievance of the applicant, in as much as, the escalation costs have rocketed in the recent years. The applicant is entitled to demonstrate before the Commission by referring to the guidelines provided under various building bylaws. In one of the cases67 the Hon'ble National Commission had gone into the various issues by the applicant and had awarded the compensation under the various heads, like mental agony and torture due to mismanagement of HUDA and compensation awarded towards the rent paid by the allottee during the period for which he was denied the possession of his flat or plot and in addition, the Commission gave a direction that compensation for escalation in the cost of construction from 1982 to 1994 would be paid in accordance with the construction done under ‘Unified Building Bye-laws, National Capital Territory of Delhi’. This was an attempt on the part or the National Commission to arrive at a figure of compensation to really redress the grievances of the allottee


monetarily. The appeal against that order taken up to the Hon’ble Supreme Court has also been dismissed against the Authority by the Hon’ble Supreme Court.68

The Supreme Court in its judgment in Ghaziabad Development Authority vs Balbir Singh69 has dealt with this question in detail and has held that compensation cannot be uniform and has to be taken on the facts of each case. Dealing with the case of delay in handing over possession of the plots/houses to the consumers, the Supreme Court observed that in cases where possession is being directed to be delivered the compensation for harassment will necessarily have to be less because the party is being compensated by increase in the value of the property he is getting as compared to the cases where only money is directed to be returned. But in cases where money is being simply returned, then the party is suffering a greater loss, inasmuch as, he had deposited the money in the hope of getting a flat or plot and he is being deprived of that flat or plot as well as the benefit of escalation of price of that flat or plot and, therefore, the compensation in such cases would necessarily have to be higher. Further, if the construction is not of good quality or not complete, the compensation would be the cost of putting it in good shape or completing it along with some compensation for harassment. Similarly, if at the time of giving possession, a higher price or other amounts are collected unjustifiably, the direction would be to refund it with reasonable rate of interest. If possession is refused or not given because the consumer has refused to pay the amount, then on the finding that the demand was unjustified, the consumer can be compensated for harassment. If a party who has paid the amount is told by the Authority that they are not in a position to ascertain whether he has paid the amount and that party is made to run from pillar to post in order to show that he has paid the amount, there would be ‘deficiency of service’ for which compensation for harassment must be awarded depending on the extent of harassment. Similarly, if after delivery of possession, the sale deeds or title deeds are not executed without any justifiable reason, the compensation would depend on the amount of harassment suffered. The court observed that these are some of the mere examples and the list is not exhaustive and that this clearly shows that compensation cannot be the same in all cases irrespective of the type of loss or injury suffered by the consumer and has to be worked out after looking into the facts of each case and after determining what the amount of harassment/ loss which has been caused to the consumer.

In this context, the Hon’ble Court further approved of the judgment in the case of Lucknow Development Authority vs M.K. Gupta70, where this


Court has held that the public 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. The Hon’ble Supreme Court has held that the Commission/Forum under the Act must determine that such sufferance is due to malafide or capricious or arbitrary act and thereafter it can determine the amount for which the authority is liable to compensate the consumer for his sufferance due to misfeasance in public office by the officer. Such compensation is for vindicating the strength of law and such orders act as a check on arbitrary and capricious exercise of power and will help in social evil. The Hon’ble Court observed that no authority abrogate to itself the power to act in a manner which is arbitrary. Matters, which require immediate attention, should not be allowed to linger on. The consumer must not be made to run from pillar to post and that if the Commission is satisfied that the complainant is entitled to compensation, then after recording a finding it must direct the authority to pay compensation and also direct recovery from those found responsible for such unpardonable behaviour.

Broad principles on Housing and Award of Compensation1. Where the authority having received full price does not deliver

possession within the stipulated/reasonable time, allottee entitled for refund of the amount paid with interest.

2. Where no time is stipulated and buyer does not issue a notice making time the essence and the buyer accepts the belated performance in terms of the contract, there is no question of damage.

3. Where an alternative site is offered/delivered in view of its inability to deliver the earlier allotted plots, the allottee will not be entitled to any interest as he has the benefit of appreciation in value.

In the case of HUDA vs Indu Ahuja71 Commission held that re-allotee not entitled to interest.

4. Though the relationship between authority and allottee is of seller and buyer and as such governed by law of contract which does not recognize mental agony, compensation can be awarded by applying principles of administrative law where seller being a statutory authority acts negligently or arbitrarily.

5. Where the plot/flat allotted at tentative/subject to final determination of price, the authority will be entitled to revise the price.

6. Where full payment is made and possession delivered, but title deed


is not executed. Allottee entitled to compensation and in addition a direction for execution of the deed.

7. Where the allotment relates to flat/house and construction is incomplete or not in accordance with the specification, the allottee entitles to compensation equivalent to cost of rectifying the defects.

8. Quantum of compensation will depend on facts of each case, nature and period of harassment and nature of the negligent act of the authority leading to harassment.

Relevant factors for computing compensation1. Whether the layout is on ‘no profit no loss’ basis or profit motive2. Whether any assurance to date of delivery of possession3. Whether any justifiable reason for the delay4. Whether complainant proved any negligence, short coming on part

of the development authority regarding delivery5. Whether allottee has been subjected to avoidable harassment

How to calculate Compensation?1. Actual loss – suffered under various headings to be proved2. Mental agony to be compensated3. Cannot be at uniform rate for all4. Escalation in cost of construction under PWD rates

In the case of Bangalore Development Authority (BDA) vs Syndicate Bank72 Commission held that that respondent is not entitled to interest or compensation, the complaint is disposed of with a direction to BDA to complete the process of execution and registration of sale deed/s in respect of the houses without claiming any extra cost, within three months from today. The cost of stamp duty and registration in respect of such sale deeds will be borne by the respondent. Parties to bear their respective costs.

Basic Concept of Real EstateThe real estate sector has been at the forefront of India’s development

agenda on account of its obvious potential to propel economic growth. The importance of this sector is that, it is the second largest employer next only to agriculture and supports nearly 250 ancillary industries such as bricks, cement, steel which are some of the supporting services. Almost five percent of the country’s GDP (Gross Domestic Product) is


contributed to by the housing sector. In next five years, this contribution to the GDP is expected to rise to six per cent.

India is poised for rapid urbanization, which will lead to major developments in the real estate sector. Development of new towns and cities requires huge amount of investments for which not just private domestic investment but also foreign investments are required. We see the role of the government primarily as a facilitator with the private sector participation bringing in capital, technical and managerial expertise in formulating and delivering good quality mass housing and commercial projects.

Globally, in contemporary days the Public Private Partnership (PPP) model is being driven by demand for better quality services. PPP can drastically increase not only the number of affordable homes, but the quality of housing through fiscal, regulatory and other incentives.

Real estate involves the purchase, sale, and development of land residential and non-residential buildings. The core stakeholders in the real estate market are the builders, landlords, developers, investors and real estate agents. The real estate sector has been one of the few sectors that had experienced a boom in India both in the retail as well as commercial space. Recognizing the potential that it had, within, people are ready to invest huge sums as the market is such that it would reap in profit and that too in a short-time span. This, quite naturally, led us to a situation wherein law has to respond in terms of unfairness, arbitrariness and unreasonableness and also restrict monopolistic and restrictive trade practices. The whole object behind a welfare society, which starts from roti, kapda aur makaan, stepped in with a broader objective of promoting housing for all. With the boon in the real estate sector, having plenty of scope for Foreign Direct Investments (FDI), the law, being in a nascent stage, is unsure of how to control the developments which cut across various sectors, raising complex set of issues and pose a huge


challenge to the social welfare model of the state. The need to have an Independent Regulator, as is the case with quite a large number of other areas that we have, came to the forefront. With people grappling in the dark, promotion of affordable houses and schemes to meet those ends got launched. Getting entangled in a variety of legal and related issues, the real estate sector needs a review of the legal system which governs rights, duties and liabilities. Newer concepts, including that of smart cities, Housing for All, Affordable housing and the like have emerged and have contributed to the development of the real estate business, not only in urban areas but also semi urban areas. With this as the backdrop, it would be interesting to examine how this sector would envisage appropriate strategies and devices to reduce the vast disparity between the haves and the have nots and help the government realise ‘right to housing’ as a basic human right. A widespread sentiment that the real estate business, which surely has turned into a business, need to be regulated.

Real Estate MeansReal estate is anything in relation to land, buildings which can

either be commercial or residential or may include any housing units, commercial office spaces, schools, shopping complexes, etc. Real estate development means anything in relation to construction or development of land or buildings and includes residential complexes, commercial centres, Malls, shopping complexes, buildings like schools, colleges, health centres, hospitals, etc.

Why Real Estate (Regulation and Development) Act, 2016 came?The real estate sector in India, in the contemporary days, has been

plagued with lack of transparency, unregulated and unscrupulous activities of developers, oppressed and highly dissatisfied consumers and lack of timely and cost effective remedies. The arm twisting tactics and unethical business practices followed by many real estate developers have led to skyrocketing prices of real estate and a pool of consumers which is repelled by such high pricing and absence of proper check on developers. As a result, a large section of our population still dreams of owning a home.

In order to address the public grievances issues affecting the real estate sector in the country, the Real Estate (Regulation and Development) Act, 2016 (RERA) has been brought into force. RERA has received Presidential assent on March 26, 2016 and the Ministry of Housing and Urban Poverty Alleviation (MHUPA), vide its notification dated April 26, 2016, appointed May 1, 2016 as the date for coming into effect of


69 out of total 92 sections of RERA. The Act is seen as a significant move towards ensuring consumer protection and standardising business practices and transactions in the real estate sector.

First introduced in 2013, the Act has been passed with the intent to bring transparency and safety in the market for consumers of residential and commercial projects by introducing a sectoral regulatory mechanism. The Act seeks to address distortions in the real estate market due to the asymmetrical relationship between real estate developers and consumers. Preventing structural abuse of dominance in a sector that has been rated as the second lowest in terms of consumer satisfaction is also a key objective of this legislation.

The core aims of RERA is to putting institutional infrastructure in place in the country for the purpose of ensuring uniform regulatory environment, protection of consumer interest, quick adjudication/resolution of disputes and overall development of the real estate sector.

The Salient Features of RERAThe Act contains several provisions to address the lacunae in the

real estate market, principally by way of establishing a disclosure framework and setting strict liabilities for promoter irregularities.

Salient Features 1. Act does not apply to building activity on plots upto 500 sq mts or

eight apartments on such plot.2. Mandatory registration of real estate projects/agents with appropriate

authority.3. Complaints can be filed by any aggrieved person with the authority

against real-estate agent u/s 31.4. Complaint against veracity of advertisement (section 12).5. Non-Adherence to sanctioned plans and project specifications by

promoters (u/s 14).6. Return of amount and compensation for failure of timely completion

and giving possession. 7. Violation of the rights of allottees (u/s 19).8. Functions and Duties of promoters (u/s 11).

Explanation of the TermsUniform applicability of Regulator: The Act mandates setting-up


of RERAs and real estate appellate tribunals in all states and union territories (except Jammu & Kashmir) within one year of its notification.

Registration: The Act requires mandatory registration of real estate projects with the RERA where the total area of land proposed to be developed exceeds 500 sq mts or where more than eight apartments are proposed to be developed inclusive of all phases (where phase-wise development is proposed). The Act also requires every phase of a project to be registered separately as a standalone project. Projects cannot be advertised, booked or sold in any form prior to registration and obtaining the necessary construction approvals. The RERA is required to either grant or reject registration applications within 30 days.

Disclosures: Publicly accessible disclosures of the project and promoter details, along with a self-declared timeline within which the promoter is required to complete the project, are compulsory. Quarterly project related disclosures are also required. The disclosures are to be made available online.

Standardisation: The Act defines key terms such as 'apartment', 'carpet area' and 'rate of interest', which will help in homogenising sector practices and prevent abuse of consumers due to biased classifications such as 'super built-up area', etc.

Ring-fencing of project receivables: Promoters must park 70 per cent of all project receivables in a separate account. Drawdown from such account is permitted for land and construction costs only, in line with the percentage of project completion (as certified by an architect, an engineer and a chartered accountant). Further, a promoter can accept only up to 10 per cent of the apartment cost prior to entering into a written agreement for sale with the consumer.

Warranties: The promoter is required to declare that it has legal title to the project land or authenticate validity of title, if such land is owned by another person. The promoter is also required to obtain insurance for title and buildings along with construction insurance.

Bar on encumbrance: The promoter is prohibited from creating any charge or encumbrance on any apartment after executing an agreement for the same. In the event such charge or encumbrance is created, it will not affect the right and interest of the concerned consumer.

Project sanctity: The promoter is not permitted to alter plans, structural designs and specifications of the land, apartment or building without prior consent of two-third of the allottees. The promoter is also not permitted to transfer or assign majority of its rights and liabilities


in a project without such consent, along with the RERA's prior written approval.

Model agreement: The Act provides that a specified form of agreement for sale between promoters and consumers may be prescribed, which will prevent inclusion of biased provisions in it. Consumers have also been granted the right to seek relief for unilateral termination of such agreements by promoters without cause.

Defects liability: The promoter is responsible for structural defects or other deficiencies for a period of five years from the date of delivery of possession.

Agents: The Act prohibits real estate agents from facilitating any sale or purchase of plots/apartments in projects without obtaining registration with the RERA. The agents are required to facilitate access of project information to consumers at the time of booking and refrain from making false statements, misleading representations and indulging in unfair trade practices.

Legal recourse: The Act provides for time bound resolution of complaints and disputes by the RERAs and the real estate appellate tribunals. The Act also provides for refund of amounts paid by consumers (along with interest and compensation) for promoter's failure to give possession of the apartment in accordance with the agreement for sale, or any breach of such agreement.

Existing projects: Existing projects which have not received completion certificate as on the date of commencement of this regulation will be required to obtain registration with the RERA within three months of such commencement.

Penalties: The Act imposes monetary penalties on the promoter up to five per cent of the 'estimated cost of the project' (as determined by the RERA) for disclosure related defaults, and up to 10 per cent for other defaults, along with a maximum imprisonment of three years. Consumers are liable to a fine of up to 10 per cent of the apartment cost or imprisonment up to one year for non-compliance with orders of the real estate appellate tribunal.

Interplay with state laws: The Act expressly repeals the Maharashtra Housing (Regulation and Development) Act, 2012 and will have over-riding effect on conflicting state laws.

Shortcomings of the ActThough the passage of the Act is a significant move, it falls short


of holistically regulating the real estate sector and addressing some of the fundamental issues associated with it. A few shortcomings are highlighted below: Capital efficiency: The requirement to deposit 70 per cent of sale

proceeds in a separate account will impact the utilisation of project receivables and increase promoter reliance on institutional capital such as private equity or bank finance (which can be expensive). This could lead to an escalation in project costs, which may then be passed on to the consumers.

Approvals process: Under the Act, all necessary approvals are required to be obtained prior to project launch, instead of certain specific approvals as previously required. This may delay project initiation and restrict supply of new properties.

There is no single-window clearance approval process which could further add to the delays in project launch. Also, the Act does not assign liability for project delays attributable to state agencies.

Systemic issues: The Act neither establishes a conclusive title system for land, nor addresses the issue of availability of housing stock across all income categories or the practice of using black money in real estate transactions.The Act is a standard-setting instrument for the real estate sector and

performs the critical task of identifying and allocating risks associated with construction and development projects. The current approach of the Act is to uniformly regulate different types and sizes of projects and its implementation will require significant capacity building at the state-level. The Act disrupts existing sector practices to raise efficiency of the real estate market and is likely to benefit all stakeholders by imposing financial and operational discipline, accountability and diligence.

The Central Government has, as of now, notified 69 out of the total 92 sections under RERA. However, the 22 sections that are yet to be notified, such as prior registration of real estate projects; registration of real estate agents; duties/obligations of promoters, which are essential for regulating the activities of promoters and achieving the key objective of bringing transparency in the real estate sector.

Until the said remaining sections are notified, constitution of Regulatory Authority and framing of necessary rules under RERA will not result in achievement of desired results of transparency, accountability and timely handovers. Therefore, it will have to be seen as to how much time the Government takes before notifying the remaining


sections and, accordingly, makes it obligatory for the promoters to ensure full compliances of their duties under the Act.

UNAUTHORIZED CONSTRUCTIONBoth the Acts Consumer Protection Act, 1986 and the Real Estate

Regulation and Development Act, 2016 deal primarily in the Housing Activity. Unauthorised construction is an important part of the Housing activity and has been resorted to by builders on several occasion.

Unauthorised construction can be divided into two part (i) Irregular Construction and (ii) Illegal Construction. The basic difference between the two is that an irregularity can be regularised by compounding fee but an illegality can never be legalised. This topic has been dealt by the Hon’ble Supreme Court on different occasion in the case of Friends Colony Development Committee vs State of Orrissa73 the builder added an additional fifth floor on the building which was totally unauthorised and also inducted occupants on the said floor also. The Court concluded that the builder conveniently walked away having pocketed the money leaving behind the unfortunate occupants to the house. Such activity should be stopped and stringent action are required to be taken by ruthlessly demolishing the illegal constructions and unwary purchasers who shall be sufferers must be adequately compensated. The arms of law must stretch to catch hold of unscrupulous builders. The Court further observed that state should impose heavy penalty on such builders and there from develop a welfare fund which can be utilised for compensating and rehabilitation innocent or unwary buyers who are displaced on account of demolition of illegal constructions.

Similarly in the case of Priyanka Estates International (P) Ltd. vs State of Assam74 the Supreme Court has reiterated the principle that unauthorized construction must be dealt with by firm hands as such unauthorized construction are definitely against public interest and hazardous to the safety of occupiers and residents of multistoried buildings. In a recent case in Asikali Akbarali Gilani & Ors vs Nasirhusain Mahebubbhai Chauhan & Ors75 Supreme Court following the earlier decision has held that encroachment of a public place and a public street has to be cleared as ordinarily public streets must be used as public streets for public right to way and cannot be let out or allowed to be used for any other purpose and further held that municipality is a trustee and must, therefore ensure public streets are not encroached upon and further municipality cannot lease out any portion of the public street.


CONCLUSIONIn the view of the above discussion, it may be said that the Consumer

Protection Act is clearly a social welfare legislation to help a consumer. The strict legal technicalities are not required to be followed and to that extent, the Commission/Forum under the Act, act differently. It has been experienced that in a large number of cases the dispute invariably is between a common man and the mighty builders or other service providers including the Public Bodies. The Hon’ble Supreme Court of India in a case involving the matter of Secretary, Thiru Murugan Co-operative Agricultural Credit Society vs M. Lalitha76, has held that having regard to the scheme of the Act and the purpose sought to be achieved, namely, to protect the interest of the consumer better, the provisions are to be interpreted broadly, positively and purposefully. The court observed that under the Consumer Protection Act, 1986 the court has to consider as regards the additional jurisdiction conferred on the Consumer Forums and not their exclusion. The remedies that are available to the aggrieved party under the Act, are wider, inasmuch as, in addition to granting a specific relief, the Forums under the Act have jurisdiction to award compensation for the mental agony, suffering etc. the Supreme Court has held that the Commissions/Forums under the Act have to keep in mind that the Act is one of the benevolent piece of legislation to protect a large body of consumers from exploitation and the provisions ought to be interpreted in a rational manner for achieving the objective set forth in the Act and the approach of the Forums has to be rational rather than technical. The court has further held that the main objective of the Act is to provide for better protection of the interest of the consumer and for that purpose to provide for better redressal mechanism through which cheaper, easier, expeditious and effective redressal is made available to the consumers. It may finally be said that the satisfaction of the consumer is in away direct reflection on the quality of service provided.

End Notes1. (1994) 1 SCC 243 2. 2014 (14) SCC 7733. 2007 (II) CPJ 17 (SC)4. AIR 2008 SC 11515. 2008 (III) CPJ 486. AIR 2009 SC 11887. 2010 (III) CPJ 3338. 2012 (5) SCC 3599. 2013 (I) CPJ 73810. (1993) 1 CPR 541 (Delhi, CDRC)


11. 2007 (13) SCC 15412. 2009 (II) CPJ 27613. AIR 1996 S.C. 198114. Estate officer Punjab Urban Planning and Development Authority vs Dev Raj I

(1999) CPJ 42615. 2009 INDLAW SC 152416. AIR 2006 S.C. 127017. 2013 (II) CPJ 33 (NC)18. 2015 (II) CPJ 69019. ElL v G.D.A I (2000) CPJ 820. I (2000) CPJ 721. Some of the cases dealing with this issue are Kanpur Development Authority vs

Smt. Sheela Devi AIR 2004 SC 400; I (2001) CPJ 8; I (1996) CPJ 7; I (1991) CPJ 359; AIR 1980 SC 738;

22. 2008 (I) CPJ 9323. 2009 (II) CPJ 24324. 2009 (III) CPJ 14725. AIR 1996 SC 198126. Shashi Kiran Rattan vs Swastic Construction I (2004) CPJ 31 (NC); H U DA vs

Dev Dutt Gandhi R.P. No. 1466/ 97—decided by the National Commission on 15.2. 02.

27. 2011 (I) CPJ 304(NC)28. 2011(III) CPJ 54(NC)29. 2015 (II) CPJ 3430. I (1994) CPJ 109731. 2010 (III) CPJ 11(NC)32. 2014 (I) CPJ 42733. 2015 (II) CPJ 498 34. I (2002) CPJ 3535. (2004) 5 SCC 65; see also S.K. Jain vs HUDA IV (2003)CPJ 9636. 2010 (II) CPJ 113(NC)37. 2015 (II) CPJ 838. IV (2004) CPJ 47 (NC)39. 2013 (II) CPJ 235 (NC)40. 2015 (III) CPJ 7941. Improvement Trust Ludhiana vs Ram Prakash IV (2003) CPJ 2142. Nita Singla & ors vs Dr. Kripal Singh III (1998) CPJ 3343. Ajit Singh Sodhi vs UT Chandigarh IV (2003) CPJ 362 also in Shiela Construction

Pvt. Ltd. V Nainital Lake Development Authority III (1996) CPJ 11(NC); Ashok Tayal & Anr. V DDA II (1996) CPJ 3 (NC)

44. 2011 (I) CPJ 70(NC)45. 2009 (7) SCC 28246. 2012 (5) SCC 35947. 2015 (II) CPJ48. 2017 III CPJ 18149. See also HUDA vs Mrs. Poonam IV (2003) CPJ 73; GDA vs K. K. Goswami IV

(2003) CPJ 3350. 2008 (I) CPJ 32751. I (2009) CPJ 56 (SC)52. 2010 (II) 35 (NC)53. II (2009) CPJ 348 (NC)54. 2015 (II) CPJ 204

INDIAN INSTITUTE OF PUBLIC ADMINISTRATION

The Indian Institute of Public Administration, established as an autonomous body under the Registration of Societies Act, was inaugurated on March 29, 1954 by Shri Jawaharlal Nehru who was also the first President of the Society. The basic purpose of establishing this Institute was to undertake such academic activities as would enhance the leadership qualities and managerial capabilities of the executives in the government and other public service organization. The activities of the Institute are organized in four inter-related areas of Research, Training, Advisory and Consultancy Services and Dissemination of Information.

CENTRE FOR CONSUMER STUDIES

CCS is dedicated to consumer studies and is sponsored by DCA, GoI. The objective of the CCS is to perform, facilitate and promote better protection of consumers’ rights and interests with special reference to rural India. The broad areas of focus of the Centre comprise capacity building, advocacy, policy analysis, research, advisory and consultative services, and networking.

The Centre seeks to network with national and international agencies and interface with other stakeholders by serving as a bridging “think tank” with an intensive advocacy role. The Centre provides a forum for creating dialogue among policy-makers, service-providers, representatives of various business establishments and their associations, professional bodies/associations, civil society organizations, educational/research institutions, economic and social development organizations as well as leading NGOs.

Centre for Consumer Studies

Room No.85Indian Institute of Public Administration

I.P. Estate, Ring RoadNew Delhi—110002

Tel: 011-23468347, 23705928 (Fax)Email: [email protected]

Website: www.consumereducation.in


55. 2012 (II) CPJ 4656. 2017 II CPJ 55157. Thirumurugam Co-operative Society vs Lalitha M. AIR 2004 SC 448; Kalawati

vs United Vaish Co-operative Thrift and Credit Society I (2002) CPJ 71 (NC); 58. 2014 (13) S.C.C 66359. Lucknow Development Authority vs M. K. Gupta (1994) 1 SCC 24360. Shashi Kiran Rattan vs Swastic Construction I (2004)CPJ 31 (NC) wherein court

withheld payment.61. Haryana Builders Ltd. vs HUDA & Ors. AIR 2003 Punjab. & Haryana 4862. (2000) 4 SCC 120 63. Revision Petition No.694/03 decided on 10/4/0364. Revision Petition No.152/2000 decided on 21/8/200065. Sankatrai vs Falcon Developers I (2003) CPJ66. II (2002)CPJ 1967. Rajnish Chander Sharda vs, HUDA, II (1995)CPJ 7068. On 12-1-2000 In the judgment in HUDA vs Rajnish Chander Sharda C.A. No.

5970 of 199569. (2004) 5 SCC 6570. (1994) 1 SCC 24371. 2011(III) CPJ 115(NC)72. 2007 (II) CPJ 17 (SC)73. 2004 (8) SCC 73374. 2010 (2) SCC 2775. 2016 (10 SCC) 79976. (2004) 1 SCC 305

HOUSING AND CONSUMER · Housing and Consumer 3 deposit amount without interest was unreasonable and ordered payment of interest at 18 per cent pa. In appeal, the National Commission

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