Page 1

Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3122 OF 2006

Haryana State Agricultural Marketing Board … Appellant

vs.

Bishamber Dayal Goyal and Ors.                              …  Respondents

J U D G M E N T

Pinaki Chandra Ghose, J.

1. The present appeal  has been filed assailing the order  dated  

April  13,  2005  passed  by  the  National  Consumer  Disputes  

Redressal Commission (hereinafter referred to as “the National  

Commission”)  in  Revision  Petition  Nos.  534-537  of  2005,  

affirming the order dated November 10, 2004 passed by the  

State Consumer  Disputes  Redressal  Commission,  Chandigarh

Page 2

(hereinafter  referred  to  as  “the  State  Commission”),  which  

further confirmed the order dated September 20, 2001 passed  

by the District Forum.   

2. The facts of the case briefly are as follows :  

a)By a notification dated November 16, 1971, the Haryana State  

Government under Section 7 of the Punjab Agricultural Produce  

Markets Act,  1961  (hereinafter referred to as ‘the said Act’),  

notified the area of New Grain Mandi, Adampur as Market Area.  

Subsequently, in the year 1974, the areas/limits were further  

extended by five kilometers.  In 1980,  the State Government  

notified a sub-market yard of  New Grain Mandi,  Adampur. The  

Colonization Department of the State by a letter dated January  

24,  1986,  transferred  the  said  area  to  the  Haryana  State  

Agricultural Marketing Board, the appellant herein.

b)The respondents herein were allotted plots by the appellant,  

being plot Nos. 17, 7, 16 and 14 upon depositing the 25% of  

the price of the said plots.  The method of payment and the  

consequences for non-payment of any instalment would appear  

from the allotment letter dated July 25, 1991. Admittedly, the  

2

Page 3

respondents  did  not  pay  the  instalments  in  terms  of  the  

allotment letters. The grounds mentioned by the respondents  

for non-payment of such instalments were the failure on the  

part  of  the  appellant  to  provide  basic  amenities  such  as  

sewerage,  electricity,  roads  etc.  at  the  said  Adampur  Mandi  

Area.  

c) On non-payment of the instalments, the appellant called upon  

the respondents to make the balance payments, being 75% of  

the cost with interest and penalty charges as prescribed in the  

said allotment letter.  The respondents did not pay the same  

and  filed  a  complaint  before  the  District  Forum  alleging  

deficiency of services, failure to notify the Adampur Mandi as  

Market Area and failure to develop and provide basic amenities  

in the said locality.  The appellant opposed the complaint on  

the ground that the respondents failed to make the payments  

of  the instalments  and further that one of the complainants  

was  not  dealing  with  the  sale  and  purchase  of  agricultural  

produce  by  himself  and  instead  had  sublet  the  shop  to  

someone else.  

3

Page 4

d)The District Forum appointed a Senior Member of the Forum as  

the Local Commissioner to inspect the said area and to file a  

report. The Local Commissioner filed a report stating that the  

area was developed with civic amenities and platforms were  

constructed in front of the shops. However, it is admitted that  

the complainant is not in a position to run the business in the  

market area as the same has not been notified by a notification  

and/or  order  declaring  it  as  a  sub-yard  for  the  purpose  of  

running the business. The District Forum held by order dated  

March 4, 1998 that the notification dated October 31, 1980 is  

not  applicable  since  the  land   was  auctioned  in  1991  and  

further, the same was not in the ownership of the appellant and  

no business was transacted by the complainant at the Adampur  

Mandi. The District Forum held that since no notification was  

issued  declaring  the  said  area  as  sub-yard,  it  amounts  to  

deficiency  of  service  and  the  appellant  was  directed  to  

withdraw the demand notice and further directed not to charge  

any interest on the instalments. The appellant filed first appeal  

before  the  State  Commission,  being  First  Appeal  No.362  of  

1998. The State Commissioner by order dated March 3, 1998  

4

Page 5

remanded the matter  to  the District  Forum holding that  the  

appointment  of  Local  Commissioner,  Shri  Arya,  being  a  

member of the District Forum vitiated the proceedings.

e)Thereafter,  the  District  Forum  took  up  the  matter  and  

appointed  an  Advocate  -  Mr.  G.L.  Balhara  -  as  the  Local  

Commissioner, to make an inspection and to file a report. The  

appellant herein on April 20, 2000, once again issued demand  

notices to the respondents demanding the payments. The main  

contention of the respondents being the complainants was that  

although the area was not notified by the appellant-Board as a  

market area, they were unable to conduct any grain business in  

the shops for  which they had purchased the said plots;  and  

further alleged that no  basic amenities, i.e., sewerage, roads,  

parao, electricity etc. had been provided by the Board, and that  

there were no boundary walls and gates of the market area  

which were a necessity in such Mandi;  furthermore, there were  

heaps of debris lying around the shops. In these circumstances,  

the plots allotted were redundant.  

5

Page 6

f) The  appellants  contended  that  the  complainants  are  not  

consumers  and  there  is  no  deficiency  of  service.  The  

respondents failed to construct the booths in two years’ time  

even after getting the licences. Furthermore, the respondents  

are not dealing with the agricultural produce instead they have  

sublet the plots in question to other persons. According to the  

appellants,  the  amenities  of  sewerage,  water  supply  and  

electricity were provided and construction of a platform was  

also  done  by  them.  An  Additional  Mandi  was  established,  

according to the appellant, by the Colonization Department and  

subsequently  transferred  to  them in  1986.  The  Colonization  

Department,  in  1980,  duly  notified  the  same.  The  District  

Forum after perusing the report dated April 25, 2000 filed by  

the Local Commissioner – Mr.  Balhara, Advocate -- held that it  

is admitted by both the parties that the Additional Mandi has  

no  boundary  walls  and  gates  and  that  there  has  been  no  

notification  by  the  appellant-Board,   further  no  auction  has  

been made by the respondents and  the debris are lying around  

the shops. In these circumstances, the District Forum by order  

dated September 20, 2001 held that it is admitted that due to  

6

Page 7

the omission of the appellant, no business could be done in the  

Mandi  and  the  boundary  walls  which  are  essential  for  the  

business,  were  not  provided.  It  is  further  held  that  the  

notification  dated  October  31,  1980  has  no  manner  of  

application since the land was transferred to the appellant in  

1986  and  the  shops  were  auctioned  in  1981.   The  District  

Forum further held that due to the omission of the appellant,  

the complainants/respondents herein were deprived of  doing  

the grain business for which the plots were purchased and in  

the absence of the notification of the area as a sub-yard, the  

District  Forum  held  that  there  was  a  grave  deficiency  of  

service. The Forum awarded the respondents interest at 12%  

per  annum on the  entire  deposited  amount  after  two years  

from  the  date  of  issuance  of  allotment  letters  to  the  

respondents till the development and notification of the area in  

question is not done. The respondents were directed to deposit  

the  remaining  balance  amount  and the  appellant-Board  was  

directed  not  to  levy  any  charge,  penalty  or  interest  on  the  

same. However, the Forum refused to allow the compensation  

7

Page 8

as prayed by the respondents and directed the appellants to  

develop the area within a month.

g)Being aggrieved, the appellant went in appeal before the State  

Commission. Cross-appeals were also filed by the respondents  

before the State Commission, seeking enhancement of the rate  

of  interest  from 12% to 18% per  annum and further  sought  

compensation. On November 10, 2004, both the appeals were  

dismissed.  The  State  Commission  upheld  the  order  of  the  

District  Forum  holding  that  the  report  of  the  Local  

Commissioner did not raise any objection with regard thereto  

nor placed any notification before the District Forum. In these  

circumstances,  the  appellant  herein  filed  a  revision  petition  

before the National Commission resulting in dismissal, hence,  

the matter has come up in appeal before us.

3. It is the case of the appellant that all the three fora below have  

erred in fact and in law by omitting to take into consideration  

the fact that the payment of instalments towards the cost by  

the respondents was unconditional.  It  was further contended  

that it was not subject to fulfilment of any condition on the part  

8

Page 9

of the appellant as a pre-requisite. Moreover, all the three fora  

lost  sight  of  the  fact  that  under  Section  8  of  the  Act,  after  

creation of a sub-market yard by notification under Section 7(2)  

of  the  said  Act,  no  person  could  be  allowed  to  trade  in  

agricultural produce without licence and they had to apply for  

the same under Section 9 of the said Act, and further to obtain  

a licence under Section 10 of the said Act.  

4. It is not in dispute that the respondents duly applied for licence  

under  Section  9  and  which  was  granted  under  Section  10  

permitting them to  trade in  agricultural  produce in  the  sub-

market yard from their allotted shops under Section 8, which  

was possible only when there was a notification under Section  

7(2) to invoke notifying the sub-market yard, according to the  

appellant,  the  same  was  notified  by  a  Notification  dated  

October 31, 1980 passed by the predecessor-in-interest of the  

appellant and the same is still subsisting and remained in force  

after  the  transfer  of  the  area  to  the  appellant  in  1986.  

Therefore,  according  to  the  learned  counsel  appearing  in  

support  of  this  appeal,  all  the  fora  failed  to  take  any  note  

thereof. It was further pointed out that there was no question  

9

Page 10

of any deficiency in service. According to the learned counsel,  

the area of Adampur Mandi was developed in the year 1992 by  

the Haryana Public Health Department by providing all  basic  

amenities like sewerage, drainage, electricity, roads etc. in the  

said area. It was further pointed out that the report of the Local  

Commissioner  would  show that  all  the  developmental  works  

except construction of the boundary walls have been carried  

out by the appellant-Board. It was further submitted that the  

sanctioning of the business licence under Section 10 of the said  

Act pre-supposes that the State Government notified the said  

area  as  a  market  area.  It  is  further  contended  that  the  

respondents are using the plots allotted to them without paying  

the instalments as ought to have been done by them.  

5. Per contra, it is submitted by Mr. N.S. Dalal, learned counsel for  

the  respondents,  that  no  developed  infrastructure  has  been  

provided by the appellant and the first two courts below have  

come to the conclusion on the basis of the facts placed before  

them. Since there is a concurrent finding on such facts, it is  

submitted  that  this  appeal  should  be  dismissed.  Learned  

counsel further submitted that the Local Commissioner – Mr.  

10

Page 11

Balhara – in the presence of both the parties carried out the  

local inspection and the report of the said Commissioner would  

show that the facts mentioned therein have been approved by  

both  the  parties.  It  was  pointed  out  that  the  Local  

Commissioner had mentioned that no infrastructure has been  

provided, there is no platform, no boundary walls and heaps of  

debris are lying there, meaning thereby the purpose for which  

the Mandi was created could not be carried out or used or even  

started or accomplished. In the absence of basic infrastructure  

and amenities to run a grain market the purpose for which the  

shops were allotted, is totally frustrated. The report of the Local  

Commissioner was not challenged by the appellant at any point  

of  time.  It  was  further  pointed  out  that  the  appellant  never  

relied  on  the  said  notification  before  the  District  Forum  or  

before  the  State  Commission  nor  even  before  the  National  

Commission. Therefore, the grounds tried to be raised by the  

learned counsel for the appellant cannot have any bearing on  

the matter. It is further contended that the District Forum as  

well as the State Commission have recorded how there could  

have been notification by the appellant  when the land itself  

11

Page 12

came  to  the  appellant  in  the  year  1986.  Therefore,  there  

cannot  be  any  reason  to  believe  that  the  notification  was  

issued earlier under the ownership of the appellant. It is further  

stated that  no explanation has been given by the  appellant  

about the conduct of non-developing the area in question by  

them. On the contrary, the respondents relied on the doctrine  

of legitimate expectations to have a proper area to continue  

with their business.      

6. The  appellant-Board  has  contended  before  us  that  the  

respondents are not consumers but we must keep it on record  

that  the  Board  never  challenged  the  jurisdiction  of  the  

consumer forum. We would reiterate that the statutory Boards  

and Development Authorities which are allotting sites with the  

promise of  development,  are amenable to the jurisdiction of  

consumer forum in case of deficiency of services as has already  

been  decided  in  U.T.  Chandigarh  Administration  &  Anr.  v.  

Amarjeet  Singh  &  Ors.1;  Karnataka  Industrial  Areas  and  

Development Board v. Nandi Cold Storage Pvt. Ltd.2. This Court  

1 (2009) 4 SCC 460 2 (2007) 10 SCC 481

12

Page 13

in Narne Construction (P) Ltd. v. Union of India 3  referred to its  

earlier  decision  in  Lucknow  Development  Authority  v.  M.K.   

Gupta 4  and duly discussed the wide connotation of the terms  

“consumer” and “service” under the consumer protection laws  

and  reiterated  the  observation  of  this  Court  in  Lucknow  

Development Authority v. M.K. Gupta (supra) which is provided  

hereunder :

“5.   In  the  context  of  the  housing  construction  and   building activities carried on by a private or statutory   body and whether such activity tantamounts to service   within the meaning of clause (o) of Section 2(1) of the  Act,  the Court observed:  (LDA case, SCC pp.  256-57,  para 6):

“…when a statutory authority develops land or   allots  a  site  or  constructs  a  house  for  the   benefit of common man it is as much service as   by  a  builder  or  contractor.  The  one  is   contractual  service  and  the  other  statutory   service.  If  the service is  defective or it  is  not   what was represented then it  would be unfair   trade practice as defined in the Act….”   

7. Though  in  the  present  case  providing  of  amenities  is  not  a  

condition precedent as per the terms of the allotment letters.  

However, the allotments were made when the plots were in the  

3 (2012) 5 SCC 359 4 (1994) 1 SCC 243

13

Page 14

development stage on the condition that they be used only for  

auction and trading of grains, therefore, the present auction is  

different  from a  free  public  auction  or  an  auction  on  “as  is  

where  is  basis”.  In  such  a  scenario  the  appellant  board  as  

service  provider  is  obligated  to  facilitate  the  utilization  and  

enjoyment of the plots as intended by the allottees and set out  

in the allotment letter. In Municipal Corporation, Chandigarh &  

Ors.  v.  Shantikunj  Investment  (P)  Ltd.&  Ors.5, wherein  the  

allottees refused to pay instalments towards the cost  of  the  

allotted plots, this Court while deciding the same held (at para  

38) as under:

“We make it clear that though it was not a condition   precedent but there is a obligation on the part of the   Administration  to  provide  necessary  facilities  for  full   enjoyment of the same by allottees”

In the aforementioned case, the Court remitted many of the cases  

back  to  the  High  Court  for  limited  adjudication  of  facts  to  

determine where the basic facilities have not been provided and  

5 (2006) 4 SCC 109

14

Page 15

held that though the allottees were incorrect unilateral action of  

not paying the instalments yet penal interest and penalty will be  

levied  as  per  the facts  of  each case.  Thus,  the  allottees  were  

entitled  to  proportionate  relief.   In  Haryana  State  Agricultural   

Marketing Board v. Raj Pal 6, wherein the appellant was involved  

and the certain allottees refused to pay instalments towards the  

allotted plots in the new grain market at Karnal-Pehowa Road at  

Nighdu in the Karnal District, citing lack of amenities provided by  

the  Board,  the  Court  while  dismissing  the  case  of  the  Board  

referred  to  the  following  decisions  in  Municipal  Corporation,   

Chandigarh  &  Ors.  v.  Shantikunj  Investment  (P)  Ltd.  and  Ors.  

(supra)  and  UT  Chandigarh  Administration  &  Anr.  v.  Amarjeet   

Singh &  Ors. (supra) as under :

“13. In  Municipal  Corpn.,  Chandigarh v.  Shantikunj  Investment (P) Ltd., this Court held: (SCC p. 128, para   38)

“38. … We make it clear that though it was not a   condition precedent but there is obligation on the   part of the Administration to provide necessary   facilities for full  enjoyment of the same by the   allottees. We therefore, remit the matter to the  High Court for a very limited purpose to see that   

6 (2011) 13 SCC 504

15

Page 16

in  cases  where  facilities  like  kutcha  road,   drainage,  drinking  water,  sewerage,  street   lighting  have  not  been  provided,  then  in  that   case,  the  High  Court  may  grant  the  allottees   some proportionate  relief.  Therefore,  we  direct   that all these cases be remitted to the High Court   and the  High  Court  may consider  that  in  case   where kutcha road, drainage, sewerage, drinking   water  facilities  have  been  provided,  no  relief   shall be granted but in case any of the facilities   had not been provided, then the High Court may  examine  the  same  and  consider  grant  of   proportionate relief in the matter of payment of   penalty under Rule 12(3) and interest for delay in   payment of equated installment or ground rent   or  part  thereof  under  Rule  12(3-A)  only.  We  repeat again that in case the above facilities had   not  been  granted  then  in  that  case  consider   grant of proportionate relief and if the facilities   have been provided then it will not be open on   the  part  of  the  allottees  to  deny  payment  of   interest  and  penalty.  So  far  as  payment  of   installment  is  concerned,  this  is  a  part  of  the   contract  and therefore,  the allottees  are under   obligation to pay the same. However, so far as   the  question  of  payment  of  penalty  and  penal   interest in concerned, that shall  depend on the   facts of each case to be examined by the High   Court.  The  High  Court  shall  examine  each   individual  case  and  consider  grant  of   proportionate relief.”

14. Referring  to  the  said  decision,  this  Court  in  UT  Chandigarh  Admn. v.  Amarjeet  Singh observed  as  follows: (SCC pp. 682-83, para 46)

“46. As noticed above, in Shantikunj, the auction  was  of  the  year  1989.  The  lessee  had  approached the High Court in its writ jurisdiction   

16

Page 17

in the year 1999 seeking amenities. Even in 2006  when this Court heard the matter, it was alleged  that the amenities had not been provided. It is in   those  peculiar  facts  that  this  Court  obviously   thought it fit to give some reliefs with reference   to  penal  interest  wherever  amenities  had  not   been provided at all even after 17 years. In fact,   this Court made it clear while remanding to the   High Court that wherever facilities/amenities had  been provided before the date of the judgment   (28-2-2006),  the lessees will  not  be entitled to   any reliefs and where the facilities/amenities had   not been granted even in 2006, the High Court   may consider giving some relief by proportionate   reduction in  [the]  penal  interest.  This  direction   was apparently on the assumption that in case of   penalty,  the  court  can  grant  relief  in  writ   jurisdictions.”

In Haryana State Agricultural Marketing Board v. Raj Pal (supra),  

the Court upheld the principles as laid down in  Shantikunj Case  

(supra) and Amarjeet Singh Case (supra) and held that allottees  

cannot postpone the payment of instalments on the grounds that  

some of the amenities were not provided and the Court setting  

aside the penal and compound interest levied by the Board and in  

consonance with the Allotment Rules of 1997, levied only simple  

interest.

17

Page 18

8.  In the present case, the inaction on the part of the appellant in  

providing the requisite facilities for more than a decade clearly  

establishes  deficiency  of  services  as  the  respondents  were  

prevented from carrying out the grain business. However, the  

respondents  were  also  incorrect  in  refusing  to  pay  the  

instalments and violating the terms of  the instalment letter.  

Thus, considering the surrounding circumstances wherein the  

appellant has been unable to develop the area for more than  

two  decades  and  the  resultant  loss  suffered  by  the  

respondents,  we  are  of  the  opinion  that  in  the  present  

situation, there is a need for proportionate relief as the levy of  

penal  interest and other charges on the respondents will  be  

grossly unfair.

9. In these circumstances, we do not find that any grounds have  

been made out  by the  appellant  to  interfere with  the order  

passed  by  the  National  Commission.  We  have  minutely  

examined the order passed by the District Forum as well as the  

State Commission, and we have noticed that adequate relief  

has  been  granted  even  to  the  respondents/complainants  by  

awarding  interest  @  12  per  cent  per  annum  on  the  entire  

18

Page 19

deposited amounts.  Hence,  we do not  find any merit  in  the  

appeal  and  the  same  is  accordingly  dismissed.  There  shall,  

however, be no order as to costs.  

…....……………………..J. (Gyan Sudha Misra)

New Delhi;                                                          ......... …………………….J. March 26, 2014.                                       (Pinaki Chandra  Ghose)

19