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REPORTABLE

 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NOS.        4432-4450      OF     2012   (Arising out of S.L.P. (C) Nos.3499-3517 of 2011

M/s Narne Construction P. Ltd. etc. etc.   …Appellants

Versus

Union of India & Ors. etc. …

Respondents

J     U     D     G     M     E     N     T   

T.S.     THAKUR,     J.   

1. The short question that falls for determination in these  

appeals by special leave is whether the appellant-company  

was, in the facts and circumstances of the case, offering  

any ‘service’ to the respondents within the meaning of the  

Consumer Protection Act, 1986 so as to make it amenable  1

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to the jurisdiction of the fora established under the said  

Act. Relying upon the decision of this Court in Lucknow  

Development Authority v. M.K. Gupta (1994) 1 SCC  

243, the High Court has answered the question in the  

affirmative and held that the respondents were ‘consumers’  

and the appellant was a ‘service’  provider within the  

meaning of the Act aforementioned, hence amenable to the  

jurisdiction of the fora under the said Act.   

2. The undisputed facts in the context of which the  

question arises have been summed up by the High Court in  

the following words:

“Indisputable facts are that the opposite party  promoted ventures for development of lands into  house-sites and invited the intending purchasers  through paper publication and brochures to join as  members. The complainants responded and joined as  members on payment of fees. It is also indisputable  that the sale and allotment of plots were subject to  terms and conditions extracted supra. The sale is not  open to any general buyer but restricted only to the  persons who have joined as members on payment of  the stipulated fee. The members should abide by the  terms and conditions set out by the seller. The sale is  not on "as it is where it is" basis. The terms and  conditions stipulated for sale of only developed plots  and the registration of the plots would be made after  the sanction of lay out by the concerned authorities.  The sale price was not for the virgin land but included  the development of sites and provision of  infrastructure. The opposite party has undertaken the  

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obligations to develop the plots and obtain  permissions/approvals of the lay outs. The opposite  party itself pleaded in its counters that the plots were  developed by spending huge amounts and subsequent  to the amounts paid by the complainants also plots  were developed. It pleaded that huge amounts were  spent towards protection of the plots from the grabbers  and developed roads, open drains, sewerage lines,  streetlights etc. It is therefore, manifest that the  transaction between the parties is not a sale simplicitor  but coupled with obligations for development and  provision of infrastructure. Inevitably, there is an  element of service in the discharge of the said  obligations.”

3. In Lucknow Development Authority’s case (supra)  

this Court while dealing with the meaning of the  

expressions ‘consumer’  and ‘service’  under the Consumer  

Protection Act observed that the provisions of the Act must  

be liberally interpreted in favour of the consumers as the  

enactment in question was a beneficial piece of legislation.  

While examining the meaning of the term ‘consumer’  this  

Court observed:

“……….. The word 'consumer' is a comprehensive  expression. It extends from a person who buys any  commodity to consume either as eatable or otherwise  from a shop, business house, corporation, store, fair  price shop to use of private or public services. In  Oxford Dictionary a consumer is defined as, "a  purchaser of goods or services". In Black's Law  Dictionary it is explained to mean, "one who consumes.  Individuals who purchase, use, maintain, and dispose  of products and services. A member of that broad class  

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of people who are affected by pricing policies, financing  practices, quality of goods and services, credit  reporting, debt collection, and other trade practices for  which state and federal consumer protection laws are  enacted.” The Act opts for no less wider definition.”

4. Similarly, this Court while examining the true purport  

of the word ‘service’ appearing in the legislation observed:

“It is in three parts. The main part is followed by  inclusive clause and ends by exclusionary clause. The  main clause itself is very wide. It applies to any service  made available to potential users. The words 'any' and  'potential' are significant. Both are of wide amplitude.  The word 'any' dictionarily means 'one or some or all'.  In Black's Law Dictionary it is explained thus, "word  'any' has a diversity of meaning and may be employed  to indicate 'all' or 'every' as well as 'some' or 'one' and  its meaning in a given statute depends upon the  context and the subject-matter of the statute". The use  of the word 'any' in the context it has been used in  Clause (o) indicates that it has been used in wider  sense extending from one to all. The other word  'potential' is again very wide. In Oxford Dictionary it is  defined as 'capable of coming into being, possibility'. In  Black's Law Dictionary it is defined as "existing in  possibility but not in act. Naturally and probably  expected to come into existence at some future time,  though not now existing; for example, the future  product of grain or trees already planted, or the  successive future instalments or payments on a  contract or engagement already made." In     other     words    service     which     is     not     only     extended     to     actual     users     but    those     who     are     capable     of     using     it     are     covered     in     the    definition.     The     clause     is     thus     very     wide     and     extends     to    any     or     all     actual     or     potential     users.     But     the     legislature    did     not     stop     there.     It     expanded     the     meaning     of     the    word     further     in     modern     sense     by     extending     it     to     even    

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such     facilities     as     are     available     to     a     consumer     in    connection     with     banking,     financing     etc.     Each     of     these    are     wide-ranging     activities     in     day     to     day     life.     They     are    discharged     both     by     statutory     and     private     bodies.     In    absence     of     any     indication,     express     or     implied     there     is    no     reason     to     hold     that     authorities     created     by     the    statute     are     beyond     purview     of     the     Act.     When     banks    advance     loan     or     accept     deposit     or     provide     facility     of    locker     they     undoubtedly     render     service.     A     State     Bank    or     nationalised     bank     renders     as     much     service     as     private    bank.     No     distinction     can     be     drawn     in     private     and     public    transport     or     insurance     companies.     Even     the     supply     of    electricity     or     gas     which     throughout     the     country     is     being    made,     mainly,     by     statutory     authorities     is     included     in     it  .  The legislative intention is thus clear to protect a  consumer     against     services     rendered     even     by     statutory    bodies. The test, therefore, is not if a person against  whom complaint is made is a statutory body but  whether the nature of the duty and function performed  by it is service or even facility.”

           (emphasis supplied)

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:

“As pointed out earlier 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.  Construction of a house or flat is for the benefit of  person for whom it is constructed. He may do it himself  

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or hire services of a builder or contractor. The latter  being for consideration is service as defined in the Act.  Similarly 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 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. Any defect in  construction activity would be denial of comfort and  service to a consumer. When possession of property is  not delivered within stipulated period the delay so  caused is denial of service. Such disputes or claims are  not in respect of Immovable property as argued but  deficiency in rendering of service of particular standard,  quality or grade. Such deficiencies or omissions are  defined in Sub-clause (ii) of Clause (r) of Section 2 as  unfair trade practice. If a builder of a house uses  substandard material in construction of a building or  makes false or misleading representation about the  condition of the house then it is denial of the facility or  benefit of which a consumer is entitled to claim value  under the Act. When     the     contractor     or     builder    undertakes     to     erect     a     house     or     flat     then     it     is     inherent     in    it     that     he     shall     perform     his     obligation     as     agreed     to.     A    flat     with     a     leaking     roof,     or     cracking     wall     or     substandard    floor     is     denial     of     service.     Similarly     when     a     statutory    authority     undertakes     to     develop     land     and     frame    housing     scheme,     it,     while     performing     statutory     duty    renders     service     to     the     society     in     general     and     individual    in     particular.  ”  

(emphasis supplied)

   6. This Court further 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  6

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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’  by  

Ordinance No.24 of 1993.  

7. In the light of the above pronouncement of this Court  

the High Court was perfectly justified in holding that the  

activities of the appellant-company in the present case  

involving offer of plots for sale to its customers/members  

with an assurance of development of  

infrastructure/amenities, lay-out approvals etc. was a  

‘service’ within the meaning of clause (o) of Section 2(1) of  

the Act and would, therefore, be amenable to the  

jurisdiction of the fora established under the statute.  

Having regard to the nature of the transaction between the  

appellant-company and its customers which involved much  

more than a simple transfer of a piece of immovable  

property it is clear that the same constituted ‘service’ within  

the meaning of the Act. It was not a case where the  

appellant-company was selling the given property with all  

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advantages and/or disadvantages on “as is where is” basis,  

as was the position in U.T. Chandigarh Administration  

and Anr. v. Amarjeet Singh and Ors. (2009) 4 SCC  

660.  It is a case where a clear cut assurance was made to  

the purchasers as to the nature and the extent of  

development that would be carried out by the appellant-

company as a part of the package under which sale of fully  

developed plots with assured facilities was to be made in  

favour of the purchasers for valuable consideration.  To the  

extent the transfer of the site with developments in the  

manner and to the extent indicated earlier was a part of the  

transaction, the appellant-company had indeed undertaken  

to provide a service. Any deficiency or defect in such  

service would make it accountable before the competent  

consumer forum at the instance of consumers like the  

respondents.  

8. This Court in Bangalore Development Authority v.  

Syndicate Bank (2007) 6 SCC 711, 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:

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“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.”

9. Suffice it to say that the legal position on the subject  

is fairly well-settled by the pronouncements of this Court  

and do not require any reiteration. The High Court has  

correctly noticed the said pronouncements and applied  

them to the facts of the case at hand leaving no room for  

us to interfere with the answer given by it to the solitary  

question raised by the appellant-company.

10. In the result, these appeals are hereby dismissed but  

in the circumstances without any order as to cost.           

……………………..……………..…J.                       (T.S. THAKUR)

……………………………….………J.   (GYAN SUDHA MISRA)

New Delhi May 10, 2012

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