Citing a decision of the National Consumer Commission, many consumer
fora are ruling that complaints concerning allotment of sites by bodies
such as Mysore Urban Development Authority do not fall within the
purview of the Consumer Protection Act. This is causing problems for the
consumers.
In the case decided by the National Commission,
a person J.C. Verma of Ropar had applied to Haryana Urban Development
Authority for a site. When he did not succeed in getting a site, he
asked for a refund of his deposit. But HUDA sent the refund cheque to a
person who had the same name but who lived in Mohali. Since his letters
to HUDA saying that he had not received the refund produced no results,
J.C. Verma of Ropar filed a complaint before the Panchkula district
consumer forum. Both the district forum and the Haryana State consumer
commission agreed with his arguments and ordered HUDA to return his
deposit with interest. HUDA then appealed to the National Commission
against these decisions.
The National Commission reversed the decisions of the lower
consumer courts. Relying on a decision of the Supreme Court ((1994) 4
SCC 225) which said that the right of a consumer in the matter of share
allotment arises only after the shares are allotted, it ruled that Verma
was not a consumer since he had not been allotted a site. It said that
the allotment of sites is similar to allotment of shares and so the the
right of a consumer in the matter of site allotment also arises only
after the sites are allotted.
It is this judgment of the National Forum which is causing
problems to consumers in various consumer courts. But the above
interpretation of the Supreme Court judgment by the National Commission
is wrong, because there is no analogy between shares and sites. Shares
do not exist until they are allotted. They come into real existence only
after allotment. This was one of the main reasons behind the Supreme
Court judgment. Shares before allotment can only be considered "future
goods". The Supreme Court ruling says that a prospective investor in
future goods can not be termed a consumer.
Unlike shares, sites do exist even before they are allotted. So
the above argument of the Supreme Court does not apply for the allotment
of sites.
What is surprising is that the National Commission held that a
person applying for sites is not a consumer based on a Supreme Court
decision on shares and a perceived analogy between shares and sites, it
ignored a landmark decision of the Supreme Court (Lucknow Development
Authority v. M.K. Gupta III (1993) CPJ 7 (SC)) which explicitly states
that site allotment by bodies such as Urban Development Authorities
comes within the purview of the Consumer Protection Act. In this
judgment, the Supreme Court held that when UDAs develop land or allot a
site or construct a house for the benefit of the common man, it is
rendering service as defined in the Consumer Protection Act.. If the
service is defective or it is not what was represented (which would
constitute unfair trade practice), consumer courts can take up the
matter. The Supreme Court also said that a person who applies for
allotment of a building/site/flat constructed by the UDA is a "potential
user" and the transaction is covered in the expression 'service of any
description' of the Consumer Protection Act.
So it is very clear that the moment a person applies for the
allotment of a site from an Urban Development Authority, he becomes a
consumer of its service and any irregularity in the process of allotment
or any problem connected with the site or the payment comes under the
purview of consumer courts.
The National Commission makes a reference to this decision of
the Supreme Court, but unfortunately does not notice these observations
of the Supreme Court. As a result, it has issued an order which
contradicts the order of the Supreme Court and creates confusion among
the lower consumer courts.
So anyone who is filing a case against MUDA on any allotment
issue should bring the order of the Supreme Court in the Lucknow
Development Authority v. M.K. Gupta case to the attention of the
District Consumer Forum. Any argument by the opposite party that a
person is not a consumer before allotment is refuted by this order.
Dr. T.N. Manjunath, Mysore Grahakara Parishat