In a recent case before the Mysore District Consumer Forum (Case No. 202/2011), a consumer had complained that MUDA had ignored seniority and allotted sites to persons who had applied for them much later. In defence, MUDA argued that the National Consumer Commission has ruled (I (2010) CPJ (99) NC) that complaints concerning allotment of sites do not come under the purview of the Consumer Protection Act. The Consumer Forum agreed with MUDA and dismissed the complaint on 13-3-12. This decision of the District Forum violates a Supreme Court order (Lucknow Development Authority v. M.K. Gupta (III (1993) CPJ 7 (SC)) which expressly states that site allotment is covered by the CP Act.
The decision of the National Consumer Commission quoted by MUDA relied 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. The National Commission 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. 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 only 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 rationale of the Supreme Court does not apply for the allotment of sites. Secondly, there is a landmark decision of the Supreme Court in the Lucknow Development Authority v. M.K. Gupta case cited above 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 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.
In the case before the Mysore District Consumer Forum, attention of the Forum was drawn to this decision of the Supreme Court, but the Forum said that the National Commission's decision had taken it into account. This is incorrect. No doubt, the National Commission order makes a reference to this decision of the Supreme Court, but it is in a totally different context. It refers only to paragraph 6 of the Supreme Court order, which says that construction of a house or a flat is a consumer issue. Since this paragraph makes no reference to allotment of sites, the National Commission concluded that the Supreme Court order is not relevant in deciding whether allotment of sites is covered by the Consumer Protection Act. Surprisingly, there is a relevant portion n the Supreme Court order, but the National Commission did not notice it. In para 10 of the same order, the Supreme Court order clearly states that an application for allotment automatically invokes the Consumer Protection Act. Under Article 141 of the Constitution of India, all courts in India are bound to follow the interpretation of any law by the Supreme Court. So the National Commission can not overrule the Supreme Court order that allotment of sites is covered by the Consumer Protection Act. If by oversight, the National Commission has given an order contrary to the Supreme Court order, the District Forum is bound to ignore the National Commission order and obey the Supreme Court order. But the Mysore District Forum has not done so.
Dr. T.N. Manjunath, Mysore Grahakara Parishat