WHEN A BUILDER IS NOT A SERVICE PROVIDER

After enactment of Consumer Protection Act 1986, there was another amendment in 1991 wherein certain minor points were added up and provision under sec 14 (2) was made that the proceedings of the forum can be conducted by President and one member in the absence of one member. It was further provided in sec 29(A) of the act      by this amendment that defect in appointment or non-appointment of members shall not invalidate the orders of consumer forums. However amendment 1993 was a very vast amendment wherein apart from goods, number of services were also brought under the purview of Consumer Protection Act and housing services by the  construction  companies and housing boards was one among them .While amendment  1993 was in the process ,the first case on housing was already pending for adjudication before the Hon’ble Supreme Court and arguments were extended before the court that  since flat or plot or house is an immovable property and is not a good as defined under sale of goods act ,it does not fall under the jurisdiction of CP Act. This landmark case of M.G.Gupta V Lucknow Development Authority was heard at length and the judgment was delivered in Aug 1993 and before this judgment, Act was amended on 18the June 1993 bringing housing as services to the consumers by the housing board .by specifically mentioning in the act The Hon’ble Supreme Court laid down the Law as held in this judgment that

 !)Purchaser is a consumer against board/construction Company for the reasons:

Late possession/No possession/Defective dwelling/Area less/Cost escalation/Forfeiture of registration fee in case of cancellation of flat/Approach road dispute

 !!)Erring officer can be penalized with the payment of compensation which is to be paid to the consumer

 

There was yet another occasion when numbers of cases were heard together by the Honb’le National Commission in 2002 and one single detailed order was passed in all the cases between GHAZIABAD DEVELOPMENT AUTHORITY V BALBIR SINGH &OTHERS SC, 2004, [CTJ] PAGE 605.

 On the issue of housing. This order was further challenged before the Supreme Court .Apex court agreed with most of the law points laid down by the National Commission and further added

 !!!)Order for interest on the amount deposited should be on the basis of facts of the case and not always @18% as ordered by National commission

 !V)If order for interest is given ,there should not be any further  order for compensation  as both the things cannot go together

 V) In case where compensation for mental agony is given, there should not be any tax deduction at source as such compensation is not an income

 The law laid down in the above case is being followed till date However in the year 2007 in the matter of BANGLORE DEVELOPMENT AUTHORITY V SYNDICATE BANK along with other issues ,one more issue was raised by the housing board that in case board has not specified any period for handing over the possession ,then  it should not be considered deficiency in services on the part of housing board  .Court agreed to this argument and held that in a situation when no promise has been made for any specific period ,construction company shall not be held guilty .But court also directed the construction companies to put a time clause in their agreement in future .Hence court held in this case that

!)In case there is outright purchase of flat, buyer is not a consumer

!!) In case terms stipulated for specific time for possession, failure to that amounts to deficiency in services

 This law has now been further elaborated by the Hon’ble Supreme Court with great emphasis on the outright purchase and bringing auction purchases out of the purview of consumer definition under the Consumer Protection Act. In the matter of U.T CHANDIGAH ADMINISTRATION AND OTHERS V AMARJEET SINGH AND OTHERS (SUPREME COURT) CP PAGE 486, it was held by the Apex court:

“That where an auction is on ‘as is where is basis’ with reference to a public auction of the existing site ,the purchase /lessee is not a consumer ,the owner is not a service provider ”

 In nutshell, the concept of service as regard to construction companies or housing boards whether private or Govt, the important features are:

·        

·         One must register for hiring of services for construction of a house from the construction company by paying registration amount

·         There must be an agreement between the parties for construction

     

·         There must exist some Plan for construction ,schedule of payments, making payments as per schedule , construction ,possession etc –all activities must exist in order to define them as services rendered by the construction co./housing board   and received by the consumer

It is remarkable to note that since the first case of M.G.Gupta v Lucknow Development Authority case decided in 1993, there had been further elaborations made by the SC through various judgments as discussed above and there is no controversy over the concept of law laid down in this area

 

 

 

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