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Arising out of SLP(C) No. 21740 of 2007 vs. Chandigarh Housing Board dated 2010-09-22

 

                                                        REPORTABLE

 

                 IN THE SUPREME COURT OF INDIA

 

                  CIVIL APPELLATE JURISDICTION

 

                CIVIL APPEAL NO.                OF 2010

                (Arising out of SLP(C) No. 21740 of 2007)

 

Chandigarh Housing Board                              ... Appellant

 
                                 Versus
 
Avtar Singh and others                                ... Respondents
 
                                 WITH
 

C.A. No. ________ of 2010 [arising out of SLP(C) No.831/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.832/2008 ]

C.A. No. ________ of 2010 [arising out of SLP(C) No.834/2008 ]

C.A. No. ________ of 2010 [arising out of SLP(C) No.24815/2007]

C.A. No. ________ of 2010 [arising out of SLP(C) No.422/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.25308/2007]

C.A. No. ________ of 2010 [arising out of SLP(C) No.25310/2007]

C.A. No. ________ of 2010 [arising out of SLP(C) No.25313/2007]

C.A. No. ________ of 2010 [arising out of SLP(C) No.25315/2007]

C.A. No. ________ of 2010 [arising out of SLP(C) No.810/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.829/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.830/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.833/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.836/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.837/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.839/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.841/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.864/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.1011/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.1030/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.1309/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.1311/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.1343/2008]

C.A. No. ________ of 2010 [arising out of SLP(C) No.1344/2008]


                                                                         2
 
 
 
 

                          J U D G M E N T

 
G.S. Singhvi, J.
 
 
 
1.    Leave granted.
 
 
 

2.    With a view to promote private housing and optimum utilisation of

 

the land in Chandigarh by constructing multi-storeyed structures, the

 

Administrator, Union Territory, Chandigarh framed a scheme called

 

"Chandigarh Allotment of Land to Co-operative House Building Societies

 

Scheme, 1991" (for short, `the 1991 Scheme') for allotment of land to Co-

 

operative House Building Societies (for short, `the Societies') through

 

Chandigarh Housing Board (for short, `the Board'). The opening paragraph

 

of the 1991 Scheme and clauses 3, 4 and 6 to 12 thereof read as under:

 

      "No. UTFI(3)-91/5214 - With view to promote private housing

      and optimum utilization of land by constructing multistoried

      structures, the Administrator, Union Territory, Chandigarh, is

      pleaded to intake the following scheme regulating allotment of

      land to the Co-operative House Building Societies, in the Union

      Territory, Chandigarh, namely:-

 
      1.    xxx                xxx                 xxx
      2.    xxx                xxx                 xxx
      2.    xxx                xxx                 xxx
 
 

      3.    The Chandigarh Administration may conduct survey to

      assess the demand by inviting applications on prescribed forms

      available from the Chief Executive Officer, Chandigarh


                                                                     3

 
Housing Board alongwith 25% of the premium of land to be
applied for as earnest money and proof that the Society has

sufficient funds and resources to pay the balance of premium of

land and to undertake construction work on the land if allotted

to them through the Chandigarh Housing Board. Such Survey

shall, however, not be construed as a commitment for allotment

of land in any way.
 

4.     The Chandigarh Administration shall allot land on chunk

basis to the Chandigarh Housing Board for its further allotment

to the eligible Co-operative House Building Societies from
whom applications were invited under clause 3 above, having

sufficient funds and resources to the satisfaction of the Estate

Officer, on Lease Hold Basis for 99 years for the construction

of multistoreyed structures/dwelling units (hereinafter called

DU) and their allotment to its eligible members on the terms

and conditions to be laid down in the allotment letter and lease

deed. The land so allotted shall be planned in consultation with

the Chief Architect and Secretary, Architecture Department,

Union Territory, Chandigarh and developed by the Engineering

Department as usual. The proposed land shall be got

sanctioned from the Chief Administrator, Chandigarh as per the

provisions of the Punjab Capital (Development and Regulation)
Building Rules, 1952 as amended to date. The seniority of
society may be determined from registration Number and date.
The Administrator may allot land to the societies within the

limits of Union Territory, Chandigarh subject to the fulfillment

of provisions of the Scheme and the Capital of Punjab
(Development and Regulation) Act, 1952 as amended from
time to time and the rules made thereunder including the

Chandigarh Lease Hold of Sites and Building Rules, 1973 (as

amended from time to time). The society and its members shall

be jointly and severely responsible for payment of premium
including instalments and ground rent and for complying with

terms and conditions, rules and regulations and the provisions

of the Act referred to above. The minimum quantum of land

that can be allotted is one acre and 40 to 60 number of Dwelling

Units (as proved by the Chief Architect) are to be provided by

the Society per acre. The Chandigarh Administration may fix

cut off date for the purpose of allotment of land to the Societies

as well as to members.

                                                                     4

 

6.    Eligibility. - A society may be considered eligible for

allotment of land if it is duly registered with the Registrar, Co-

operative Societies, Union Territory, Chandigarh functioning

property having sufficient funds/resources to pay the premium,

to undertake the construction work, to complete it is stipulated

period, and that each of its members fulfills the following
conditions:-
 

      (i)   He is a bona fide resident of the Union Territory of

      Chandigarh and should be residing in Union Territory,

      Chandigarh atleast for last two years on the date of the

      allotment of land to the Society;

 

      (ii) He is an employee of the Central

      Government/Corporation owned or controlled by Central

      Government stationed at Chandigarh on the date of

      notification of Scheme or has served in the past at

      Chandigarh, or

 

      (iii) He is an employee of Union Territory

      Administration or the States of Punjab and Haryana or

      any Corporation owned or controlled by Union Territory

      or State Governments referred to above and is either

      serving at Chandigarh on the date of notification of the

      Scheme or has served in the past; or

 

      (iv) He is a retired from the Government or

      Corporation referred to at (ii) and (iii) above and residing

      at Chandigarh.
 

An applicant member may be eligible for allotment of dwelling

unit in accordance with his monthly income i.e. one dwelling
unit out of the dwelling units constructed per acre, as per
category given below:-
 
 
A.    (1)    25 Dwelling Units per acre       Category "A"
      (2)    35 Dwelling Units per acre       Category "B"
      (3)    45 Dwelling Units per acre       Category "C"
 

(The density shall not in total exceed 40% of the covered area)


                                                                     5

 
 
B.    Income Group
 
Members having monthly income of Rs.5,0001 and above "A"

Members having monthly income of Rs.2,0001 to 5,000 "B"

Members having monthly income upto Rs.2,000         "C"
 

Provided that no society shall be eligible for allotment of a site

under this scheme if any of its members, their spouses or
dependent children already owns, either on free-hold, lease-

hold or hire purchase basis, a dwelling unit or a residential

house/site/flat at Chandigarh, Manimajra, Panchkula and S.A.S.

Nagar (Mohali).
 
Provided further that not more than one member of a family
shall be a member of any such Society and no more than one
dwelling unit shall be allotted to one family.
 

Provided further that no individual/Society shall part with the

possession of the land or dwelling unit before the expiry of
atleast 5 years from the date of allotment.
 

7.     Grouping of Society/Enrolment of new members.- If any

Society has less than 50 members, these shall be grouped

together so as to enable the Chandigarh Housing Board to allot

atleast one acre of land to a group of Societies.
 

8.     Refund of Earnest Money.- The earnest money shall be

refunded to the Society, if any Society cancels its demand

before allotment of land. Earnest money shall also be refunded

to un-accommodated Societies, if any. No interest shall,
however, be payable on any amount which remained deposited
with the Estate Officer under this Scheme.
 

9.     Operation of Account/Check thereon.- Every member

who applied/have applied to the Society for allotment of a

dwelling unit under this Scheme shall pay all the amount in this

respect demanded by the Society by means of crossed demand

draft payable to the Society. The Society shall deposit it in

their account maintained in the Chandigarh State Co-operative

Bank Ltd., Sector 22, Chandigarh only. The Society shall not

be competent to withdraw any amount so deposited without the
prior approval of the Registrar, Co-operative Societies,

                                                                           6

 

      Chandigarh Administration, to discharge liabilities of payment

      of earnest money, instalments, ground rent and for construction

      purpose in respect of the land to be allotted/allotted to the

      Society.
 

      10. Construction of dwelling units and allotment thereof.-

      The Society shall be responsible for completion of building i.e.

      dwelling units within 3 years from the date of allotment and

      further allotment of these to their members by draw of lots.

      However, grouping can be allowed by the Society. Draw of

      lost shall be witnessed by the authorised officer/officials of Co-

      operative Department and Estate Office, Chandigarh

      Administration.
 

      11. Apart from the provisions of this scheme, provision of

      the Chandigarh Lease Hold of Sites and Building Rules, 1973,

      as amended from time to time, shall be applicable to the land

      allotted under this scheme.

 

      12. If at any time any difficulty arises in giving effect to the

      provisions of this scheme, the Chief Administrator may give

      directions consistent with the provisions of the scheme as

      he/she may deem appropriate."

                                                 (emphasis supplied)

 
 

3.    Fifty three Societies challenged the 1991 Scheme in Writ Petition

 

No.1454 of 1992 filed in the Punjab and Haryana High Court with the

 
following prayer:
 

      i.)    Writ of Certiorari or any other appropriate writ, order of

             direction in the nature of Certiorari, may be issued

             thereby quashing the impugned notification No.UTFI (3)-

             91/5214 dated 28th May, 1991 (Annexure P.4) issued by

             the Finance Secretary (respondent No.2).

 

      ii.)   Further a writ of Mandamus be issued to the respondent

             with a direction to give individual and developed plots to

             the members of the petitioner societies in view of the

             Scheme of 1983 which is still operative under which

             plots were/shall be given.


                                                                            7

 
 
 
 

4.    By an interim order dated 11.5.1992, the Division Bench of the High

 

Court permitted the Societies to deposit 10% of the tentative price and also

 

recorded the undertaking given by them that if the writ petition is dismissed,

 

they shall deposit the balance amount with interest @ 18% per annum, if

 

they were to accept allotment of flats under the new scheme. The relevant

 
portion of that order is extracted below:
 

      "Learned counsel for the petitioner contends that the rules

      provide for deposit of only 10% of the amount of the tentative

      price and the remaining 15% is to be deposited if plots/flats are

      allotted. In view of this, learned Counsel for the State-Union

      Territory, Chandigarh does not oppose the prayer of the

      petitioners for stay to the extent of deposit of 15% of the

      tentative price. The petitioner shall deposit 10% of the tentative

      price within the time extended by this court vide order dated

      30.5.1992. The petitioners undertake that if the writ petition is

      dismissed, they shall deposit the remaining amount with interest

      @ 18% per annum if they accept allotment of flats under the

      scheme. The Chandigarh Administration shall also refund the

      amount deposited by the petitioner with interest at the same rate

      to those petitioners who are not interested in the allotment of

      flats."
 

                                                   (emphasis supplied)

 
 

5.    In view of the aforesaid order, the Societies collected 10% of the

 

tentative price from their members and deposited the same in the bank

 
specified in the 1991 Scheme.     Thereafter, the Chief Executive Officer of
 

the Board issued circular-letters dated 3.11.1992 to the Societies indicating

 

the amount deposited by them towards 10% of the earnest money/premium,


                                                                         8

 

the total amount payable by them and also called upon them to furnish the

 

list of eligible members and details of the deposits made on behalf of each

 

member category-wise. This is evident from the following paragraphs of

 

one such letter sent to the Progressive Co-operative House Building Society

 
Limited (respondent No.2 in the lead appeal):
 
            "1.    xxx                xxx                xxx
 

            2.    All the co-operative House Building Societies

            were requested to apply on the prescribed forms and

            deposit earnest money equal to 25% of the premium on

            behalf of eligible members for the allotment of land.

            However, in view of the Hon'ble Punjab & Haryana

            High Court's order in your case you were required to

            deposit 10% of the tentative price by 31.5.1992.

 
            3.     xxx                xxx                xxx
 

            4.     Your society has deposited a sum of Rs.9,50,000/-

            representing 10% in respect of 933 members as per

            details given below:-

 

                   Category

 

                   A     345

                   B     529

                   C      59

                         933

 

            5.     For the purpose of assessment of land requirement

            the strength of your society has been taken as 933 which

            is the number of members on behalf of whom your

            society has reportedly deposited at least 10% by 1.6.92.

            This assessment of land is purely tentative and subject to

            revision in case any member of your society is found to

            have not been declared eligible by the screening

            Committee or to have not deposited at least 10% of the

            premium by 1.6.1992.


                                                                              9

 

              6.    On the basis of the said strength of the society the

              land requirement of your society has tentatively been

              assessed as 125379.05 Sq. Yd. provided that if the final

              assessment shows that the total number of eligible

              members in your society is less tan the number required

              for allotment in terms of the category-wise density

              specified per acre, your society shall be clubbed with one

              or more of the Societies to attain the optimum number

              required for allotment of land.

 
              7.    The total premium of this land works out to

              Rs.9,40,34,287/- @ Rs.750/- per Sq. yd.

 

              8.    With a view to finalize the matter relating to the

              allotment of land, the following information may kindly

              be furnished within 30 days:-

 

              i)    List of eligible members i.e. of the members duly

              approved by Registrar Co-operative Society/Screening

              Committee.

 

              ii) List of each member giving details of deposits

              made on his behalf (as on 1.6.1992) category-wise.

 
              9.      xxx                   xxx              xxx
 

              10. In view of the above position, you are requested to

              furnish the information, as indicated in para 8 above,

              within 30 days from the date of issue of this letter for the

              purpose of finalizing the assessment of the land

              requirement of your society.
 
              11.     xxx                   xxx              xxx.
 

                     A copy of the local plan where land is tentatively

              proposed to be allotted to your society is also enclosed

              for information."
 
 

6.    After        seven    months,   the     Finance   Secretary,   Chandigarh

 

Administration (hereinafter referred to as `the Finance Secretary') issued


                                                                             10

 

memo dated 9.6.1993 and directed that if any member of the Society was to

 

seek refund, then 10% out of 25% of the earnest money should be deducted

 

as calculated on reduced density. The relevant clause of that memo is

 
reproduced below:
 

      "V(i) 10% of 25% of the premium amount as calculated on

      reduced density shall be deducted in case members seek refund

      on any ground what so ever their earnest money deposited with

      the Chandigarh Housing Board."

 
 

7.    The writ petition was finally dismissed by the High Court vide

 

judgment dated 18.12.1996. The last paragraph of the judgment on which

 

the appellant has heavily relied in support of its plea that the members of the

 

Societies are not entitled to claim refund of 18% interest reads as under:

 

      "Before parting, we may observe that in view of the interim

      order passed by this Court wherein the petitioners were allowed

      to deposit 10% of the sale consideration while applying for the

      allotment of plots, the Societies who had deposited 10% of the

      sale consideration and found eligible for allotment or have been

      allotted the sites, would be liable to pay the balance 15% of the

      amount so as to make it 25% as per terms and conditions of the

      allotment as agreed upon by them, with a further interest at the

      rate of 18% per annum."

 
 

8.    By taking cue from the observations made by the High Court, the

 

Finance Secretary sent memo dated 6.11.1997 to the Chairperson of the

 

Board with the request to accept the balance 15% earnest money from the

 

Societies along with interest at the rate of 18%. Paragraphs 2 and 3 of that

 
letter read as under:

                                                                           11

 

      "2. You are requested to accept the balance amount of 15%

      to complete the 25% earnest money along with the interest

      @18% p.a. up to date of the High Court order i.e. 18.12.96,

      from the petitioners of the Co-operative House Building

      Societies who jointly filed CWP No.1454 of 1992 in the Punjab

      and Haryana High Court, calculation and imposition of interest

      would, therefore, be stopped till the possession of land is

      offered to the Societies.

 

      3.     Balance of 25% of the earnest money may be accepted at

      the original rate. However, it may be made clear to the

      Societies that balance amount of the premium shall be

      determined at the rate applicable at the time of actual allotment

      of land to the Societies."

 
 

9.    Thereafter, the Board vide its letter dated 15.12.1997 directed the

 

Societies to deposit the balance 15% earnest money along with 18% interest.

 

The Societies complied with the Board's directive and deposited the amount

 
after collecting the same from their members.
 
 
 

10.   Although, the members of the Societies paid the balance earnest

 

money and 18% interest, the Board did not take effective steps for allotment

 

of land to the Societies. This naturally gave rise to an apprehension in their

 

mind that they may have to wait indefinitely for getting the flats. Therefore,

 

some of them including Lieutenant Colonel Avtar Singh (respondent No.1 in

 

the lead appeal) applied through their respective Societies for refund of the

 

amount paid by them by clearly indicating that they were no longer

 

interested in the flats.   The Societies forwarded their applications to the

 

Board. Thereupon, Secretary of the Board sent letter dated 11.12.1998 to


                                                                          12

 

the Finance Secretary seeking his guidance in the matter. That letter reads

 
as under:
 

                  "CHANDIGARH HOUSING BOARD

                         CHANDIGARH

 

      No.HB(s)-GAO-AOI-98/22741                       Dated:11/12/98

 
      To
 

      The Finance Secretary,

      Chandigarh Administration,

      Chandigarh.
 

                    Subject: Refund of Earnest Money.

 
      Sir,

             It is stated that the Board has been making refunds to the

      members of societies by deducting 10% of the revised density

      in terms of the Chandigarh Administration letter No.30/11/FTI-

      31-93/5149 dated (copy enclosed).

 

             As per instruction issued vide your letter No.5158-UTIF

      (4) 97/20685 dated 6.11.1997, the Board demanded balance

      15% to complete 25% earnest money alongwith interest @ 18%

      p.a. for the period from 1.6.1992 to 18.12.1996 from the

      petitioner societies. Now some of the societies after paying the

      above amount of earnest money and interest have sought refund

      in respect of their certain members. The instructions of

      Chandigarh Administration dated 9.6.1993 provide for refund

      of earnest money after forfeiting 10% of revised density but no

      guidelines are available with the Board whether it should also

      refund the interest paid by the members for the period 1.6.1992

      to 18.12.1996 or not. You are requested to decide the matter

      and decision taken may kindly be conveyed at the earliest to

      decide such pending cases.

 

      Yours faithfully,

 
      Secretary,

      Chandigarh Housing Board."


                                                                        13

 

11.   However without waiting for the decision of the Finance Secretary,

 

the Chief Accounts Officer of the Board suo motu remitted the amount of

 

earnest money to the Societies after deducting 10% in accordance with the

 

instructions issued by the Finance Secretary vide memo dated 9.6.1993 and

 
directed that the same be paid to the members.
 
 
 

12.   In the meanwhile, the Finance Secretary constituted a committee

 

consisting of Chief Executive Officer of the Board, Officer on Special Duty

 

(CP), Chandigarh Administration and Joint Registrar, Co-operative

 

Societies, Chandigarh to look into various pending issues of the Societies.

 

After considering the recommendations of the committee and guidelines

 

given by the Deputy Commissioner-cum-Estate Officer, the Finance

 

Secretary issued memo dated 9.3.2000, the relevant portions of which are

 
reproduced below:
 

      "7. Full refund of earnest money will hence forth be made to

      the societies/and its members without forfeiting 10% of the

      25% earnest money deposited.

 

      11. The interest paid by the Societies on the earnest money

     deposited with the Board in pursuance of High Court's

      judgment dated 18.12.96 is not to be refunded if the Society

      seek refund of earnest money as a whole or in respect of any

      member, as it is not part of the earnest money."

 
 

13.   The members of the Societies, who felt aggrieved by the action of the

 

Board to forfeit 10% earnest money and the direction given by the Finance


                                                                           14

 

Secretary not to refund 18% interest, filed complaints under Section 12 of

 

the Consumer Protection Act, 1986 (for short, `the Act'). They specifically

 

averred that till the making of applications for refund, the Board had not

 
allotted land to the Societies.        They pleaded that action and decision
 

complained against were not only contrary to the provisions of the

 

Chandigarh Lease Hold of Sites and Buildings Rules, 1973 (for short, `the

 

1973 Rules'), the 1991 Scheme but were also discriminatory inasmuch as

 

the applications made by Kuldip Singh son of Gurdin Singh and Smt. Subh

 

Lata w/o Shri Tarlochan Singh for refund of the amount was accepted

 

without any deduction but in their cases 10% of the earnest money and 18%

 
interest were arbitrarily forfeited.
 
 
 

14.   The Finance Secretary, Chandigarh Administration, through whom

 

the Union of India was impleaded as a party to the complaints did not file

 

written statement and it was left to the Board to contest the complaints. In

 

the written statement filed on behalf of the Board, an objection was raised to

 

the very maintainability of the complaints on the ground that there was no

 

privity of contract between the complainants and the Board. On merits, it

 

was pleaded that there was no deficiency in service or negligence on the

 

Board's part and the provisions of the Act cannot be invoked by the

 

complainants. It was further pleaded that the decision of the Chandigarh

 

Administration not to refund 18% amount paid by the members of the


                                                                          15

 

Societies was in consonance with the 1991 Scheme and without challenging

 

the same, the complainants were not entitled to any relief. Another plea

 

taken by the Board was that 18% interest was not refunded because it did not

 
form part of the earnest money.      The allegation of discrimination was
 

controverted by asserting that in the cases of Shri Kuldip Singh and Smt.

 

Subh Lata, 10% of the 25% earnest money was forfeited in accordance with

 

the instructions dated 29.7.1993 issued by the Finance Secretary but the

 
amount was refunded to them in the month of March 1998.
 
 
 

15.   The District Forum noted that till the making of applications by the

 

complainants for refund of the earnest money and 18% interest by

 

specifically mentioning that they were no longer interested in the flats, the

 

Board had not allotted land to the Societies and held that forfeiture of 10%

 

earnest money in terms of the decision contained in memo dated 9.6.1993

 

and non-refund of 18% interest were contrary to the 1991 Scheme and the

 

1973 Rules and the same amounted to deficiency in service and unfair trade

 

practice. The District Forum also accepted the plea of discrimination and

 
observed:
 

      "The complainant has also alleged discrimination against him

      vis-`-vis two other applicants members of OP-2 namely Sh.

      Kuldeep Singh and Smt. Subh Lata to her. The interest

      component of their deposits was refunded without its forfeiture.

      On this point the reply of the OP-1 is round about. It is stated

      that 10% of 25% of the earnest money of these members was

      also forfeited as per the instructions dated 29.7.1993 and the


                                                                          16

 

      refund was made to them in March 1998. The refund to them

      had been made vide the OP-1 letters dated 30.3.1998 (Annexure

      H) and letter dated 17.3.1998 (Annexure I). If we compare

      these letters with each other and with the pleadings of the

      complainant and the pleadings of the OP. We find that only

      10% of 25% of the earnest money of Smt. Subh Lata and Sh.

      Kuldeep Singh had been forfeited and not the interest

      component of their deposits. Therefore, to this extent, the

      complainant was discriminated against by OP1 vis-`-vis

      Kuldeep Singh and Subh Lata."

 
 

16.   Before the State Commission, it was argued on behalf of the Board

 

that District Forum did not have the jurisdiction to entertain the complaints

 

because it had acted strictly in accordance with the directions given by the

 

Finance Secretary. While rejecting this contention, the State Commission

 

observed that in terms of clause 12 of the 1991 Scheme, the Finance

 

Secretary could give directions in case of difficulty arising in the

 

implementation of the Scheme but he could not have used that power for

 

giving directions in violation of the Rules and the Scheme.       The State

 

Commission then held that memo dated 9.6.1993 issued by the Finance

 

Secretary authorizing the Board to deduct 10% of the earnest money was

 

contrary to clause 8 of the 1991 Scheme, which provided for refund of the

 

earnest money without any deduction if the Society was to cancel the

 

demand before allotment of land. The State Commission further held that

 

once the Finance Secretary had issued instructions vide memo dated

 

9.3.2000 that full refund of earnest money will henceforth be made to the

 

Societies/and its members without forfeiting 10% of the earnest money


                                                                           17
 

already deposited, the Board should have refunded the remaining amount to

 

the complainants and its failure to do so amounted to deficiency in service.

 

The State Commission also opined that the instructions issued by the

 

Finance Secretary to the Board not to refund 18% interest deposited by the

 

members of the Society did not have any legal sanction and the Board

 

committed an illegality by refusing to refund the amount of interest by

 

relying upon clause 11 of memo dated 9.3.2000. In conclusion, the State

 

Commission directed the Board to refund the amount to the complainants

 

along with interest @ 8% per annum. However, the direction given by the

 

District Forum for payment of interest from the amount of earnest money

 
was set aside by the State Commission.
 
 
 

17.   The National Commission agreed with the findings and conclusion

 

recorded by the State Commission and dismissed the revisions filed by the

 

Board. The National Commission referred to letter dated 11.12.1998 and

 

Memo dated 9.3.2000 issued by the Finance Secretary, Rule 8 of the 1973

 
Rules and observed:
 

      "From the letter dated 11.12.1998 and Memo dated 9.3.2000

      extracted above, it may be seen that the issue of forfeiture of

      10% of 25% of earnest money was under consideration of the

      Chandigarh Administration since 1998 and the final decision

      taken is incorporated in the said Memo. The petitioner Housing

      Board cannot take benefit of the delay on their part in finalizing

     the said issue to the disadvantage of respondent

      No.1/complainants. Submission advanced on their behalf about

      Clause No.7 of the Memo being prospective, therefore,


                                                                           18

 

      deserves to be repelled being without any merit. At the cost of

      repetition it may be mentioned that Clause 7 of the Memo

      permits full refund of the earnest money to the society and/or to

      its members. Instructions contained in the letter dated 9.6.93

      have no relevance.

 

              Coming to interest issue, by virtue of para 11 of the

      Scheme of 1991 the Rules of 1973 have been made applicable

      to the land allotted to the Societies. Neither Rules, 1973 nor

      Scheme, 1991 vest in the petitioner Housing Board the power to

      forfeit the interest paid. Moreover there seems to be no

      justification in forfeiting the interest amount paid on late

      deposit of 15% of earnest money when the entire amount of

      earnest money was decided to be paid to the Society and/or its

      members under the Memo dated 9.3.2000. Amount of interest

      paid by respondent No.1/Complainant will not fall in the

      category of interest referred to in para No.8 of the Scheme,

      1991. Fora below had thus rightly made the order for refund of

      the interest amount."

 
 

18.   The first and foremost argument of Ms. Rachana Joshi Issar, learned

 

counsel for the Board is that the District Forum did not have the jurisdiction

 

to entertain the complaints filed by the members of the Societies because

 

there was no privity of contract between them and the Board. She pointed

 

out that the 1991 Scheme envisaged allotment of land to the Societies and

 

not to their members and argued that they cannot be treated as consumers

 

within the meaning of Section 2(d) of the Act and the Board cannot be held

 

liable for any deficiency in service because it had not entered into any

 

agreement with the members of the Societies for allotment of land/flats.

 

Learned counsel emphasized that the Board had acted in accordance with the

 

directives given by the Finance Secretary vide memos dated 9.6.1993 and


                                                                            19

 

9.3.2000 and argued that the consumer foras committed serious error by

 

granting relief to the members of the Societies ignoring that they had not

 

challenged the offending clauses of those memos. She further argued that

 

the members of the Society did not have the locus to complain against non-

 

refund of 18% interest because they had taken advantage of the interim order

 

passed by the High Court and avoided payment of 15% earnest money.

 
 
 

19.   Shri S.S. Khetrapal, learned counsel for the complainants argued that

 

the District Forum did not commit illegality by entertaining the complaints

 

because they were the direct beneficiaries of the 1991 Scheme. Learned

 

counsel submitted that the members of the Societies were compelled to file

 

complaints because the Board did not allot land to the Societies even after

 

deposit of the balance earnest money and 18% interest. Shri Khetrapal

 

emphasized that the Chandigarh Administration and the Board were not

 

empowered to forfeit 10% earnest money or withhold refund of 18% interest

 

because the land had not been allotted to the Societies till the making of

 

applications for refund and filing of the complaints. Learned counsel relied

 

upon clause 7 of memo dated 9.3.2000 in terms of which the Board was

 

required to refund the earnest money to the Societies/their members without

 

forfeiting any portion thereof and argued that the direction given by the State

 

Commission for refund of the forfeited portion of the earnest money and


                                                                          20

 

18% interest, which was upheld by the National Commission does not suffer

 
from any legal infirmity.
 
 
 

20.   Before proceeding further, we deem it proper to mention that

 

arguments in these appeals were heard and the judgment was reserved on

 

16.8.2010. Thereafter, the case was listed in the mentioning list on 7.9.2010

 

because the Court wanted to find out from the learned counsel for the Board

 

whether land had been allotted to the Societies till the making of

 

applications by their members for refund of the earnest money and 18%

 

interest. On 7.9.2010, the case was adjourned to 9.9.2010 at the request of

 

learned counsel for the Board. On the next date, learned counsel produced

 

xerox copy of letter dated 3.11.1992 sent by the Board to the President,

 

Progressive Co-operative House Building Society and a three-page note.

 

She also disclosed that allotment letters were issued to the Societies

 
sometime in 2002.
 
 
 

21.   We have considered the respective arguments and submissions. The

 

question which calls for determination in these appeals is whether the

 

members of the Societies, who would have been benefited by allotment of

 

land under the 1991 Scheme were consumer within the meaning of Section

 

2(d) of the Act and the District Forum had the jurisdiction to entertain the

 

complaints filed by them for refund of 10% earnest money forfeited by the


                                                                          21

 

Board and 18% interest paid by them in the light of the orders passed by the

 
High Court in Writ Petition No.1454/1992.
 
 
 

22.   The definitions of the terms `consumer', `deficiency' and `service'

 

contained in Section 2(d), (g) and (o), which have bearing on the decision of

 
these appeals read as under:
 

      "2.   Definitions. - (1) In this Act, unless the context

      otherwise requires,--

 
      (d)   "consumer" means any person who--
 

      (i)   buys any goods for a consideration which has been paid

      or promised or partly paid and partly promised, or under any

      system of deferred payment and includes any user of such

      goods other than the person who buys such goods for

      consideration paid or promised or partly paid or partly

      promised, or under any system of deferred payment, when such

      use is made with the approval of such person, but does not

      include a person who obtains such goods for resale or for any

      commercial purpose; or

 

      (ii) hires or avails of any services for a consideration which

      has been paid or promised or partly paid and partly promised,

      or under any system of deferred payment and includes any

      beneficiary of such services other than the person who hires or

      avails of the services for consideration paid or promised, or

      partly paid and partly promised, or under any system of

      deferred payment, when such services are availed of with the

      approval of the first mentioned person but does not include a

      person who avails of such services for any commercial

      purposes;
 

      Explanation.-- For the purposes of this clause, "commercial

      purpose" does not include use by a person of goods bought and

      used by him and services availed by him exclusively for the


                                                                            22
 

      purposes of earning his livelihood by means of self-

      employment
 

      (g) "deficiency" means any fault, imperfection, shortcoming

      or inadequacy in the quality, nature and manner of performance

      which is required to be maintained by or under any law for the

      time being in force or has been undertaken to be performed by a

      person in pursuance of a contract or otherwise in relation to any

      service
 

      (o) "service" means service of any description which is made

      available to potential users and includes, but not limited to, the

      provision of facilities in connection with banking, financing

      insurance, transport, processing, supply of electrical or other

      energy, board or lodging or both, housing construction,

      entertainment, amusement or the purveying of news or other

      information, but does not include the rendering of any service

      free of charge or under a contract of personal service"

 
 
 

23.   The first part of the definition of `consumer' refers to the buyer of

 

goods and user thereof by a person other than buyer but does not include a

 

person who obtains such goods for resale or for any commercial purpose.

 

The second part of the definition refers to a person who hires or avails of any

 

services for a consideration which has been paid or promised or partly paid

 

and partly promised, or under any system of deferred payment and includes

 

the beneficiary of such services other than the person who hires or avails of

 

the services but does not include a person who avails such services for

 

commercial purpose. The term `deficiency' means any fault, imperfection,

 

shortcoming or inadequacy in the quality, nature and manner of performance

 

which is required to be maintained by or under any law by a person in


                                                                             23

 

pursuance of a contract or otherwise in relation to any service. The term

 

`service' means service of any description which is made available to

 

potential users and includes the provision of facilities in relation to banking,

 

financing, insurance, transport, processing, supply of electrical and other

 

energy,      boarding   or   lodging,   housing   construction,   entertainment,

 

amusement etc. However, the services rendered free of charge or under a

 

contract of personal service are excluded from the definition of term

 
`service'.
 
 
 

24.   The question whether the consumer foras can entertain a complaint in

 

the matter of allotment of plot or construction of a flat by statutory authority

 
was considered by a two-Judge Bench of this Court in Lucknow
 

Development Authority v. M.K. Gupta (1994) 1 SCC 243, in the backdrop

 

of challenge to the orders passed by the National Commission which had

 

awarded damages to the respondents on account of delayed delivery of

 

possession of the houses. The Bench observed that the nature of `complaint'

 

which can be filed under clause 2(c) of the Act is for unfair trade practice or

 

restrictive trade practice adopted by any trader or for the defects suffered for

 

the goods bought or agreed to be bought and for deficiency in service hired

 

or availed of or agreed to be hired or availed of, by a complainant i.e. a

 

consumer or any voluntary consumer association registered under the

 

Companies Act, 1956 or under any law for the time being in force or the


                                                                           24

 

Central Government or any State Government. The Bench then noted that

 

the definition of `consumer' is in two parts and proceeded to observe:

 
 

      "The first deals with goods and the other with services. Both

      parts first declare the meaning of goods and services by use of

      wide expressions. Their ambit is further enlarged by use of

      inclusive clause. For instance, it is not only purchaser of goods

      or hirer of services but even those who use the goods or who

      are beneficiaries of services with approval of the person who

      purchased the goods or who hired services are included in it.

      The legislature has taken precaution not only to define

      `complaint', `complainant', `consumer' but even to mention in

      detail what would amount to unfair trade practice by giving an

      elaborate definition in clause (r) and even to define `defect' and

      `deficiency' by clauses (f) and (g) for which a consumer can

      approach the Commission. The Act thus aims to protect the

      economic interest of a consumer as understood in commercial

      sense as a purchaser of goods and in the larger sense of user of

      services. The common characteristics of goods and services are

      that they are supplied at a price to cover the costs and generate

      profit or income for the seller of goods or provider of services.

      But the defect in one and deficiency in other may have to be

      removed and compensated differently. The former is, normally,

      capable of being replaced and repaired whereas the other may

      be required to be compensated by award of the just equivalent

      of the value or damages for loss."

 
 
 

      The Court repelled the argument that the Act is confined to movable

 

goods only and observed that the consumer foras have jurisdiction to deal

 

with complaints of deficiency of service in relation to immoveable

 

properties. The Court referred to the definition of term `service' as amended

 
in 1993 to cover `housing construction' and observed:
 

      "It is in three parts. The main part is followed by inclusive

      clause and ends by exclusionary clause. The main clause itself


                                                                        25

 
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 installments 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 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)


                                                                           26

 
 
 
 

      The Court then considered the question whether public authorities are

 

amenable to the jurisdiction of the consumer foras and answered the same in

 

affirmative.    An ancillary issue considered by the Court was whether

 

housing construction or building activity carried on by a private or statutory

 

body was service within the meaning of Section 2(o) as it stood prior to

 

inclusion of the expression `housing construction' in the definition and it

 
was 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 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 immoveable 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........A

      development authority while developing the land or framing a

      scheme for housing discharges statutory duty the purpose and


                                                                            27

 

      objective of which is service to the citizens. As pointed out

      earlier the entire purpose of widening the definitions is to

      include in it not only day to day buying of goods by a common

      man but even such activities which are otherwise not

      commercial but professional or service-oriented in nature. The

      provisions in the Acts, namely, Lucknow Development Act,

      Delhi Development Act or Bangalore Development Act clearly

      provide for preparing plan, development of land, and framing of

      scheme etc. Therefore if such authority undertakes to construct

      building or allot houses or building sites to citizens of the State

      either as amenity or as benefit then it amounts to rendering of

      service and will be covered in the expression `service made

      available to potential users'. A person who applies for allotment

      of a building site or for a flat constructed by the development

      authority or enters into an agreement with a builder or a

      contractor is a potential user and nature of transaction is

      covered in the expression `service of any description'. It further

      indicates that the definition is not exhaustive. The inclusive

      clause succeeded in widening its scope but not exhausting the

      services which could be covered in earlier part. So any service

      except when it is free of charge or under a constraint of

      personal service is included in it. Since housing activity is a

      service it was covered in the clause as it stood before 1993."

                                                    (emphasis supplied)

 
 

25.   The judgment in M.K. Gupta's case was relied upon in Ghaziabad

 

Development Authority v. Balbir Singh (2004) 5 SCC 65 and it was held

 

that the Act has a wide reach and the Commission has jurisdiction even in

 

cases of service rendered by statutory and public authorities. The Court

 

observed that where there has been capricious or arbitrary or negligent

 

exercise or non-exercise of power by an officer of the authority, the

 

Commission/Forum has a statutory obligation to award compensation.


                                                                          28

 

26.   We shall now consider whether the members of the Societies were

 

consumer of the service rendered by the Chandigarh Administration and the

 

Board in the matter of allotment of land to the Societies under the 1991

 
Scheme and the complaints filed by them were maintainable.
 
 
 
 

27.   A cursory reading of the 1991 Scheme may give an impression that

 

the sole object thereof was to allot land to the Societies through the agency

 

of the Board for construction of multistoried structures and the Chandigarh

 

Administration and the Board had nothing to do with the members of the

 

Societies, but a careful reading of various clauses of the Scheme and the

 

directives given by the Finance Secretary from time to time leave little room

 

for doubt that the members of the Societies were the real and ultimate

 
beneficiaries. This is evident from the following:
 

      (i)   Clause 4 of the Scheme envisaged allotment of land by the

 

      Chandigarh Administration to the Board on chunk basis for its further

 

      allotment to the eligible Societies so as to enable them to construct

 

      multistoried structures/dwelling units for their members.          The

 

      Societies and their members were made jointly and severely

 

      responsible for payment of premium including installments and

 

      ground rent. By clause 4, a duty was cast upon the Societies and their

 

      members to comply with the provisions of the Capital of Punjab


                                                                    29

 
(Development and Regulation) Act, 1952 and the rules and
 

regulations framed thereunder. Clause 6 of the Scheme enumerated

 

the conditions of eligibility and entitlement of the members for

 

allotment of dwelling units of different categories. Clause 8 provided

 

for refund of earnest money to a Society, if it were to cancel the

 

demand before allotment of land. In terms of clause 9, every member

 

of the Society was required to pay the amount to the Society by means

 

of crossed demand draft and the latter was to deposit the same in its

 
account maintained in the Chandigarh State Co-operative Bank
 

Limited. Clause 10 provided for construction of dwelling units by the

 

Societies within three years from the date of allotment. By clause 11,

 

the provisions of the 1973 Rules were made applicable to the land

 
allotted under the 1991 Scheme.
 

(ii)    In view of the interim order passed by the High Court in Writ

 

Petition No.1454/1992, the Board accepted 10% earnest money and

 

then called upon the Societies to give the particulars of their members

 
and the amount deposited by them.
 

(iii)   Vide memo dated 9.6.1993, the Finance Secretary directed that

 

in case the members of the Societies seek refund of the earnest

 
money, then 10% of 25% amount deposited by them shall be
 
deducted.

                                                                             30

 

      (iv)   After dismissal of the writ petition by the High Court with an

 

      observation that the Societies who had deposited 10% of the sale

 

      consideration and found eligible for allotment, would be liable to pay

 

      balance 15% with a further interest at the rate of 18% per annum, the

 

      Finance Secretary issued memo dated 6.11.1997 and asked the Board

 

      to accept the balance 15% earnest money with 18% interest.

 

      (v)    When the members of the Societies demanded refund of the

 

      amount paid by them by indicating that they were no longer interested

 

      in the flats, the Board requested the Finance Secretary to give

 

      guidance in the matter. The latter constituted a committee of three

 

      officers and on receipt of the recommendations of the committee, he

 

      issued memo dated 9.3.2000 for refund of earnest money to the

 

      Societies and their members without forfeiting 10% of the earnest

 

      money but, at the same time, he directed that interest paid pursuant to

 

      the High Court's judgment be not refunded because the same did not

 

      form part of the earnest money.

 
 
 
 

28.   From what we have noted above, it is crystal clear that even though

 

the 1991 Scheme was ostensibly framed for allotment of land to the

 

Societies for construction of multistoried structures (dwelling units/flats) for

 

their members, but the provisions contained therein not only regulated the


                                                                            31

 

relationship of the Societies with their members, but also made them jointly

 

and severally responsible for payment of the earnest money etc.            The

 

Finance Secretary and the Board issued directions from time to time for

 

payment of the earnest money and interest by the members of the Societies.

 

If the scheme had nothing to do with the members of the Societies, then it

 

would not have contained provisions to regulate their eligibility and

 

entitlement to get dwelling units to be constructed on the land allotted by the

 

Board and made them jointly and severally responsible for payment of the

 

premium etc. and the Finance Secretary would not have issued directions

 

vide memos dated 9.6.1993 and 9.3.2000 in the matter of refund of earnest

 

money and interest. The Board too would not have entertained the request

 

made by the members of the Societies for refund of the earnest money and

 

remitted the amount to the Societies after deducting 10%.          Thus, even

 
though no formal contract had been entered into between the Chandigarh
 

Administration and the Board on the one hand and the members of the

 

Societies on the other hand, the former exercised sufficient degree of control

 

over the latter. By making applications for allotment of land, the Societies

 
will be deemed to have hired or availed the services of the Chandigarh
 

Administration and the Board in relation to housing construction as

 

elucidated and explained in M.K. Gupta's case and Balbir Singh's case. If

 

the scheme had been faithfully implemented and land had been allotted to

 

the Societies, their members would have been the actual and real


                                                                           32

 

beneficiaries. Therefore, they were certainly covered by the definition of

 

`consumer' under Section 2(d)(ii), the second part of which includes any

 

beneficiary of the services hired or availed for consideration which has been

 

paid or promised or partly paid and partly promised. As a sequel to this, it

 

must be held that the members of the Societies had every right to complain

 

against illegal, arbitrary and unjustified forfeiture of 10% earnest money and

 

non-refund of 18% interest and the District Consumer Forum did not

 

commit any jurisdictional error by entertaining the complaints.

 
 
 
 

29.   The argument of Mrs. Rachana Joshi Issar that the Board had

 

deducted 10% earnest money and declined to refund 18% interest to the

 

members of the Societies strictly in accordance with the directives given by

 

the Finance Secretary and in the absence of challenge to memos dated

 

9.6.1993 and 9.3.2000, the complainants were not entitled to any relief is

 
meritless and deserves to be rejected.    At the cost of repetition, we may
 

observe that in terms of clause 8 of the 1991 Scheme, a Society would have

 

become entitled to refund of the earnest money without any deduction if it

 

were to cancel the demand before allotment of land. This is also the spirit of

 

Rule 8 of the 1973 Rules which were made applicable to the land allotted

 
under the scheme. That rule reads as under:

                                                                          33

 

      "8. Lease by allotment, Procedure for.-- (1) In case of

      allotment of site or building the intending lessee shall make an

      application to the Estate Officer in Form `A'.

      (2) No application under sub-rule (1) shall be valid unless it

      is accompanied by 10 per cent of the premium as earnest money

      in the prescribed mode of payment.

      (3) When 10 per cent of the premium has been so tendered

      the Estate Officer shall, subject to such directions as may be

      issued by the Chief Administrator in this behalf, allot a site of

      the size applied for or a building of which particulars are given

      in the application and shall intimate, by registered post the

      number, sector, approximate area, premium and the rent of the

      site or building allotted to the applicant.

      (4) The applicant shall, unless he refuses to accept the

      allotment within 30 days of the date of the receipt of the

      allotment order, deposit within that period and in the prescribed

      mode of payment, further 15 per cent of the premium. The

      remaining 75 per cent of the per cent of the premium shall be

      paid as provided in rule 12.

      (5) If the applicant refuses to accept the allotment within said

      period of 30 days, he will be entitled to the refund of the

      amount paid by him. The refusal shall be communicated to the

      Estate Officer by a registered letter (acknowledgement due).

      The refund shall be made by means of a cheque payable at the

      State Bank of India at Chandigarh and the applicant shall bear

      the collection charges for the same.

      (6) If the applicant fails to communicate his refusal to accept

      the allotment within 30 days and also fails to deposit 15 per

      cent of the premium under sub-rule (4) the Estate Officer may

      forfeit the whole or part of the earnest money."

 
 
 

30.   An analysis of the above reproduced rule would show that an

 

application for allotment of site or building by way of lease can be

 

entertained only if it is accompanied by 10% of the premium as earnest

 

money. The allottee is required to deposit 15% of the premium within 30


                                                                               34

 

days of allotment. The balance amount is to be paid in accordance with Rule

 

12. An applicant who refuses to accept allotment within 30 days is entitled

 

to refund of the amount paid by him. If the applicant neither refuses to

 

accept the allotment nor deposits 15% of the premium, the Estate Officer can

 

forfeit the whole or part of the earnest money. The provision relating to

 

refund of the premium/earnest money or forfeiture of the whole or part

 

thereof gets attracted only after the allotment is made and not before that.

 

      If para V(i) of memo dated 9.6.1993 issued by the Finance Secretary

 

is examined in the light of the plain language of Rule 8 of the 1973 Rules

 

and clause 8 of the 1991 Scheme, it becomes clear that the concerned officer

 

had exceeded his brief when he directed that 10% of 25% of the

 

premium/earnest money should be deducted if the members seek refund of

 

the earnest money on any ground whatsoever. By giving this directive, the

 

concerned officer indulged in arm twisting and attempted to teach a lesson to

 

the members of the Societies who had filed writ petition and succeeded in

 

persuading the High Court to restrict payment of the earnest money to 10%.

 

However, he must have realized the folly committed by issuing a direction

 

in complete disregard of the spirit of Rule 8(5) of the 1973 Rules and clause

 

8 of the 1991 Scheme and this must have been the reason why he made

 

amends by incorporating clause 7 in memo dated 9.3.2000 for full refund of

 

the earnest money without forfeiting 10%. Unfortunately, it proved to be a


                                                                            35
 

half hearted attempt by the Finance Secretary to redeem the wrong done

 

earlier because while directing refund of the earnest money without any

 

deduction, he used the expression `will henceforth' in clause 7, which gave

 

leverage to the Board to decline the request of the members of the Societies

 

for full refund of the earnest money on the ground that 15% had already

 

been remitted to the Societies for being paid to their members before the

 

issue of memo dated 9.3.2000. In our view, once the Finance Secretary took

 

the corrective step, which was in consonance with the spirit of Rule 8(5) of

 

the 1973 Rules and clause 8 of the 1991 Scheme, the Board should have

 

refunded the balance 10% amount to all the members who had applied for

 

refund on finding that land had not been allotted to the Societies and they

 
may have to wait for indefinite period to get the flats.
 
 
 
 

31.   It is also worth noticing that on receipt of the applications made by the

 

members of the Societies for refund of the earnest money and interest, the

 

Secretary of the Board had written letter dated 11.12.1998 to the Finance

 

Secretary seeking his guidance in the matter. However, before the latter

 

could take a decision, the Chief Accounts Officer of the Board remitted the

 

amount of earnest money to the Societies after deducting 10% with a

 
direction that the same be paid to their members.          The Board has not
 

explained why its officers did not wait for the decision of the Finance


                                                                            36
 

Secretary and why the Chief Accounts Officer exhibited undue haste in

 

remitting the amount of earnest money to the Societies after deducting 10%.

 

In any case, after the Finance Secretary decided that earnest money will be

 

refunded to the Societies and their members without any deduction, the

 

Board should have refunded forfeited portion of the earnest money to the

 

members of the Societies and its failure to do so certainly amounted to

 
deficiency in service.
 
 
 

32.   The issue which remains to be examined is whether the Chandigarh

 

Administration and the Board were justified in refusing to refund 18%

 

interest paid by the members of the Societies in view of the observations

 

made by the High Court.        The consideration of this issue needs to be

 

prefaced with a comment that the 1952 Act and the 1973 Rules do not

 

provide for levy of 18% interest on the delayed payment of earnest money or

 

a portion thereof. The 1991 Scheme also did not provide for levy of such

 

interest. Notwithstanding this, the members of the Societies had to pay 18%

 

interest because while dismissing the writ petition, the High Court observed

 

that the Societies who had deposited 10% of the sale consideration and

 

found eligible for allotment or have been allotted sites would be liable to pay

 

the balance 15% with a further interest at the rate of 18% per annum.

 

However, there was nothing either in the interim or the final order of the


                                                                          37
 
High Court from which it can be inferred that the Chandigarh
 

Administration or for that reason the Board was authorised or empowered to

 

refuse refund of 18% interest to the members who did not seek allotment of

 

flat. If the final order passed by the High Court is read in conjunction with

 

interim order dated 11.5.1992, it becomes clear that the Societies were to

 

deposit the remaining amount with interest at the rate of 18% per annum

 

only if they were to accept allotment of flats under the Scheme. Although,

 

the writ petitions were filed by the Societies, the language of the interim

 

order passed by the High Court shows that the learned Judges were thinking

 

of imposing liability of 18% interest only on those members who were to

 

accept allotment of flats to be constructed by the Societies. The members of

 

the Societies did not get an opportunity to accept the allotment because even

 

after deposit of full earnest money and 18% interest, the Board did not allot

 

land to the Societies on which they could construct dwelling units/flats. The

 

Finance Secretary misinterpreted the orders of the High Court and issued

 

wholly arbitrary and unjust directive to the Board not to refund 18% interest

 

to the members of the Societies who had applied for refund before allotment

 

of land by the Board. In our view, the Chandigarh Administration and the

 

Board had no right to refuse refund of 18% interest and absence of direct

 

challenge to clause 11 of memo dated 9.3.2000 was not sufficient to

 

legitimize indirect forfeiture of that amount and the State Commission did

 

not commit any error by directing refund of the amount of interest by


                                                                                     38

 

treating it to be a case of deficiency in service and the National Commission

 

rightly declined to interfere with the order of the State Commission.

 
 
 
 

33.       In the result, the appeals are dismissed. The Board is directed to

 

refund the amount due to the complainants within a period of three months

 

from the date of receipt/production of copy of this judgment. Within that

 

period, the Board shall also pay litigation cost of Rs.25,000/- to each of the

 
complainants.
 
 
 

                                              ..................................J.

                                              [G.S. Singhvi]

 
 
 
 

                                                     ..............................

.....J.
                                              [Asok Kumar Ganguly]
New Delhi
September 22, 2010.

 

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