Supreme Court of India
U.T. CHANDIGARH ADMINISTRATION & ANR.versusAMARJEET SINGH & ORS.
- Citation
- 2009 INSC 359
- Decided
- 17 March 2009
- Disposal
- Disposed off
- Bench
- R V RAVEENDRAN
Holding
The lessees are not consumers and the administration is not a service provider; therefore the complaint is not maintainable under the Consumer Protection Act and the National Commission’s order is set aside.
Summary
The Supreme Court examined whether lessees who obtained leasehold rights to sites in Chandigarh through public auction could invoke the Consumer Protection Act, 1986, on the ground that payment of lease premium instalments and ground rent was conditional upon the administration providing basic amenities. The Court held that the auction of existing sites is a transaction of sale/lease of immovable property, not a service; consequently the lessees are not "consumers" and the administration is not a "trader" or "service provider" within the meaning of the Act. The lease terms do not make payment contingent on amenities, and interest on instalments is governed by the Leasehold Rules (10% per annum on instalments, 24% penal interest on default). The National Consumer Disputes Redressal Commission’s order rescheduling instalments and altering interest was set aside. The appeal of UT Chandigarh was allowed and the lessees’ complaints were dismissed as non‑maintainable.
Issues considered
- Whether a complaint by auction purchasers/lessees against UT Chandigarh for non‑provision of basic amenities is maintainable under the Consumer Protection Act, 1986.
- Whether payment of lease premium instalments and ground rent is conditional upon the provision of amenities.
- What rate of interest applies to delayed instalments and whether the National Commission could lawfully modify it.
- Whether the National Consumer Disputes Redressal Commission had jurisdiction to reschedule instalments and grant relief in a consumer dispute.
Legislation cited
- Consumer Protection Act, 1986s. 2(b), s. 2(c), s. 2(d), s. 2(o), s. 2(q)
Subjects
Consumer Protection Actlease premiumpublic auctionbasic amenitiesservice providerconsumerinterest ratedefault interestleaseholdjurisdictionUT Chandigarhreschedulingpenal interest
Judgment
[2009] 4 S.C.R. 541
'\
U.T. CHANDIGARH ADMINISTRATION & ANR. A
v.
AMARJEET SINGH & ORS.
Civil Appeal No. 1994 of 2006
MARCH 17, 2009
B
[R.V. RAVEENDRAN AND MARKANDEY KATJU, JJ.]
• Consumer Protection Act, 1986:
Auction for grant of lease of sites - Liability to pay lease
premium instalments and annual rent - If conditional upon
UT Chandigarh providing basic amenities to sites leased -
c
Held: It is not conditional - There is no obligation on
Chandigarh administration to provide amenities with reference.
to lease of sites by public auction - It cannot be said that
instalments could be rescheduled so as to begin after
amenities were provided and that interest would start to run D
only when lessee takes possession - When instalments are
not paid on due dates, lessees become liable to pay penal
interest from due date to date of actual payment - Rate of
default interest in r. 12(3A) as on date of auction, would apply
- Hence, order of National Commission rescheduling recovery E
of lease premium instalments and granting certain relief to
lessee in regard to interest, set aside - Capital of Punjab
"· (Development & Regulation) Act, 1952 - Chandigarh
Leasehold Sites & Building Rules, 1973.
s. 2 (b), (c), (d), (q) and (o)- Lease of sites by public auction F
by owner - Complaint by auction purchaser/(essee -
Maintainability of - Held: Not maintainable - Grievance by
purchaser/lessee will not give rise to consumer dispute- There
is no hiring or availing of services - Purchaser/lessee is not a
'consumer' - Owner is not a 'trader' or 'service provider'. G
Words and Phrases:
'Amenity' - Meaning of - In the context of s. 2(b) of the
Capital of Punjab (Development and Regulation) Act, 1952.
541 H
542 SUPREME COURT REPORTS (2009] 4 S.C.R.
A Respondent-lessees secured leasehold interest in T
sites belonging to UT Chandigarh in public auctions held
by it. It is alleged that the appellants did not provide any
amenities in regard to the site and as a result the
respondents suffered huge losses. Respondents filed a
B complaint before the Consumer forum that until the basic
amenities-approach road, sewerage, ground water, street
light, electricity, parking spacl:! were provided, the
appellants should not be legally entitled to claim the •
balance of premium or the annual rent. The complaint was
c allowed with certain directions. In appeal, the National
Commission rescheduled the recovery of lease premium
instalments and granted certain reliefs to respondents in
regard to interest. Hence the present appeals.
Allowing the appeals filed by UT Chandigarh
D Administration and dismissing the appeals filed by the .
lessees-complainant, the Court
HELD: 1.1 A 'com\>laint' is maintainable before a
consumer forum under the Consumer Protection Act,
1986, by a 'complainant'-'consumer' or others specified'
E against a 'trader' or 'service provider'. The terms
'complainant' 'complaint' 'consumer' 'trader' and 'service'
are defined in clauses (b),(c),(d),(q) and (o) of Section 2 of
the Act. Therefore, a consumer forum will have jurisdiction
only when: (i) the complainant is a 'consumer' as defined
F in clause (d) or a person specified in clause (b) of section
2 of the Act; (ii) the respondent is a 'trader' as defined in
clause (q) or a provider of 'service' as defined in clause
(o) of section 2 of the Act; and (iii) the 'complaint' relates
to any of the matters specified in clause (c) of section 2,
G for obtaining any relief provided by order under the Act.
[Para 1OJ [555-F-G]
1.2 Where a public development authority having
invited applications for allotment of sites in a lay out to be
formed or for houses to be constructed and delivered,
H
UT CHANDIGARH ADMINISTRATION & ANR. V. 543
AMARJEET SINGH & ORS.
fails to deliver possession by forming the lay out of sites A
or by constructing the houses within the stipulated period,
the delay may amount to a deficiency in service by treating
the development authority as a service provider and the
allottee as the consumer. But where existing sites are put
up for sale or lease by public auction by the owner, and B
the sale/lease is confirmed in favour of the highest bidder,
the resultant contract relates to sale or lease of immovable
• property. There is no hiring or availing of services by the
person bidding at the auction. Nor is the seller or lessor,
a trader who sells or distributes 'goods'. The sale price or c
lease premium paid by the successful bidder of a site, is
the consideration for the sale or lease, and not consi-
deration for any service or for provision of any amenity
or for sale of any goods. [Para 12] [558-F-H; 559-A]
.I
1.3 Where there is a public auction without assuring D
any specific or particular amenities, and the prospective
purchaser/lessee participates in the auction after having
an opportunity of examining the site, the bid in the auction
is made keeping in view the existing situation, position
and condition of the site. If all amenities are available, he E
would offer a higher amount. If there are no amenities, or
if the site suffers from any disadvantages, he would offer
" a lesser amount, or may not participate in the auction.
Once with open eyes, a person participates in an auction,
he cannot thereafter be heard to say that he would not F
pay the balance of the price/premium or the stipulated
interest on the delayed payment, or the ground rent, on
the ground that the site suffers from certain
disadvantages or on the ground that amenities are not
provided. With reference to a public auction of existing G
sites (as contrasted from sites to be 'formed'), the
purchaser/lessee is not a consumer, the owner is not a
'trader' or 'service provider' and the grievance does not
relate to any matter in regard which a complaint can be
filed. Therefore, any grievance by the purchaser/lessee H
544 SUPREME COURT REPORTS [2009] 4 S.C.R.
A will not give rise to a complaint or consumer dispute and
the fora under the Act will n.ot have jurisdiction to entertain
or decide any complaint by the auction purchaser/lessee
against the owner holding the auction of sites. [Para 14]
[560-C-G]
B Lucknow Development Authority v M.K. Gupta 1994 (1)
SCC 243; Ghaziabad Development Authority v Balbir Singh
2004 (5) sec 65 - relied on. •
Municipal Corporation, Chandigarh & Ors. v Shanti Kun}
Investment (P) Ltd. and Ors. 2006 (4) SCC 109; Sector - 6,
c Bahadurgarh Plot Holders Association v. State of Haryana
1996 (1) sec 485 - distinguished.
1.4 The term 'amenity' as defined in section 2(b) of
the Capital of Punjab (Development and Regulation) Act,
D 1952 includes roads, water-supply, street lighting,
drainage, sewerage, public building, horticulture,
landscaping and any other public utility service provided
at Chandigarh". The term 'amenity' is significantly not
used in section 3 which relates to transfer of land by sale
or lease by the government. Neither ss 6 and 7 nor any
E
other provision of the Development Act casts any
obligation on the Central Government to provide
amenities to plots sold/leased by public auction.
Therefore, the assumption that there is a statutory
obligation on the part of the Central Government to
F provide amenities, because the word 'amenity' is defined
in the Act is erroneous and baseless. The word 'amenity'
is used in the context of two specific matters. The first is
that the transferee/occupier of a site should not use the
site or leave it in a condition that it will prejudicially affect
G the amenities in any part of Chandigarh. The second is
that Central Government can levy fees/taxes in respect of
any site/building, on the transferee/occupier for the
purpose of providing, maintaining or continuing any
amenity at Chandigarh. Thus, definition of the 'amenity'
H in the Development Act, does not in any manner cast any
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 545
AMARJEET SINGH & ORS.
obligation on Chandigarh administration to provide A
amenities with reference to the auction of leasehold rights
relating to sites belonging to Central Government. [Para
16] [562-8-D; 563-C-F]
1.5 The National Commission proceeded on
erroneous and baseless assumptions that there is no 8
obligation to pay the instalments until the amenities were
provided and consequently the instalments could be
rescheduled so as to begin after the amenities were
provided and that interest would sta,rt to run· only when
the lessee takes possession. The National Commission C
held that as the auction sale was in December 1996 and
the appellant had however provided all the basic facilities
by 1999 and the matter had been pending thereafter
before the Consumer fora, the three annual instalments
would get postponed and commence only after its D
decision, that is from 1.5.2005, instead of t~e instalment
schedule specified by the appellants (which commenced
in 1997). [Paras 17 and 24] [567-C-D; 576-D]
Shanti Kunj Investments Pvt. Ltd. v. U. T Administration
Chandigarh AIR 2001 P&H 309; DLJ Builders (P) Ltd. v. E
Advisor to the Administrator Chandigarh Administration CWP
~ No. 13695 of 2001 dated 18. 2. 2002; Municipal Corporation,
Chandigarh v. Shantikunj Investments Pvt. Ltd. 2006 (4) SCC
109 - referred to.
F
1.6 The equated instalment includes interest only
upto the dates stipulated as due dates. When the
instalments are not paid on the due dates, the lessees
become liable to pay penal interest at 24% per annum from
the due date to date of actual payment (vide clause 4 of G
General Term & Conditions of Auction and clause 5 of
Letter of allotment and Rule 12(3A) of the Leasehold
Rules). [Para 19] [571-D-E]
1.7 Section 7 of the Act empowers the Central
Government to levy such fees and taxes as it may consider H
546 SUPREME COURT REPORTS [2009] 4 S.C.R.
A necessary (which shall be in addition to any fee or tax for
the time being leviable under any other law) in respect of
any site or building on the transferee or the occupier
thereof, for the purpose of providing, maintaining or
continuing any amenity at Chandigarh. This provision
B clearly demonstrates that the providing amenities is not
linked to auction of plots on lease basis and the premium
paid is not for providing any amenity. The Central
Government is required to provide amenities by levying ~
fees and taxes in respect of sites/plots on the transferees/
occupiers thereof. Therefore, it is doubtful whether any
c proportionate reduction in penal/default interest could be
made on the ground of non-provision of amenities. [Para
24] [576-E-H]
1.8 The submission that the rate of default interest
D was only 12% per annum under Rule 12(3A) of the
Leasehold Rules as on the date of the auction and
therefore clause (4) of the General Terms & Conditions of
Sale and clause (5) of the letter of allotment, providing for
payment of default interest @ 24% per annum was illegal
and unauthorized was urged for the first time in this Court.
E
The rate of default interest mentioned in Rule 12(3A) as
on the date of auction, would alone apply. If Rule 12(3A)
was not amended increasing the rate of default interest
from 12% p.a. to 24% p.a. as on the date of auction, then
the rate of interest stipulated in Rule 12(3A) as it stood on
F the date of auction will apply. The appellants could not
charge default interest at a rate higher than what was
provided in the said rule. If any higher rate has been
charged by way of default interest and. it is not corrected,
it is open to the lessees to seek relief in accordance with
G law. [Para 25] [577-B-D]
Municipal Corporation, Chandigarh v. Shantikunj
Investments Pvt. Ltd. 2006 (4) SCC 109 - distinguished.
Sector - 6, Bahadurgarh Plot Holders Association v. State
H of Haryana - 1996 (1) SCC 485; Secretary, Bhubaneswar
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 547
\.
AMARJEET SINGH & ORS.
Development Authority v Susanta Kumar Mishra C.A.No. 605/ A
2009 decided on 30.1.2009 by Supreme Court - referred to.
Case Law Reference
1994 (1) sec 243 Relied on. Para 11
B
1996 (1) sec 485 Distinguished. Para 11, 20
2004 (5) sec 65 Relied on. Para 11
2006 (4) sec 109 Distinguished. Para11,23&24
AIR 2001 P&H 309 Referred to. Para 18 c
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1994
of 2006
From the Judgement and Order dated 21.02.2005 of the
_,
Hon'ble National Consumer Disputes Redressal Commission, D
New Delhi in F.A. No. 499 of 2003.
And Civil Appeal No. 1995 of 2006,
CA No. 1633 of 2009@ SLP [CJ No.25250 of 2007;
E
CA No. 1634 of 2009@ SLP [CJ No.4518 of 2008,
CA No. 1635 of 2009@ SLP [CJ No.4519 of 2008,
~·
CA No. 1636 of 2009 @ SLP [CJ No.4520 of 2008,
CA No. 1637 of 2009@ SLP [CJ No.4523 of 2008, F
CA No. 1638 of 2009@ SLP [CJ No.4525 of 2008,
CA No. 1639 of 2009@ SLP [CJ No.6362 of 2008,
CA No. 1640 of 2009@ SLP [CJ No. 6363 of 2008,
G
CA No. 1641 of 2009 @ SLP [CJ No.6364 of 2008,
CA No. 1642 of 2009 @ SLP [CJ No.6365 of 2008,
CA No. 1643 of 2009@ SLP [CJ No.6366 of 2008,
H
548 SUPREME COURT REPORTS (2009] 4 S.C.R.
A CA No. 1644 of 2009@ SLP [CJ No.6367 of 2008,
CA No. 1645 of 2009 @ SLP [CJ No.6368 of 2008,
CA No. 1646 of 2009@ SLP [CJ No.6369 of 2008,
CA No. 1647 of 2009@ SLP [CJ No. 6372 of 2008,
B
CA No. 1648 of 2009 @ SLP [CJ No.6373 of 2008,
CA No. 1649 of 2009@ SLP [CJ No.6374 of 2008,
CA No. 1650 of 2009@ SLP [CJ No.6375 of 2008,
c CA No. 1651 of 2009@ SLP [CJ No.6376 of 2008,
CA No. 1652 of 2009 @ SLP [CJ No.6377 of 2008,
CA No. 1653 of 2009 @ SLP [CJ No.6378 of 2008,
D CA No. 1654 of 2009@ SLP [CJ No.6379 of 2008,
CA No. 1655 of 2009 @ SLP [CJ No.6380 of 2008,
CA No. 1656 of 2009@ SLP [CJ No.6381 of 2008,
CA No. 1657 of 2009 @ SLP [CJ No.6382 of 2008,
E
CA No. 1658 of 2009@ SLP [CJ No.6383 of 2008,
CA No. 1659 of 2009@ SLP [CJ No.6384 of 2008,
CA No. 1660 of 2009 @ SLP [CJ No.6385 of 2008,
F CA No. 1661 of 2009 @ SLP [CJ No.15831 of 2008,
CA No. 1662 of 2009 @ SLP [CJ No.15859 of 2008.
WITH
CA NOS.1674-1686 OF 2009, [@ SLP (C) NOS. 3271
G TO 3283 OF 2008]
Kamini Jaiswal, P.N. Puri. Jatinder Kumar Bhatia, K.P.
Dubey, for the Appellants.
P.S.Patwalia Senthil Jagadeesan, Himanshu Shekhar,
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 549
AMARJEET SINGH & ORS.
Kailash Chand, K.G. Bhagat, Manju Bhagat, Ehraz Zarar, A
Mahohar Singh Bakshi, Vineet Bhagat, for the Respondent.
The Judgement of the Court was delivered by
R.V. RAVEENDRAN, J.
Leave granted in the special leave petitions. These appeals B ,
are filed by Union Territory of Chandigarh (for short 'UT
Chandigarh'). C.A. Nos.1994 of 2006 and 1995 of 2006 are
filed against a common order dated 21.2.2005 passed by the
National Consumer Disputes Redressal Commission ("National
Commission" for short). Other appeals are filed against the C
common order dated 21.2.2007 passed by the National
Commission following the earlier order dated 21.2.2005. By
these orders, the lease premium instalments have been
rescheduled and certain reliefs have been granted in regard to
interest, to the lessees - respondents (who had secured D
leasehold interest in sites belonging to UT Chandigarh in public
auctions held by it).
FACTS OF THE CASE
2. As the facts are similar, we will refer to the facts of only E
one case (CA No.1994/2006 arising from FA No.499/2003 on
the file of the National Commission). The Estate Officer, Union
'"' Territory Chandigarh Administration issued an advertisement
notifying the auction of 74 residential sites and 71 commercial
sites in different sectors of Chandigarh, on leasehold basis F
subject to the General Terms and Conditions regarding auction.
The relevant terms were:-
(i) The auction was for grant of a lease of sites for 99 years.
The auction was governed by the provisions of the Capital of
Punjab (Development & Regulation) Act, 1952 ('Development G
Act' for short) and Chandigarh Leasehold Sites &Building Rules,
1973 ('Leasehold Rules' for short).
(ii) In addition to the premium for lease (to be offered by
bids), the lessee had to pay annual rent at the rate of 2.5% of H
550 SUPREME COURT REPORTS [2009] 4 S.C.R.
A the preITTium for the first 33 years, liable to be raised to 3.375%
of the premium for the next 33 years and 5% of the premium for
the remaining 33 years;
(iii) 25% of the bid amount had to be paid by demand draft
or cash at the fall of the hammer. The remaining 75% premium
B could be paid either in a lump sum with 30 days of the auction
without any interest, or at the option of the lessee, in three
equated annual instalments along with interest at 10% per
annum, the first instalment becoming due on the expiry of one
year from the date of auction.
c
(iv) If the instalments of the lease of premium or the ground
rent were not paid on the due dates, interest at the rate of 24%
per annum should be paid from the due date to date of payment.
(v) The successful bidder should complete the construction
D of the building on the plot within three years from the date of
auction in accordance with the Punjab Capital (Development &
Regulation) Building Rules, 1952 ('Building Rules' for short)
(vi) The government would not be responsible for leveling
of uneven sites.
E
(vii) In the event of default, breach or non compliance of
any of the terms and conditions of lease, the lease was liable to
be cancelled and the site/building resumed and the amount paid
to government towards premium/rent forfeited either wholly or
F in part.
(viii) The lessee was liable to pay all taxes and fees as
may be levied by the Chandigarh Administration in respect of
the site and the building to be constructed thereon.
G
3. Respondents 1 to 4 were the successful bidders in
regard to plot No.173 in Sector No.39C & D at the auction held
on 18.12.1996. The lease premium bid offered by them was
Rs.20,45,000. The acceptance of the bid cum confirmation of
the lease of the plot was communicated to respondents 1 to 4
by letter dated 19.5.1997 (for short 'letter of allotment') enclosing
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 551
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
therewith a letter offering possession of the leased site. The A
said letter of allotment acknowledged the receipt of Rs.511,250
towards 25% of the premium and permitted the respondents to
pay the balance 75% of the premium with 10% interest thereon
in 3 equated instalments of Rs.6,16,736/- on 18.12.1997,
18.12.1998 and 18.12.1999. It also required the respondents B
to pay annual ground rent of Rs.51125/- during the first 33 years
of lease. The letter of allotment set out and reiterated the terms
and conditions of lease and required the respondents to enter
into a lease deed within six months and take possession of the
site before the lease deed is executed. c
4. The respondents filed a complaint before the Consumer
Disputes Redressal Commission, Union Territory, Chandigarh
(for short 'UT Commission') under the Consumer Protection Act,
1986 ('Act' for short) in the year 1999. In the said complaint they
alleged that in addition to the initial payment of Rs.511250/- D
towards the lease premium, they had paid Rs.616,736/- plus
Rs.51,125/- on 9.1.1998, Rs.168,000/- on 4.3.1999 and
Rs.200,000/- on 12.5.1999. They alleged that the appellant did
not provide any amenities in regard to the site, and as a result
they had suffered huge losses. They contended that until the E
basic amenities were provided, the appellants were not legally
entitled to claim the balance of premium or the annual rent. They
sought the following directions to the appellants :
(i) Not to recover the balance amount of premium or the
interest on the premium or the ground rent until the F
basic amenities (approach road, sewerage, ground
water, street light, electricity, parking space) were
provided. ·
(ii) To provide the basic amenities so as to enable them G
to raise a construction on the site.
(iii) To pay compensation of Rs.10 lacs for harassment
and blocking of various payments made by them.
(iv) To pay interest at the rate of 18% per annum on the H
552 SUPREME COURT REPORTS [2009] 4 S.C.R.
A amounts paid by them, from the date of payment till
all the basic amenities were provided.
5. The appellants filed a reply resisting the complaint. It
was submitted that the respondents, having accepted the terms
and conditions of lease contained in the conditions of auction
B and the letter of allotment were not entitled to wriggle out of the
contract terms or refuse to pay the balance. It was also
contended that the respondents were liable to pay the 75%
'
balance premium in three annual instalments and in addition
pay interest@ 24% per annum on the delayed instalments. The
c appellants submitted that they had not made any representation
to the public in general or the respondents in particular that the
plots auctioned were 'fully developed' plots or that the plots are
situated in fully developed areas; nor was payment of premium
or rent subject to Chandigarh Administration providing any 'basic
D amenities'. Therefore, the respondents could not link the issue
of payment of instalments or ground rent with the issue of basic
amenities. It was also submitted neither the terms of lease nor
the provisions relating to auction of leasehold rights in the
Development Act and the Leasehold Rues, cast any obligation
E upon the appellants to provide the basic amenities required by
the respondents and ensure that the site auctioned was situated
in a fully developed area; and that the auction was on "as is
where is" basis and the bidders were fully aware of the situation
and condition of the site for which they were bidding, as also
F the terms and conditions subject to which the auction was held.
The appellants also contended that the complaint was not
maintainable.
6. The U.T. Commission allowed the complaint by the
respondents, alongwith other similar complaints, by a common
G order dated 31.3.2003 with the following directions :
(i) The date of auction for the purpose of payment of
price shall be deemed to be date on which plinth
level and all the basic amenities demanded in the
complaint cases are actually provided.
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 553
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
... (ii) An officer of the rank of Chief Engineer (or next rank) A
of UT Chandigarh shall certify that the plinth level as
well as other basic requirements/amenities were
provided. The date of such certificate shall be
considered to be the date of auction.
8
(iii) The instalments shall be rescheduled accordingly and
the remaining price of the plots shall be deposited
after rescheduling the instalments without any change
in the bid price offered.
(iv) The lease rent shall be payable from the date of C
certificate of the Chief Engineer mentioned above.
(v) Interest on the amount due by the lessee shall be
payable only from the date the aforesaid certificate
is issued.
.; D
(vi) The amount deposited by the complainants shall earn
interest @ 18% per annum till the essential
requirements were provided.
[Note: Providing of "plinth level" directed by UT
Commission apparently refers to filling up of low lying sites so E
as to bring them to the road level.]
7. Feeling aggrieved, the appellants filed an appeal before
the National Commission. The National Commission allowed
the appeal in part by a common order dated 21.2.2005, and F
modified and restricted the reliefs granted by the
U.T.Commission as follows:
(1) The Chandigarh Administration shall reschedule the
recovery of three instalments and recover the same
)
on (i) 1.5.2005, (ii) 1.5.2006 and (iii) 1.5.2007. G
(2) Complainants shall pay interest @ 10% on the
instalment amounts from the date of taking
possession of the plot. This would be in conformity
with condition No.5 of the allotment letter which H
554 SUPREME COURT REPORTS (2009] 4 S.C.R.
A provides that balance of 75% of the premium is to
be paid with 10% interest.
(3) The complainants shall also pay the ground rent as
per the prevailing rules.
B However, the National Commission made it clear that:
(a) No penalty shall be levied for delayed payment of
instalments or ground rent as the complaints were ...
pending with the State Commission which had
ultimately granted relief to the complainants;
c
(b) In respect of the premium instalments payable on 1st
May, 2005, 2006 and 2007, complainants shall pay
interest@ 10% and in case of any default in payment
of instalments as above, it would be open to the
D appellants to recover interest as per the rules.
8. The facts of the other appeals are also similar. Only the
plot numbers/dates/amounts vary. CA No.1995/2006 arises out
of FA No.500/2003 disposed by the said common order dated
21.2.2005. All other appeals arise from a common order dated
E
21.2.2007 of the National Commission which was passed in
terms of the earlier order dated 21.2.2005, the only change
being to alter the dates of rescheduled instalments as 1.5.2007,
1.5.2008 and 1.5.2009. The orders dated 21.2.2005 and
21.2.2007 of the National Commission are challenged in these
F
appeals.
GROUNDS OF CHALLENGE
9. The appellants have urged the following common
contentions in these appeals :
G '
(i) When the auction of sites (for grant of a lease for 99
years) was in exercise of the power of the government (UT
Chandigarh Administration) under the provisions of the
Development Act ;, , accordance with the Leasehold Rules, it
H involves neither sale of goods nor rendering of any service. The
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 555
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
.c act of leasing plots by auction by the appellants therefore did A
not result in the successful bidder becoming a 'consumer' or
the appellants becoming 'service providers'. In the absence of
hiring or availing of any service, the question of deficiency in
service or unfair or restrictive trade practice with reference to a
service, did not arise and the complaint under the Act was not B
maintainable.
(ii) There was no obligation on the part of the appellants,
either statutory or contractual, to provide the 'basic amenities'
demanded by the respondents with reference to the lease of
sites by public auction. The payment of the premium (which was C
permitted to be paid in instalments on the request of the
successful bidder) and the annual rent was not conditional upon
the UT Chandigarh providing any basic amenities. Payment of
the amounts due coufd not be postponed on the ground of
" absence of amenities. Nor could payment of default interest be D
avoided, once there was default. Therefore, even assuming that
the complaint was maintainable, the National Commission was
not justified in interfering with the terms of the contract of lease
and giving relief in regard to interest, which was legally due.
RE : FIRST CONTENTION E
10. A 'complaint' is maintainable'before a consumer forum
~ under the Consumer Protection Act, 1986, by a 'complainant'
('consumer' or others specified) against a 'trader' or 'service
provider'. The terms 'complainant' 'complaint' 'consumer' F
'trader' and 'service' are defined in clauses (b},(c},(d),(q) and
(o) of Section 2 of the Act. Therefore, a consumer forum will
have jurisdiction only when : (i) the complainant is a 'consumer'
as defined in clause (d) or a person specified in clause (b) of
section 2 of the Act; (ii) the respondent is a 'trader' as defined G
in clause (q) or a provider of 'service' as defined in clause (o) of
section 2 of the Act; and (iii) the 'complaint' relates to any of the
matters specified in clause (c) of section 2, for obtaining any
relief provided by order under the Act. It therefore follows that
, where the complainant is not a 'consumer' (or a person specified H
556 SUPREME COURT REPORTS [2009] 4 S.C.R.
~
,,.
~
A in clause (b) of section 2), or where the respondent is not a
'trader' or 'service provider' or where the complaint does not
relate to matters enumerated in clause (c) of Section 2 of the
Act, the consumer forum will have no jurisdiction either to
entertain any complaint or grant any relief under the Act.
B 11. The respondents relied upon the decisions in Lucknow
Development Authority v. M.K. Gupta - 1994 (1) SCC 243,
Sector - 6, Bahadurgarh Plot Holders Association v. State of .
Haryana - 1996 (1) SCC 485, Ghaziabad Development
Authority v. Balbir Singh - 2004 (5) SCC 65 and Municipal
c Corporation, Chandigarh & Ors. v. Shanti Kunj Investment (P)
Ltd. and Ors. - 2006 (4) SCC 109, to contend that the complaints
were maintainable and relief sought could be granted. We may
straight away note that the decisions in Bahadurgarh and
Shantikunj will not be of any assistance to decide the issue of
D maintainability, as those cases did not relates to complaints
under the Consumer Protection Act, but arose out of writ
petitions.
11.1 In Lucknow Development Authority v. M. K. Gupta
[1994 (1) SCC 243] this Court held that if the nature of duty or
E function performed was a service as defined under the Act, then
the provider of the service, irrespective of whether it is a private
body or statutory or a public authority, would be amenable to
the provisions of the Act This Court held :-
F "As pointed out earlier the entire purpose of widening the
definition (of 'service' under section 2(o) of the Consumer
Protection Act) 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 '
G
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. Tne l::itter being for consideration is service as
defined in the Act. Similarly when a statutory authority
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 557
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
develops land or allots a site or constructs a house for the A
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 B
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 c
of particular standard, quality or grade. Such deficiencies
or omissions are defined in sub-clause (ii) or clause (r)
of Section 2 as unfair trade practice. xxxxxTherefore 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
0
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 E
transaction is covered in the expression 'service or 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 F,
free of charge or under a constraint of personal service is
included in it."
(emphasis supplied).
• >- 11.2 In Ghaziabad Development Authority v. Balbir Singh G
[2004(5) SCC 65] this Court held :-
''Thus the law is that the Consumer Protection Act, 1986
has a wide reach and the Commission has jurisdiction
even in cases of service rendered by statutory and public H
558 SUPREME COURT REPORTS [2009) 4 S.C.R
A authorities. Such authorities become liable to compensate
t '
for misfeasance in public office i.e. an act which is
oppressive or capricious or arbitrary or negligent provided
loss or injury is suffered by a citizen. The Commission/
Forum must determine that such sufferance is due to mala
B fide or capricious or oppressive act. It can then determine
the amount for which the authority is liable to compensate
the consumer for his sufferance due to misfeasance in
public office by the officers. Such compensation is for .....
vindicating the strength of the law. It acts as a check on •
c arbitrary and capricious exercise of power. It helps in curing
social evil. It will hopefully result in improving the work
culture and in changing the outlook of the officer/public
servant. No authority can arrogate to itself the power to
act in a manner which is arbitrary. Matters which require
immediate attention should not be allowed to linger on.
D
The consumer must not be made to run from pillar to post.
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."
E ~
12. The decisions in Lucknow Development Authority and '
Ghaziabad Develoopment Authority make it clear that where
a public development authority having invited applications for .A
allotment of sites in a lay out to be formed or for houses to be
F constructed and delivered, fails to deliver possession by forming
the lay out of sites or by constructing the houses within the
stipulated period, the delay may amount to a deficiency in
service by treating the development authority as a service
provider and the allottee as the consumer. But where existing
sites are put up for sale or lease by public auction by the owner,
G ii
and the sale/lease is confirmed in favour of the highest bidder,
the resultant contract relates to sale or lease of immovable
property. There is no hiring or availing of services by the person
bidding at the auction. Nor is the seller or lessor, a trader who
sells or distributes 'goods'. The sale price or lease premium
H
U.T. CHANDIGARH ADMINISTRATION &ANR. V. 559
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
J
paid by the successful bidder of a site, is the consideration for A
the sale or lease, and not consideration for any service or for
provision of any amenity or for sale of any goods.
13. In Lucknow Development Authority, it was held that
where a developer carries on the activity of development of land
and invites applications for allotment of sites in a developed B
layout, it will amount to 'service', that when possession of the
allotted site is not delivered within the stipulated period, the delay
may amount to a deficiency or denial of service, and that any
claim in regard to such delay is not in regard to the immovable
property but in regard to the deficiency in rendering service of a C
particular standard, quality or grade. The activity of a developer,
that is development of land into layout of sites, inviting
applications for allotment by assuring formation of a lay out with
amenities and delivery of the allotted sites within a stipulated
time at a particular price, is completely different from the auction D
of existing sites either on sale or lease. In a scheme for
development and allotment, the allottee has no choice of the
site allotted. He has no choice in regard to the price to be paid.
The development authority decides which site should be allotted
to him. The development authority fixes the uniform price with E
reference to the size of plots. In most development schemes,
the applications are invited and allotments are made long before
the actual development of the lay out or formation of sites. Further
the development scheme casts an obligation on the
development authority to provide specified amenities. F
Alternatively the developer represents that he would provide
certain amenities, in the Brochure or advertisement. In a public
auction of sites, the position is completely different. A person
interested can inspect the sites offered and choose the site
which he wants to acquire and participate in the auction only in G
regard to such site. Before bidding in the auction, he knows or
is in a position to ascertain, the condition and situation of the
site. He knows about the existence or lack of amenities. The
auction is on 'as is where is basis'. With such knowledge, he
participates in the auction and offers a particular bid. There is H
560 SUPREME COURT REPORTS (2009] 4 S.C.R.
A no compulsion that he should offer a particular price. When the \
sites auctioned are existing sites, without any assurance/
representation relating to amenities, there is no question of
deficiency of service or denial of service. Where the bidder has
a choice and option in regard to the site and price and when
8 there is no assurance of any facility or amenity, the question of
the owner of the site becoming a service provider, does not
arise even by applying the tests laid down in Lucknow
Development Authority or Balbir Singh. "
14. Where there is a public auction without assuring any
c specific or particular amenities, and the prospective purchaser/
lessee participates in the auction after having an opportunity of
examining the site, the bid in the auction is made keeping in
view the existing situation, position and condition of the site. If
all amenities are available, he would offer a higher amount. If
D there are no amenities, or if the site suffers from any
disadvantages, he would offer a lesser amount, or may not
participate in the auction. Once with open eyes, a person
participates in an auction, he cannot thereafter be heard to say
that he would not pay the balance of the price/premium or the
E stipulated interest on the delayed payment, or the ground rent,
on the ground that the site suffers from certain disadvantages
or on the ground that amenities are not provided. With reference
to a public auction of existing sites (as contrasted from sites to
be 'formed'), the purchaser/lessee is not a consumer, the owner
F is not a 'trader' or 'service provider' and the grievance does not
relate to any matter in regard which a complaint can be filed.
Therefore, any grievance by the purchaser/lessee will not give
rise to a complaint or consumer dispute and the fora under the
Act will not have jurisdiction to entertain or decide any complaint
by the auction purchaser/lessee against the owner holding the
G
auction of sites.
RE : SECOND CONTENTION
15. The complaint by the respondents proceeded on the
assumption that there was an obligation on the part of the
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 561
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
appellants to provide amenities in the nature of approach road, A
water supply lines, drainage system, rainwater drainage and
electricity and that unless such amenities were provided, they
were not liable to pay the premium or interest on the premium
or the ground rent. As noticed above, neither the terms and
conditions of auction, nor the advertisement relating to the B
auction, nor the letter of allotment contained any assurance
regarding provisions of any such amenities with reference to
the sites put up for auction. To get over the absence of such
term or assurance, the respondents relied upon the definitions
of the words 'site' and 'amenity' in the Development Act and the c
provisions of the Leasehold Rules to contend that there was a
statutory obligation to provide the amenities and failure to
provide such amenities gave a cause of action to approach the
Consumer Forum with a complaint against the appellants and
also withhold payment of the premium instalments and ground D
rent. On the other hand, the appellants contend that they had no
obligation, either contractual or statutory, to provide amenities
of any nature, with reference to the auction of the leasehold rights
of sites and the lack of amenities or alleged non-provision of
amenities cannot be a ground for withholding the premium and
re~. E
16. In view of the rival contentions, it becomes necessary
to refer to the relevant provisions of the Development Act and
the Leasehold Rules.
16.1) "}:he Development Act re-enacts and modifies the F
law in relation to the development and regulation of new capital
of Pu"njab. Section 20) defines 'site' as meaning 'any land' which
is transferred by the Central Government under section 3.
Section 3 relates to the power of Central Government in respect
of transfer of land and buildings in Chandigarh. Sub-section (1) G
thereof provides that subject to the provisions of the said section,
the central government may sell, lease or otherwise transfer,
whether by auction, allotment or otherwise, any land or building
belonging to the government in Chandigarh on such terms and
conditions as it may subject to any rules that may be made under H
562 SUPREME COURT REPORTS [2009] 4 S.C.R.
A the Act, think fit to impose. Sub-section (2) thereof, provides \
that the consideration for any transfer under sub-section (1)
shall be paid to the central government in such a manner and in
such instalments and at such rate of interest as may be
prescribed.
B 16.2) The term 'amenity' is defined in section 2(b) of the
Development Act as follows :
"2(b). 'amenity' includes roads, water-supply, street lighting,
drainage, sewerage, public building, horticulture,
c landscaping and any other public utility service provided
at Chandigarh".
Section 4 relates to power to issue directions in respect
of erection of building. Section 5 relates to bar to erection of
buildings in contravention of building rules. The term 'amenity'
D is significantly not used in section 3 which relates to transfer of
land by sale or lease by the government. The term 'amenity' is
referred only in sections 6 and 7 which are extracted below :
"6. Power to require proper maintenance of site or
building. - If it appears to the Chief Administrator that the
E condition or use of any site or building is prejudicially
affecting the proper planning of, or the amenities in, any
part of Chandigarh or the interests of the general public
there, he may serve on the transferee or occupier of that
site or building a notice requiring him to take such steps
F and within such period as may be specified in the notice
and thereafter to maintain it in such a manner as may be
specified therein.
7. Levy of fee or tax for amenities. - (1) For the purposes
of providing maintaining or continuing any amenity at
G
Chandigarh the central government may levy such fees or
taxes as it may consider necessary (which shall be in
addition to any free or tax for the time being leviable under
any other law) in respect of any site or building on the
transferee or occupier thereof. -
H
UT CHANDIGARH ADMINISTRATION & ANR. V. 563
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
(2) If the central government considers it necessary or A
expedient so to do having regard to the fact that the
transferee or occupier is a religious or charitable institution
or that he does not enjoy the amenity for which any fee or
tax is levied, the central government may, by general or
special order, exempt wholly or partly any class of such B
transferees or occupiers from the payment of fees or taxes
,. levied under sub-section (1 )."
Neither Sections 6 and 7 nor any other provision of the
Development Act casts any obligation on the central government
to provide amenities to plots sold/leased by public auction. C
Therefore the assumption that there is a statutory obligation on
the part of the Central Government to provide amenities,
because the word 'amenity' is defined in the Act is erroneous
and baseless. As noticed above, the word 'amenity' is used in
the context of two specific matters. The first is that the transferee/ D
occupier of a site should not use the site or leave it in a condition
that it will prejudicially affect the amenities in any part of
Chandigarh (vide section 6). The second is that central
government can levy fees/taxes in respect of any site/building,
on the transferee/occupier for the purpose of providing, E
maintaining or continuing any amenity at Chandigarh. Thus
definition of the 'amenity' in the Development Act, does not in
any manner cast any obligation on Chandigarh administration
with reference to the auction of leasehold rights relating to sites
belonging to central government. F
16.3) Section 22 of the Development Act empowers the
Central Government to make rules for carrying out the purposes
of the Act, in particular and among others : (a) the terms and
conditions on which any land or building may be transferred by
the (central government) under this Act; (b) the manner in which G
consideration money for any transfer may be paid; (c) the rate
of interest payable, and the procedure for payment of
instalments, interest, fees, rents or other dues payable under
this Act; (d) the terms and conditions under which the transfer of
any right in any site or building may be. permitted; (e) erection of H
564 SUPREME COURT REPORTS [2009] 4 S.C.R.
\
A any building or the use of any site; (f) levy of fees or taxes under
Section 7 of the Act.
16.4) The Leasehold Rules were made in 1973 in regard
to lease of properties by UT Chandigarh. We extract below the
relevant rules:-
B
"3. (2). 'premium' means the price paid or promised for
the transfer of a right to enjoy immovable property under
these Rules."
"4. The Chandigarh Administration may demise sites and
c buildings at Chandigarh on lease for 99 years. Such leases
may be given by allotment or by auction in accordance
with these Rules.
xxx xxx
D
6. Commencement and period of lease. - The lease shall
commence from the date of allotment or auction as the
case may be, and shall be for a period of 99 years. After
the expiry of said period of 99 years the lease may be
E renewed for such further period and on such terms and
conditions as the Government may decide.
xxx xxx
8. Lease by allotment, Procedure for : xxx (not relevant)
F xxx
9. Lease by auction. procedure for.-ln case of auction, at
least 25 per cent of the bid accepted by the auctioning
officer shall be paid on the spot by the intending lessee in
G the prescribed mode of payment in accordance with Rule
12:
Provided that the Estate Officer may, in his absolute
discretion, allow the successful bidder to deposit in the
prescribed mode of payment not less than 10 per cent of
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 565
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
the bid on the condition that the difference between the A
amount deposited and 25 per cent of the bid shall be
deposited in the same manner within 30 days of auction.
9A Extension of period : xxx (not relevant) xxx
10. Delivery of possession.-Actual possession of the B
site/building shall be delivered to the lessee on payment
>.
of 25 per cent of the premium in accordance with Rule 8
or Rule 9 as the case may be:
Provided that no ground rent payable under Rule 13 and C
interest on the instalments of premium payable under sub-
rule (2) of Rule 12 shall be paid by the lessee till the actual
and physical possession of the site/building is delivered
or offered to be delivered to him, whichever is earlier.
11. Premium.-(1) In case of anotment, the premium shall D
be such amount as may be determined by the Chandigarh
Administration.
(2) In case of auction, the premium shall be the bid
accepted by the Estate Officer, as a result of bidding in E
open auction.
12. Payment of premium and consequences of non-
payment or late payment.-(1) In addition to payment of
25 per cent premium under Rule 8 or 9 as the case may
be, the remaining 75 per cent premium may be paid 1n F
lump sum within 30 days from the date of allotment/auction
without any interest.
(2) If payment is not made in accordance with sub-rule (1)
of this rule, the balance of the 75 per cent premium shall G
be paid in three annual equated instalments or more as
the Chief Administrator may in exceptional circumstances
of a case fix with prior approval of the Chief Commissioner
along with interest at the rate of 10 per cent per annum or
H
566 SUPREME COURT REPORTS [2009] 4 S.C.R.
\v
A at such higher rate of interest as may be fixed by the Chief
Administrator by a notification in the Official Gazette before
the commencement of the lease. The first instalment shall
become payable after one year from the date of allotmenU
auction:
B
(3) xx x (Not relevant) x x x
(3-A) In case any equated instalment or ground rent or
.
part thereof is not paid by the lessee by the date on which
it became payable he shall be liable to pay in respect of
....
c that instalment or ground rent or part thereof as the case
may be, interest calculated at the rate of twenty-four per
cent per annum from the date on which the instalment or
ground rent became payable till such date it is actually
paid.
D
13. Rent and conseguences of non-12aY'.ment.-ln addition
to the premium, whether in respect of site or building, the
lessee shall pay rent as under -
(i) Annual rent shall be 2 % per cent of the premium for the
E first 33 years which may be enhanced by the Chandigarh
Administration to 3 % per cent of the premium for the next
33 years and to 5 per cent of the premium for the remaining ...
period of the lease.
F (ii) Rent shall be payable annually on the due date without
any demand from the Estate Officer:
Provided that the Estate Officer may for good and sufficient
reasons extend the time for payment of rent upto six months
on the whole on further payment of 6 per cent per annum
G
interest from the due date upto the date of actual payment.
(iii) If rent is not paid by the due date, the lessee shall be
liable to pay a penalty not exceeding 100 per cent of the
amount due which may be imposed and recovered in the
H manner laid down in section 8 of the Capital of Punjab
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 567
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
,J (Development and Regulation) Act, 1952, as amended by A
Act No.17 of 1973.
14. Execution of lease deed.-(1) After payment of 25 per
cent premium the lessee shall execute a lease deed in
Form B, B-1, B-11 or C, as the case may be, in such manner
8
as may be directed by the Estate Officer within six months
of the date of allotment/auction or within such further period
> as the Estate Officer m'!y, for good and sufficient reasons,
allow.
17. The National Commission has proceeded on c
erroneous and baseless assumptions that there is no obligation
to pay the instalments until the amenities were provided and
consequently the instalments could be rescheduled so as to
begin after the amenities were provided and that interest would
start to run only when the lessee takes possession. In view of D
the conflicting views of the High Court as to whether instalments
are payable only after the government provides the basic
amenities, the National Commission circumvented the issue. It
held that as the appellant herein had however provided all the
basic facilities by 1999 and the matter had been pending E
thereafter before the Consumer fora, the three ar. .. ual
instalments would get postponed and commence only after its
decision, that is from 1.5.2005, instead of the instalment
schedule specified by the appellants (which commenced in
1997).
F
18. The conflict referred to by the National Commission
was with reference to the decisions of the High Court in Shanti
Kunj Investments Pvt. Ltd. v. U. T Administration Chandigarh
reported in AIR 2001 P&H 309 (CWP No. 95911999 decided
on 2.2.2001) and in DLJ Builders (P) Ltd. v. Advisor to the G
Administrator Chandigarh Administration (CWP No. 13695 of
2001 dated 18.2.2002).
18.1) Shantikunj Investments related to an auction of
leasehold rights of a site by the UT Chandigarh. In that case,
the lessee found large number of jhuggis, adjacent to the plot H
568 SUPREME COURT REPORTS [2009] 4 S.C.R.
A which were not removed inspite of his repeated requests. He
also found no amenities such as road, water, landscaping etc.
Therefore the lessee filed a writ petition before the High Court
seeking relief. The High Court declared that the UT Chandigarh
having failed to provide the basic amenities, its order of
B resumption and forfeiture could not be sustained and therefore
liable to be set aside. The High Court further directed that all
amenities should be provided within three months and no interest
shall be charged from the allottees if they pay the entire
outstanding amount within three months from the date of
c providing amenities.
18.2) On the other hand, in its subsequent decision in DLG
Builders Pvt. Ltd. v. Advisor to the Administratotr, Chandigarh
Admn. (CWP No. 13695/2001 dated 18.2.2002) the High Court
had held:-
D
"In our opinion, the judgment in M/s. Shanti Kunj Investment
Pvt. Ltd.'s case (supra) has to be read in the light of the
peculiar facts brought before the court and the same cannot
be read as laying down the proposition that the allottee is
not required to pay the insalments of premium with interest
E and ground rent in accordance with the terms and
conditions of allotment and Rule 12 of the Rules till each
and every amenity enumerated in Section 2(1) is made
available at the site. The obligation of the Administration
to provide approach road, water supply, electricity,
F sewerage, storm water drainage can be read as implicit
in the scheme of the Act and the Rules, but it cannot be
said that the allottee is entitled to withhold the payment of
instalments on the ground of lack of particular amenity at
the site. If the basic amenities, like water, electricity and
G approach road are not available at the site and on that
account it is not possible to construct the building, the
allottee can represent to the Administration that he may
not be burdened with the liability of ground rent and may
not be penalized for non construction within the specified
H time. After completion of building, he can represent for
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 569
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
waiver of ground rent in case facility of sewerage has not A
been provided. However, after taking possession of the
site and constructing the building, he cannot avoid his
obligation to pay the balance of the premium along with
interest and ground rent in accordance with the conditions
of allotment and the provisions of Rule 12 of the Rules on B
the pretext that land scaping has not been done or
pavement has not been tiled or the particular public utility
'\. service has not been provided. In our considered view,
the allottee is bound to pay the balance premium and
other charges in accordance with the conditions of c
allotment."
18.3) The decision of the High Court in Shantkunj
Investments was challenged by the Chandigarh Administration
and Municipal Corporation of Chandigarh. The decision in DLG
Builders was challenged by the allottees. They were disposed D
of by this Court by a common judgment reported in Municipal
Corporation, Chandigarh v. Shantikunj Investments Pvt. Ltd.
2006 (4) SCC 109. This Court noted that the conflict between
the two decisions of the High Court were in regard to the question
whether providing of amenities as defined in Section 2(b) of E
the Development Act was a condition precedent for payment of
instalments and charging interest. After examining the provisions .
of the Act and the relevant rules, this Court rejected the
contentions of the lessees and held that the High Court's view
in Shantikunj could not be sustained. This Court held :- F
"On a plain reading of the definition "amenities" read with
Rule 11 (2) and Rule 12, it cannot be construed to mean
that the allottees could take upon themselves not to pay
the lease amount and take recourse to say that since all
the facilities were not provided, therefore, they are not G
under any obligation to pay the installment, interest and
penalty, if any, as provided under the Act and the Rules .
. . . .. . It has never been the condition precedent. It is true
that in order to fully enjoy the allotment, proper linkage is
necessary. But to say that this is a condition precedent, H
570 SUPREME COURT REPORTS (2009] 4 S.C.R.
A that is not the correct approach in the matter. ...... It is true \ ;
the word, "enjoy" appearing in the definition of the word
"premium" in Rule 3(2) of the Rules, means the price paid
or promised for the transfer of a right to enjoy immovable
property under the Rules. It was very seriously contended
B before us that the word, enjoy immovable property
necessarily means that the Administration should provide
all the basic amenities as appearing under Section 2(b)
of the Act for enjoying that allotment. The expression
"premium" appearing in the present context does not mean
c that the allottees/ lessees cannot enjoy the immovable
property without those amenities being provided. The word
"enjoy" here in the present context means that the allottees
have a right to use the immovable property which has
been leased out to them on payment of premium i.e. the
D price ..... It is the common experience that for full
development of an area it takes years. It is not possible in
every case that the whole area is developed first and
allotment is served on a platter. Allotment of the plot was
made on an as-is-where-is basis and the Administration
E promised that the basic amenities will be provided in due
course of time. It cannot be made a condition precedent.
This has never been a condition of the auction or of the
lease. As per the terms of allotment upon payment of the
25 per cent, possession will be handed over and rest of
F the 75 per cent of the leased amount to be paid in a
staggered manner i.e. in three annual equated installments
along with interest at the rate of 10 per cent. If someone
wants to deposit the whole of the 75 per cent of the amount
he can do so. In that case, he will not be required to pay
G any interest. But if a party wants to make payment within
a period of three years then he is under the obligation to
pay 1Oper cent interest on the amount of installment. This
is the obligation on the part of the allottee as per the
condition of Ji:>ase and he cannot get out of it by saying
H that the basic amenities have not been provided for
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 571
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
enjoying the allotted land, therefore he is not liable to pay A
the interest".
We asked the learned counsel for the parties to tell us
which is the obligation of the lessor in the lease deed
which says that they will not charge interest on the
installments before providing the amenities. There is 8
neither any condition in the lease nor any obligation under
the auction. If the parties have given their bids an with their
,. eyes wide open, they have to blame themselves. It cannot
be enforced by any mandamus as there is no obligation
contained in the lease deed or in the auction-notice." C
Therefore, it is evident that a lessee/successful bidder
cannot seek reschduling of the instalments of premium or
postponement of accrual of the interest payable as per rules.
19. The equated instalment includes interest only upto the D
dates stipulated as due dates. When the instalments are not
paid on the due dates, the lessees become liable to pay penal
interest at 24% per annum from the due date to date of actual
payment (vide clause 4 of General Term & Conditions of Auction
and clause 5 of Letter of allotment and Rule 12(3A) of the E
Leasehold Rules). We may also refer to two decisions of this
Court in the context of interest.
20. In Sector-6, Bahadurgarh Plot Holders' Association
(supra), the issue that arose for determination was whether the
allottee could refuse to pay interest on the instalments of the F
price on the ground that the site had not been fully developed by
providing all the modern amenities as assured. The issue did
not arise in a complaint under the Consumer Protection Act, but
in a writ petition filed by the allottees challenging the charging
of interest and requiring the authority to complete the G
development. The allottees contended that what was offered
was allotment of developed sites and not undeveloped sites;
that they were informed that "all modern amenities like
underground sewerage, storm water drainage, roads, electricity,
supply of potable water" will be provided; that as the sites were H
572 SUPREME COURT REPORTS [2009] 4 S.C.R
A not developed fully and as possession of "developed sites" was
'I '
yet to be given, the state government could not charge interest.
The state government, on the other hand, contended that
charging of interest was not correlated to the delivery of
possession under the Punjab Urban Estates Sale of Rights
B Rules, 1965 and having regard to Rule 12(2) of the Rules,
interest accrued from the date of issue of an allotment order.
Interpreting the said provisions, this Court held that while interest
could not be demanded till possession was offered, it was not
necessary that such offer should be of fully developed plots. This
c Court held :-
"As the offer had stated that modern amenities noted
above "will be provided", it cannot be held that till the
amenities as mentioned have become fully functional, the
offer is incomplete. It is for this reason that the fact that full
D development has not yet taken place, even if that be the ~
position as contended by Shri Bhandare, cannot be a
ground to hold that interest has not become payable. It is
true that the applicants were given to understand that the
amenities noted above would become available (and
E within reasonable time), the fact that the same did not
become available to the desired extent could not be a
ground not to accept delivery of possession. From the
order of the High Court which we have quoted above, we
find that the offer of possession of the undeveloped plot
F was not accepted by the counsel of the appellant. That
order being of 17-10-1980, we are of the view that interest
did become payable from that date. The fact that the plot
has not yet been fully developed, as is the case of the
appellant, has, therefore, no significance insofar as
charging of interest is concerned. We are not in a position
G ~
to accept the submission of Shri Bhandare that equity
would not demand charging of interest, even though the
plots are yet to be fully developed. When parties enter into
contract, they are to abide by the terms and conditions of
the same, unlese the same be inequitable. In the present
H
UT CHANDIGARH ADMINISTRATION &ANR. V. 573
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
:i --.;/ case, question of equity does not really arise inasmuch as A
the condition relating to interest is founded on a statutory
rule, vires of which has not been challenged."
(emphasis supplied)
If interest could not be denied to the state government even B
where there was an assurance of all "modern amenities", it is
~ needless to say that the claim of the government will be much
>-- more stronger, when there is no assurance at all, as in this case.
21. In regard to default interest, we may refer to the following C
observations of this Court in Secretary,. Bhubaneswar
Development Authority v. Susanta Kumar Mishra (C.A.No.
605/2009 decided on 30.1.2009)
"Each equated instalment would then have a principal
component and interest component. As the equated D
instalments would include interest on the principal only up
to the due date of instalment, whenever there is a default,
there can be no dispute that the 'principal' part of the
instalment could be subjected to interest from the date of
default to date of payment. It is no doubt true that when the E
defaulted instalment in entirety is subjected to interest, the
'interest' component of the defaulted instalment is also
subjected to interest. To that limited extent, there may be
charging of interest upon interest. Charging of such
interest, on the interest part of the instalment, on default in F
payment of the instalment, at a reasonable rate from the
date of default, cannot be termed as charging of compound
interest in regard to the entire dues. It is only a provision
to ensure that the dues (instalments) are paid promptly
and avoid misuse of the concession given by permitting G
payment in instalments. But for such a provision, lessees/
allottees who have already been given possession, will.
be tempted to delay payments, thereby leading to
continuous defaults. A statutory development authority,
working on no profit no loss basis, can ill afford to permit H
574 SUPREME COURT REPORTS (2009] 4 S.C.R.
A such continuous defaults by lessees/allottees, which will ';.. fr-
paralyse their very functioning, thereby affecting future
developmental activities for the benefit of other members
of the general public. Therefore a provision for interest as
contained in clause 6 of the lease-cum-sale agreement is
B neither inequitable nor in terrorem. Where the basic rate
of interest is itself very high, or where interest is charged
on the entire price instead of charging interest on the ~
reducing balance, when working out the equated
instalments, or where the rate of interest on default is "
c punitively excessive, the position may be different. But no
such case is made out by the respondent."
22. In this case, having regard to the provisions in the
leasehold Rules and contractual terms (as contained in the
General terms and conditions of auction lease and the letter of
D confirmation of lease cum offer of possession), the following
position is evident :
(i) Interest at 10% per annum is payable from the date
of auction till date of payment on the balance of
premium (if the lessee chooses to pay the 75% of
E premium in instalments).
(ii) Payment of interest has nothing to do with provision
of amenities.
(iii) If the premium interest on ground rent is not paid on
F the due date, then interest will be payable at 24%
P.A. from the date of default (due date) to date of
payment.
(iv) The lessee will not be liable to pay interest on the
premium instalments or the rent, till the actual and -<
G
physical possession of the site is delivered or offered
to be delivered to the lessee (whichever date is
earlier).
23. The lessees-respondents, however, placed strong
H reliance on the following observations and directions in para
U.T. CHANDIGARH ADMINISTRATION & ANR V. 575
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
38 of the decision of this Court in Shantikunj (supra) to contend A
that commencement of interest could be postponed :-
"We make it clear that though it was not a condition
precedent but there is obligation on the part of the
Administration to provide necessary facilities for full
enjoyment of the same by the allottees. We therefore, remit B
the matter to the High Court for a very limited purpose to
• see that in cases where facilities like kutcha road,
drainage, drinking water, sewerage, street lighting have
not been provided, then in that case, the High Court may
grant the ai'lottees some proportionate relief. Therefore, C
we direct that all these cases be remitted to the High
Court and the High Court may consider that in case where
kutcha road, drainage, sewerage, drinking water, facilities
have not been provided, no relief shall be granted but in
case any of the facilities had not been provided, then the D
High Court may examine the same and consider grant of
proportionate relief in the matter of payment of penalty
under Rule 12(3) and interest for delay in payment of
equated instalment or ground rent or part thereof under
Rule 12(3-A) only. We repeat again that in case the above E
facilities had not been granted then in that case consider
grant of proportionate relief and if the facilities have been
provided then it will not be open on the part of the allottees
to deny payment of interest and penalty. So far as payment
of instalment is concerned, this is a part of the contract F
and therefore, the allottees are under obligation to pay the
same. However, so far as the question of payment of
penalty and penal interest is concerned, that shall depend
on the facts of each case to be examined by the High
Court. The High Court shall examine each individual case G
and consider grant of proportionate relief."
The above observations and directions were apparently
on the special facts and circumstances of that case. As noticed
above, in Shantikunj, the auction was of the year 1989. The
Lessee had approached the High Court in its writ jurisdiction in H
576 SUPREME COURT REPORTS [2009] 4 S.C.R.
\
A the year 1999 seeking amenities. Even in 2006 when this Court
heard the matter, it was alleged that the amenities had not been
provided. It is in those peculiar facts that this Court obviously
thought fit to give some reliefs with reference to penal interest
wherever amenities had not been provided at all even after 17
B years. In fact, this court made it clear while remanding to High
Court that wherever facilities/amenities had been provided
before the date of the judgment (28.2.2006), the lessees will •
not be entitled to any reliefs and where the facilities/amenities '
had not been granted even in 2006, the High Court may consider
c giving some relief by proportionate reduction in penal interest.
This direction was apparently on the assumption that in case of
penalty, the court can grant relief in writ jurisdictions.
24. But the facts of this case are completely different. The
auction sale was in December 1996. The National Commission
D has recorded a finding that almost all the facilities/amenities
had provided in the year 1999, that is within about two years.
Therefore, the observations of this court in para 38 of Shantikunj
will have no applications to these cases, particularly as they
were made in the context of a writ proceeding, whereas we are
E concerned with a proceedings under Consumer Protection Act.
We may also refer to another aspect. Section 7 of the Act
empowers the Central Government to levy such fees and taxes ,I
as it may consider necessary (which shall be in addition to any
fee or tax for the time being leviable under any other law) in
F respect of any site or building on the transferee or the occupier
thereof, for the purpose of providing, maintaining or continuing
any amenity at Chandigarh. This provision clearly demonstrates
that the providing amenities is not linked to auction of plots on
lease basis and the premium paid is not for providing any
amenity. The Central Government is required to provide 4
G
amenities by levying fees and taxes in respect of sites/plots on
the transferees/ occupiers thereof. Therefore, it is doubtful
whether any proportionate reduction in penal/default interest
could be made on the ground of non-provision of amenities. Be
that as it may. As we have already held that para 38 will not
H
U.T. CHANDIGARH ADMINISTRATION & ANR. V. 571
AMARJEET SINGH & ORS. [R.V. RAVEENDRAN, J.]
.,7 apply, we do not propose examine that aspect any further in A
these cases.
25. The respondents lastly contended that the rate of default
interest was only 12% per annum under Rule 12(3A) of the
Leasehold Rules as on the date of the auction and therefore
clause (4) of the General Terms & Conditions of Sale and clause 8
(5) of the letter of allotment, providing for payment of default
~ interest@ 24% per annum was illegal and unauthorized. This
r contention is urged for the first time in this court. The appellants
countered by contending that the Administrator had by
notification, fixed the default interest at 24% per annum. Suffice C
it to say that the rate of default interest mentioned in Rule 12(3A)
as on the date of auction, would alone apply. If Rule 12(3A) was
not amended increasing the rate of default interest from 12%
P.A. to 24% per annum as on the date of auction, then the rate
of interest stipulated in Rule 12(3A) as it stood on the date of D
auction will apply. The appellants could not charge default
interest at a rate higher than what was provided in the said rule.
If any higher rate has been charged by way of default interest
and it is not corrected, it is open to the lessees to seek relief in
accordance with law. E
26. We may note that the appellants raised one more
contention that the complaints were not maintainable against
the government can never be considered as a 'service provider'
under the Act. As such a contention was not raised either before
the UT Commission or National Commission, we do not F
propose to examine the said contention in these appeals.
27. The appellants thus succeed on both grounds. We,
therefore, allow these appeals by UT Chandigarh and set aside
the orders dated 21.2.2005 and 21.2.2007 of the National G
}-
Commission in the matters which are the subject matter of these
appeals and dismiss the respective complaints filed by the
respondents as not maintainable.
CA Nos.1674-1686 of 2009 [@ SLP [C] Nos.3271-3283
~200~ H
578 . SUPREME COURT REPORTS [2009] 4 S C.R.
A 28. Leave granted. The lessees-complainants have filed
these appeals against the common order dated 21.2.2007 of
the National Commission seeking further relief. They contend
that the National Commission ought to have further directed the
UT Chandigarh not to charge interest on the premium
8 instalments nor claim the ground rent until the basic amenities
were provided. They also contend that as the basic amenities
were not provided on the date of delivery of possession of the
sites, but were provided only in 1999, their liability to pay ground
rent and interest on premium instalments would start only with
effect from 25.10.1999.
c
29. We have considered and rejected these contentions
while dealing with the appeals by UT Chandigarh. In view of the
dismissal of their complaints, these appeals do not survive and
are dismissed.
N.J. Appeals of U.T. Chandigarh Administration allowed and
Appeal filed by lessees complainant dismissed.
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