Page 1 Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3122 OF 2006

Haryana State Agricultural Marketing Board … Appellant

vs.

Bishamber Dayal Goyal and Ors. …

Respondents

J U D G M E N T

Pinaki Chandra Ghose, J.

1.The present appeal has been filed assailing the order dated

April 13, 2005 passed by the National Consumer Disputes

Redressal Commission (hereinafter referred to as “the National

Commission”) in Revision Petition Nos. 534-537 of 2005,

affirming the order dated November 10, 2004 passed by the

State Consumer Disputes Redressal Commission, Chandigarh

Page 2 (hereinafter referred to as “the State Commission”), which

further confirmed the order dated September 20, 2001 passed

by the District Forum.

2.The facts of the case briefly are as follows :

a)By a notification dated November 16, 1971, the Haryana State

Government under Section 7 of the Punjab Agricultural Produce

Markets Act, 1961 (hereinafter referred to as ‘the said Act’),

notified the area of New Grain Mandi, Adampur as Market Area.

Subsequently, in the year 1974, the areas/limits were further

extended by five kilometers. In 1980, the State Government

notified a sub-market yard of New Grain Mandi, Adampur. The

Colonization Department of the State by a letter dated January

24, 1986, transferred the said area to the Haryana State

Agricultural Marketing Board, the appellant herein.

b)The respondents herein were allotted plots by the appellant,

being plot Nos. 17, 7, 16 and 14 upon depositing the 25% of

the price of the said plots. The method of payment and the

consequences for non-payment of any instalment would appear

from the allotment letter dated July 25, 1991. Admittedly, the

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Page 3 respondents did not pay the instalments in terms of the

allotment letters. The grounds mentioned by the respondents

for non-payment of such instalments were the failure on the

part of the appellant to provide basic amenities such as

sewerage, electricity, roads etc. at the said Adampur Mandi

Area.

c)On non-payment of the instalments, the appellant called upon

the respondents to make the balance payments, being 75% of

the cost with interest and penalty charges as prescribed in the

said allotment letter. The respondents did not pay the same

and filed a complaint before the District Forum alleging

deficiency of services, failure to notify the Adampur Mandi as

Market Area and failure to develop and provide basic amenities

in the said locality. The appellant opposed the complaint on

the ground that the respondents failed to make the payments

of the instalments and further that one of the complainants

was not dealing with the sale and purchase of agricultural

produce by himself and instead had sublet the shop to

someone else.

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Page 4 d)The District Forum appointed a Senior Member of the Forum as

the Local Commissioner to inspect the said area and to file a

report. The Local Commissioner filed a report stating that the

area was developed with civic amenities and platforms were

constructed in front of the shops. However, it is admitted that

the complainant is not in a position to run the business in the

market area as the same has not been notified by a notification

and/or order declaring it as a sub-yard for the purpose of

running the business. The District Forum held by order dated

March 4, 1998 that the notification dated October 31, 1980 is

not applicable since the land was auctioned in 1991 and

further, the same was not in the ownership of the appellant and

no business was transacted by the complainant at the Adampur

Mandi. The District Forum held that since no notification was

issued declaring the said area as sub-yard, it amounts to

deficiency of service and the appellant was directed to

withdraw the demand notice and further directed not to charge

any interest on the instalments. The appellant filed first appeal

before the State Commission, being First Appeal No.362 of

1998. The State Commissioner by order dated March 3, 1998

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Page 5 remanded the matter to the District Forum holding that the

appointment of Local Commissioner, Shri Arya, being a

member of the District Forum vitiated the proceedings.

e)Thereafter, the District Forum took up the matter and

appointed an Advocate - Mr. G.L. Balhara - as the Local

Commissioner, to make an inspection and to file a report. The

appellant herein on April 20, 2000, once again issued demand

notices to the respondents demanding the payments. The main

contention of the respondents being the complainants was that

although the area was not notified by the appellant-Board as a

market area, they were unable to conduct any grain business in

the shops for which they had purchased the said plots; and

further alleged that no basic amenities, i.e., sewerage, roads,

parao, electricity etc. had been provided by the Board, and that

there were no boundary walls and gates of the market area

which were a necessity in such Mandi; furthermore, there were

heaps of debris lying around the shops. In these circumstances,

the plots allotted were redundant.

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Page 6 f)The appellants contended that the complainants are not

consumers and there is no deficiency of service. The

respondents failed to construct the booths in two years’ time

even after getting the licences. Furthermore, the respondents

are not dealing with the agricultural produce instead they have

sublet the plots in question to other persons. According to the

appellants, the amenities of sewerage, water supply and

electricity were provided and construction of a platform was

also done by them. An Additional Mandi was established,

according to the appellant, by the Colonization Department and

subsequently transferred to them in 1986. The Colonization

Department, in 1980, duly notified the same. The District

Forum after perusing the report dated April 25, 2000 filed by

the Local Commissioner – Mr. Balhara, Advocate -- held that it

is admitted by both the parties that the Additional Mandi has

no boundary walls and gates and that there has been no

notification by the appellant-Board, further no auction has

been made by the respondents and the debris are lying around

the shops. In these circumstances, the District Forum by order

dated September 20, 2001 held that it is admitted that due to

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Page 7 the omission of the appellant, no business could be done in the

Mandi and the boundary walls which are essential for the

business, were not provided. It is further held that the

notification dated October 31, 1980 has no manner of

application since the land was transferred to the appellant in

1986 and the shops were auctioned in 1981. The District

Forum further held that due to the omission of the appellant,

the complainants/respondents herein were deprived of doing

the grain business for which the plots were purchased and in

the absence of the notification of the area as a sub-yard, the

District Forum held that there was a grave deficiency of

service. The Forum awarded the respondents interest at 12%

per annum on the entire deposited amount after two years

from the date of issuance of allotment letters to the

respondents till the development and notification of the area in

question is not done. The respondents were directed to deposit

the remaining balance amount and the appellant-Board was

directed not to levy any charge, penalty or interest on the

same. However, the Forum refused to allow the compensation

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Page 8 as prayed by the respondents and directed the appellants to

develop the area within a month.

g)Being aggrieved, the appellant went in appeal before the State

Commission. Cross-appeals were also filed by the respondents

before the State Commission, seeking enhancement of the rate

of interest from 12% to 18% per annum and further sought

compensation. On November 10, 2004, both the appeals were

dismissed. The State Commission upheld the order of the

District Forum holding that the report of the Local

Commissioner did not raise any objection with regard thereto

nor placed any notification before the District Forum. In these

circumstances, the appellant herein filed a revision petition

before the National Commission resulting in dismissal, hence,

the matter has come up in appeal before us.

3.It is the case of the appellant that all the three fora below have

erred in fact and in law by omitting to take into consideration

the fact that the payment of instalments towards the cost by

the respondents was unconditional. It was further contended

that it was not subject to fulfilment of any condition on the part

8

Page 9 of the appellant as a pre-requisite. Moreover, all the three fora

lost sight of the fact that under Section 8 of the Act, after

creation of a sub-market yard by notification under Section 7(2)

of the said Act, no person could be allowed to trade in

agricultural produce without licence and they had to apply for

the same under Section 9 of the said Act, and further to obtain

a licence under Section 10 of the said Act.

4.It is not in dispute that the respondents duly applied for licence

under Section 9 and which was granted under Section 10

permitting them to trade in agricultural produce in the sub-

market yard from their allotted shops under Section 8, which

was possible only when there was a notification under Section

7(2) to invoke notifying the sub-market yard, according to the

appellant, the same was notified by a Notification dated

October 31, 1980 passed by the predecessor-in-interest of the

appellant and the same is still subsisting and remained in force

after the transfer of the area to the appellant in 1986.

Therefore, according to the learned counsel appearing in

support of this appeal, all the fora failed to take any note

thereof. It was further pointed out that there was no question

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Page 10 of any deficiency in service. According to the learned counsel,

the area of Adampur Mandi was developed in the year 1992 by

the Haryana Public Health Department by providing all basic

amenities like sewerage, drainage, electricity, roads etc. in the

said area. It was further pointed out that the report of the Local

Commissioner would show that all the developmental works

except construction of the boundary walls have been carried

out by the appellant-Board. It was further submitted that the

sanctioning of the business licence under Section 10 of the said

Act pre-supposes that the State Government notified the said

area as a market area. It is further contended that the

respondents are using the plots allotted to them without paying

the instalments as ought to have been done by them.

5.Per contra, it is submitted by Mr. N.S. Dalal, learned counsel for

the respondents, that no developed infrastructure has been

provided by the appellant and the first two courts below have

come to the conclusion on the basis of the facts placed before

them. Since there is a concurrent finding on such facts, it is

submitted that this appeal should be dismissed. Learned

counsel further submitted that the Local Commissioner – Mr.

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Page 11 Balhara – in the presence of both the parties carried out the

local inspection and the report of the said Commissioner would

show that the facts mentioned therein have been approved by

both the parties. It was pointed out that the Local

Commissioner had mentioned that no infrastructure has been

provided, there is no platform, no boundary walls and heaps of

debris are lying there, meaning thereby the purpose for which

the Mandi was created could not be carried out or used or even

started or accomplished. In the absence of basic infrastructure

and amenities to run a grain market the purpose for which the

shops were allotted, is totally frustrated. The report of the Local

Commissioner was not challenged by the appellant at any point

of time. It was further pointed out that the appellant never

relied on the said notification before the District Forum or

before the State Commission nor even before the National

Commission. Therefore, the grounds tried to be raised by the

learned counsel for the appellant cannot have any bearing on

the matter. It is further contended that the District Forum as

well as the State Commission have recorded how there could

have been notification by the appellant when the land itself

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Page 12 came to the appellant in the year 1986. Therefore, there

cannot be any reason to believe that the notification was

issued earlier under the ownership of the appellant. It is further

stated that no explanation has been given by the appellant

about the conduct of non-developing the area in question by

them. On the contrary, the respondents relied on the doctrine

of legitimate expectations to have a proper area to continue

with their business.

6.The appellant-Board has contended before us that the

respondents are not consumers but we must keep it on record

that the Board never challenged the jurisdiction of the

consumer forum. We would reiterate that the statutory Boards

and Development Authorities which are allotting sites with the

promise of development, are amenable to the jurisdiction of

consumer forum in case of deficiency of services as has already

been decided in U.T. Chandigarh Administration & Anr. v.

Amarjeet Singh & Ors.

1

; Karnataka Industrial Areas and

Development Board v. Nandi Cold Storage Pvt. Ltd.

2

. This Court

1

(2009) 4 SCC 460

2

(2007) 10 SCC 481

12

Page 13 in Narne Construction (P) Ltd. v. Union of India

3

referred to its

earlier decision in Lucknow Development Authority v. M.K.

Gupta

4

and duly discussed the wide connotation of the terms

“consumer” and “service” under the consumer protection laws

and reiterated the observation of this Court in Lucknow

Development Authority v. M.K. Gupta (supra) which is provided

hereunder :

“5. In the context of the housing construction and

building activities carried on by a private or statutory

body and whether such activity tantamounts to service

within the meaning of clause (o) of Section 2(1) of the

Act, the Court observed: (LDA case, SCC pp. 256-57,

para 6):

“…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 the 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….”

7.Though in the present case providing of amenities is not a

condition precedent as per the terms of the allotment letters.

However, the allotments were made when the plots were in the

3

(2012) 5 SCC 359

4

(1994) 1 SCC 243

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Page 14 development stage on the condition that they be used only for

auction and trading of grains, therefore, the present auction is

different from a free public auction or an auction on “as is

where is basis”. In such a scenario the appellant board as

service provider is obligated to facilitate the utilization and

enjoyment of the plots as intended by the allottees and set out

in the allotment letter. In Municipal Corporation, Chandigarh &

Ors. v. Shantikunj Investment (P) Ltd.& Ors.

5

, wherein the

allottees refused to pay instalments towards the cost of the

allotted plots, this Court while deciding the same held (at para

38) as under:

“We make it clear that though it was not a condition

precedent but there is a obligation on the part of the

Administration to provide necessary facilities for full

enjoyment of the same by allottees”

In the aforementioned case, the Court remitted many of the cases

back to the High Court for limited adjudication of facts to

determine where the basic facilities have not been provided and

5

(2006) 4 SCC 109

14

Page 15 held that though the allottees were incorrect unilateral action of

not paying the instalments yet penal interest and penalty will be

levied as per the facts of each case. Thus, the allottees were

entitled to proportionate relief. In Haryana State Agricultural

Marketing Board v. Raj Pal

6

, wherein the appellant was involved

and the certain allottees refused to pay instalments towards the

allotted plots in the new grain market at Karnal-Pehowa Road at

Nighdu in the Karnal District, citing lack of amenities provided by

the Board, the Court while dismissing the case of the Board

referred to the following decisions in Municipal Corporation,

Chandigarh & Ors. v. Shantikunj Investment (P) Ltd. and Ors.

(supra) and UT Chandigarh Administration & Anr. v. Amarjeet

Singh & Ors. (supra) as under :

“13. In Municipal Corpn., Chandigarh v. Shantikunj

Investment (P) Ltd., this Court held: (SCC p. 128, para

38)

“38. … 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 the matter to the

High Court for a very limited purpose to see that

6

(2011) 13 SCC 504

15

Page 16 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 allottees

some proportionate relief. Therefore, 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 been provided, no relief

shall be granted but in case any of the facilities

had not been provided, then the 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 installment or ground rent

or part thereof under Rule 12(3-A) only. We

repeat again that in case the above 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

installment is concerned, this is a part of the

contract and therefore, the allottees are under

obligation to pay the same. However, so far as

the question of payment of penalty and penal

interest in 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 and consider grant of

proportionate relief.”

14. Referring to the said decision, this Court in UT

Chandigarh Admn. v. Amarjeet Singh observed as

follows: (SCC pp. 682-83, para 46)

“46. As noticed above, in Shantikunj, the auction

was of the year 1989. The lessee had

approached the High Court in its writ jurisdiction

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Page 17 in 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 it fit to give some reliefs with reference

to penal interest wherever amenities had not

been provided at all even after 17 years. In fact,

this Court made it clear while remanding to the

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 giving some relief by proportionate

reduction in [the] penal interest. This direction

was apparently on the assumption that in case of

penalty, the court can grant relief in writ

jurisdictions.”

In Haryana State Agricultural Marketing Board v. Raj Pal (supra),

the Court upheld the principles as laid down in Shantikunj Case

(supra) and Amarjeet Singh Case (supra) and held that allottees

cannot postpone the payment of instalments on the grounds that

some of the amenities were not provided and the Court setting

aside the penal and compound interest levied by the Board and in

consonance with the Allotment Rules of 1997, levied only simple

interest.

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Page 18 8. In the present case, the inaction on the part of the appellant in

providing the requisite facilities for more than a decade clearly

establishes deficiency of services as the respondents were

prevented from carrying out the grain business. However, the

respondents were also incorrect in refusing to pay the

instalments and violating the terms of the instalment letter.

Thus, considering the surrounding circumstances wherein the

appellant has been unable to develop the area for more than

two decades and the resultant loss suffered by the

respondents, we are of the opinion that in the present

situation, there is a need for proportionate relief as the levy of

penal interest and other charges on the respondents will be

grossly unfair.

9.In these circumstances, we do not find that any grounds have

been made out by the appellant to interfere with the order

passed by the National Commission. We have minutely

examined the order passed by the District Forum as well as the

State Commission, and we have noticed that adequate relief

has been granted even to the respondents/complainants by

awarding interest @ 12 per cent per annum on the entire

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Page 19 deposited amounts. Hence, we do not find any merit in the

appeal and the same is accordingly dismissed. There shall,

however, be no order as to costs.

…....……………………..J.

(Gyan Sudha Misra)

New Delhi; .........

…………………….J.

March 26, 2014. (Pinaki Chandra

Ghose)

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