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Published : August 13, 2017 | Author : Rohan Dua
Category : Case Laws | Total Views : 2072 | Rating :

Rohan Dua
First Year Learner, Symbiosis Law School, Noida, BBA.LL.B

Lucknow Development Authority Vs M.K. Gupta Air 1994 Sc 787 (AIR 1994 SC 787)

Question of Law:
# Whether Statutory Land Development authorities come under the ambit of Consumer Protection Act 1986.

# Whether housing activity came within the purview of services defined in the act prior to its amendment in 1993.

# The rights and powers of the National Commission to hold statutory authorities accountable for omissions and award exemplary damages.

# Liability of the state in torts: Sovereign and Non-sovereign functions

# Compensation for loss or injury even in cases resulting out of actions authorised by law and carried out without any negligence.

# Compensation not only in terms of value of goods and services but also damages for injustice.

# For acts done in bad faith, absolute liability is on the part of employee.

The Consumer Protection Act, 1986: As per the preamble it was enacted to provide for the protection of the interest of consumers' -

It serves a total purpose in empowering the common man to get goods and services as per the quality claimed by the seller/provider. In any deficiency thereof the consumer is entitled to claim compensation by approaching the or state or National commission as the case may be. It protects the common man from ways committed by the seller of goods and provider of services. It allows the consumer to file a complaint for unfair trade practices, restrictive trade practice; for defective goods; for deficiency in service.

The judgment has examined in detail the purpose of the Act, what was the legislative institution behind it. It has expressed the opinion that the enactment was a positive step in the welfare of the society in general and providing an instrument to the common man to claim his legitimate dues in particular. The supreme court ruling has carried out the in-depth analysis of various definitions given in the Act i.e., Consumer, Service, trader, unfair trade practices etc.

After carefully examining the intent behind the Act, it has concluded that building or construction activity carried on by a statutory authority or a private builder was covered under the act before the amendment of 1993 and therefore the authorities, namely the district forum, the state Commission and the National Commission were competent to entertain complaints by a consumer for any defect or deficiency in relation to construction activity against a private builder or statutory authority. The court has carried out a detailed examination of the larger issue whether public authorities come under the jurisdiction of the Act. The appellant had argued that public authorities develop land and construct houses in discharge of their statutory function and therefore could not be subjected to the provisions of the Act. It was argued that if the ambit of the Act was widened to include statutory authorities , it would vitally affect the functioning of the official bodies . The supreme court disagreed with this view of the appellant. While analyzing the meaning of service in context of the Act it concluded that service of any description which is made available to the potential users is covered under the Act. It further held that the definition 'service' also includes facilities available to a consumer in connection with banking, insurance etc. All such activities are discharged by the statutory authorities as well as private bodies. The supreme court has rightly held that in the absence of any indication, express or implied, there is no reason to hold that authorities created by a statute are beyond the purview of the Act. The supreme court concluded that public bodies instead of claiming exclusion should subject themselves to the Act so that their acts and omission are scrutinized and be accountable for healthy growth of society. It was urged on behalf of one appellant that inclusion of 'housing construction' in the 1993 amendment indicates that the Act did not apply to it prior to the amendment as the amendment did not specifically state that it had retrospective effect. The supreme court whle agreeing that the amendment did not have retrospective effect ruled that 'housing construction' was added as a matter of abundant caution as housing as a service was already there in the Act prior to the amendment. Likewise in respect of the inclusion of the clause 'avail' in the 1993 amendment the supreme court ruled that this was added in the Act only to dispel any doubt that a consumer means a person who not only hires but also avails of any facility for consideration.

Finally the court ruled that the Commission had all the rights under the Act to award compensation not only for deficient services but also for harassment and agony caused to a consumer. Citing various case laws it was held that the State is liable to compensate for loss or injury suffered by a citizen due to arbitrary actions of its functionaries. It is now accepted law that even for bona fide action the State is liable to compensate if that action causes loss or injury to a person. Now there is no distinction between sovereign and non sovereign functions in determining the liability of the State because under our constitution sovereignty vests in the people. No functionary of the State can claim immunity except to the extent provided in the statute itself. Thus, the supreme court was of the opinion that all public authorities are accountable for their actions.

In a sense the supreme court in this judgement has upheld the rule of law. By holding that the Commission was well within its rights to damages for harassment and this has empowered the ordinary citizen. This judgement should act as a deterrent for public authorities to not take the public for granted. It will act as a check on arbitrary and capricious exercise of powers. By ordering the Lucknow Development Authority to fix responsibility and recover the compensation from the defaulting employees the supreme court has set standards. Since the public authority's money is tax-payer's money, why should the tax-payer be burdened with the liability to pay compensation when the same has arisen on account of inaction or negligence on the part of some official. It is the official concerned who must pay for non-performance of his duties.


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