HSBC Asset Management (India) Private Ltd. v. Mani Rao
2011-04-29
GHULAM MOHAMMED, K.G.SHANKAR
body2011
DigiLaw.ai
ORDER Ghulam Mohammed, J. The point involved in all these three writ petitions is one and the same, therefore they are being disposed of by this common order. 2. For the purpose of convenience, the facts in Writ Petition No.18276 of 2010 have been adverted to for the purpose of disposal of these writ petitions. Writ Petition No.18276 of 2010 has been filed challenging the order dated 2-6-2010 in CCIA No.190 of 2010 in CC No.76 of 2009 on the file of the A.P. State Consumer Disputes Redressal Commission at Hyderabad(for short "the State Commission") and consequently sought a direction to dismiss the complaint for want of inherent jurisdiction and to refer the disputes for arbitration. 3. The respondents 1 and 2 are the individual customers of the respondent No.4. The respondent No.3 is a bank. The respondents 1 and 2 have filed a Consumer Complaint before the State Commission against the petitioner and the respondents 3, 4 and 6 herein alleging deficiency in service and sought the following prayer. (a) Direct to pay a sum of Rs.65 lakhs together with interest @ 24% per annum from respective date of transfer of amounts from individual savings accounts to PMS account (b) Direct the OPs to pay a sum of Rs.25 lakhs towards mental agony and torture suffered by the complainants during the course of transaction (c) Pay the costs of this complaint which is valued at Rs. 3 lakhs." 4. Having received notice from the State Commission the petitioner filed an Interlocutory Application No.190 of 2010 to dismiss the complaint filed by the respondents 1 and 2 on the ground that the State Commission had no inherent jurisdiction to entertain the complaint and that there was an arbitration clause contained in the agreement executed between the respondent 1 and 2 and the petitioner. The respondents 3 and 4 also filed interlocutory application praying for dismissal of the complaint by the State Commission on similar grounds: 5. By the common orders in both the interlocutory applications dated 2-6-2010 the State Commission dismissed the interlocutory applications on the ground that even though there existed an arbitration clause still the Consumer Forums are entitled to proceed with the matter. Hence, this writ petition. 6. M/s Maytas Properties Limited has also filed batch of writ petitions challenging the orders of the State Commission on similar grounds.
Hence, this writ petition. 6. M/s Maytas Properties Limited has also filed batch of writ petitions challenging the orders of the State Commission on similar grounds. For the purpose of ready reference, the facts in Writ Petition No.27689 of 2010 can be summarized below. 7. The petitioner company started a new venture at Bachupally under the name and style of Maytas Hill County. The 2nd and 3rd respondents approached the 1'1 petitioner for purchasing Flats in the said Maytas Hill County Project. The 2nd and 3rd respondents agreed to purchase the flats. According to the petitioners, there was delay in completing the Hill Country Project because of the major events which are beyond the control of the opposite parties. The 2nd and 3rd respondents herein, issued notice on 14-12-2009 and thereupon the 1st petitioner invoked the arbitration clause provided in the agreement of sale dated 27-12-2006 between the 1st petitioner and the 2nd and 3rd respondents and referred such disputes and claims made by the 2nd and 3rd respondents herein to arbitration by a retired High Court Judge, who has entered upon Arbitration vide Arbitration Cases and the same have been posted for the appearance of the 2nd and 3rd respondents to 7-4-2010. 8. Having received the notice from the sole Arbitrator the 2nd and 3rd respondents have approached the 1st respondent Commission under the provisions of the Consumer Protection Act, 1986 and filed C.C.No.19 of 2010 seeking a direction against the petitioners to handover the finished flat or to refund the amount paid by the 2nd and 3rd respondents. 9. The petitioners on receipt of the notice to file written version, have filed an application in I.A.No.1910 of 2010 in CC No.19 of 2010 before the 1st respondent Commission under Section 8 of the Arbitration and Conciliation Act, 1996 seeking to reject the complaint and refer the disputes raised by the 2nd and 3rd respondents to the Sole Arbitrator. Upon hearing the rival parties, the 1st respondent Commission dismissed the application filed by the petitioners herein. Hence, the above writ petition. 10. Heard Sri S. Ravi, learned Senior Counsel appearing on behalf of the petitioners in Writ Petition Nos.18276 and 18277 of 2010, Sri S. Niranjan Reddy appearing for the petitioners -Maytas Company, Sri Venkateswarlu Posani, Sri Prabhakar Sripada, and Sri K.V. Siva Prasad, advocates appearing for the respondents in the respective writ petitions. 11.
Hence, the above writ petition. 10. Heard Sri S. Ravi, learned Senior Counsel appearing on behalf of the petitioners in Writ Petition Nos.18276 and 18277 of 2010, Sri S. Niranjan Reddy appearing for the petitioners -Maytas Company, Sri Venkateswarlu Posani, Sri Prabhakar Sripada, and Sri K.V. Siva Prasad, advocates appearing for the respondents in the respective writ petitions. 11. Sri S. Niranjan Reddy, learned counsel for the petitioners contended that as legislature was aware of the Consumer Protection Act, 1986 (for short "the 1986 Act"), when the Arbitration and Conciliation Act, 1996 (for short "the Arbitration Act) was prepared and therefore the Arbitration Act prevails over the 1986 Act and it is all the more so, if the later act contains non-obstante clause. It is further contended that under Section 34 of the Arbitration Act, 1940 there is discretion to the judicial authority whereas under Section 8 of the 1996 Act the legislative command is that it is mandatory. Unless the State Commission gives effect to Section 8 of the Arbitration Act, they will be violating Section 3 of the 1986 Act and that section 3 of the Act does not permit the court to destroy other laws. Placing reliance on the decisions reported in Fair Air Engineer's Pvt. Ltd and another v. N.K. Modi ((1) (1996) 6 SCC 385 ), P. Anand Gajapathi Raju v. P. V.G. Raju ((2) (2000) 4 SCC 539 ), Magma Leasing & Finance Ltd. v. Potluri Madhavilata ((3) (2009) 10 SCC 103 ) it is contended by the learned counsel for the petitioners that the language of Section 8 of the Arbitration Act is peremptory and the court is under an obligation to refer parties to arbitration in the given circumstances of the case and that the Arbitration Act is a special Act, it prevails over Consumer Protection Act. It is further contended on behalf of the petitioners that the dispute presented by the complainants is not "service" within the meaning of Section 2(0) of the Act. Citing the constitution Bench judgment of the Supreme Court reported in SBP & Co.
It is further contended on behalf of the petitioners that the dispute presented by the complainants is not "service" within the meaning of Section 2(0) of the Act. Citing the constitution Bench judgment of the Supreme Court reported in SBP & Co. v. Patel Engineering Ltd and another (4) 2005 (7) SCJ 461 = (2005) 8 SCC 618 = 2003 (5) ALT 1 .1 (DN OHC), and also decisions reported in Shri Sanvan Singh and another v. Shri Kasturi Lal (5) (1977) 1 SCC 750 , A.P. State Financial Corporation v. Official Liquidator (6) (2000) 7 SCC 291 , General Manager, Telecom v. M. Krishnan (7) 2009 (6) ALT 63 (SC) = 2009 (8) SCJ 35 = AIR 2010 SC 90 , it is further contended by the learned counsel for the petitioners that later enactment prevails, all the more so, if the later act contains the non-obstante clause and that when there is a special remedy provided under the Arbitration Act the remedy under the Act 1986 is by implication barred. 12. Sri S. Ravi, learned Senior Counsel while supporting the contentions advanced on behalf of the petitioners further contended that the Consumer Forum has no primacy over Sections 5 and 8 of the Arbitration and Consumer Protection Act. Placing reliance on the decision reported in Morgan Securities and Credit Pvt. Ltd v. Modi Rubber Ltd. (8) 2007 (2) SCJ 359 = (2007) 3 SCC 686 = 2007 (4) AL T 2.1 (ON SC)), Branch Manager Magma Leasing and Finance Ltd's case (3 supra), Empire Jute Co.
Placing reliance on the decision reported in Morgan Securities and Credit Pvt. Ltd v. Modi Rubber Ltd. (8) 2007 (2) SCJ 359 = (2007) 3 SCC 686 = 2007 (4) AL T 2.1 (ON SC)), Branch Manager Magma Leasing and Finance Ltd's case (3 supra), Empire Jute Co. Ltd. and others v. Jute Corporation of India Ltd and another (9) ; 2008 (2) ALT 34 (SC) = 2008 (2) SCJ 175 = 2007 AIR SCW 6930), Oriental ISllrance Co Ltd v. Meena Variyal and others (10) 2007 (1) An.W.R. 545 (SC) = 2007 (3) SCJ 498 = (2007) 5 SCC 428 = 2007 (5) ALT 25.3 (ON SC)' Sanjay Dutt v. State through CBI Bombay (11) (1994) 5 SCC 402 , Shree Baidyanath Ayurved Bhavan Pvt Ltd and another v. Praveen Bhatia and others (12) 2009 (6) SCJ 624 = 2009 AIR SCW 7576), Shree Subbalaxmi Fabrics Pvt Ltd v. Chandmal Baradia and others (13) 2005 AIR SCW 1807 and Agrigold Exims Limited v. Srilakshmi Knits and Worens (14) (2007) 3 SCC 686 ) he contended that the Consumer Court has no discretion that the agreement contains a clause of exclusive jurisdiction at Mumbai that it was not challenged in the consumer forum, that the Court at the first instance shall refer the matter for arbitration and that therefore the impugned orders under challenge requires to be set aside. 13. On the other hand, it is contended by the learned counsel appearing on behalf of the respondents that existence of Arbitration clause in an agreement between the parties would not bar the Consumer Forum to entertain the complaint. It is further stated that the Act 1986 was enacted with a view to protect the interest of the Consumers of various goods and services, and that the provisions of the Consumer Protection Act are additional remedy and as such rights of the Consumer cannot be taken away by any means. It is further submitted that if the argument of the petitioners is given effect to, the consequences and ramifications would lead to dangerous situation as the every Goods Supplier and Service Provider would provide a condition in the Invoice/Bill to the effect that any dispute is subject to the provisions of the Arbitration Act and that the poor consumers would have to suffer without knowing the procedure as to how to go ahead with their grievances.
Apart from the above, it is contended, one law be it Special Law or the General Law cannot come in the way of other law to defeat the provisions of the other law, which is enacted as beneficial legislation. It is further contended that respondents 1 and 2 are consumers and their status is not disputed and that arbitration agreement does not bar the jurisdiction of consumer forum. In support of the contention, reliance was placed on the decisions reported in Deepak Bajaj v. State of Maharashtra and another ((15) 2009 (1) SCJ 295 = (2008) 16 SCC 14), Fair Air Enginers Pvt Ltd's case (1 supra), Bank of India v. Ketan Parekh and others (16) 2008 (7) SCJ 411 = (2008) 8 SCC 148 ), judgment of the Supreme Court in Civil Appeal No.5896 of 2010 dated July 23, 2010, Sukanya Holdings Pvt. Ltd v. Jayesh H. Pandya and another ( (17) AIR 2003 SC 2252 (1)), Bharat Petroleum Corpn Ltd and another v. N.R. Vairamani and another (18) (2004) 8 SCC 579 = 2005 (1) ALT 32.1 (ON SC)), Secretary, Thirumurugan Co-operative Agricultural Credit Society v. M. Lalitha (dead) through L.Rs and others (19) (2004) 1 SCC 305 = 2004 (2) ALT 27.2 (ON SC) and the judgment of the learned single Judge reported in Saipriya Estates, Hyderabad v. V. V.L Sujatha and another (20) 2008 (3) ALT 125 = 2008 (3) ALD 608 ). 14. Having heard the learned counsel on either side, in our view, the point that is germane for consideration in these writ petitions is as to whether the complaint is maintainable in view of the existence of the Arbitration Clause in the agreement, and whether the provisions of Arbitration Act, overrides the provisions of the Consumer Protection Act, 1986. 15. Before dealing with the said issues, we may consider as to what constitutes service which has been defined under Section 2(1) (0) of the Act, 1986.
15. Before dealing with the said issues, we may consider as to what constitutes service which has been defined under Section 2(1) (0) of the Act, 1986. According to Section 2(1)(0) of the Act 1986, " service" means service of any description which is made available to potential users and includes, but not limited to, the provisions of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service. Section 2(g) of the Act 1986 describes that" deficiency" means any fault, imperfection, short coming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service. Section 8 of the Arbitration Act reads as under: "8. Power to refer parties to arbitration where there is an arbitration agreement: - (1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration. (2) The application referred to in subsection (1) shall not be entertained unless it is accompanies by the original arbitration agreement or a duly certified copy thereof. (3) Notwithstanding that an application has been made under subsection (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitration award made. Section 5 of the Arbitration Act reads as follows: "5. Extent of judicial intervention : Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part." 16. The undisputed facts are that respondent Nos. 1 and 2 filed a consumer complaint before the State Commission against the petitioner and respondents 3, 4, 5 and 6 for the alleged deficiency in service. The Consumer complaint was admitted and notices were issued to the other parties.
The undisputed facts are that respondent Nos. 1 and 2 filed a consumer complaint before the State Commission against the petitioner and respondents 3, 4, 5 and 6 for the alleged deficiency in service. The Consumer complaint was admitted and notices were issued to the other parties. The writ petitioners filed application under Section 8(1) of the Arbitration Act to refer the matter to the Arbitration. According to the respondents, the developer should have handedover Flats but they did not do so and that therefore they moved the State Consumer. (sic. Commission). According to petitioners, in view of the agreement between the parties, as per Section 8 of the Arbitration Act the matter has to be referred to the Arbitrator. Be it noted that what is relevant for the purpose of Section 8 of the Arbitration Act is that there should be existence of dispute with regard to a particular liability arising out of the terms of the agreement. The respondents case is that there was deficiency of service. Section 3 of the Act 1986 envisages that the provisions of the Act are in addition to and are not in derogation of any other law in force. 17. Placing reliance on Sections 5 and 8 of the Arbitration Act, it is contended by the writ petitioners that the words contained in Section 3 of the 1986 Act that is 'not in derogation of the provisions of any other law for the time being in force' would be given proper meaning and effect and that if the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. The objects and reasons of the 1986 Act is to provide a forum for speedy and simple redressal of consumer disputes. Such avowed legislative purpose cannot be either defeated or diluted on the premise that Arbitration clause will take care of the situation. If that is done the efficacy of remedy under the Act will be substantially curtailed and in many cases the remedy will become illusory to the common man. When a person offers/sell sites coupled with an assurance of development of infrastructure/amenities/ layout approvals, such an offer/sale and the obligations undertaken pursuant thereto is "service" within the meaning of Section 2(1) (0) of the Act.
When a person offers/sell sites coupled with an assurance of development of infrastructure/amenities/ layout approvals, such an offer/sale and the obligations undertaken pursuant thereto is "service" within the meaning of Section 2(1) (0) of the Act. On a conspectus reading of the provisions of the Consumer Protection Act, we are not inclined to accept the argument of the writ petitioners. The Consumer Protection Act provides the additional remedy. This view of ours is fortified by the judgment: of the Supreme Court reported in Fair Air Engineers Pvt. Ltd., (1 supra). By reason of the provisions of Section 3 of the Act 1986 we are therefore of the view that the remedies provided there under are not in derogation of those provided under any other law. The said Act supplements and not supplants the jurisdiction of the civil courts or other statutory authorities. The remedies that are available to an aggrieved party under the 1986 Ad are wider. The provisions of the Act 1986 clearly demonstrate that it was enacted for protecting the common man from wrongs from wherefore the ordinary law fer all intents and purport had become illusory. A contrary view is likely to result in grave hardship. The Court must not only see whether the power may be derived by a reasonable implication from the provisions of the statute, but also whether such powers are necessary for carrying out the purpose of the provisions of the statute which confers powers on the authority in its exercise of such power. 18. In Skypak Couriers Ltd v. rata Chemicals Ltd (21) (2000) 5 SCC 294 ), considering the provisions of Section 2 and 7 of the Arbitration Act and the Act 1986, it was inter alia held by the Supreme Court that existence of an arbitration clause in the agreement is not a bar to the entertainment of complaint by the redressal agency under the Act as the remedy under the Act 1986 is in addition to the provisions of any other law. 19. In M. Lalitha's case (19 supra) the Supreme Court considering the provisions of Sections 3, 11, 17 and 21 of the Act, 1986 it was held by the Supreme Court that Act 1986 should be interpreted broadly positively and purposefully having regard to the additional/extended jurisdiction conferred under Section 3 of the Act 1986.
19. In M. Lalitha's case (19 supra) the Supreme Court considering the provisions of Sections 3, 11, 17 and 21 of the Act, 1986 it was held by the Supreme Court that Act 1986 should be interpreted broadly positively and purposefully having regard to the additional/extended jurisdiction conferred under Section 3 of the Act 1986. In Bank of India's case (16 supra) it was inter alia held by the Supreme Court as follows " .. Where both the enactments have the non obstante clause then in that case, the proper perspective would be that one has to see the subject and the dominant purpose for which the special enactment was made and in case the dominant purpose is covered by that contingencies, then notwithstanding that the Act might have come at a later point of time still the intention can be ascertained by looking to the objects and reasons." 20. In a recent judgment reported in Deepak Bajaj's case (15 supra), the Supreme Court considering various cases reiterated that the judgment should not be read as a statute and should be read as a whole while taking into consideration the attending circumstances. The learned single Judge of this Court in Saipriya Estates's case (20 supra), while following the judgments of the Supreme Court in Fair Air Engineers Pvt. Ltd's case (1 supra)"with regard to Section 3 of the 1986 Act and the ratio in Lucknow Development Authority's cast (infra) held that the Act 1986 being a specia enactment creates additional remedy it favour of the consumers. 21. The Supreme Court in Lucknow Development Authority v. M.K. Gupta (22) (1994) 1 SCC 243 , while considering the various definitions such as 'Consumer', 'Service', 'Trader', 'Unfair Trade Practice', held that the legislature has attempted to widen the reach of the Act. Each of these definitions are in two parts, one, explanatory and the other expandatory. The explanatory or the main part itself uses expressions of wide amplitude indicating clearly its wide sweep, then its ambit is widened to include activities which otherwise would have been beyond its natural import.
Each of these definitions are in two parts, one, explanatory and the other expandatory. The explanatory or the main part itself uses expressions of wide amplitude indicating clearly its wide sweep, then its ambit is widened to include activities which otherwise would have been beyond its natural import. After referring to the judgments reported in Regional Director, Employees' State Insurance Corpn v. High Land Coffee Works of P.F.X. Saldanha and Sons (23) (1991) 3 SCC 617 ]; CIT v. Taj Mahal Hotel, Secunderabad (24) (1971) 3 SCC 550 ]; and State of Bombay v. Hospital Mazdoor Sabha (25) AIR 1960 SC 610 the Supreme Court observed thus: "The provisions of the Act thus have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit oriented legislation. The primary duty of the Court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and is not contrary to the attempted objective of the enactment." In construing the meaning of 'consumer' as defined in Section 2(d) of the Act (as it stood before the Amendment Act 62/2002 w.e.f. 15.3.2003, which inserted the words "but does not include a person who avails of such services for any commercial purpose") and the explanation was made applicable to clause (i) and (ii), the Court observed thus: "It is in two parts. The first part deals with goods and the other with services. Both parts first declare the meaning of goods and services by use of wide expressions. Their ambit is further enlarged by use of inclusive clause. For instance, it is not only purchaser of goods or hirer of services but even those who use the goods or who are beneficiaries of services with approval of the person who purchased the goods or who hired services are included in it. The legislation has taken precaution not only to define 'complaint', 'complainant', 'consumer' but even to mention in detail what would amount to unfair trade practice by giving an elaborate definition in clause (r) and even to define' defect' and' deficiency' by clauses (f) and (g) for which a consumer can approach the Commission.
The legislation has taken precaution not only to define 'complaint', 'complainant', 'consumer' but even to mention in detail what would amount to unfair trade practice by giving an elaborate definition in clause (r) and even to define' defect' and' deficiency' by clauses (f) and (g) for which a consumer can approach the Commission. The Act thus aims to protect the economic interest of a consumer as understood in commercial sense as a purchaser of goods and in the larger sense of user of services. The common characteristics of goods and services are that they are supplied at a price to cover the costs and generate profit or income for the seller of goods or provider of services. But the defect in one and deficiency in other may have to be removed and compensated differently. The former is, normally, capable of being replaced and repaired whereas the other may be required to be compensated by award of the just equivalent of the value or damages for loss." 22. The Supreme Court while interpreting meaning of word 'Service' (as it stood before Amendment Act 62/2002 which inserted words "but not limited to") and observed as under: "It is in three parts. The main part is followed by inclusive clause and ends by exclusionary clause. The main clause itself is very wide. It applies to any service made available to potential users. The words 'any' and 'potential' are significant. Both are of wide amplitude. The word 'any' dictionarily means 'one or some or all'. In Black's Law Dictionary it is explained thus, "word 'any' has a diversity of meaning and may be employed to indicate 'all' or 'every' as well as 'some' or 'one' and its meaning in a given statute depends upon the context and the subjectmatter of the statute". The use of the word 'any' in the context it has been used in clause (0) indicates that it has been used in wider sense extending from one to all. The other word 'potential' is again very wide. In Oxford Dictionary it is defined as 'capable of coming into being, possibility'. In Black's Law Dictionary it is defined as "existing in possibility but not in act.
The other word 'potential' is again very wide. In Oxford Dictionary it is defined as 'capable of coming into being, possibility'. In Black's Law Dictionary it is defined as "existing in possibility but not in act. Naturally and probably expected to come into existence at some future time, though not now existing; for example, the future product of grain or trees already planted, or the successive future installments or payments on a contract or engagement already made." In other words service which is not only extended to actual users but those who are capable of using it are covered in the definition. The clause is thus very wide and extends to any or all actual or potential users. But the legislature did not stop there. It expanded the meaning of the word further in modern sense by extending it to even such facilities as are available to a consumer in 'connection with banking, financing etc. Each of these are wide-ranging activities in day to day life. They are discharged both by statutory and private bodies. In absence of any indication, express or implied there is no reason to hold that authorities created by the statute are beyond purview of the Act. When banks advance loan or accept deposit or provide facility of locker they undoubtedly render service. A State Bank or nationalised bank renders as much service as private bank. No distinction can be drawn in private and public transport or insurance companies. Even the supply of electricity or gas which throughout the country is being made, mainly, by statutory authorities is included in it. The legislative intention is thus clear to protect a consumer against services rendered even by statutory bodies.
No distinction can be drawn in private and public transport or insurance companies. Even the supply of electricity or gas which throughout the country is being made, mainly, by statutory authorities is included in it. The legislative intention is thus clear to protect a consumer against services rendered even by statutory bodies. The test, therefore, is not if a person against whom complaint is made is a statutory body but whether the nature of the duty and function performed by it is service or even facility." The Supreme Court further examined the question whether housing construction or building activity carried on by a private or statutory body was service within the meaning of clause (0) of Section 2 (1) of the 1986 Act as it stood prior to the inclusion of expression 'housing construction' in the definition of service by Ordinance No.24 of 1993 and observed thus: "As pointed out earlier the entire purpose of widening the definition is to Include in it not only day to day buying and selling activity undertaken by a common man but even such activities which are otherwise not commercial in nature yet they partake of a character in which some benefit is conferred on the consumer. Construction of a house or flat is for the benefit of person for whom it is constructed. He may do it himself or hire services of a builder or contractor. The latter being for consideration is service as defined in the Act. Similarly when a statutory authority develops land or allots a site or constructs a house for the benefit of common man it is as much service as by a builder or contractor. The one is contractual service and other statutory service. If the service is defective or it is not what was represented then it would be unfair trade practice as defined in the Act. Any defect in construction activity would be denial of comfort and service to a consumer. When possession of property is not delivered within stipulated period the delay so caused is denial of service. Such disputes or claims are not in respect of immoveable property as argued but deficiency in rendering of service of particular standard, quality or grade. Such deficiencies or omissions are defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice.
Such disputes or claims are not in respect of immoveable property as argued but deficiency in rendering of service of particular standard, quality or grade. Such deficiencies or omissions are defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice. If a builder of a house uses substandard material in construction of a building or makes false or misleading representation about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value under the Act. When the contractor or builder undertakes to erect a house or flat then it is inheren t in it that he shall perform his obligation as agreed to. A flat with a leaking roof, or cracking wall or substandard floor is denial of service. Similarly when a statutory authority undertakes to develop land and frame housing scheme, it, while performing statutory duty renders service to the society in general and individual in particular. The entire approach of the learned counsel for the development authority in emphasising that power exercised under a statute could not be stretched to mean service proceeded on misconception. It is incorrect understanding of the statutory functions under a social legislation. A development authority while developing the land or framing a scheme for housing discharges statutory duty the purpose and objective of which is service to the citizens. As pointed out earlier the entire purpose of widening the definitions is to include in it not only day to day buying of goods by a common man but even such activities which are otherwise not commercial but professional or service-oriented in nature. The provisions in the Acts, namely, Lucknow Development Act, Delhi Development Act or Bangalore Development Act clearly provide for preparing plan, development of land, and framing of scheme etc. Therefore if such authority undertakes to construct building or allot houses or building sites to citizens of the State either as amenity or as benefit then it amounts to rendering of service and will be covered in the expression 'service made available to potential users'. A person who applies for allotment of a building site or for a flat constructed by the development authority or enters into an agreement with a builder or a contractor is a potential user and nature of transaction is covered in the expression' service of any description'.
A person who applies for allotment of a building site or for a flat constructed by the development authority or enters into an agreement with a builder or a contractor is a potential user and nature of transaction is covered in the expression' service of any description'. It further indicates that the definition is not exhaustive. The inclusive clause succeeded in widening its scope but not exhausting the services which could be covered in earlier part. So any service except when it is free of charge or under a constraint of personal service is included in it. Since housing activity is a service it was covered in the clause as it stood before 1993." 23. It is to be noted that the 1986 Act is a special Act having additional extended jurisdiction, more so Section 3 of the Act 1986 seeks to provide remedy under the Act in addition to other remedies provided under other Acts unless there is a clear bar. As noted above, when a person offers/sells of sites/plots coupled with an assurance of development of infrastructure/amenities/layout approvals, such an offer/sale and the obligations undertaken pursuant thereto is "service" within the meaning of Section 2 (1)(0) of the Act. In Fair Air Engineers Pvt. Ltd and anothers case (1 supra), rejecting the contention that the proceedings under the 1986 Act could not continue in view of the Arbitration Clause in the agreement entered into between the parties, the Supreme Court observed as under: "15. Accordingly, it must be held that the provisions of the Act are to be construed widely to give effect to the object and purpose of the Act. it is seen that Section 3 envisages that the provisions of the Act are in addition to and are not in derogation of any other law in force. It is true, as rightly contended by Shri Suri, that the words " in derogation of the provisions of any other law for the time being in force' would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. Prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well founded.
Prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well founded. Parliament is aware of the provisions of the Arbitration Act and the Contract Act, 1872 and the consequential remedy available under Section 9 of the Code of Civil Procedure, i.e. to avail of right of civil action in a competent court of civil jurisdiction. Nonetheless, the Act provides the additional remedy." 24. On consideration of the entire material on record, we are of the view that the complaints as presented by each of the complainants before the consumer fora are maintainable and are amenable to jurisdiction of the consumer fora and that the orders under challenge do not require any interference by this Court either on the ground of inherent jurisdiction or on the premise of arbitration clause. The Consumer Fora do not suffer from lack of jurisdiction to entertain the complaints. 25. It is nextly argued by the learned counsel for the petitioners that the decision in Fair Air Enginers's case (1 supra) is per incurium in the light of the decision in Patel Engineer Ltd 's case (4 supra). This argument is also merit less for the reason that• the Supreme Court in Fair Air Enginer's case (1 supra) while sustaining the order of the National Commission in declining to refer the dispute for arbitration by holding that Section 3 of the 1986 Act envisages that its provisions are in addition to and not in derogation of any other law in force held that the Legislature intended to provide a remedy in addition to the remedies, such as arbitration, and that in view of the object of the 1986 Act and the provisions of Section 3 thereof it would be appropriate for the Fora created under the said Act to proceed with the matters in accordance with the provisions of the said Act rather than relegating the parties to arbitration proceedings as provided by a contract entered into between the parties.
Though Section 8 of the Arbitration Act couched in a peremptory language and that the judicial authority has to refer the dispute to arbitration once it is satisfied that an arbitration agreement exists between the parties and that the dispute raised before it is covered by such an agreement, still the 1986 Act being a special enactment, which created an additional remedy in favour of the consumers for raising consumer dispute before the consumer forum, Section 8 of the Act cannot take away such a remedy from the consumers as in the civil suits. In Patel Engineers case (4 supra), the question under consideration was the nature of the function of the Chief Justice under Section 11 of the Arbitration Act. A Seven Judge Bench of the Supreme Court in Patel Engineering's case (4 supra) while overruling the decision in Konkan Rly. Corporation Ltd v. Rani Constntctions P. Ltd (26) (2002) 2 SCC 388 ) held that the power exercised by the Chief Justice of a High Court or the Chief Justice of India under Section 11(6) of the Arbitration Act is not an administrative power but it is a quasijudicial power and in case of designation of a Judge of the High Court or of the Supreme Court, the power that is exercised by the designated Judge would be that of the Chief Justice as conferred by the statute. It is noteworthy that a case is an authority for what it decides and the Court shall not place reliance on cases out of context as the decisions are not statutes. In this regard it is apt to refer to the judgment of the Supreme Court reported in Bharat Petroleuin Corpn Ltd v. N.R. Vairammli (18 supra). The relevant portion of the judgment reads as under: “Circumstantial flexibility, one additional or different fact may make a world of difference .between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper.
The relevant portion of the judgment reads as under: “Circumstantial flexibility, one additional or different fact may make a world of difference .between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. The following words of Lord Denning in the matter of applying precedents have become locus classicus: U Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cardozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive." In Hindusthan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums (27) (2003) 6 SCC 503 = 2003 (5) ALD 26 (SC) = 2003 (5) ALT 33.4 (ON SC), issue that fell for consideration was whether in view of the mandatory provisions of Section 8 of the Arbitration Act, the civil court had the power to decide the dispute raised in a civil suit without relegating the parties to Arbitration, wherein the provisions of Act 1986 were not for consideration at all. In the circumstances, the decisions of the Supreme Court reported in Fair Air Enginers Put Ltd's case (1 supra) and also the ratio in Lucknow Development Authority's case (22 supra) will cover the points urged in these writ petitions and therefore we are not inclined to refer to the other citations relied on by the learned counsel for the petitioners which are not helpful to the facts and circumstances of the present case. In case of conflict between special law and general law beneficial law prevails. Arbitration law is general law and the Consumer Protection Act is a special law and is a beneficial legislation. The remedy provided under 1986 Act is not in derogation of the other remedies to a party. In this regard it is expedient and necessary to refer to the judgment reported in Lucknow Development Authority's case (22 supra), which elaborately considered the scheme and object of the Act 1986.
The remedy provided under 1986 Act is not in derogation of the other remedies to a party. In this regard it is expedient and necessary to refer to the judgment reported in Lucknow Development Authority's case (22 supra), which elaborately considered the scheme and object of the Act 1986. Though there is a qualitative difference between the language of Section 34 of the 1940 Act and Section 8 of the 1996 Act and the case arose under the 1940 Act, the Supreme Court still referred to Section 8 of the 1996 Ordinance. In Patel Engineers's case (4 supra) there was a passing reference to the Consumer Protection Act. The conclusions reached by the Supreme Court at para 142 of the said judgment are therefore binding precedent. It is also to be noteworthy there is no finding that the Arbitration Act prevails over the Consumer Protection Act. 26. Having regard to the interpretation given by the Supreme Court in Fair Air Engineers Pvt. Ltd (1 supra) with regard to Section 3 of the 1986 Act and the ratio in Lucknow Development Authority (22 supra), we are of the view that the 1986 Act, being a special enactment, created an additional remedy in favour of the consumers to raise consumer disputes before the Fora constituted under the said Act, and that Section 8 of the Arbitration Act does not have the effect of taking away such a remedy from the consumers as in the case of civil suits, which are in the nature of common law remedies. If a party chooses to avail a remedy other than the consumer dispute, he shall be free to do so because the remedy under the 1986 Act is not in derogation of the other remedies available to such a party and he cannot be denied such right on the ground of availability of an alternative remedy, such as Arbitration Act as Section 3 of the 1986 Act is intended to provide an additional remedy to a party and the same is not meant to deny such a remedy to him. Further, by virtue of Section 17 of the Consumer Protection Act the parties can undoubtedly resort to filing of the complaint as specified 'under Section 17 of the Consumer Protection Act.
Further, by virtue of Section 17 of the Consumer Protection Act the parties can undoubtedly resort to filing of the complaint as specified 'under Section 17 of the Consumer Protection Act. The restriction as to the' inherent jurisdiction would not come in the way for the complainant to file the complaint, provided he fulfils the conditions mentioned in Section 17 of the Consumer Protection Act. 27. In this view of the matter, the orders passed by the State Commission does not suffer from any legal infirmity and it cannot be said that there is inherent lack of jurisdiction to entertain and adjudicate the complaint filed by respondents before it. 28. For the foregoing discussion, the writ petitions are meritless and are accordingly dismissed. No costs.