Lucknow Development Authority v. M.K. Gupta

A development authority built flats and allotted them to the public. When it delayed delivery, it argued that its statutory housing work was not a service under the Consumer Protection Act, 1986. The Supreme Court rejected this and held that public bodies answer to consumer forums like private service providers.

Quick Revision

Parties

• Lucknow Development Authority — appellant in Civil Appeal No. 6237 of 1990. It is a statutory authority for planned development of Lucknow. It built flats and allotted them to applicants.
• M.K. Gupta — respondent in that appeal and the complainant. He applied for a Middle Income Group flat in the Gomti Nagar Scheme and paid in full.
• Other parties — para 1 names the Delhi and Bangalore Development Authorities in the question of law. Para 7 mentions a builder who filed Civil Appeal No. 2954. Para 10 mentions an appeal about the Bangalore Development Authority.
• Sahai J. — delivered the judgment of the Court. Kuldip Singh J. was the other judge on the bench. There are no separate opinions.

Procedural History

1. The appeals were brought against orders of the National Consumer Disputes Redressal Commission (National Commission), New Delhi (para 1).
2. In Civil Appeal No. 6237 of 1990, the respondent complained to the District Forum. The complaint said possession was not given after payment of the whole amount, and the work was incomplete (para 9).
3. By its order dated 15 February 1990, the State Commission directed 12% annual simple interest on the deposit from 1 January 1989 to 15 February 1990 (para 9).
4. The State Commission also directed the authority to hand over possession without delay after completing the work up to June 1990 (para 9).
5. The State Commission added a fallback. If completion was not possible, the authority had to hand over the flat by 5 April 1990 after determining the deficiencies. The estimated cost of the deficient construction had to be refunded by 20 April 1990 (para 9).
6. The authority did not comply. It appealed to the National Commission and raised the question of jurisdiction. The Commission overruled it and dismissed the appeal (para 9).
7. The National Commission allowed the respondent's cross-appeal. It ordered payment of Rs 44,615, the cost of completing construction as estimated by the authority's architect in October 1989 (para 9).
8. The National Commission held that the authority's action amounted to harassment, mental torture and agony. It directed Rs 10,000 as compensation (para 9).
9. Civil Appeal No. 6237 of 1990 was the only appeal in which the National Commission, in its appellate power, awarded compensation for harassment and agony (para 9).
10. In another appeal from Bangalore (arising out of SLP (Civil) No. 659 of 1991), the Commission directed the Bangalore Development Authority to pay Rs 2446 as registration expenses (para 10).
11. Civil Appeal Nos. 5257 of 1990, 3963 of 1989 and 2954-59 of 1992 are named in the costs order (para 13).

Facts

The facts below are from Civil Appeal No. 6237 of 1990. The judgment says the facts of the other appeals are of no consequence (para 2).

1. The Lucknow Development Authority wanted to ease the acute housing problem in Lucknow. It developed land, formed plots of different categories and sizes, and built dwelling units for people of different income groups (para 9).
2. After construction was complete, the authority invited applications from people wanting plots or houses (para 9).
3. The respondent applied on the prescribed form for registration for a Middle Income Group (MIG) flat in the Gomti Nagar Scheme, Lucknow, on a cash down basis (para 9).
4. There were more applicants than flats. The authority drew lots, and flat No. 11/75 in Vinay Khand-II was allotted to the respondent on 26 April 1988 (para 9).
5. The respondent deposited Rs 6132 on 2 July 1988 and Rs 1,09,975 on 29 July 1988 (para 9).
6. The whole payment was made in July 1988, so the flat was registered on 18 August 1988 (para 9).
7. By a letter dated 23 August 1988, the authority directed its Executive Engineer-VII to hand over possession to the respondent (para 9).
8. The respondent was told this on 30 November 1988. The flat was still not delivered because the construction was incomplete (para 9).
9. The respondent approached the authority. No steps were taken and possession was not handed over (para 9).
10. He filed a complaint before the District Forum. He said the authority had not given possession or completed the formalities, although he had paid the whole amount under the cash down scheme (para 9).
11. In the Bangalore appeal, the authority allotted an alternative site after it found its own mistake. The consumer spent Rs 2446 to register the lease-cum-sale agreement for that site (para 10).

Issues Raised

1. Are statutory authorities such as the Lucknow, Delhi and Bangalore Development Authorities amenable to the Consumer Protection Act, 1986 for acts or omissions in housing activity? These include delay in giving possession, non-completion of a flat in time and defective construction (para 1).
2. Did housing activity by a statutory authority, a private builder or a contractor come within the Act only after the amendment by Ordinance No. 24 of 1993? Or could the Commission entertain such a complaint earlier (para 1)?
3. Is a complaint about a house or a site outside the Act because the Act's definition of goods covers only movable property (para 3)?
4. Does the word service in section 2 clause (o) cover the building of a house or flat, and a statutory authority's housing scheme (paras 4-6)?
5. Can the Commission award compensation, including compensation for harassment and agony to a consumer (para 8)?
6. Who should pay that compensation? Should it be the authority and so the taxpayer, or the officers responsible (paras 8, 10 and 11)?

Arguments Contended

For the appellants (the authorities and the builder)

1. The Act applies only to movable goods. Goods are defined by clause (i) through the Sale of Goods Act, 1930. So a complaint about immovable property, such as a house or a site, could not be entertained (para 3).
2. Local authorities and government bodies develop land and build houses in discharge of a statutory function. They could not be subjected to the Act (para 5).
3. Widening the Act to cover such authorities would vitally affect the functioning of official bodies (para 5).
4. The whole objective of the Act is to protect a consumer against malpractices in business (para 5).
5. The development authority stressed that power exercised under a statute could not be stretched to mean service (para 6).
6. In Civil Appeal No. 2954, the builder said the 1993 additions of housing construction in clause (o) and avail in clause (d) showed that the earlier Act did not cover hiring of services for housing construction (para 7).
7. The amendment was not expressly retrospective, so it should be held prospective. A law that materially affects vested rights, duties or obligations in past transactions should remain untouched (para 7).
8. The builder relied on Jose Da Costa v. Bascora Sadasiva Sinai Narcornim, State of M.P. v. Rameshwar Rathod and the Pulborough School Board Election case (para 7).
9. When the definition of service in the Monopolies and Restrictive Trade Practices Act was amended in 1991, it was made retrospective. The absence of such words in this Act meant it was prospective (para 7).

For the respondents

The judgment does not set out the respondents' arguments separately. It records that they were aggrieved by delay in delivery of possession or the use of substandard material. They therefore claimed deficiency in service by the appellants (para 3). In Civil Appeal No. 6237 of 1990, the respondent also filed a cross-appeal before the National Commission (para 9).

Court's Reasoning

Sahai J. (for the Court)

Sahai J. delivered the judgment of the Court. There is no concurring or dissenting opinion.

The purpose of the Act

1. Noted: the question is whether statutory authorities are amenable to the Act for housing activity. The Court also asks whether the Act covered housing activity only after Ordinance No. 24 of 1993 (para 1).
2. Noted: how the dispute arose in the different appeals does not matter, except in two appeals. Those two bear on the Commission's power to award exemplary damages and on the accountability of statutory authorities (para 2).
3. Held: the Court first looks at the purpose of the Act, which helps to construe its provisions. The preamble says the Act protects the interest of consumers. The word protection is the key to the makers' minds (para 2).
4. Noted: a preamble cannot control the otherwise plain meaning of a provision. The Act meets the need to protect the common man from wrongs where the ordinary remedy has become illusory (para 2).
5. Noted: laws that let the State intervene for consumers have become a haven for unscrupulous people, because enforcement does not move or moves ineffectively. The Act's importance lies in letting the consumer take part directly in the market economy (para 2).
6. Noted: the Act attempts to remove the helplessness of a consumer against powerful business and against public bodies that have become storehouses of inaction. The Court calls the Act a silver lining that may check the rot (para 2).
7. Noted: the definitions of consumer, service, trader and unfair trade practice show that the legislature widened the Act's reach. Each definition has an explanatory part and an expanding part (para 2).
8. Noted: Dilworth v. Commissioner of Stamps explains an inclusive clause. The word include enlarges the words in the body of the statute. It covers their natural meaning and also the things the definition says they include (para 2).
9. Noted: the Court approved Dilworth in Regional Director, E.S.I. Corporation v. High Land Coffee Works, CIT v. Taj Mahal Hotel and State of Bombay v. Hospital Mazdoor Sabha (para 2).
10. Held: the Act is social benefit legislation (beneficial legislation) and its provisions must be construed in favour of the consumer. The court must adopt a constructive approach, but without doing violence to the language or the Act's objective (para 2).

Jurisdiction, consumer and goods

11. Noted: the Court first checks, on a plain reading, whether the Act applies to building activity by statutory authorities, private builders or contractors. This depends on the Commission's jurisdiction (para 3).
12. Noted: under sections 21 and 16, the National and State Commissions entertain complaints, and under section 11 the District Forum does. This depends on the value of goods or services and the compensation claimed (para 3).
13. Noted: under clause (c) of section 2, a complaint can allege an unfair trade practice or restrictive trade practice by a trader. It can allege a defect in goods or a deficiency in service (para 3).
14. Noted: under clause (b), a complainant is a consumer, a voluntary consumer association registered under the Companies Act, 1956 or another law, the Central or a State Government, or one or more consumers with the same interest (para 3).
15. Noted: the word consumer is comprehensive. The Court notes its Oxford and Black's Law Dictionary meanings. The Act's definition has a goods limb and a services limb, both widened by inclusive words (para 3).
16. Noted: the definition also covers users of goods and beneficiaries of services, when the buyer or hirer approves. Under its Explanation, commercial purpose does not include goods used exclusively for earning a livelihood by self-employment (para 3).
17. Noted: the legislature also defined unfair trade practice in clause (r), and defect and deficiency in clauses (f) and (g). The Act protects a consumer's economic interest as a buyer of goods and as a user of services (para 3).
18. Noted: a defect in goods can usually be repaired or replaced. A deficiency in service may need the just equivalent of its value, or damages for loss (para 3).
19. Held: the argument that the Act covers only movable goods is not well founded. The respondents complained of deficiency in service. The Commission's jurisdiction is not ousted because the service related to immovable property (para 3).

The meaning of service and statutory bodies

20. Noted: the word service has many meanings, and its meaning in an Act depends on context. Clause (o) has a main part, an inclusive part and an exclusionary part (para 4).
21. Held: the main part covers any service made available to potential users. Both words are very wide. Any extends from one to all, and potential covers those capable of using the service (para 4).
22. Noted: the inclusive part adds facilities for banking, financing, insurance, transport, processing and supply of energy. Statutory and private bodies both discharge these (para 4).
23. Noted: no distinction can be drawn between private and public transport or insurance companies. Supply of electricity or gas, mainly by statutory authorities, is also included (para 4).
24. Held: the legislative intention is clear. It is to protect a consumer against services rendered even by statutory bodies (para 4).
25. Held: absent any indication, express or implied, there is no reason to hold that statutory authorities are beyond the Act. A State Bank or nationalised bank renders as much service as a private bank (para 4).
26. Held: the test is not whether the person complained against is a statutory body. The test is whether the nature of its duty and function is service or facility (para 4).
27. Held: the argument that statutory bodies cannot be subjected to the Act rests on a complete misunderstanding of the Act's purpose and language. The Act requires a provider of service to be more objective and caretaking, and more so in public services (para 5).
28. Why: when undertakings are taken over, or corporations are created to discharge State functions, one objective is better, efficient and cheaper service. Excluding public bodies would go against the Act and its spirit (para 5).
29. Noted: the Court criticises demands for exclusion from the Act. It says official bodies that bargain for benefits claim exclusion when accountability arises (para 5).
30. Noted: the spirit of consumerism is feeble. No association raises a finger on regular price hikes made without regard to the common man (para 5).
31. Held: "A government or semi-government body or a local authority is as much amenable to the Act as any other private body rendering similar service." Subjecting themselves to the Act would be a service to society (para 5).

Housing construction as service

29. Noted: the next question is whether housing construction was a service under clause (o) before Ordinance No. 24 of 1993 added the words housing construction (para 6).
30. Held: the widening of the definition covers activities that are not commercial but confer a benefit on the consumer. Hiring a builder or contractor for consideration is a service (para 6).
31. Held: when a statutory authority develops land, allots a site or builds a house for the common man, it is as much a service as that of a builder. "The one is contractual service and other statutory service." (para 6)
32. Held: a defective service, or one not as represented, is an unfair trade practice. Any defect in construction denies comfort and service to the consumer (para 6).
33. Held: delay in delivering possession within the stipulated period is a denial of service. Such claims are not about immovable property. They are about deficiency in a service of a particular standard (para 6).
34. Noted: sub-clause (ii) of clause (r) of section 2 treats such deficiencies as unfair trade practice. Use of substandard material, or a false or misleading statement about the condition of a house, denies a benefit the consumer can claim under the Act (para 6).
35. Noted: a builder who undertakes to erect a house must perform as agreed. A flat with a leaking roof, cracking wall or substandard floor is a denial of service (para 6).
36. Held: a development authority that develops land or frames a housing scheme performs a statutory duty whose purpose is service to citizens. The argument that statutory power cannot be service is a misconception (para 6).
37. Held: an applicant for a building site or a flat, or a person who contracts with a builder, is a potential user. The transaction is a service of any description. The definition is not exhaustive (para 6).
38. Held: any service is covered, except one free of charge or under a contract of personal service. Housing activity was a service before 1993 (para 6).

The 1993 amendment

39. Noted: the builder argued that adding housing construction and avail in 1993 showed the earlier Act did not cover such services. He argued the amendment was prospective (para 7).
40. Held: the Ordinance does not make the definition retrospective, but that was not necessary. The words appear to have been added as a matter of abundant caution, because housing construction was a service even earlier (para 7).
41. Why: the contractor had no vested right to render deficient service or to build a defective house. A law that protects public interest cannot be construed so narrowly that it defeats its objective (para 7).
42. Held: the absence of avail of in the definition of consumer did not exclude such activity. The word facility was already in the definition of service. The 1993 words only clarified the position (para 7).

Compensation and accountability of public authorities

43. Noted: the Court turns to whether the Commission can award compensation, including for harassment and agony. It also asks who should pay: the society or taxpayer, or those responsible for oppressive and capricious acts (para 8).
44. Noted: administrative law on the accountability of public authorities for arbitrary and even ultra vires (beyond power) actions has advanced. The State is liable to compensate for loss or injury caused by its employees' arbitrary actions (para 8).
45. Noted: in State of Gujarat v. Memon Mahomed Haji Hasam, compensation was upheld for disposing of seized vehicles. The grounds were the legal obligation of a bailee to preserve and return the property and the statutory obligation to return it or pay its value (para 8).
46. Noted: in Lala Bishambar Nath v. Agra Nagar Mahapalika, the Court extended this to bona fide action contrary to law. Good motive did not matter, because the orders were illegal (para 8).
47. Noted: the idea that the King can do no wrong has been given up in England. The First Law Commission said the distinction between sovereign and non-sovereign functions should no longer decide the State's liability (para 8).
48. Noted: Friedmann says the proper test is the nature and form of the activity in question. The line between governmental and non-governmental function is not the test (para 8).
49. Held: Kasturi Lal gave no immunity for tortious acts of public servants that are not referable to sovereign power. House construction and any service hired by a consumer are not sovereign functions. So Kasturi Lal does not stop the Commission from awarding compensation (para 8).
50. Noted: the Court agrees with Mathew J. in Shyam Sunder v. State of Rajasthan. It is not necessary to consider whether there is a rational dividing line between sovereign and proprietary functions (para 8).
51. Noted: public authorities with statutory functions cannot act negligently. Geddis v. Proprietors of Bann Reservoir (1878) says no action lies for what the Legislature authorised if done without negligence. An action lies if it is done negligently (para 8).
52. Held: sovereignty vests in the people under the Constitution, and every limb of the machinery must be people oriented. "No functionary in exercise of statutory power can claim immunity, except to the extent protected by the statute itself." (para 8)
53. Held: public authorities that act oppressively in violation of constitutional or statutory provisions are accountable before the Commission or the courts that maintain the rule of law (para 8).
54. Held: compensation is not defined in the Act and has a very wide meaning. It may cover actual or expected loss, and physical, mental or emotional suffering, insult or injury (para 8).
55. Held: the Commission can therefore award compensation for any loss or damage a consumer suffers that the law includes in compensation. The Commission can redress any injustice done to him. Any other reading would defeat the Act (para 8).
56. Held: the Commission or the Forum can award the value of goods or services and also compensate the consumer for injustice suffered (para 8).
57. Noted: Civil Appeal No. 6237 of 1990 is the only appeal where the National Commission, in appeal, upheld the State Commission's finding and awarded compensation for harassment and agony (para 9).

Who pays: wrongdoing by public officers

58. Noted: compensation includes both the just equivalent for loss of goods or services and compensation for suffering injustice (para 10).
59. Held: in the Bangalore appeal, the Rs 2446 was the exact loss suffered. The authority acted promptly once it knew of its mistake, and no misfeasance was found. For such acts in due discharge of duty, the authority must make good the loss (para 10).
60. Held: the liability changes when suffering results from mala fide, oppressive or capricious acts of a public servant. The Commission can award compensation if the consumer suffered injury because of what English courts call misfeasance by officers (para 10).
61. Noted: in England, exemplary or aggravated damages are punitive, but an exception exists for "oppressive, arbitrary or unconstitutional action by servants of the Government" (Salmond and Heuston). Wade describes misfeasance in public office as malicious abuse of power and deliberate maladministration (para 10).
62. Noted: Lord Hailsham in Cassell & Co. Ltd. v. Broome said that an award of exemplary damages can serve a useful purpose in vindicating the strength of law. Lord Devlin in Rookes v. Barnard said servants of the government are also servants of the people (para 10).
63. Held: a public functionary who acts maliciously or oppressively abuses power and does not exercise it. No law protects him. He must suffer it (para 10).
64. Held: "Harassment of a common man by public authorities is socially abhorring and legally impermissible." Compensation for it satisfies the individual and helps cure a social evil (para 10).
65. Why: nothing is more damaging than the feeling of helplessness. Crime and corruption thrive when the public does not resist. Compensation may improve the work culture and change the outlook (para 10).
66. Noted: an ordinary citizen is hardly equipped to match the might of the State. The rule of law gives him that strength and checks arbitrary and capricious exercise of power (para 10).
67. Noted: compensation may arise even when an officer acts honestly and bona fide. When it arises from arbitrary or capricious behaviour, it loses its individual character and assumes social significance (para 10).
68. Noted: harm to society from such harassment is far more grievous than harm to the individual. A helpless citizen succumbs to pressure instead of complaining (para 10).
69. Noted: Wade says that few English decisions arise on misfeasance in public office. One reason is the law that holds officers personally responsible for capricious or ultra vires action (para 10).
70. Noted: Ashby v. White applied the principle of ubi jus ibi remedium (a Latin maxim on remedies for rights). The House of Lords decreed damages for an elector wrongly stopped from voting (para 10).
71. Noted: in Roncarelli v. Duplessis, the Supreme Court of Canada awarded damages against the Premier of Quebec personally. He had directed the cancellation of a restaurant owner's liquor licence because the owner stood bail for Jehovah's Witnesses (para 10).
72. Noted: in Smith v. East Elloe Rural District Council, the House of Lords held that an action for damages could proceed against the clerk of a local authority personally. He had procured a compulsory purchase wrongfully and in bad faith (para 10).
73. Noted: in Farrington v. Thomson, the Supreme Court of Victoria awarded damages for exercising a power the authorities knew they did not have. A licensing inspector and a police officer ordered the plaintiff to close his hotel and stop supplying liquor. He obeyed and sued for his loss (para 10).
74. Noted: the Court in Farrington observed that an action may be maintained against a public officer who abuses his office by act or omission and so injures an individual (para 10).
75. Noted: in Wood v. Blair, notices forbidding a dairy farmer to sell milk were void. The farmer got damages for misfeasance, although the officers had acted from the best motives (para 10).
76. Noted: the question is not only the award of compensation but who bears it. A public authority discharges a public duty. If it acts honestly and bona fide, a person may still claim compensation that is payable in the circumstances (para 11).
77. Noted: an authority empowered by statute discharges a public duty. It must act to subserve general welfare and the common good (para 11).
78. Noted: where power is exercised capriciously and causes harassment and agony, the question is who must pay. No authority can arrogate to itself power to act arbitrarily (para 11).
79. Noted: the Court deplores matters that linger, citizens made to run from one end to the other, and the death of the culture of window clearance (para 11).
80. Noted: public administration involves vast administrative discretion that shields the authority. That shield ends where the discretion was exercised mala fide (para 11).
81. Noted: the test of a merely permissive grant of power is over. It is now imperative and implicit that power be exercised for the sake of society (para 11).
82. Held: if discretion was exercised mala fide and the complainant is entitled to compensation for mental and physical harassment, the officer cannot claim protective cover (para 11).
83. Held: when the National Commission finds the capricious exercise of power duly proved, it has a statutory obligation to award compensation (para 11).
84. Why: damages against the State are paid from the taxpayers' money, so the common man is the ultimate sufferer (para 11).
85. Held: the Commission may award compensation for harassment, mental agony or oppression only on a finding recorded carefully, on material and convincing circumstances, and not lightly (para 11).
86. Held: the Commission should then direct the department concerned to pay the complainant from the public fund immediately. It should recover the amount from those found responsible. Where there are several functionaries, it should divide the amount proportionately (para 11).

Provisions mentioned

• Consumer Protection Act, 1986, preamble — the Act provides for the protection of the interest of consumers (para 2).
• Section 2, clause (b) — defines a complainant: a consumer, a registered voluntary consumer association, the Central or a State Government, or consumers with the same interest (para 3).
• Section 2, clause (c) — defines a complaint: an allegation of unfair or restrictive trade practice, a defect in goods or a deficiency in service (para 3).
• Section 2, clause (d) — defines a consumer who buys goods or hires or avails of services for consideration, including users and beneficiaries with the buyer's approval (paras 3 and 7).
• Section 2, clauses (f) and (g) — define defect and deficiency (para 3).
• Section 2, clause (i) — defines goods by the meaning in the Sale of Goods Act, 1930: movable property other than actionable claims and money (para 3).
• Section 2, clause (o) — defines service as service of any description made available to potential users. It includes banking, financing, insurance, transport and similar facilities and, after 1993, housing construction. It excludes free service and service under a contract of personal service (paras 4 and 6).
• Section 2, clause (r), sub-clause (ii) — the definition of unfair trade practice that the Court links to deficiencies and omissions in housing (para 6).
• Sections 11, 16 and 21 — the jurisdiction of the District Forum, the State Commission and the National Commission, depending on the value of goods or services and compensation claimed (para 3).
• Ordinance No. 24 of 1993 — added housing construction to clause (o) and avail to clause (d). The Court held it was not needed to make housing a service (paras 6 and 7).
• Companies Act, 1956 — a voluntary consumer association may be registered under it to be a complainant (para 3).
• Lucknow Development Act, Delhi Development Act and Bangalore Development Act — provide for planning, development of land and framing of schemes (para 6).
• Monopolies and Restrictive Trade Practices Act — its 1991 amendment of service was made retrospective, as the builder argued (para 7).

Authorities

• Dilworth v. Commissioner of Stamps, 1899 AC 99; 15 TLR 61 — an inclusive definition enlarges the words defined. Quoted (para 2).
• Regional Director, Employees' State Insurance Corpn. v. High Land Coffee Works of P. F.X. Saldanha and Sons, (1991) 3 SCC 617 — approved Dilworth (para 2).
• CIT v. Taj Mahal Hotel, Secunderabad, (1971) 3 SCC 550 — approved Dilworth (para 2).
• State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610; (1960) 2 SCR 866; (1960) 1 LLJ 251 — approved Dilworth (para 2).
• Jose Da Costa v. Bascora Sadasiva Sinai Narcornim, (1976) 2 SCC 917 — relied on by the builder on prospective amendment. The Court rejected the argument (para 7).
• State of M.P. v. Rameshwar Rathod, (1990) 4 SCC 21; AIR 1990 SC 1849 — relied on by the builder in the same way (para 7).
• Pulborough School Board Election, Re (Pulborough School Board Election v. Nutt), (1891-94) All ER — relied on by the builder in the same way (para 7).
• State of Gujarat v. Memon Mahomed Haji Hasam, AIR 1967 SC 1885; (1967) 3 SCR 938 — compensation for disposal of seized vehicles was upheld. Used for State liability (para 8).
• Lala Bishambar Nath v. Agra Nagar Mahapalika, Agra, (1973) 1 SCC 788 — liability applies even to bona fide but illegal action (para 8).
• Kasturi Lal Ralia Ram Jain v. State of U.P., AIR 1965 SC 1039; (1965) 1 SCR 375; (1966) 2 LLJ 583 — no immunity for acts not referable to sovereign power. Held not to bar compensation here (para 8).
• Shyam Sunder v. State of Rajasthan, (1974) 1 SCC 690 — the Court agreed with Mathew J. (para 8).
• Geddis v. Proprietors of Bann Reservoir, (1878) 3 AC 430 — an action lies for negligent exercise of statutory power. Quoted (para 8).
• Cassell & Co. Ltd. v. Broome, 1972 AC 1027 — Lord Hailsham on exemplary damages vindicating the law (para 10).
• Rookes v. Barnard, 1964 AC 1129 — Lord Devlin on servants of the government (para 10).
• Ashby v. White, (1703) 2 Ld Raym 938 — damages for an elector wrongly stopped from voting (para 10).
• Roncarelli v. Duplessis, (1959) 16 DLR 2d 689 — damages against the Premier of Quebec (para 10).
• Smith v. East Elloe Rural District Council, 1956 AC 736 — action against a clerk for bad-faith compulsory purchase (para 10).
• Farrington v. Thomson, 1959 UR 286 (as printed in the judgment) — damages against officers who exercised a power they did not have (para 10).
• Wood v. Blair, The Times, 3-5 July 1957 — damages despite the officers' good motives (para 10).
• Also cited: Friedmann on the State's liability (para 8); the First Law Commission (para 8); Salmond and Heuston on the Law of Torts and Wade on Administrative Law, p. 777 (para 10); the Oxford and Black's Law Dictionaries (paras 3-4).

Judgement

1. All the appeals are dismissed (para 12).
2. In Civil Appeal No. 6237 of 1990, the Lucknow Development Authority must fix responsibility on the officers who caused the harassment and agony to the respondent. It must do so within six months of a copy of the order being produced or served on it (para 12).
3. The Rs 10,000 awarded by the Commission for mental harassment must be recovered from those officers proportionately from their salary (para 12).
4. Compliance must be reported to this Court within one month after the six months expire (para 12).
5. The Registrar General must send a copy of the order to the Secretary, Lucknow Development Authority, immediately (para 12).
6. In Civil Appeal Nos. 6237 of 1990, 5257 of 1990, 3963 of 1989 and 2954-59 of 1992, the appellant must pay the contesting respondents costs of Rs 5,000 in each case (para 13).
7. The other respondents did not appear, so there is no order as to costs in the other appeals (para 13).
8. The amounts awarded below, as recorded, are Rs 44,615 for completing the construction and Rs 10,000 for harassment (para 9).

Legal Principle / Ratio

A statutory development authority that develops land, allots sites or builds houses renders a service under the Consumer Protection Act, 1986. This was so even before Ordinance No. 24 of 1993. The Commission can award compensation for harassment and agony. Where officers acted mala fide or oppressively, the authority must pay and then recover the amount from them.

Key holding: "When possession of property is not delivered within stipulated period the delay so caused is denial of service."

Subsequent Treatment

Indian Medical Association v. V.P. Shantha (1995)

• The Court said Lucknow construed the three-part definition of service in section 2(1)(o). It relied on the wide main part and found no reason to cut it down to exclude medical practitioners. This judgment has no numbered paragraphs.

Bar of Indian Lawyers v. D.K. Gandhi (2024, D.K. Gandhi PS National Institute of Communicable Diseases)

• The Court quoted paragraph 2 of Lucknow on the Act's purpose and the word protection (para 10 of that judgment). It then held that the Act does not cover advocates' services, treated as a contract of personal service.

Kaushal Kishor v. State of U.P. (2023)

• In Ramasubramanian J.'s opinion for the Constitution Bench, Lucknow is listed as pointing out that administrative law of accountability of public authorities has taken many strides. It said the State is liable to compensate for injury caused by arbitrary action of its employees (para 76(vii)).

Other later cases (not summarized)

• Chandigarh Housing Board v. Avtar Singh, (2010) 10 SCC 194. Its official text was not fetched.

Comparative Analysis

• Lucknow held that housing activity is a service because the main part of clause (o) is very wide. Indian Medical Association v. V.P. Shantha used the same width to bring doctors within the main part.
• In the 2024 Bar of Indian Lawyers decision, the Court quoted Lucknow for the Act's consumer-protection purpose. It still excluded advocates under the personal-service part of the definition.
• Kaushal Kishor used Lucknow in a different area. It cited Lucknow in tracing the law on State liability to compensate for arbitrary action by its employees.

Critical Analysis

Analysis based on the judgment text.

• The Court said that compensation for harassment needs a carefully recorded finding on convincing material. It gave no list of what that material should be (para 11).
• The judgment gives no fixed test for when an act is capricious or oppressive rather than an honest error. It contrasts the Bangalore case with the Lucknow case on their facts (paras 9-10).
• The Court left open how the authority should recover the amount from several officers. It said proportionately and set a six-month period for fixing responsibility (paras 11-12).

Significance

• It established that statutory housing authorities are subject to consumer forums for delay and defects in construction.
• It held that housing construction was a service before the 1993 amendment.
• It gave compensation a wide meaning that includes mental harassment.
• It directed that the amount for oppressive acts be recovered from the officers responsible, and not left to the taxpayer.

Exam-Important Points

• Rule: a statutory body is not exempt from the Act. The test is whether its duty and function is a service or facility (para 4).
• Rule: housing construction was a service even before Ordinance No. 24 of 1993. The Ordinance only clarified the law (paras 6-7).
• Rule: delay in handing over possession is a denial of service. Substandard material and false statements are unfair trade practice (para 6).
• Rule: compensation covers mental, physical and emotional suffering. The Commission can award it for harassment and agony (para 8).
• Rule: where officers acted mala fide or capriciously, the department pays at once from public funds and recovers from the officers (paras 10-11).
• Trap: the claim that the Act covers only movable goods fails, because the complaint is about deficiency in service (para 3).
• Trap: the sovereign-function plea in Kasturi Lal does not apply, because house construction is not a sovereign function (para 8).
• Directions: responsibility fixed within six months; Rs 10,000 recovered from the officers' salaries; costs of Rs 5,000 per appeal (paras 12-13).

Prepared from the full text of the judgment. Paragraph numbers follow the official Supreme Court judgment text; law reports may number the same paragraph differently.