ESTATE OFFICER AND ANR. versus CHARANJIT KAUR on 7 September 2021

SUPREME COURT REPORTS

[2021] 6 S.C.R.

ESTATE OFFICER AND ANR.

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v.

CHARANJIT KAUR

(Civil Appeal No. 4964 of 2021)

BSEPTEMBER 07, 2021

[HEMANT GUPTA AND A. S. BOPANNA, JJ.]

Consumer Protection Act, 1986 – s.2(1)(o) and s.14(1)(e) –Chandigarh Conversion of Residential Leasehold Land Tenure intoFreehold Land Tenure Rules, 1996 – Respondent-complainantCsought conversion of a plot allotted by Chandigarh administrationfrom leasehold to freehold site – District Consumer Forum directedappellant-Estate Officer to convert the plot on acceptance ofrequisite conversion fee; to pay compensation; and also costs oflitigation – Order affirmed by State and National ConsumerDCommissions – Plea of appellant-Estate Officer that the findingsrecorded by National Commission that the respondents areconsumers as charges have been paid for conversion, are nottenable for the reason that the charges deposited were not for anyservices to be rendered but to grant complete title to the allottees– It was contended that such conversion fee was in fact part ofEthe sale consideration to confer complete title to an allottee – Held:The appellant is not charging any fee for conversion of leaseholdproperty into freehold property except the amount in accordancewith the 1996 Rules – The amount so fixed under the Rules wouldform part of the sale consideration and not a fee or charge leviedFfor providing any kind of service – Appellant is not providing anyservices within the meaning of s.2(1)(o) of the Consumer Act – Theexpression ‘service’ includes housing construction and notallotment of a site or a plot – Since the respondents are already inpossession of the sites as lessee on 99 years basis, it cannot besaid that the appellant was deficient in providing any service, whichGeven if used in a liberal sense would not include transfer of titlein an immovable property – Thus, the consumer fora under the Actwould not have jurisdiction to entertain the consumer complaintson the ground of deficiency in service related to transfer of titleof the immovable property – Though it is not a case of theHdeficiency in service as contemplated by Consumer Act but, on facts, in exercise of power under Art.142 of the Constitution,various directions issued to the Chandigarh Administrationincluding direction to decide the claim of conversion as on the datewhen consumer complaints were filed – Chandigarh Lease Holdof Sites and Building Rules, 1973 – Chandigarh Estate Rules, 2007– Constitution of India, 1950 – Art. 142.

Administrative Law – Administrative process – Office Notings– Held: A noting is a part of the decision-making process – Suchnoting does not fructify into an order unless the same iscommunicated to the affected person.

Disposing of the appeals, the Court

Conclusion

HELD:1. The respondents claim conversion of lease holdsites to free hold sites on payment of the charges fixed by theChandigarh Administration. Such conversion was sought in viewof the fact that as against the limited right in the lease propertyfor 99 years, the Administration decided to grant freehold rightson satisfaction of certain conditions mentioned in the ChandigarhConversion of Residential Leasehold Land Tenure into FreeholdLand Tenure Rules, 1996. The respondents had paid thepremium amount as fixed under the Chandigarh Lease Hold ofSites and Building Rules, 1973. Now, the claim is for purchaseof remaining rights of the Central Government to convert thesite into freehold. The Central Government continues to beowner of the land until the entire consideration money togetherwith interest or any other amount is paid to the CentralGovernment on account of transfer of any site or building or bothas provided in Section 3 of the Capital of Punjab (Developmentand Regulation) Act, 1952. Therefore, the owner i.e., the CentralGovernment, cannot be said to be a trader or a service provider.The appellant is not charging any fee for conversion of leaseholdproperty into freehold property except the amount in accordancewith the Chandigarh Conversion of Residential Leasehold LandTenure into Freehold Land Tenure Rules, 1996, which is partof the sale consideration. It is thus a case of sale of immovableproperty on the terms as were fixed in the 1996 Rules. Theamount so fixed under the Rules would form part of the saleconsideration and not a fee or charge levied for providing anykind of service. [Para 18][137-B-F]

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A2. In terms of Section 14(1)(e) of the Consumer ProtectionAct, 1986, the District Forum can inter-alia direct removal ofdeficiency in the services. The deficiency in service howeverdoes not include the transfer of title in favour of the allottee whowas earlier granted leasehold rights. The appellant is notproviding any services within the meaning of Section 2(1)(o) ofBthe Consumer Act. The expression ‘service’ includes housingconstruction and not allotment of a site or a plot. [Para 19][137-G]

3.1. The Consumer fora had taken into consideration anoting in the administrative file of the appellant. A noting isChowever a part of the decision-making process. Such noting doesnot fructify into an order unless the same is communicated tothe affected person. Therefore, the noting by itself cannot bepressed into service to return a finding of deficiency in service.However, the fact remains that in terms of 1996 Rules, anDamount of Rs.1710/- per sq.mt. was fixed as conversion charges.The land rates were to be fixed by the Administration from timeto time under Rule 5 of 1996 Rules. The rates were revised onlyin 2017. The request could not be kept pending when thestatutory Rules were in force. The executive authority could notby an administrative order keep the matter pending, when thereEwas no other reason not to accept the conversion exceptimpending increase in the conversion charges. The action of theappellant in rejecting the request for conversion is arbitrary anddiscriminatory. [Paras 20, 21][137-H; 138-A; 139-F-G]

3.2. On the date when the letter was issued by theFadministration on 10.05.2013, the statutory 1996 Rules were inforce. Such Rules were kept in abeyance on the basis ofcommunication on behalf of the Finance Secretary to the EstateOfficer. Such communication cannot be countenanced. Thestatutory rules could not be put to hold because the issue ofrevision of rates of conversion was under consideration of theGAdministration. Even after the said letter the rates were fixedonly in 2017. In the face of valid statutory Rules, anadministrative decision cannot be sustained. [Para 23][140-C-D]

4. Since the respondents are already in possession of theHsites as lessee on 99 years basis, it cannot be said that the appellant was deficient in providing any service, which even ifused in a liberal sense would not include transfer of title in animmovable property. Thus, the consumer fora under the Actwould not have jurisdiction to entertain the consumer complaintson the ground of deficiency in service related to transfer of titleof the immovable property. [Para 24][140-E]

5. Though it is not a case of the deficiency in service ascontemplated by Consumer Act but definitely a case of exerciseof jurisdiction in an arbitrary and discriminatory manner. Inexercise of the power conferred on this Court under Article 142,the Chandigarh Administration is directed to decide the claimof conversion as on the date when consumer complaints werefiled. [Para 25][140-F-G]

6.1. The difficulty in the Administration is that the seniorofficers in the Chandigarh Administration are on deputation fromthe States of either Punjab or Haryana. The officers revert totheir parent cadre after completion of deputation period ofapproximately three years. However, the officials continue towork at the Estate Office. Though the Administration has donecommendable work to maintain the character of Chandigarh asCity Beautiful, but the Estate Office has underbelly, that is, theaction of the officials cannot be said to be bona fide, as is apparentin the present case. On the other hand, the officers are unableto take decisions which are citizen friendly. Even no attempt ismade to remove the bottlenecks in the working of the EstateOffice. [Para 26][140-H; 141-A-B]

6.2. Many cases of alleged misuse have been initiated butnot concluded by the Estate Office. The residents of Chandigarhare widely harassed while seeking no-objection certificate forsale of leasehold property as the procedure for grant ofno-objection certificate and of deposit of unearned increase isinterpreted in different manners by the different officials, whichthe officers of the Administration has failed to control. Anotherarea of concern is the unreasonable procedure adopted by theAdministration for affecting mutation after the demise of theleaseholder or the allottee and of completing other formalitiesat the offices of the appellant. The difficult and near impossibleprocedure leads to arbitrary and discriminatory action by the AB

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[2021] 6 S.C.R.

Aofficials of the Estate Office. Therefore, the ChandigarhAdministration is directed to constitute a Committee which mayinclude a Member of Parliament; an architect; an advocate, whois or has represented Chandigarh Administration before theHigh Court; two representatives of the Municipal Corporationbeing representatives of the citizens of Chandigarh, apart fromBsuch officers which the Administration may think fit, so as toreview and streamline the processes of sanction of mutation,grant of occupancy certificate, no-objection certificate and othercitizen-centric requirements including calculation of unearnedprofit under the 1973 Rules or under Chandigarh Estate Rules,C2007. [Para 29][143-E-H; 144-A-B]Lucknow Development Authority v. M.K. Gupta (1994)1 SCC 243 : [1993] 3 Suppl. SCR 615 ; GhaziabadDevelopment Authority v. Balbir Singh (2004) 5 SCC65 : [2004] 3 SCR 68 ; Chandigarh Housing BoardDv. Avtar Singh and Ors. (2010) 10 SCC 194 : [2010]12 SCR 96 ; UT Chandigarh Administration andAnother v. Amarjeet Singh and Others (2009) 4 SCC660 : [2009] 4 SCR 541 ; Chandigarh Administrationv. Jagjit Singh (1995) 1 SCC 745 : [1995] 1 SCR 126;Amritpal Singh v. Chandigarh Administration 2012ESCC OnLine P&H 9310; Dheera Singh v. U.T.Chandigarh Admn. and Ors. 2012 SCC Online P&H21473 – referred to.

Bachhittar Singh v. State of Punjab AIR 1963 SC395 : [1962] Suppl. SCR 713 – relied on.FCase Law Reference CIVIL APPELLATE JURISDICTION : Civil Appeal No.4964Hof 2021.

From the Judgment and Order dated 24.05.2017 of the NationalConsumer Disputes Redressal Commission at New Delhi in RevisionPetition No.2126 of 2016.

With

Civil Appeal Nos. 4965 and 4966 of 2021.

Ankit Goel, Adv. for the Appellants.

Vikas Jain, M. C. Dhingra, Gaurav Dhingra, Himanshu Sharma,Siddharth Mittal, Ms. Archana Pathak Dave, Gautam Diwan, Advs. forthe Respondent.

The Judgment of the Court was delivered by HEMANT GUPTA, J.

1. This order shall dispose of three appeals bearing Civil AppealNo. 4964 of 2021 - Estate Officer v. Charanjit Kaur, Civil Appeal No.4965 of 2021 - Estate Officer v. Kamlesh and Civil Appeal No. 4966of 2021 - Estate Officer v. D.K. Khanna raising identical questions oflaw.

2. In Civil Appeal No. 4964 of 2021, the order of the NationalConsumer Disputes Redressal Commission[1] dated 24.05.2017 is thesubject matter of challenge. By the aforesaid order, the NCDRC hasdismissed the revision petition filed by the appellant against an orderdated 16.05.2016 passed by the State Consumer Disputes RedressalCommission[2] affirming the order of the District Consumer DisputesRedressal Forum[3]. The respondent had sought conversion of Plot No.4059, Sector 46 D, Chandigarh, from leasehold to freehold site onacceptance of the requisite conversion fee. The learned District Forumdirected the appellant to convert the said plot in question from leaseholdto freehold site on acceptance of requisite conversion fee; to pay anamount of Rs. 10,000/- as compensation for mental agony and physicalharassment; and to pay Rs.5,000/- as costs of litigation.

3. The learned NCDRC relied upon the judgment of this Courtreported as Lucknow Development Authority v. M.K. Gupta[4]to holdthat the respondent would be considered to be a consumer as fee had 1 For short the ‘NCDRC’

2 For short the ‘SCDRC’3 For short the ‘DCDRF’4 (1994) 1 SCC 243

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Abeen charged by the appellant for conversion. The NCDRC further heldthat the administrator had put a note on the file that he would not liketo take any decision till he gets clear directions from the CentralGovernment. It was held that the appellant had not produced any publicnotification suspending all conversions of plots from leasehold tofreehold, at least on 28.03.2013 when the application was received inBthe office of Estate Officer.

4. In Civil Appeal No. 4965 of 2021, the impugned order waspassed by NCDRC on 17.11.2017 relying upon the order passed inCharanjit Kaur. In the said case, the respondent was allotted a siteunder Chandigarh Milk Colony Allotment of Site Rules, 1975[5] onC08.08.1977 measuring 143 sq. yards on a leasehold basis for a periodof 30 years for the purposes of cowshed cum dairy. The ChandigarhConversion of Residential Leasehold Land Tenure into Freehold LandTenure Rules, 1996[6] were extended to the sites allotted under the 1975Rules. The lease period of 30 years was extended by four years soDthat 1996 Rules could be made applicable. The request of the respondentfor conversion of leasehold to freehold was not accepted which led tofiling of a complaint before the District Forum. The District Forumpassed an order on the same lines as in Charanjit Kaur. The NCDRCalso dismissed the revision filed by the appellant on 17.11.2017 relyingupon Charanjit Kaur.E

5. In the third appeal herein i.e., Civil Appeal No. 4966 of2021, the order under challenge is that of the NCDRC passed on21.03.2018 in respect of conversion of a residential site bearing no. 719,Sector-43A, Chandigarh, from leasehold to freehold. The order inCharanjit Kaur was followed in this matter as well.F

6. Some of the statutory provisions need to be reproduced beforeexamining the respective contentions of the parties. Section 3 of theCapital of Punjab (Development and Regulation) Act, 1952[7] reads as:-

“3. Power of Central Government in respect of transfer of landGand building in Chandigarh. – (1) [Subject to the provisions ofthis section, the Central Government may] sell, lease or otherwisetransfer, whether by auction, allotment or otherwise, any land or

H7 For short ‘1952 Act’

building belonging to the Government in Chandigarh on such termsand conditions as it may subject to any rules that may be madeunder this Act, think fit to impose.

(2) The consideration money for any transfer under sub-section(1) shall be paid to the [Central Government] in such mannerand in such instalments and at such rate of interest as may beprescribed.

(3) Notwithstanding anything contained in any other law for thetime being in force, until the entire consideration money togetherwith interest or any other amount, if any, due to the CentralGovernment on account of the transfer of any site or building,or both, under sub-action (12) is paid, such site or building, orboth, as the case may be, shall continue to belong to the CentralGovernment.”

7. In terms of power conferred on the Central Government underSection 3, initially Chandigarh (Sale of Sites and Buildings) Rules, 1960[8]were published on 08.03.1960. Such rules contemplated sale of sitesby auction or allotment. The Chandigarh Lease Hold of Sites andBuilding Rules, 1973[9] were thereafter published on 20.08.1973authorizing Chandigarh Administration to demise sites and buildings atChandigarh on lease for 99 years by allotment or by auction. Rule 13mandates that in addition to the premium i.e., price paid or promisedfor the transfer of a right to enjoy an immovable property under 1973Rules, an annual rent would be payable which shall be 2½% of thepremium for 33 years which may be enhanced by the ChandigarhAdministration to 3.75% for the next 33 years and 5% of the premiumfor the remaining period of lease. In terms of Rule 17, the propertycould be transferred on payment of unearned increase in terms of Rule17. The relevant provisions of 1973 Rules read thus:

“3. (1) Unless the context otherwise requires, the words andexpressions used in these rules shall have the meaning assignedto them in the Capital of Punjab (Development and Regulation)Act, 1952 and the rules made thereunder.

(2) “Premium” means the price paid or promised for the transferof a right to enjoy immovable property under these rules.

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[“Prescribed mode of payment” means payment in cash or bydemand draft drawn on any Scheduled Bank situated atChandigarh in favour of the Estate Officer, ChandigarhAdministration or in cash upto Rs.500/- or the amount paid incash representing 25% of the premium at the time of auction].

13. Rent and consequences of non-payment- In addition to thepremium, whether in respect of site or building, the lessee shallpay rent as under:

(i) Annual rent shall be 2-½ % of the premium for the 33 yearswhich may be enhanced by the Chandigarh Administration to3-3/4% of the premium for the next 33 years and to 5% of thepremium for the remaining period of the lease.

17. General Conditions of lease. – (1) Lease may be jointly takenby more than one person. The liability to pay the premium aswell as the rent and any penalty imposed under these rules shallbe joint and several:

(10) The lessee will not be entitled to transfer the site or thebuilding without the prior permission of the Estate Officer. Suchpermission shall not be given until the lessee has paid full premiumand the rent due under the lease for the site, unless in the opinionof the Estate Officer exceptional circumstances exist for thegrant of such permission. The lessee shall be liable to pay suchtransfer charges as are notified by the Chandigarh Administrationfrom time to time.”

Provided that where the property was leased out by allotment,or at a reserve price or at any other concessional rate, or byhire-purchase, then transfer shall be allowed on payment of 1/3[rd] of the unearned increase in value. The unearned increase willbe assessed by the Estate Officer by determining the differencebetween the current market value of the property and the presentvalue of the premium paid for the property. The current marketvalue of the property shall be assessed in view of the averageof auction price over the last three financial years for propertyof the same category or such other evidence as the Estate Officerdeems to be appropriate. The present value of the originalpremium shall be calculated by enhancing the premium by 9%per annum, compounded annually, from the date(s) of payment.

The difference between these two values shall be the unearnedincrease. During assessment, notice shall be issued to the lesseeand he shall be afforded an opportunity of being heard.”

8. The Chandigarh Administration framed 1996 Rules permittingconversion of residential leasehold properties to freehold properties.Some of the conditions of the said Rules are as follows:

“5. Land rates will be the rates as notified by the ChandigarhAdministration from time to time.

6. Conversion charges to be paid shall be as provided inAnnexure “A” annexed to these rules, from time to time.

8. The conversion shall also be allowed in the cases wherethe lessees/sub-lessees/allottees have parted with thepossession of the property, provided that- (a) The application for Conversion is made by a personholding registered and valid power of attorney andthere is also an agreement to sell from the lesseeto sub-lessee to alienate (sell/transfer) the propertyand proper linkage with the original allottee/lesseeis established.

9. In all cases of Conversion, the Conveyance-deeds shallbe got registered on payment of requisite Stamp Dutyand Registration Charges. The Consideration amount forthis purpose shall be the “Conversion Fee” and the“Surcharge” wherever applicable. However, in caseswhere lease deed has not been executed, the Price/Premium of the site as reflected in the letter of allotmentor last agreement for sale or the predetermined rate asprescribed by the Competent Authority on the date ofallotment/transfer shall also be added for the purposeof calculation of Stamp Duty.”

ANNEXURE “A”

Part – I

STATEMENT SHOWING ONE TIME CONVERSION,CHARGES/FEE FOR VARIOUS SITES ALLOTTED BY THEESTATE OFFICER, UNION TERRITORY, CHANDIGARH.

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The land rate has been fixed at Rs.1710/- per Square Metre andBthe same shall be applicable for a period of one year from thedate as notified by the Estate Officer, Union Territory,Chandigarh. The land rate applicable for calculating theConversion Charges shall be notified from time to time by theAdministrator, Union Territory, Chandigarh.”

C9. The grievance of the allottees was that conversion was allowedon pick and choose basis rather than on the basis of either the date ofreceipt of the application or the date of decision. Reference was madeto the letter dated 10.5.2013 on behalf of the Finance Secretary to theEstate Officer. The said letter reads as: - “ToD

The Estate OfficerU.T. ChandigarhMemo No. 11/1/18-UTFI(2)-2013/3520Dated: 10-5-2013

ESubject:Re-fixation of rate for conversion of lease holdresidential sites into free hold.

Reference your memo No.7610/MA/Conversion Policy/2013dated 4.3.13, on the subject cited above.

The issue of revision of rate for conversion under the schemeF“Chandigarh Conversion of residential lease hold land tenure intofreehold land tenure, Rule 1996” is under consideration of theAdministration.

You are directed not to allow any conversion under the saidscheme till further orders.

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Joint Secretary (Estates)For Finance Secretary Chandigarh Administration”

10. Mr. Ankit Goel, learned counsel for the appellant argued thatHthe title of leasehold property vests with the Central Government in terms of Section 3 of the Act and the Rules framed thereunder. TheCentral Government had granted lease of residential plots for a periodof 99 years under the 1973 Rules. The conversion fee fixed to convertleasehold property leased for 99 years to freehold property, if allowed,would absolve the allottees from payment of annual rent in terms ofRule 13 as well as the payment of unearned increase in the case oftransfer of leasehold rights in terms of Rule 17(10) of the 1973 Rules.Thus, an un-encumbered title would pass on to the purchaser as against99-year lease to an allottee under the 1973 Rules. Therefore, the findingsrecorded by the NCDRC that the respondents are consumers as chargeshave been paid for conversion are not tenable for the reason that thecharges deposited were not for any services to be rendered but to grantcomplete title to the allottees. Such conversion fee was in fact part ofthe sale consideration to confer complete title to an allottee.

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11. Still further, it was argued that the reliance on the judgmentin M.K. Gupta was clearly erroneous inasmuch as that was a casewherein the allotment of flats was considered to be “service” withinthe meaning of Section 2 (1) (o) of the Consumer Protection Act, 1986[10].Some of the provisions from the Consumer Act as are relevant for thedecision of the present case are as under:

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(c) “complaint” means any allegation in writing made by acomplainant that- E

(i) xxxxxx xxx

(iii) the services hired or availed of or agreed to be hiredor availed of by him suffer from deficiency in anyrespect; F

(d) “consumer” means any person who-

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(ii) hires or avails of any services for a considerationwhich has been paid or promised or partly paid andpartly promised, or under any system of deferredGpayment and includes any beneficiary of suchservices other than the person who [hires or availsof] the services for consideration paid or promised,or partly paid and partly promised, or under any H

10 For short ‘Consumer Act’

system of deferred payment, when such servicesare availed of with the approval of the firstmentioned person [but does not include a personwho avails of such services for any commercialpurpose; A

(g) “deficiency” means any fault, imperfection,shortcoming or inadequacy in the quality, nature andmanner of performance which is required to bemaintained by or under any law for the time being inforce or has been undertaken to be performed by aperson in pursuance of a contract or otherwise in relationto any service; B

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(o) “service” means service of any description which ismade available to potential users and includes, but notlimited to, the provision of facilities in connection withbanking, financing insurance, transport, processing,supply of electrical or other energy, board or lodging orboth, housing construction, entertainment, amusement orthe purveying of news or other information, but does notinclude the rendering of any service free of charge orunder a contract of personal service; D

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14. Finding of the District Forum.—(1) If, after the proceedingconducted under Section 13, the District Forum is satisfied thatthe goods complained against suffer from any of the defectsspecified in the complaint or that any of the allegations containedin the complaint about the services are proved, it shall issue anForder to the opposite party directing him to do one or more ofthe following things, namely:

(a) xxxxxxx

(e) to remove the defects in goods or deficiencies in theGservices in question; (f) xxxxxxx

12. In M.K. Gupta, the question posed was as to the word“service” extends to the deficiency in construction of a house or flat.It was held that such construction was for the benefit of person forHwhom it was to be constructed. The allottee may do so himself or hire services of a builder or contractor. When a statutory authority developsland or allots a site or constructs a house for the benefit of commonman, it is a statutory service. But if such service is provided by a builderor contractor, it would be a contractual service. The Court held as under:

“4. What is the meaning of the word ‘service’? Does it extendto deficiency in the building of a house or flat? Can a complaintbe filed under the Act against the statutory authority or a builderor contractor for any deficiency in respect of such property. Theanswer to all this shall depend on understanding of the word‘service’. The term has variety of meanings. It may mean anybenefit or any act resulting in promoting interest or happiness. Itmay be contractual, professional, public, domestic, legal, statutoryetc. The concept of service thus is very wide. How it should beunderstood and what it means depends on the context in whichit has been used in an enactment. Clause (o) of the definitionsection defines it as under:

“‘service’ means .......................”

It is in three parts. The main part is followed by inclusive clauseand ends by exclusionary clause. The main clause itself is verywide. It applies to any service made available to potential users.The words ‘any’ and ‘potential’ are significant. Both are of wideamplitude. …….

6. Construction of a house or flat is for the benefit of person forwhom it is constructed. He may do it himself or hire services ofa builder or contractor. The latter being for consideration isservice as defined in the Act. Similarly when a statutory authoritydevelops land or allots a site or constructs a house for the benefitof common man it is as much service as by a builder orcontractor. The one is contractual service and other statutoryservice. If the service is defective or it is not what wasrepresented then it would be unfair trade practice as defined inthe Act. Any defect in construction activity would be denial ofcomfort and service to a consumer. When possession of propertyis not delivered within stipulated period the delay so caused isdenial of service. Such disputes or claims are not in respect ofimmoveable property as argued but deficiency in rendering ofservice of particular standard, quality or grade. Such deficienciesor omissions are defined in sub- clause (ii) of clause (r) of A

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Section 2 as unfair trade practice. If a builder of a house usessubstandard material in construction of a building or makes falseor misleading representation about the condition of the house thenit is denial of the facility or benefit of which a consumer is entitledto claim value under the Act. When the contractor or builderundertakes to erect a house or flat then it is inherent in it that heshall perform his obligation as agreed to. A flat with a leakingroof, or cracking wall or substandard floor is denial of service.Similarly when a statutory authority undertakes to develop landand frame housing scheme, it, while performing statutory dutyrenders service to the society in general and individual inparticular. The entire approach of the learned counsel for thedevelopment authority in emphasising that power exercised undera statute could not be stretched to mean service proceeded onmisconception. It is incorrect understanding of the statutoryfunctions under a social legislation. A development authority whiledeveloping the land or framing a scheme for housing dischargesstatutory duty the purpose and objective of which is service tothe citizens. As pointed out earlier the entire purpose of wideningthe definitions is to include in it not only day to day buying ofgoods by a common man but even such activities which areotherwise not commercial but professional or service-oriented innature. The provisions in the Acts, namely, LucknowDevelopment Act, Delhi Development Act or BangaloreDevelopment Act clearly provide for preparing plan, developmentof land, and framing of scheme etc. Therefore if such authorityundertakes to construct building or allot houses or building sitesto citizens of the State either as amenity or as benefit then itamounts to rendering of service and will be covered in theexpression ‘service made available to potential users’. A personwho applies for allotment of a building site or for a flat constructedby the development authority or enters into an agreement with abuilder or a contractor is a potential user and nature of transactionis covered in the expression ‘service of any description’. It furtherindicates that the definition is not exhaustive. The inclusive clausesucceeded in widening its scope but not exhausting the serviceswhich could be covered in earlier part. So any service exceptwhen it is free of charge or under a constraint of personal serviceis included in it. Since housing activity is a service it was coveredin the clause as it stood before 1993.”

ESTATE OFFICER AND ANR. v. CHARANJIT KAUR[HEMANT GUPTA, J.]

13. The judgment in Ghaziabad Development Authority v.Balbir Singh[11]was in the context of grant of interest at the rate of18%. Such grant of interest was not interfered with. This Courtapproved the judgment in M.K. Gupta and held as under:

“We are in full agreement with what is observed herein. Thusthe law is that the Consumer Protection Act has a wide reachand the Commission has jurisdiction even in cases of servicerendered by statutory and public authorities. Such authoritiesbecome liable to compensate for misfeasance in public office i.e.an act which is oppressive or capricious or arbitrary or negligentprovided loss or injury is suffered by a citizen. The wordcompensation is of a very wide connotation. It may constituteactual loss or expected loss and may extend to compensation forphysical, mental or even emotional suffering, insult or injury orloss.”

14. In Chandigarh Housing Board v. Avtar Singh and Ors.[12],the Cooperative Housing Societies submitted an application for allotmentof plots advertised by Chandigarh Housing Board. The Societiescollected 10% of the tentative price from their members and depositedthe same in a bank specified in the scheme. If any member was toseek refund, then 10% out of the 25% of the earnest money was to bededucted. The dispute before the High Court was in respect of thedirection of 10% of the amount. This Court held as under:

“51. If the final order passed by the High Court is read inconjunction with the interim order dated 11-5-1992, it becomesclear that the Societies were to deposit the remaining amountwith interest at the rate of 18% per annum only if they were toaccept allotment of flats under the Scheme. Although, the writpetitions were filed by the Societies, the language of the interimorder passed by the High Court shows that the learned Judgeswere thinking of imposing liability of 18% interest only on thosemembers who were to accept allotment of flats to be constructedby the Societies. The members of the Societies did not get anopportunity to accept the allotment because even after depositof full earnest money and 18% interest, the Board did not allotland to the Societies on which they could construct dwelling units/

11 (2004) 5 SCC 65

12 (2010) 10 SCC 194

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136SUPREME COURT REPORTS

Aflats. The Finance Secretary misinterpreted the orders of the HighCourt and issued wholly arbitrary and unjust directive to theBoard not to refund 18% interest to the members of the Societieswho had applied for refund before allotment of land by theBoard.”

B15. In fact, the precise issue as to whether the auction of sitesunder the 1973 Rules involves sale of goods or of rendering of servicecame up for consideration in UT Chandigarh Administration andAnother v. Amarjeet Singh and Others[13]. This Court considered thejudgments of this Court in M.K. Gupta and Balbir Singh. One of thearguments raised was as under-C

“When the auction of sites (for grant of a lease for 99 years)was in exercise of the power of the Government (the UTChandigarh Administration) under the provisions of theDevelopment Act in accordance with the Leasehold Rules, itinvolves neither sale of goods nor rendering of any service. TheDact of leasing plots by auction by the appellants therefore did notresult in the successful bidder becoming a “consumer” or theappellants becoming “service providers”. In the absence of hiringor availing of any service, the question of deficiency in serviceor unfair or restrictive trade practice with reference to a service,did not arise and the complaint under the Act was notEmaintainable.”16. In respect of the abovementioned question posed, it was heldas under:

“21. With reference to a public auction of existing sites (asFcontrasted from sites to be “formed”), the purchaser/lessee isnot a consumer, the owner is not a “trader” or “service provider”and the grievance does not relate to any matter in regard towhich a complaint can be filed. Therefore, any grievance by thepurchaser/lessee will not give rise to a complaint or consumerdispute and the fora under the Act will not have jurisdiction toGentertain or decide any complaint by the auction-purchaser/lesseeagainst the owner holding the auction of sites.”

17. The second question was in respect of lack of amenities i.e.,roads, water supply lines, drainage system, rainwater drainage and H13 (2009) 4 SCC 660

electricity etc. This Court held that since the sites were put to publicauction, therefore, no grievance regarding amenities could be entertainedas the bidder had the opportunity to verify the sites before participatingin the auction.

18. In the present case, the allotment of residential sites on leasehold basis for 99 years is not in issue. It has not come on record as towhether such sites were allotted in an auction or by inviting applications.Even if the site had been allotted after inviting applications, the factremains that the respondents claim conversion of such lease hold sitesto free hold sites on payment of the charges which are fixed by theAdministration. Such conversion was sought in view of the fact thatas against the limited right in the lease property for 99 years, theAdministration has decided to grant freehold rights on satisfaction ofcertain conditions mentioned in the 1996 Rules. The fact is that therespondents had paid the premium amount as fixed under the 1973Rules. Now, the claim is for purchase of remaining rights of the CentralGovernment to convert the site into freehold. The Central Governmentcontinues to be owner of the land until the entire consideration moneytogether with interest or any other amount is paid to the CentralGovernment on account of transfer of any site or building or both asprovided in Section 3 of the Act. Therefore, the owner i.e., the CentralGovernment, cannot be said to be a trader or a service provider. Theappellant is not charging any fee for conversion of leasehold propertyinto freehold property except the amount in accordance with the 1996Rules, which is part of the sale consideration. It is thus a case of saleof immovable property on the terms as were fixed in the 1996 Rules.The amount so fixed under the Rules would form part of the saleconsideration and not a fee or charge levied for providing any kind ofservice.

19. In terms of Section 14(1)(e) of the Consumer Act, the DistrictForum can inter-alia direct removal of deficiency in the services. Thedeficiency in service however does not include the transfer of title infavour of the allottee who was earlier granted leasehold rights. As notedabove, appellant is not providing any services within the meaning ofSection 2(1)(o) of the Consumer Act. The expression ‘service’ includeshousing construction and not allotment of a site or a plot.

20. The Consumer fora had taken into consideration a noting inthe ad- ministrative file of the appellant. A noting is however a part of A

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Athe decision-making process. Such noting does not fructify into anorder unless the same is communicated to the affected person. Thereference may be made to Bachhittar Singh v. State of Punjab[14],wherein this Court held as under:- “9. The question, therefore, is whether he did in fact make suchBan order. Merely writing something on the file does not amountto an order. Before something amounts to an order of the StateGovernment two things are necessary. The order has to beexpressed in the name of the Governor as required by clause(1) of Article 166 and then it has to be communicated. As alreadyindicated, no formal order modifying the decision of the RevenueCSecretary was ever made. Until such an order is drawn up theState Government cannot, in our opinion, be regarded as boundby what was stated in the file. As long as the matter rested withhim the Revenue Minister could well score out his remarks orminutes on the file and write fresh ones.

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10. The business of State is a complicated one and hasnecessarily to be conducted through the agency of a largenumber of officials and authorities. The Constitution, therefore,requires and so did the Rules of Business framed by theRajpramukh of PEPSU provide, that the action must be takenEby the authority concerned in the name of the Rajpramukh. It isnot till this formality is observed that the action can be regardedas that of the State or here, by the Rajpramukh. We may furtherobserve that, constitutionally speaking, the Minister is no morethan an adviser and that the head of the State, the Governor orRajpramukh [Till the abolition of that office by the AmendmentFof the Constitution in 1956.], is to act with the aid and advice ofhis Council of Ministers. Therefore, until such advice is acceptedby the Governor whatever the Minister or the Council ofMinisters may say in regard to a particular matter does notbecome the action of the State until the advice of the Council ofGMinisters is accepted or deemed to be accepted by the Head ofthe State. Indeed, it is possible that after expressing one opinionabout a particular matter at a particular stage a Minister or theCouncil of Ministers may express quite a different opinion, onewhich may be completely opposed to the earlier opinion. Which of them can be regarded as the “order” of the StateGovernment? Therefore, to make the opinion amount to a decisionof the Government it must be communicated to the personconcerned. In this connection we may quote the following fromthe judgment of this Court in the State of Punjab v. SodhiSukhdev Singh [AIR (1961) SC 493, 512] :

“Mr Gopal Singh attempted to argue that before the final orderwas passed the Council of Ministers had decided to acceptthe respondent’s representation and to reinstate him, and that,according to him, the respondent seeks to prove by calling thetwo original orders. We are unable to understand thisargument. Even if the Council of Ministers had provisionallydecided to reinstate the respondent that would not prevent theCouncil from reconsidering the matter and coming to acontrary conclusion later on, until a final decision is reachedby them and is communicated to the Rajpramukh in the formof advice and acted upon by him by issuing an order in thatbehalf to the respondent.”

Thus it is of the essence that the order has to be communicatedto the person who would be affected by that order before the Stateand that person can be bound by that order. For, until the order iscommunicated to the person affected by it, it would be open to theCouncil of Ministers to consider the matter over and over again and,therefore, till its communication the order cannot be regarded as anythingmore than provisional in character.

21. Therefore, the noting by itself cannot be pressed into serviceto return a finding of deficiency in service. However, the fact remainsthat in terms of 1996 Rules, an amount of Rs.1710/- per sq.mt. wasfixed as conversion charges. The land rates were to be fixed by theAdministration from time to time under Rule 5 of 1996 Rules. InAnnexure-A, the land rate for conversion was fixed at Rs.1710/- persq.mt. The same was to be applied for a period of one year. But asadmitted at the Bar, the rates were revised only in 2017. The action ofthe appellant in rejecting the request for conversion is thus arbitraryand discriminatory. The request could not be kept pending when thestatutory Rules were in force. The executive authority could not by anadministrative order keep the matter pending, when there was no otherreason not to accept the conversion except impending increase in theconversion charges.

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A22. It is the stand of the appellant that no conversion was allowedafter a letter was issued on 10.05.2013. The Administration hashowever allowed conversion of leasehold properties into freehold evenafter the said letter dated 10.05.2013, as conversion of plots bearingfile No. RPL 19565 and RPL 19601, was allowed on 04.12.2013 and11.11.2013 respectively.B

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23. Mr. Goel has argued that there cannot be any negativeequality as even if some sites have been converted in contravention ofthe decision communicated on 10.05.2013, it would not confer anyenforceable right in favour of the allottees. Reference was made toChandigarh Administration v. Jagjit Singh[15]. We do not find anyCmerit in the argument of Mr. Goel. On the date when the letter wasissued by the administration on 10.05.2013, the statutory 1996 Ruleswere in force. Such Rules were kept in abeyance on the basis ofcommunication on behalf of the Finance Secretary to the Estate Officer.Such communication cannot be countenanced. The statutory rules couldDnot be put to hold because the issue of revision of rates of conversionwas under consideration of the Administration. Even after the said letterthe rates were fixed only in 2017. In the face of valid statutory Rules,an administrative decision cannot be sustained.

24. Since the respondents are already in possession of the sitesEas lessee on 99 years basis, it cannot be said that the appellant wasdeficient in providing any service, which even if used in a liberal sensewould not include transfer of title in an immovable property. Thus, theconsumer fora under the Act would not have jurisdiction to entertainthe consumer complaints on the ground of deficiency in service relatedto transfer of title of the immovable property.F

25. We find that it is not a case of the deficiency in service ascontemplated by Consumer Act but definitely a case of exercise ofjurisdiction in an arbitrary and discriminatory manner. In exercise of thepower conferred on this Court under Article 142, we direct theAdministration to decide the claim of conversion as on the date whenGconsumer complaints were filed. Such action shall be taken within 3months.

26. The difficulty in the Administration is that the senior officersin the Chandigarh Administration are on deputation from the States of H15 (1995) 1 SCC 745

either Punjab or Haryana. The officers revert to their parent cadreafter completion of deputation period of approximately three years.However, the officials continue to work at the Estate Office. Thoughthe Administration has done commendable work to maintain thecharacter of Chandigarh as City Beautiful, but the Estate Office hasunderbelly, that is, the action of the officials cannot be said to be bonafide, as is apparent in the present case. It is a typical case of ‘you showme face, I will show the Rule’. On the other hand, the officers areunable to take decisions which are citizen friendly. Even no attempt ismade to remove the bottlenecks in the working of the Estate Office.

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27. The Division Bench of the High Court of Punjab & Haryanain a judgment reported as Amritpal Singh v. ChandigarhAdministration[16], has set aside the requirement of no-objectioncertificate from the Chandigarh Administration before affecting sale offreehold properties. The Chandigarh Administration was directed tore-examine Rule 17(10) of the 1973 Rules contemplating unearnedincrease, as well the restriction to sell the properties before the expiryof specific years as the root-cause of malice of Power of Attorneyssales. Similar rule exists as Rule 7 of Chandi- garh Estate Rules, 2007.The High Court had issued the following directions:

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“(i) That the requirement of ‘No Objection Certificate’ fromthe Chandigarh Administration before effecting sale ofthe free hold properties is not supported by the Act orthe Rules framed thereunder.

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(ii) The Registering Authority is duty bound to examine;whether the Power of Attorneys are being executed forconsideration. If the Authorities are satisfied that it isfor consideration, the Power of Attorney shall not beregistered unless the proper stamp duty is affixedthereon.

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(iii) If the proper stamp duty is not paid on a Power ofAttorney executed on and after 15.11.2007, theGRegistering Authority shall refuse to register thedocument on the basis of such attorney at anysubsequent stage unless proper stamp duty is affixedthereon in accordance with law.

A(iv) The Chandigarh Administration may re-examine Rule17(10) of the 1973 Rules contemplating unearnedincrease, as well the restriction to sell the propertiesbefore the expiry of specific years, as the root-causeof malice of Power of Attorneys sales.

(v) The Chandigarh Administration to frame Rules tomaintain and update the property records in the mannermutations are sanctioned in respect of non urbanproperties under the Punjab Land Revenue Act, 1887or such other procedure, which is fair, reasonable andtransparent.”

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28. The Full Bench of the High Court in Dheera Singh v. U.T.Chandigarh Admn. and Ors.[17]noticed that the Executive has failedto live-up to the expectations of the residents as instead of approachingthe concerned Ministry with a concrete proposal on data-basedinformation for onward consideration of the Legislature to rejuvenateDthe 1952 Act and make it more vibrant and alive to the issues inpresentia or in future, it has gone for ad-hoc solutions by taking refugeunder Section 22 of the Act. The Court held as under:

“102. Having held that, we cannot refrain from observing thatthe 1952 Act may need revamping and updation to meet theEmodern day challenges some of which are incidental to the steephike in the value of real estate and an unprecedented pressureof population mounted on Chandigarh. We are cognizant of thefact that the issue whether or not the 1952 Act is in need ofsuitable amendments falls exclusively within the domain oflaw-makers as the Courts would ordinarily expound the law andFrefrain from legislating except in a case of casus omissus.However, it cannot be overlooked that after enacting a bill theLegislature becomes functus officio so far as that particularStatute is concerned. The Legislature may not have a mechanismof its own to keep track of the deficiencies or difficulties facedGby the executive who has been assigned the duty to give effectto the enactment and achieve the legislative object(s). It is theExecutive, therefore, who has an onerous duty to apprise, suggestand put up before the Legislature a proposal along with factsand figures justifying the changes that may be brought into an enactment. Thereafter, it is the absolute and non-justiciableprerogative of the Legislature to take a decision on such proposalas per its wisdom.

103. The Executive has in the instant case, with reference tothe 1952 Act, failed to live-up to the expectations of the residentsas instead of approaching the Ministry concerned with a concreteproposal on data-based information for onward consideration ofthe Legislature to rejuvenate the 1952 Act and make it morevibrant and alive to the issues in prasentia or in future, it has gonefor ad hoc solutions taking refuge under Section 22 of the Act.Strangely, the amount of penalty or fine fixed by the Legislaturein the year 1952 (Sections 8, 13 & 15) has not been got revisedeven after the expiry of 60 years.

107. In the light of the interpretation given by us to some ofthe provisions of the 1952 Act in paragraphs 81, 82, 84 to 87,102, 103 & 105 of this order, we also deem it appropriate to issuethe following directions:

(iii) The Union Territory of Chandigarh through its Administratorshall take steps as may be necessary for updation of the 1952Act in the light of the observations made by us in paragraphs102, 103 & 105 of this order before March 31, 2013.”

29. But nothing appears to have been done either in terms ofAmritpal Singh or Dheera Singh. Dheera Singh has laid down theprocess of exercising the power of resumption. However, many casesof alleged misuse have been initiated but not concluded by the EstateOffice. The residents of Chandigarh are widely harassed while seekingno-objection certificate for sale of leasehold property as the procedurefor grant of no-objection certificate and of deposit of unearned increaseis interpreted in different manners by the different officials, which theofficers of the Administration has failed to control. Another area ofconcern is the unreasonable procedure adopted by the Administrationfor affecting mutation after the demise of the leaseholder or the allotteeand of completing other formalities at the offices of the appellant. Thedifficult and near impossible procedure leads to arbitrary anddiscriminatory action by the officials of the Estate Office. Therefore,we direct Administration to constitute a Committee which may includea Member of Parliament; an architect; an advocate, who is or hasrepresented Chandigarh Administration before the High Court; two AB

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Arepresentatives of the Municipal Corporation being representatives ofthe citizens of Chandigarh, apart from such officers which theAdministration may think fit, so as to review and streamline theprocesses of sanction of mutation, grant of occupancy certificate,no-objection certificate and other citizen-centric requirements includingcalculation of unearned profit under the 1973 Rules or under 2007 Rules.B30. In view of the above, the present appeals are disposed ofwith the following directions:

a) The appeals are allowed and the orders passed by theDCDRF, SCDRC and the NCDRC are set aside. TheCAdministration shall decide the claim of conversion ofallottees as on the date when the consumer complaintswere filed. Such action shall be taken within 3 months;

b) The Administration to give details of the notices forresumption on account of alleged misuse which areDpending consideration. Such details to include the dateof serving of notice of the alleged misuse and the stageof proceedings pending before the different officers ofAdministration. A report to be submitted by theAdministration thereafter in respect of the abovedirections within 4 months for perusal and the necessaryEaction, if so warranted, after four months.

c) To constitute a Committee which may include inter-aliathe Member of Parliament from Chandigarh, anarchitect, an advocate who is or had representedChandigarh Administration before the High Court, twoFrepresentatives of the Municipal Corporation and theofficers of Administration.

d) Such abovementioned Committee shall submit report tothe Administrator, Chandigarh Administration preferablywithin three months. We hope that the learnedGAdministrator will take appropriate steps to implementthe suggestions made by the Committee includingforwarding of the proposed amendments in the Statuteto the Ministry of Home Affairs, if any, suggested bythe Committee.

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31. List after 4 months for the Action Taken Report in respectof directions (b), (c) and (d).

Bibhuti Bhushan Bose

Appeals disposed of.

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