Raising water tariff: Punish the good and excuse the defaulter

The news of Minister S.A.Ramdas instructing MCC to maintain the old water rates and not implement the 3- to 5-fold hike has been welcomed by many, but this is not the legal way of rescinding a rate hike. The hike was also probably illegal and so two illegalities may cancel each other!

MCC seems to have a habit of illegally imposing taxes and hiking existing taxes. The last time it hiked the water rates in 2005, the High Court quashed it as illegal on 25-10-05 (in Writ Petition No. 19047 of 2005). Many of the cesses and taxes it collects along with the property tax are illegal. In spite of having a legal department, it is surprising that MCC can not get things right legally.

There seems to be no rationale for increasing the water tariff. In the field of electricity, the law says that the electric supply company can make a profit equal to the government interest rate. So an ESCOM can add all its expenditures, add the interest rate and this will be the revenue it will have to generate. The power rates are adjusted to achieve this goal. But VVWW does not know or does not want to publish its expenditures. Systemic inefficiencies like losses due to water leakage and pilferage (estimated at upwards of 50%), inefficient electric motors that raise electricity bills for pumping water, or failure to collect water dues from defaulting consumers while continuing to supply water to them over months and years, have not been addressed.

According to statistics revealed by the minister, there are 175,000 water connections in the city, but only 116,000 connections are being billed. So 59,000 (33%) connections are getting water without paying. Even among the connections that are billed, a significant percentage do not pay. According to information given under the RTI Act, there are more than 40,000 water bill defaulters who owe Rs. 57.58 crores to VVWW. The authorities, instead of punishing the guilty, keep announcing interest waivers to the defaulters, but the dues keep climbing. The minority of honest tax payers are burdened with an ever-increasing load of taxes and tariffs.

VVWW and MCC should place a detailed accurate analysis of the economics of Mysore's water supply in the public domain, and raise water tariff only if absolutely unavoidable, but after due administrative and legal process.

Maj.Gen.(Rtd.) S.G. Vombatkere, Mysore Grahakara Parishat

Water tariff hike

The huge hike in water tariffs in Mysore city is in all the papers and is the hottest topic of discussion among Mysoreans. Let us examine how a water tariff hike can be effected. 

According to Sec. 191 of the Karnataka Municipal Corporations Act, 1976, payment for water usage should be made at such rates, at such times and under such conditions as may be specified by bye-laws. Sec. 220 (1) of the Act states that MCC may make bye-laws relating to water supply. Therefore, MCC can effect a water tariff hike by making a bye-law. Let us now see how MCC can make a bye-law. 

According to Sec. 426 of the Act, a draft of the bye-law should be published in the Gazette and the local newspapers. It should be available for inspection by the public for at least one month till which time no action should be taken on the draft bye-law. 

Once the bye-law is made by MCC, it must be sanctioned by the state government (Sec. 425 of the Act) and published in the gazette (Sec. 428 of the Act). The bye-law will come into effect three months after it has been published in the gazettes (Sec. 428 of the Act).  

Sec. 427 of the Act permits the state government to make rules in place of bye-laws. Such rules will override any bye-laws made by MCC. But before making the rule, the state government should issue a notice to MCC asking it to show cause for not making a rule.  

Therefore, water tariff can be changed in two ways only, making a bye-law by MCC or making a rule by the state government. It is not clear which route was taken in the present water tariff hike. If the bye-laws were changed without publishing the draft in the local newspapers, the bye-law change and hence the tariff hike would be illegal. If, on the other hand, the state government made a rule without issuing a show cause notice to MCC, the tariff hike would again be illegal.

P M Bhat, MGP

Photos from the May 2012 issue of Grahaka Patrike

(B.V.Shenoy)

Students of Sri Kaginele Kanaka Gurupeetha Teachers College who participated in the World Consumer Day celebration by MGP on 15-3-12 were given certificates at a simple ceremony at MGP office.

(D.V. Dayanand Sagar)

The footpath at the bus stop at Dasappa Circle is about 20 inches high. It is knee-high even for tall people. How can elderly people, women and children get down from this high footpath and get on a bus?

(D.V. Dayanand Sagar)

The widening of Dhanvantari Road near Dasappa Circle has left it with no footpath. So "footpath" vendors have set up shop on the storm water drain itself!

(D.V. Dayanand Sagar)

Dozens of bus stops all over the city have been replaced by hi-tech bus stops. But the old bus stops have not been demolished. They have become an eye-sore.

Problems With Consumer Courts

The Mysore District Consumer Forum recently ruled (8-3-12 in Case No. 993/2010)  that a person who applies for information under the Right to Information Act, 2005 (RIA) is a consumer under the Consumer Protection Act (CPA) and failure to provide information asked under the RIA is a deficiency in service under the CPA. It ordered the DDPI, Mysore, who failed to provide information, to pay a compensation of Rs. 4000 to the complainant as well as Rs. 2000 as costs. This judgment exposes many problems which exist in the consumer court system.  

Firstly, the decision of the Mysore DCF relied on a decision of the National Consumer Commission given on 28-5-09 which said that failure of public authorities to provide information under the Karnataka Right to Information Act, 2000 constitutes deficiency of service under the CPA. The case before the Mysore DCF was concerning an application for information given under a different law, RIA, which is a central act. In its order, the Mysore DCF says "As rightly submitted by the complainant's learned counsel, in the case arising out of this Forum itself, the Hon'ble National Commission has already held in the case of Dr. Thirumala Rao V/s City Corporation, Mysore in Revision Petition No. 1975/2005 that the failure of the concerned officer to furnish the information sought for by the applicant under RTI Act is a deficiency in service and the complaint is maintainable under the C.P. Act in respect of such deficiency in service" and proceeds to punish the DDPI for deficiency in service. But it fails to realize that the National Commission's ruling related to Karnataka Right to Information Act, 2000 while the complaint before it was related to a different Act, namely, the central RIA. Since the number of Dr. Thirumala Rao's Revision Petition before the National Commission is 1975/2005, obviously it was filed in 2005 and so the original complaint must have been filed before 2005 (It was actually filed in 2003) while the RIA was implemented only in 2005. So it is clear that Dr. Thirumala Rao's complaint must have been under a law different from the RIA. But the Mysore DCF failed to appreciate this important point. Since Karnataka Right to Information Act, 2000 was repealed in 2005 itself and is no longer in effect, the decision of the National Commission was not relevant to the case before the DCF.  

It still would have been alright if the National Commission had not passed any order concerning the relevant issue of whether consumer courts have jurisdiction in RIA cases. Then Mysore DCF could have drawn a parallel between the Karnataka Right to Information Act, 2000 and the RIA and passed correct orders. But the National Commission has passed an order concerning the jurisdiction of consumer courts in RIA cases, and what is worse, has passed an opposing order. In Revision Petition No. 4061 of 2010 decided on  14-9-10, the National Commission has ruled that a person who has filed a petition under the RIA cannot be termed to be a consumer under the CPA. According to this decision of te National Commission, public authorities who do not provide information under the RIA can not be prosecuted under the CPA. So the decision of the Myosre DCF is in direct violation of the National Commission order on RIA cases.   

Secondly, this decision of the National Commission, though very important (this might be the only decision the National Commission has given till now concerning the jurisdiction of consumer courts in RIA cases), is not available in the website confonet.nic.in which is maintained by the Government of India and which is supposed to contain all the judgments given by all the consumer courts in the country. We found the reference to the National Commission judgment in the RIA website. In this order, the National Commission upheld a decision of the the Karnataka State Consumer Commission which was being appealed against. The decision of the Karnataka State Commission is also not available on confonet.nic.in website.The decisions of the State Commission and the National Commission are binding on lower consumer courts. If they are not put on confonet.nic.in, how will the lower courts come to know what the upper courts have ordered? What precedents will they follow? Obviously, the Mysore DCF was not aware of this decision of the State Commission or the National Commission since they are nowhere mentioned in the judgment of the DCF.  

Thirdly, this decision of the Karnataka State Commission upheld by the National Commission is flawed. It says that a person who does not receive information sought under the RIA cannot be considered a consumer under the CPA since there is a remedy available for the complainant to approach the appellate authority under Section 19 of the RIA. It is well-established that the Consumer Protection Act is an additional remedy available to consumers even when there is another law which is applicable. Unless there is an express provision in the other law which ousts the jurisdiction of the Consumer Protection Act (such as the Railway Claims Tribunal Act regarding railway claims or the Motor Vehicles Act regarding compensation in road accidents), one can always make use of the Consumer Protection Act as an easy and inexpensive means of obtaining justice. This fact has been reiterated countless times both by the National Commission and the Supreme Court. So the judgment of the Karnataka Commission and the National Commission that consumer courts can not decide RIA cases violates earlier orders of the National Commission and the Supreme Court.

In fact, the same point had been stressed in the earlier decision of the National Commission in Dr. Thirumala Rao's case. It is likely that both Karnataka State Commission and the National Commission were not aware of this earlier decision of the National Commission. This again illustrates the information gap in the consumer court system.

RIA provides only for punishment of officials who do not provide information to applicants. Though there is a provision for compensating the loss suffered by the applicant due to non-supply of information, we are not aware of any case in which such compensation has been awarded. Under CPA, obtaining compensation for the loss suffered by the complainant is routine. So the CPA provides better justice than the RIA.

In summary, the present case exposes the following problems affecting consumer courts: 1. There is a communication gap and the consumer courts (and the consumers) are not sufficiently aware about the decisions given by other consumer courts and by themselves at an earlier time. This has resulted in mutually contradictory decisions and decisions which violate decisions of higher courts.
2. Judgments of higher courts which are binding on lower courts are not being strictly followed and this is creating judicial confusion.
3. Judgments of higher courts which are not relevant are being followed as binding precedents and this is also increasing judicial confusion. 

A final word on RIA and CPA. Now, an NGO of Hyderabad by the name Gareeb Guide International has filed a PIL before the Supreme Court to resolve the problem of conflicting decisions of the National Consumer Commission on whether an applicant under the RIA can take recourse to the CPA if he does not get the information sought.

B.V. Shenoy, Mysore Grahakara Parishat

More Megastore misleads the public

More Megastore on Narayana Shastri Road, Mysore issued a large front page advertisement in a national newspaper on 1st May offering huge discounts on various items of merchandise. Tempted by the ad, I went to More Megastore on the morning of the 1st and found a large crowd who had also been enticed by the same advertisement. But to our surprise, we were told that the store had no authorization to offer the discounts mentioned in the advertisement. So all of us had to return disapppointed.

How can a supermarket issue an expensive advertisement in a major newspaper and not honour it? Is this not unfair trade practice? Thousands of people must have been lured by the advertisement to make a fruitless trip to the store. Who will reimburse their needless expenditure? Will More Megastore explain?

P M Bhat, Mysore Grahakara Parishat

Supply of substandard seeds is punishable under Consumer Act

Stories about farmers protesting against poor quality seeds appear very often in the newspapers. Most of the seeds fail to germinate, the year's crop is lost and the farmers are driven to desperation. Seed failure is one of the main reasons for farmer suicides. Normally, supply of defective seeds comes under the purview of the Consumer Protection Act and the farmers can approach the consumer courts and obtain compensation for the loss they have suffered because of seed failure.

Recently, several District Consumer Fora of Andhra Pradesh ruled against National Seeds Corporation for selling defective seeds. The company appealed before the Andhra Pradesh State Consumer Commission and the National Consumer Commission, but lost both the appeals. It then appealed to the Supreme Court arguing that complaints againt defective seeds should be filed under the National Seeds Act, 1966 and not under the Consumer Protection Act. It also argued that thefarmers were not consumers under the Consumer Protection Act since they had purchased the seeds for a commercial purpose.

In a judgment given on 16-1-12 (I (2012) CPJ 1 (SC)), the Supreme Court rejected these arguments. It said that the National Seed Act deals with only the prosecution of the vendors of defective seeds, but is totally silent on the issue of payment of compensation for the loss of crop on account of defective seeds. To get compensation for the loss they have suffered, the only course open to the farmers is filing a complaint under the Consumer Protection Act. Since the Consumer Protection Act is in addition to the Seed Act and not in its derogation, there is no bar on filing complaints against defective seeds under the Consumer Protection Act. Since the farmers were growing crops to earn their livelihood, the Supreme Court said the argument that they had a commercial purpose was not valid.

After dismissing the appeal of the Corporation, the Supreme Court imposed court costs of Rs. 25,000 to be paid to each farmer who had filed cases against it. It would have been even better if the Supreme Court had ordered the Corporation to pay a sum to compensate the loss of hundreds if not thousands of other farmers who lost their livelihood due to the defective seeds supplied by it.

National Seeds Corporation is a Government of India undertaking and is a "Mini- Ratna" company. It was started to help the poor farmers of India by providing them with affordable good quality seeds. It is surprising that the Corporation is not only derelict in it duty of supplying quality seeds but is also harassing the farmers by appealing all the way to the Supreme Court with frivolous objections.

G.L.Nagaraj Urs, Mysore Grahakara Parishat

Kudos to MCC Revenue Officer

After many premature announcements, Mysore City Corporation has finally printed the requisite challans for payment of property tax at branches of State Bank of Mysore, Syndicate Bank and Vijaya Bank. These challans are available at the various zonal offices of MCC as well as the bank branches from 25-4-12.

These challans enable property owners in Mysore to pay the property tax at the above banks and avoid the heavy rush at the zonal offices. According to Sec. 109A of the Karnataka Municipal Corporations Act, 1976, the property tax for 2012-13 need not be calculated afresh. It is the same as the tax for 2011-12. So the property owners can fill in the challans in the same manner as last year and pay the amount at the above banks either by cash or by cheques drawn on the same branch.

The bank will keep two portions of the 4-part challan and will give the other two portions (one for you and one for MCC) to you. These challan portions and the property tax forms should be submitted to the MCC zonal offices for endorsement. You have one month to do so without being levied a fine (of Rs. 100). It can be done in May when there is little rush at the MCC offices.

MCC signed in 2008 itself the agreement to provide the facility of property tax payment at the above banks. But for the last four years, it had neglected to check if the facility was working. The present Revenue Officer of MCC is to be congratulated for having taken interest in the matter and making the system work finally.

Dr. T.N. Manjunath, Mysore Grahakara Parishat

Conditions not signed by the consumer are not binding

The first duty of a consumer is to get a receipt whenever he buys something, either goods or services. If there is a defect in the goods purchased or a deficiency in the service obtained, he can approach the consumer courts to get compensation, provided that he has the receipt. To be a consumer under the Consumer Protection Act, one has to have paid a consideration for the goods or services he has received and the receipt is the proof that he has paid.

But most receipts have conditions printed on them (often in small print). The receipt given by a courier service says that the liability of the company is limited to Rs. 100 if the mail is damaged or lost. Similarly airline tickets limit the liability of the airline company in case of a mishap.The receipt given bu the dry cleaning shop says that the shop's liability is Rs. 100 or Rs. 200 per piece of clothing if it is damaged. The receipts given by many shops still carry the warning "Goods once sold will not be taken back".

Are these conditions on the receipts which limit the liability of the vendor binding? If a silk saree which you have given for dry cleaning gets damaged, do you have to be satisfied with the Rs. 100 or 200 specified on the receipt as the liability of the dry cleaner. If you send an important document by courier and they lose it, is Rs. 100 all you are going to get? MGP has been getting a lot of queries on this issue.

In a judgment favourable to the consumers, the National Commission has held (III (1999) CPJ 23 (NC)) that conditions mentioned in the receipt but not signed by the consumer are not binding on the consumer. But in a partial reversal of this order, the National Commission held three years later (II (2002) CPJ 24 (NC)) that conditions which have not been signed by the consumer, but which have been brought to his notice are binding. Luckily for the consumer, three years still later, the National Commission has gone back to its original position and ruled (IV (2005) CPJ 207 (NC)) that terms and conditions on the receipt are binding only if they are signed by the customer.

The National Commission has also held that contractual terms which have not been individually negotiated shall be regarded as unfair (and hence null and void) if, contrary to the requirements of good faith, they cause a significant imbalance in the rights and obligations arising under the contract. So blanket conditions such as "The carrier is not liable for damaged goods" found on the receipts of many lorry services, "We are not responsible if clothes are damaged" found on receipts of several dry cleaners, "Goods once sold will not be taken back" found on the receipts of many shops which seek to nullify the liability of the vendor of goods or services are not acceptable in the eyes of the law if they have not been individually negotiated (even if they have been signed by the consumer) since the conditions are far too one-sided.

In fact, the Department of Consumer Affairs in Delhi has issued a D.O. (D.O. No. 11(11)99- CPU/1647 dated 22-12-99) prohibiting the printing of the condition "Goods once sold will not be taken back" on receipts. Unfortunately, a large number of businesses are still flouting the D.O. and many consumers who are not aware of the law are being cheated. If you are dissatisfied with any merchandise you have purchased, you can return it and get a refund of your money even though the receipt says that goods once sold will not be taken back. If the shop refuses to take it back, file a complaint before the consumer forum and you will get your money back.

P.M. Bhat, Mysore Grahakara Parishat

Wrong interpretation of the law by Consumer Forum

The Mysore District Consumer Forum recently dismissed (13-7-11 in Case No. 1070/2010) a complaint filed by a consumer. It appears to be based on a wrong interpretation of the Consumer Protection Act.

The consumer had complained that her late husband had paid a deposit on an Ashraya house, but the house was not handed over. This constituted deficiency in service, she contended. But Mysore City Corporation, the opposite party, argued that the complainant was not a consumer since the Ashraya house was given at a concessional price. The District Forum agreed with this argument, concluded that the complainant was not a consumer and dismissed the case.

But this conclusion is a direct violation of the Consumer Protection Act. According to the Act, a complainant is not a consumer only if the goods or services are COMPLETELY FREE. Just because the goods or services are given at a concessional price, it does not make the buyer a non-consumer in the eye of the law. Otherwise, every seller of goods and services will sell at a nominal discount and escape the provisions of the Consumer Protection Act. Then the Consumer Protection Act will become totally useless and the exploitation of the consumers will increase without let or hindrance.

A similar decision was given by the Mysore DCF some time ago in a case filed by MGP against the Postal department. MGP was mailing its newsletter under the special rates allowed for newspapers. The Postal department misapplied a provision applicable to book packets containing periodicals to the newsletter and cancelled the concessional postage. MGP complained to the Mysore District Consumer Forum claiming deficiency in service. But the Forum did not even admit the case saying that postal concession is a privilege extended by the postal department to the complainant and so one can not file a case of deficiency in service. This is again not tenable because the Consumer Protection Act does not exempt services given at a concessional rate (even if they are a "privilege") from its purview.

In the first half of the last decade, The Supreme Court gave several landmark decisions with reference to the Consumer Protection Act. These decisions took the view "The provisions of the Act have to be construed in favour of the consumer to achieve the purpose of the enactment as it is a social benefit oriented legislation" (III (1993) CPJ 7 (SC)). But over the last few years, the Supreme Court as well as the consumer courts seem to be going the opposite way, limiting the applicability of the Act more and more. Many of these decisions are contrary to the spirit of the law, but some, as the cases referred above, are contrary to the letter of the law itself. This development does not bode well for the consumers.

B.V. Shenoy, Mysore Grahakara Parishat

MCC's Misleading Announcement - Part 2

Mysore City Corporation issued a press statement two weeks ago stating that property tax can be paid at ING Vysya Bank, State Bank of Mysore, Vijaya Bank and Syndicate Bank. It gave the account numbers of MCC at these banks into which the property tax payment could be credited.

MGP checked with these banks and found that none of them accepts property tax payments. State Bank of Mysore, Vijaya Bank and Syndicate Bank did not have the required challans and even though ING Vysya bank had the property tax challans, it did not accept payments at its branches. So one could pay property tax only to ING Vysya representatives at the nine zonal offices of MCC.

MGP wrote to the press that MCC's announcement was misleading. In response, MCC has again issued a press statement on 17-4-12 signed by the Revenue Officer saying that challans have been provided and that property tax can be paid at ING Vysya Bank, State Bank of India, Vijaya Bank and Syndicate Bank (Mysooru Mithra 19-4-12). This statement is again wrong.

In its first press release, MCC referred to ING Vysya Bank, SBM, Vijaya and Syndicate Banks. In the second release, it refers to ING Vysya Bank, SBI, Vijaya and Syndicate Banks. SBM has been replaced by SBI. Is this just a typographical error or has MCC really changed banks?

MGP checked with Zone 4 MCC Office on 19-4-12 and the only challans available are those of ING Vysya Bank. These challans are not accepted at any of the banks and they are only accepted by ING Vysya representatives athe various zonal office.

It is surprising that MCC has again issued a press release without checking the ground reality.

It is also surprising that MCC has printed the name of ING Vysya Bank on its property tax challans. It could have left a blank and the tax payer could have filled in the blank at whichever bank he chose to remit the property tax.

Dr. T.N. Manjunath, Mysore Grahakara Parishat

Site Cleaning Tax

MUDA issued a press release recently, warning owners of MUDA-allotted sites to keep the sites clean. We understand MUDA's concern for layouts still under its control, but its warning seems to cover even layouts handed over to Mysore City Corporation. When MCC is charging site cleaning charges for all the vacant sites under its control, MUDA need not have worried about their cleanliness.

The site cleaning tax of MCC (which, by the way, is not sanctioned by the Karnataka Municipal Corporations Act and hence is illegal) seems an easy way for the Corporation to make money. They are merely collecting the tax and are not cleaning the sites. We received a complaint recently from a vacant site owner who asked MCC why they are not cleaning his site even after collecting a site cleaning tax only to be told that he has to give an application in writing for it to be cleaned!

A.M. Subba Rao, Mysore Grahakara Parishat

Will the MCC clarify?

The Commissioner of Mysore City Corporation has issued large advertisements in today's local newspapers exhorting the citizens of Mysore to pay their property tax before 30-4-12 and avail of a 5% rebate.

But the text of the advertisement says "ಮೈಸೂರು ಮಹಾನಗರಪಾಲಿಕೆಯ ವಲಯ ಕಛೇರಿ -೦೬ ವ್ಯಾಪ್ತಿಯಲ್ಲಿ ಬರುವ ಆಸ್ತಿ ಮಾಲೀಕರುಗಳಿಗೆ ೨೦೧೨-೧೩ ನೇ ಪ್ರಸಕ್ತ ಸಾಲಿನ ಆಸ್ತಿ ತೆರಿಗೆಯನ್ನು ದಿನಾಂಕ ೩೦-೦೪-೨೦೧೨ರೊಳಗೆ ಪಾವತಿಸಿ ಶೇಕಡ ೫ ರಷ್ಟು ರಿಯಾಯಿತಿ ಸೌಲಭ್ಯವನ್ನು ಪಡೆಯುವ ಅವಕಾಶವನ್ನು ಕಲ್ಪಿಸಲಾಗಿರುತ್ತದೆ '', i.e., the 5% rebate is available to residents of ward No. 6 who pay their taxes in April. Does it not mean that only residents of ward 6 will get this rebate and that residents of other wards are not eligible for the 5% rebate?! How can MCC issue such a misleading advertisement at enormous cost (which will be borne by us, the taxpayers)? Will it clarify this point?

G.L.Nagaraja Urs, Mysore Grahakara Parishat 

Need to make road-side food safer

Every summer, we have major or minor outbreaks of jaundice and cholera in Mysore. Eating out and that too at road-side food vendors is a major contributor to this public health problem. 

Mysore City Corporation seems to believe that it has done its duty by issuing annual commands that road-side vendors can not sell cut fruits, but this is only a very small part of the problem. A comprehensive road-side vendor policy by MCC is required. This policy should be based on the following hygiene issues pointed out by public health experts:

1. Location of the vending units (near garbage heaps, open sewers, etc.) as a potential source of contamination,

2. Cleanliness of the surface of vending carts,

3. Protection of food from sun, wind, dust and rain,

4. Disposal of the waste generated,

5. Water used for cleaning,

6. Cooking, storage and serving material,

7. Use of gloves and aprons while cooking and serving,

8. Health status of food handlers,

9. General cleanliness of food handlers,

10. Keeping food (both raw and cooked) covered,

11. Extra care needed in preparation of uncooked foods (chutneys, curds, ice creams, etc.) to prevent germ contamination, and

12. Eating or smoking at the place where the food is prepared.

N.Dwarkanath, Mysore Grahakara Parishat 

Photos from the April 2012 issue of Grahaka Patrike

(B.V. Shenoy)

MGP celebrated World Consumer Day on 15-3-12 by holding a public demonstration-exhibition on food adulteration, water contamination and other consumer-related issues.

(B.V.Shenoy)

MGP's World Consumer Day programme held near RMC Circle attracted nearly 800 viewers.

(Dwarkanath Narayan)

MGP's Dr. T.N. Manjunath (Extreme right) and Sreemathi Hariprasad (2nd from right) spoke at a workshop on Karnataka Guarantee Of Services To Citizens Act, 2011

(Dwarkanath Narayan) 

The Workshop was organized by the Indian Institute of Public Administration, JSS Law College and Mysore Grahakara Parishat.

Mysore District Forum Violates Supreme Court Order

In a recent case before the Mysore District Consumer Forum (Case No. 202/2011), a consumer had complained that MUDA had ignored seniority and allotted sites to persons who had applied for them much later. In defence, MUDA argued that the National Consumer Commission has ruled (I (2010) CPJ (99) NC) that complaints concerning allotment of sites do not come under the purview of the Consumer Protection Act. The Consumer Forum agreed with MUDA and dismissed the complaint on 13-3-12. This decision of the District Forum violates a Supreme Court order (Lucknow Development Authority v. M.K. Gupta (III (1993) CPJ 7 (SC)) which expressly states that site allotment is covered by the CP Act.

The decision of the National Consumer Commission quoted by MUDA relied on a decision of the Supreme Court ((1994) 4 SCC 225) which said that the right of a consumer in the matter of share allotment arises only after the shares are allotted. The National Commission said that the allotment of sites is similar to allotment of shares and so the the right of a consumer in the matter of site allotment also arises only after the sites are allotted.

It is this judgment of the National Forum which is causing problems to consumers in various consumer courts. But the above interpretation of the Supreme Court judgment by the National Commission is wrong, because there is no analogy between shares and sites. Shares do not exist until they are allotted. This was one of the main reasons behind the Supreme Court judgment. Shares before allotment can only be considered "future goods". The Supreme Court ruling only says that a prospective investor in future goods can not be termed a consumer.

Unlike shares, sites do exist even before they are allotted. So the above rationale of the Supreme Court does not apply for the allotment of sites. Secondly, there is a landmark decision of the Supreme Court in the Lucknow Development Authority v. M.K. Gupta case cited above explicitly states that site allotment by bodies such as Urban Development Authorities comes within the purview of the Consumer Protection Act. In this judgment, the Supreme Court held that when UDAs develop land or allot a site or construct a house for the benefit of the common man, it is rendering service as defined in the Consumer Protection Act. If the service is defective or it is not what was represented (which would constitute unfair trade practice), consumer courts can take up the matter. The Supreme Court also said that a person who applies for allotment of a building/site/ flat by the UDA is a "potential user" and the transaction is covered in the expression 'service of any description' of the Consumer Protection Act. So it is very clear that the moment a person applies for the allotment of a site from an Urban Development Authority, he becomes a consumer of its service and any irregularity in the process of allotment or any problem connected with the site or the payment comes under the purview of consumer courts.

In the case before the Mysore District Consumer Forum, attention of the Forum was drawn to this decision of the Supreme Court, but the Forum said that the National Commission's decision had taken it into account. This is incorrect. No doubt, the National Commission order makes a reference to this decision of the Supreme Court, but it is in a totally different context. It refers only to paragraph 6 of the Supreme Court order, which says that construction of a house or a flat is a consumer issue. Since this paragraph makes no reference to allotment of sites, the National Commission concluded that the Supreme Court order is not relevant in deciding whether allotment of sites is covered by the Consumer Protection Act. Surprisingly, there is a relevant portion n the Supreme Court order, but the National Commission did not notice it. In para 10 of the same order, the Supreme Court order clearly states that an application for allotment automatically invokes the Consumer Protection Act. Under Article 141 of the Constitution of India, all courts in India are bound to follow the interpretation of any law by the Supreme Court. So the National Commission can not overrule the Supreme Court order that allotment of sites is covered by the Consumer Protection Act. If by oversight, the National Commission has given an order contrary to the Supreme Court order, the District Forum is bound to ignore the National Commission order and obey the Supreme Court order. But the Mysore District Forum has not done so.

Dr. T.N. Manjunath, Mysore Grahakara Parishat