# CHANDIGARH HOUSING BOARD v. AVTAR SINGH AND OTHERS

- **Citation:** [2010] 12 S.C.R. 96
- **Court:** Supreme Court of India
- **Decided:** 2010-09-22
- **Case number:** Civil Appeal No. 8203 of 2010
- **Bench:** G.S. Singhvi, Asok Kumar Ganguly
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/chandigarh-housing-board-v-avtar-singh-and-others-26312
- **Pages:** 41

## Headnote

Consumer Protection Act, 1986 - s. 2(1)(d), (g), (o) and
s. 12 - Chandigarh Allotment of Land to Co-operative House
C Building Societies Scheme, 1991 - Envisaging allotment of
land by Chandigarh Administration to Co-operative House
Building Societies through Chandigarh Housing Board -
Construction of multistoried structures/dwellings for members
of Societies - Non-allotment of land to Societies - Complaint
o by members u/s. 12, for refund of 10% earnest money
forfeited by the Board and 18% interest paid by them -
Maintainability of -
Held: Complaint is maintainable -
Members of the Societies were the real and ultimate
beneficiaries - Provisions in the Scheme regulated the
E relationship of the Societies with their members and also
made them jointly and severally responsible for payment of
the earnest money etc. - By making applications for
allotment of land, Societies would be deemed to have hired
or availed services of Chandigarh Administration and the
F Board in relation to housing construction, thus, members
covered by definition of 'consumer' uls. 2(d)(ii) and had right
to file such complaint - Even though Finance Secretary
decided to refund the earnest money, Board did not refund
the forfeited portion of the earnest money to the members of
G the Societies, thus, amounted to deficiency in service - 1952
Act, 1973 Rules and 1991 Scheme does not provide for levy
of 18% interest on the delayed payment of earnest money -
Chandigarh Administration and Board had no right to refuse
refund of 18% interest -
Thus, .National Commission and
H
96
CHANDIGARH HOUSING BOARD v. AVTAR SINGH.
97
AND ORS.
State Commission justified in directing refund of the amount
A
of interest - Board directed to refund the amount due to
complainant within the stipulated period -
Chandigarh
Allotment of Land to Co-operative House Building Societies
Scheme, 1991 -
Capital of Punjab (Development and
Regulation) Act, 1952 - Chandigarh Lease Hold of Sites and
B
Buildings Rules, 1973.
The Chandigarh Administration framed the
'Chandigarh Allotment of Land to Co-operative House
Building Societies Scheme, 1991' through Chandigarh
C
Housing Board for allotment of land to Co-operative
House Building Societies. Fifty three Societies
challenged the 1991 Scheme. The High Court dismissed
the writ petition. In terms of the order of the High Court
the members of the Societies paid the balance earnest
money and 18% interest, however, the Board did not take
D
effective steps for allotment of land to the Societies.
Respondent No.1 and others-members, applied through
their respective Societies for refund of the amount paid
by them. The Secretary of the Board sent a letter to the
Finance Secretary, Chandigarh Administration for its
E
decision However, the Chief Accounts Officer of the
Board suo motu remitted the atnount of earnest money
to the Societies after deducting 10% in accordance with
the memo dated 9.6.1993 issued by the Finance Secretary,
Meanwhile, the Finance Secretary issued a memo dated
F
9.3.2000 directing that full earnest money would be
refunded to the societies/and its members, however, the
interest on the earnest money would not to be refunded.
The members of the Societies filed complaints under the
Consumer Protection Act, 1986 against the action of the
G
Board to forfeit 10% earnest money and the direction
given by the Finance Secretary not to refund 18%
interest. The District Forum held that the forfeiture of 10%
earnest money in terms of the memo dated 9.6.1993 and
H
98
SUPREME COURT REPORTS
(2010] 12 S.C.R.
A non-refund of 18% interest were contrary to the 1991
Scheme and the 1973 Rules and amounted to deficiency
in service and unfair trade practice. The State
Commission held that the Finance Secretary could not
have used the power for giving directions in violation of
B the Rules and the Scheme; that the memo dated 9.6.1993
was contrary to clause 8 of the 1991 Scheme; that once
the Finance Secretary had issued instructions vide memo
dated 9.3.2000 that

## Text

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A
B
[2010] 12 S.C.R. 96
CHANDIGARH HOUSING BOARD
V.
AVTAR SINGH AND OTHERS
(Civil Appeal No. 8203 of 2010)
SEPTEMBER 22, 2010
[G.S. SINGHVI AND ASOK KUMAR GANGULY, JJ.]
Consumer Protection Act, 1986 - s. 2(1)(d), (g), (o) and
s. 12 - Chandigarh Allotment of Land to Co-operative House
C Building Societies Scheme, 1991 - Envisaging allotment of
land by Chandigarh Administration to Co-operative House
Building Societies through Chandigarh Housing Board -
Construction of multistoried structures/dwellings for members
of Societies - Non-allotment of land to Societies - Complaint
o by members u/s. 12, for refund of 10% earnest money
forfeited by the Board and 18% interest paid by them -
Maintainability of -
Held: Complaint is maintainable -
Members of the Societies were the real and ultimate
beneficiaries - Provisions in the Scheme regulated the
E relationship of the Societies with their members and also
made them jointly and severally responsible for payment of
the earnest money etc. - By making applications for
allotment of land, Societies would be deemed to have hired
or availed services of Chandigarh Administration and the
F Board in relation to housing construction, thus, members
covered by definition of 'consumer' uls. 2(d)(ii) and had right
to file such complaint - Even though Finance Secretary
decided to refund the earnest money, Board did not refund
the forfeited portion of the earnest money to the members of
G the Societies, thus, amounted to deficiency in service - 1952
Act, 1973 Rules and 1991 Scheme does not provide for levy
of 18% interest on the delayed payment of earnest money -
Chandigarh Administration and Board had no right to refuse
refund of 18% interest -
Thus, .National Commission and
H
96
CHANDIGARH HOUSING BOARD v. AVTAR SINGH.
97
AND ORS.
State Commission justified in directing refund of the amount
A
of interest - Board directed to refund the amount due to
complainant within the stipulated period -
Chandigarh
Allotment of Land to Co-operative House Building Societies
Scheme, 1991 -
Capital of Punjab (Development and
Regulation) Act, 1952 - Chandigarh Lease Hold of Sites and
B
Buildings Rules, 1973.
The Chandigarh Administration framed the
'Chandigarh Allotment of Land to Co-operative House
Building Societies Scheme, 1991' through Chandigarh
C
Housing Board for allotment of land to Co-operative
House Building Societies. Fifty three Societies
challenged the 1991 Scheme. The High Court dismissed
the writ petition. In terms of the order of the High Court
the members of the Societies paid the balance earnest
money and 18% interest, however, the Board did not take
D
effective steps for allotment of land to the Societies.
Respondent No.1 and others-members, applied through
their respective Societies for refund of the amount paid
by them. The Secretary of the Board sent a letter to the
Finance Secretary, Chandigarh Administration for its
E
decision However, the Chief Accounts Officer of the
Board suo motu remitted the atnount of earnest money
to the Societies after deducting 10% in accordance with
the memo dated 9.6.1993 issued by the Finance Secretary,
Meanwhile, the Finance Secretary issued a memo dated
F
9.3.2000 directing that full earnest money would be
refunded to the societies/and its members, however, the
interest on the earnest money would not to be refunded.
The members of the Societies filed complaints under the
Consumer Protection Act, 1986 against the action of the
G
Board to forfeit 10% earnest money and the direction
given by the Finance Secretary not to refund 18%
interest. The District Forum held that the forfeiture of 10%
earnest money in terms of the memo dated 9.6.1993 and
H
98
SUPREME COURT REPORTS
(2010] 12 S.C.R.
A non-refund of 18% interest were contrary to the 1991
Scheme and the 1973 Rules and amounted to deficiency
in service and unfair trade practice. The State
Commission held that the Finance Secretary could not
have used the power for giving directions in violation of
B the Rules and the Scheme; that the memo dated 9.6.1993
was contrary to clause 8 of the 1991 Scheme; that once
the Finance Secretary had issued instructions vide memo
dated 9.3.2000 that full refund of earnest money would be
made to the Societies/and its members the Board should
c have refunded the remaining amount to the complainants
and its failure to do so amounted to deficiency in service;
that the instructions issued by the Finance Secretary not
to refund 18% interest deposited by the members of the
Society did not have any legal sanction. The State
0 Commission directed the Board to refund the amount to
the complainants along with interest @ 8% p.a. However,
the State Commission set aside the direction given by the
District Forum for payment of interest from the amount
of earnest money. The National Commission upheld the
E order passed by the State Commission. Therefore, the
appellants filed the instant appeals.
The question which arose for consideration in these
appeals were whether the members of the Societies, who
would have been benefited by allotment of land under the
F 1991 Scheme were 'consumer' within the meaning of
Section 2(d) of the Act; and whether the District Forum
had the jurisdiction to entertain the complaints filed by
the members of the Societies for refund of 10% earnest
money forfeited by the Board and 18% interest paid by
G them.
H
Dismissing the appeals, the Court
HELD: 1.1 Even though the Chandigarh Allotment of
Land to Co-operative House Building Societies Scheme,
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
99
AND ORS.
1991 was ostensibly framed for allotment of land to the
A
Co-operative House Building Societies through the
agency of the Chandigarh Housing Board for
construction of multistoried structures (dwelling units/
flats) for their members and the Chandigarh
Administration and the Board had nothing to do with the
B
members of the Societies, but a careful reading of
various clauses of the Scheme and the directives given
by the Finance Secretary from time to time leave little
room for doubt that the members of the Societies were
the real and ultimate beneficiaries. The provisions c
contained therein not only regulated the relationship of
the Societies with their members, but also made them
jointly and severally responsible for payment of the
earnest money etc. The Finance Secretary and the Board
issued directions from time to time for payment of the
0
earnest money and interest by the members of the
Societies. If the scheme had nothing to do with the
members of the Societies, then it would not have
contained provisions to regulate their eligibility and
entitlement to get dwelling units to be constructed on the
land allotted by the Board and made them jointly and
severally responsible for payment of the premium etc. and
E
the Finance Secretary would not have issued directions
vide memos dated 9.6.1993 and 9.3.2000 in the matter of
refund of earnest money and interest. The Board too
would not have entertained the request made by the
members of the Societies for refund of the earnest money
and remitted the amount to the Societies after deducting
10%. Thus, even though no formal contract had been
entered into between the Chandigarh Administration and
F
the Board on the one hand and the members of the
G
Societies on the other hand, the former exercised
sufficient degree of control over the latter. [Paras 27 and
28] [129-B-C; 131-A-F]
H
100
SUPREME COURT REPORTS
[2010] 12 S.C.R.
A
1.2 By making applications for allotment of land, the
Societies would be deemed to have hired or availed
services of Chandigarh Administration and the Board in
relation to housing construction. If the scheme had been
faithfully implemented and land had been allotted to the
B Societies, their members would have been the actual and
real beneficiaries. Therefore, they were certainly covered
by the definition of 'consumer' under Section 2(d)(ii) of
the Consumer Protection Act, 1986, the second part of
which includes any beneficiary of the services hired or
c availed for consideration which has been paid or
promised or partly paid and partly-promised. The
members of the Societies had every right to complain
against illegal, arbitrary and unjustified forfeiture of 10%
earnest money and non-refund of 18% interest and the
0 District Consumer Forum did not commit any
jurisdictional error by entertaining the complaints. [Para
28] [131-F-H; 132-A-B]
Lucknow Development Authority v. MK. Gupta (1994) 1
SCC 243; Ghaziabad Development Authority v. Balbir Singh
E (2004) 5 sec 65, relied on.
1.3 The submission that the Board had deducted
10% earnest money and declined to refund 18% interest
to the members of the Societies strictly in accordance
F with the directives given by the Finance Secretary and in
the absence of challenge to memos dated 9.6.1993 and
9.3.2000, the complainants were not entitled to any relief,
is meritless and cannot be accepted. In terms of clause
8 of the 1991 Scheme, a Society would have become
entitled to refund of the earnest money without any
G deduction if it were to cancel the demand before allotment
of land. This is also the spirit of Rule 8 of the Chandigarh
Lease Hold of Sites and Building Rules, 1973 which were
made applicable to the land allotted under the scheme.
[Para 29] [132-B-D]
H
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
1-01
AND ORS.
1.4 Rule 8 shows that an application for allotment of A
site or building by way of lease can be entertained only
if it is accompanied by 10% of the premium as earnest
money. The allottee is required to deposit 15% of the
premium within 30 days of allotment. The balance
amount is to be paid in accordance with Rule 12. An B
applicant who refuses to accept allotment within 30 days
is entitled to refund of the amount paid by him. If the
applicant neither refuses to accept the allotment nor
deposits 15% of the premium, the Estate Officer can
forfeit the whole or part of the earnest money. The C
provision relating to refund of the premium/earnest
money or forfeiture of the whole or part thereof gets
attracted only after the allotment is made and not before
that. [Para 30) [133-E-G]
1.5 On examining para V(i) of memo dated 9.6.1993 D
issued by the Finance Secretary in the light of the plain
language of Rule 8 of the 1973 Rules and clause 8 of the
1991 Scheme, it becomes clear that the concerned officer
exceeded his brief when he directed that 10% of 25% of
the premium/earnest money should be deducted if the E
members sought refund of the earnest money on any
ground whatsoever. By giving the said directive, the
concerned officer attempted to teach a lesson to the
members of the Societies who had filed writ petition and
succeeded in persuading the High Court to restrict F
payment of the earnest money to 10%. However, he must
have realized the folly committed by issuing a direction
in complete disregard of the spirit of Rule 8(5) of the 1973
Rules and clause 8 of the 1991 Scheme and this must
have been the reason why he made amendments by G
incorporating clause 7 in memo dated 9.3.2000 for full
refund of the earnest money without forfeiting 10%.
Unfortunately, it proved to be a half hearted attempt by
the Finance Secretary to redeem the wrong done earlier
because while directing refund of the earnest money H
102
SUPREME COURT REPORTS
[2010] 12 S.C.R.
A without any deduction, he used the expression 'will
henceforth' in clause 7, which gave leverage to the Board
to decline the request of the members of the Societies for
full refund of the earnest money on the ground that 15%
had already been remitted to the Societies for being paid
8
to their members before the issue of memo dated
9.3.2000. Once the Finance Secretary took the corrective
step, which was in consonance with the spirit of Rule 8(5)
of the 1973 Rules and clause 8 of the 1991 Scheme, the
Board should have refunded the balance 10% amount to
C all the members who had applied for refund on finding
that land had not been allotted to the Societies and they
might have to wait for indefinite period to get the flats.
[Para 30] (133-G-H; 134-A-F]
1.6 On receipt of the applications made by the
D members of the Societies for refund of the earnest money
and interest, the Secretary of the Board wrote letter dated
11.12.1998 to the Finance Secretary seeking his guidance
in the matter. However, before the latter could take a
decision, the Chief Accounts Officer of the Board remitted
E the amount of earnest money to the Societies after
deducting 10% with a direction that the same be paid to
their members. The Board did not explain why its officers
did not wait for the decision of the Finance Secretary and
why the Chief Accounts Officer exhibited undue haste in
F
remitting the amount of earnest money to the Societies
after deducting 10%. In any case, after the Finance
Secretary decided that earnest money would be
refunded to the Societies and their members without any
deduction, the Board should have refunded forfeited
G portion of the earnest money to the members of the
Societies and its failure to do so certainly amounted to
deficiency in service. [Para 31] [134-G-H; 135-A-B]
1.7 The Capital of Punjab (Development and
Regulation) Act, 1952 and the Chandigarh Lease Hold of
H
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
103
AND ORS.
Sites and Buildings Rules, 1973 do not provide .for levy
A
of 18% interest on the delayed payment of earnest money
or a portion thereof. The 1991 Scheme also did not
provide for levy of such interest. Notwithstanding this,
the members of the Societies had to pay 18% interest
because while dismissing the writ petition, the High Court
B
observed that the Societies who had deposited 10% of
the sale consideration and found eligible for allotment or
were allotted sites would be liable to pay the balance 15%
with a further interest at the rate of 18% per annum.
However, there was nothing either in the interim or the c
final order of the High Court from which it could be
inferred that the Chandigarh Administration or for that
reason the Board was authorised or empowered to
refuse refund of 18% interest to the members who did not
seek allotment of flat. If the final order passed by'the High
D
Court is read in conjunction with interim order dated
11.5.1992, it becomes clear that the Societies were to
deposit the remaining amount with interest at the rate of
18% per annum only if they were to accept allotment of
flats under the Scheme. Although, the writ petitions were
E
filed by the Societies, the language of the interim order
passed by the High Court shows that the judges were
thinking of imposing liability of 18% interest only on those
members who were to accept allotment of flats to be
constructed by the Societies. The members of the
Societies did not get an opportunity to accept the
allotment because evan after deposit of full earnest
money and 18% interest, the Board did not allot land to
F
the Societies on which they could construct dwelling
units/flats. The Finance Secretary misinterpreted the
orders of the High Court and issued wholly arbitrary and
G
unjust directive to the Board not to refund 18% interest
to the members of the Societies who had applied for
refund before allotment of land by the Board. The
'.
Chandigarh Administration and the Board had no right
to refuse refund of 18% interest and absence of direct
H
104
SUPREME COURT REPORTS
[2010] 12 S.C.R.
A challenge to clause 11 of memo dated 9.3.2000 was not
sufficient to legitimize indirect forfeiture of that amount
and the State Commission did not commit any error by
directing refund of the amount of interest by treating it to
be a case of deficiency in service and the National
s Commission rightly declined to interfere with the order of
the State Commission. The Board is directed to refund
the amount due to the complainants within the period
stipulated. [Paras 32 and 33] [135-C-H; 136-A-E]
c
Case Law Reference:
(1994) 1 sec 243
(2004) 5 sec 65
Relied on.
Referred to.
Para 28
Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
D 8203 of 2010.
E
F
From the Judgment & Order dated 12.7.2007 of the
National Consumer Disputes Redressal Commission in R.P.
No. 734 of 2004.
WITH
C.A. 8204, 8205, 8206, 8207, 8208, 8209, 8210, 8211,
8212,8213,8214, 8215,8216,8217,8218,8219,8220,8221,
8222, 8223, 8224, 8225, 8226 & 8227 of 2010.
Rachana Joshi lssar, Nidhi Tiwari for the Appellant.
Anil Nag, S.S. Khetarpal, H.K. Chaturvedi, Syed Ahmad
Saud, M.M. Abbasi, Shakil Ahmed Syed for the Respondent.
G
The Judgment of the Court was delivered by
G.S. SINGHVI, J. 1. Leave granted.
2. With a view to promote private housing and optimum
utilisation of the land in Chandigarh by constructing multiH storeyed structures, the Administrator, Union Territory,
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
105
AND ORS. [G.S. SINGHVI, J.]
Chandigarh framed a scheme called "Chandigarh Allotment of
A
Land to Co-operative House Building Societies Scheme, 1991"
(for short, 'the 1991 Scheme') for allotment of land to Cooperative House Building Societies (for short, 'the Societies')
through Chandigarh Housing Board (for short, 'the Board'). The
opening paragraph of the 1991 Scheme and clauses 3, 4 and
B
6 to 12 thereof read as under:
"No. UTFl(3)-91/5214 - With view to promote private
housing and optimum utilization of land by constructing
multistoried structures, the Administrator, Union Territory,
C
Chandigarh, is pleaded to intake the following scheme
regulating allotment of land to the Co-operative House
Building Societies, in the Union Territory, Chandigarh,
namely:-
1.
)()()(
)()()(
)()()(
D
2.
)()()(
)()()(
)()()(
2.
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)()()(
)()()(
3. The Chandigarh Administration may conduct survey to
E
assess the demand by inviting applications on prescribed
forms available from the Chief Executive Officer,
Chandigarh Housing Board alongwith 25% of the premium
of land to be applied for as earnest money and proof that
the Society has sufficient funds and resources to pay the
F
balance of premium of land and to undertake construction
work on the land if allotted to them through the Chandigarh
Housing Board. Such Survey shall, however, not be
construed as a commitment for allotment of land in any
w~.
G
4. The Chandigarh Administration shall allot land on chunk
basis to the Chandigarh Housing Board for its further
allotment to the eligible Co-operative House Building
Societies from whom applications were invited under
clause 3 above, having sufficient funds and resources to
H
A
B
c
D
E
F
G
106
SUPREME COURT REPORTS
(2010] 12 S.C.R.
the satisfaction of the Estate Officer, on Lease Hold Basis
for 99 years for the construction of multistoreyed
structures/dwelling units (hereinafter called DU) and their
allotment to its eligible members on the terms and
conditions to be laid down in the allotment letter and lease
deed. The land so allotted shall be planned in consultation
with the Chief Architect and Secretary, Architecture
Department, Union Territory, Chandigarh and developed
by the Engineering Department as usual. The proposed
land shall be got sanctioned from the Chief Administrator,
Chandigarh as per the provisions of the Punjab Capital
(Development and Regulation) Building Rules, 1952 as
amended to date. The seniority of society may be
determined from registration Number and date. The
Administrator may allot land to the societies within the
limits of Union Territory, Chandigarh subject to the
fulfillment of provisions of the Scheme and the Capital of
Punjab (Development and Regulation) Act, 1952 as
amended from time to time and the rules made thereunder
including the Chandigarh Lease Hold of Sites and Building
Rules, 1973 (as amended from time to time). The society
and its members shall be jointly and severely
responsible for payment of premium including
instalments and ground rent and for complying with terms
and conditions, rules and regulations and the provisions
of the Act referred to above. The minimum quantum of
land that can be allotted is one acre and 40 to 60 number
of Dwelling Units (as proved by the Chief Architect) are
to be provided by the Society per acre. The Chandigarh
Administration may fix cut off date for the purpose of
allotment of land to the Societies as well as to members.
6. Eligibility. - A society may be considered eligible for
allotment of land if it is duly registered with the Registrar,
Co-operative Societies, Union Territory, Chandigarh
functioning property having sufficient funds/resources to
H
pay the premium, to undertake the construction work, to
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
107
AND ORS. [G.S. SINGHVI, J.]
complete it is stipulated period, and that each of its
A
members fulfills the following conditions:-
(i) He is a bona fide resident of the Union Territory
of Chandigarh and should be residing in Union
Territory, Chandigarh atleast for last two years on~ 8
the date of the allotment of land to the Society;
(ii) He is an employee of the Central Government/
Corporation owned or controlled by Central
Government stationed at Chandigarh on the date .
of notification of Scheme or has served in the past
C
at Chandigarh, or
(iii) He is an employee of Union Territory
Administration or the States of Punjab and Haryana
or any Corporation owned or controlled by Union
D
Territory or State Governments referred to above
and is either serving at Chandigarh on the date of
notification of the Scheme or has served in the past;
or
(iv) He is a retired from the Government or
E
Corporation referred to at (ii) and (iii) above and
residing at Chandigarh.
An applicant member may be eligible for allotment of
dwelling unit in accordance with his monthly income i.e.
F
one dwelling unit out of the dwelling units constructed per
acre, as per category given below:-
A.(1) 25 Dwelling Units per acre Category "A"
(2)35 Dwelling Units per acre
(3)45 Dwelling Units per acre
Category "B"
Category "C"
(The density shall not in total exceed 40% of the covered
area)
G
H
108
SUPREME COURT REPORTS
[2010) 12 S.C.R.
A
B. Income Group
Members having monthly income of Rs.5,0001 and above
"A"
Members having monthly income of Rs.2,0001 to 5,000
B
"B"
c
D
E
F
G
H
Members having monthly income upto Rs.2,000
Provided that no society shall be eligible for allotment of
a site under this scheme if any of its members, their
spouses or dependent children already owns, either on
free-hold, lease-hold or hire purchase basis, a dwelling unit
or a residential house/site/flat at Chandigarh, Manimajra,
Panchkula and S.A.S. Nagar (Mohali).
Provided further that not more than one member of a family
shall be a member of any such Society and no more than
one dwelling unit shall be allotted to one family.
Provided further that no individual/Society shall part with
the possession of the land or dwelling unit before the expiry
of atleast 5 years from the date of allotment.
7. Grouping of Society/Enrolment of new members.- If any
Society has less than 50 members, these shall be grouped
together so as to enable the Chandigarh Housing Board
to allot atleast one acre of land to a group of Societies.
8. Refund of Earnest Money.- The earnest money shall·
be refunded to the Society, if any Society cancels its
demand before allotment of land. Earnest money shall
also be refunded to un-accommodated Societies, if any.
No interest shall, however, be payable on any amount
which remained deposited with the Estate Officer under
this Scheme.
9. Operation of Account/Check thereon.- Every member
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
109
AND ORS. [G.S. SINGHVI, J.]
who applied/have applied to the Society for allotment of A
a dwelling unit under this Scheme shall pay all the
amount in this respect demanded by the Society by
means of crossed demand draft payable to the Society.
The Society shall deposit it in their account maintained
in the Chandigarh State Co-operative Bank Ltd., Sector
B
22, Chandigarh only. The Society shall not be competent
to withdraw any amount so deposited without the prior
approval of the Registrar, Co-operative Societies,
Chandigarh Administration, to-Clischarge .liabilities of
payment of earnest money, instalments, ground rent and c
for construction purpose in respect of the· 1and to be
allotted/allotted to the Society.
10. Construction of dwelling units and allotment thereof.-
The Society shall be responsible for completion of
building i.e. dwelling units within 3 years from the date of D
allotment and further allotment of these to their members
by draw of lots. However, grouping can be allowed by the
Society. Draw of lost shall be witnessed by the authorised
officer/officials of Co-operative Department and Estate
Office, Chandigarh Administration.
E
11. Apart from the provisions of this scheme, provision
of the Chandigarh Lease Hold of Sites and Building
Rules, 1973, as amended from time to time, shall be
applicable to the land allotted under this scheme.
12. If at any time any difficulty arises in giving effect to the
provisions of this scheme, the Chief Administrator may give
directions consistent with the provisions of the scheme as
he/she may deem appropriate."
(emphasis supplied)
3. Fifty three Societies challenged the 1991 Scheme in
Writ Petition No.1454 of 1992 filed in the Punjab and Haryana
High Court with the following prayer:
F
G
H
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[2010] 12 S.C.R.
A
(i.)
Writ of Certiorari or any other appropriate writ, order
of direction in the nature of Certiorari, may be
issued thereby quashing the impugned notification
No.UTFI (3)-91/5214 dated 28th May, 1991
(Annexure P.4) issued by the Finance Secretary
B
(respondent No.2).
c
(ii.)
Further a writ of Mandamus be issued to the
respondent with a direction to give individual and
developed plots to the members of the petitioner
societies in view of the Scheme of 1983 which is
still operative under which plots were/shall be given.
4. By an interim order dated 11.5.1992, the Division Bench
of the High Court permitted the Societies to deposit 10% of
D the tentative price and also recorded the undertaking given by
them that if the writ petition is dismissed, they shall deposit the
balance amount with interest@ 18% per annum, if they were
to accept allotment of flats under the new scheme. The relevant
E
F
G
H
portion of that order is extracted below:
"Learned counsel for the petitioner contends that the rules
provide for deposit of only 10% of the amount of the
tentative price and the remaining 15% is to be deposited
if plots/flats are allotted. In view of this, learned Counsel
for the State-Union Territory, Chandigarh does not oppose
the prayer of the petitioners for stay to the extent of deposit
of 15% of the tentative price. The petitioner shall deposit
10% of the tentative price within the time extended by this
court vide order dated 30.5.1992. The petitioners
underlake that if the writ petition is dismissed, they shall
deposit the remaining amount with interest @ 18% per
annum if they accept allotment of flats under the scheme.
The Chandigarh Administration shall also refund the
amount deposited by the petitioner with interest at the
same rate to those petitioners who are not interested in
the allotment of flats."
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
111
AND ORS. [G.S. SINGHVI, J.]
(emphasis supplied)
A
5. In view of the aforesaid order, the Societies collected
10% of the tentative price from their members and deposited
the same in the bank specified in the 1991 Scheme.
Thereafter, the Chief Executive Officer of the Board issued
B
circular-letters dated 3.11.1992 to the Societies indicating the
amount deposited by them towards 10% of the earnest money/
premium, the total amount payable by them and also called
upon them to furnish the list of eligible members and details
of the deposits made on behalf of each member category-wise.
This is evident from the following paragraphs of one such letter C
sent to the Progressive Co-operative House Building Society
Limited (respondent No.2 in the lead appeal):
"1. xxx
xxx
xxx
D
2.
All the co-operative House Building Societies were
requested to apply on the prescribed forms and deposit
earnest money equal to 25% of the premium on behalf of
eligible members for the allotment of land. However, in
view of the Hon'ble Punjab & Haryana High Court's order
E
in your case you were required to deposit 10% of the
· tentative price by 31.5.1992.
3. xxx
xxx
xxx
4. Your society has deposited a sum of Rs.9,50,000/-
F
representing 10% in respect of 933 members as per
details given below:-
Categorv
A
345
G
B
529
c
~
933
5. For the purpose of assessment of land requirement the
strength of your society has been taken as 933 which is
H
A
8
c
D
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[2010] 12 S.C.R.
the number of members on behalf of whom your society
has reportedly deposited at least 10% by 1.6.92. This
assessment of land is purely tentative and subject to
revision in case any member of your society is found to
have not been declared eligible by the screening
Committee or to have not deposited at least 10% of the
premium by 1.6.1992.
6. On the basis of the said strength of the society the land
requirement of your society has tentatively been assessed
as 125379.05 Sq. Yd. provided that if the final assessment
shows that the total number of eligible members in your
society is less tan the number required for allotment in
terms of the category-wise density specified per acre, your
society shall be clubbed with one or more of the Societies
to attain the optimum number required for allotment of land.
7. The total premium of this land works out to
Rs.9,40,34,287/-@ Rs.750/- per Sq. yd.
8. With a view to finalize the matter relating to the allotment
E
of land, the following information may kindly be furnished
within 30 days:-
F
G
H
(i) List of eligible members i.e. of the members duly
approved by Registrar Co-operative Society/Screening
Committee.
(ii) List of each member giving details of deposits made
on his behalf (as on 1.6.1992) category-wise.
9.
)()()(
)()()(
)()()(
10. In view of the above position, you are requested to
furnish the information, as indicated in para 8 above,
within 30 days from the date of issue of this letter for the
•purpose of finalizing the assessment of the land
requirement of your society.
CHANDIGARH HOUSING BOARD v. AVTAR SINGH 113
AND ORS. [G.S. SINGHVI, J.]
11.xxx
xxx
xxx.
A copy of the local plan where land is tentatively proposed
to be allotted to your society is also enclosed for
information."
6. After seven months, the Finance Secretary, Chandigarh
Administration (hereinafter referred to as 'the Finance
Secretary') issued memo dated 9.6.1993 and directed that
if any member of the Society was to seek refund, then 10%
A
B
out of 25% of the earnest money should be deducted as
calculated on reduced density. The relevant clause of that
C
memo is reproduced below:
"V(i) 10% of 25% of the premium amount as calculated
on reduced density shall be deducted in case members
seek refund on any ground what so ever their earnest
D .
money deposited with the Chandigarh Housing Board."
7. The writ petition was finally dismissed by the High Court
vide judgment dated 18.12.1996. The last paragraph of the
judgment on which the appellant has heavily relied in support
E
of its plea that the members of the Societies are not entitled
to claim refund of 18% interest reads as under:
"Before parting, we may observe that in view of the interim
order passed by this Court wherein the petitioners were
allowed to deposit 10% of the sale consideration while
F
applying for the allotment of plots, the Societies who had
deposited 10% of the sale consideration and found eligible
for allotment or have been allotted the sites, would be liable
to pay the balance 15% of the amount so as to make it
25% as per terms and conditions of the allotment as
G
agreed upon by them, with a further interest at the rate of
18% per annum."
8. By taking cue from the observations made by the High
Court, the Finance Secretary sent memo dated 6.11.1997 to
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[2010] 12 S.C.R.
A
the Chairperson of the Board with the request to accept the
balance 15% earnest money from the Societies along with
interest at the rate of 18%. Paragraphs 2 and 3 of that letter
read as under:
B
c
D
"2. You are requested to accept the balance amount of
15% to complete the 25% earnest money along with the
interest @18% p.a. up to date of the High Court order i.e.
18.12.96, from the petitioners of the Co-operative House
Building Societies who jointly filed CWP No.1454 of 1992
in the Punjab and Haryana High Court, calculation and
imposition of interest would, therefore, be stopped till the
possession of land is offered to the Societies.
3. Balance of 25% of the earnest money may be accepted
at the original rate. However, it may be made clear to the
Societies that balance amount of the premium shall be
determined at the rate applicable at the time of actual
allotment of land to the Societies."
9. Thereafter, the Board vide ·its letter dated 15.12.1997
E
directed the Societies to deposit the balance 15% earnest
money along with 18% interest. The Societies complied with
the Board's directive and deposited the amount after collecting
the same from their members.
10. Although, the members of the Societies paid the
F
balance earnest money and 18% interest, the Board did not
take effective steps for allotment of land to the Societies. This
naturally gave rise to an apprehension in their mind that they
may .have to wait indefinitely for getting the flats. Therefore,
some of them including Lieutenant Colonel Avtar Singh
G (respondent No.1 in the lead appeal) applied through their
. respective Societies for refund of the amount paid by them by
clearly indicating that they were no longer interested in the flats.
The Societies forwarded their applications to the Board.
Thereupon, Secretary of the Board sent letter dated 11.12.1998
H
to the Finance Secretary seeking his guidance in the matter.
CHANDIGARH HOUSING BOARD v. AVTAR S,INGH
115
AND ORS. [G.S. SINGHVI, J.]
That letter reads as under:
A
"CHANDIGARH HOUSING BOARD
CHANDIGARH
No.HB(s)-GAO-AOl-98/22741
To
The Finance Secretary,
Chandigarh Administration,
Chandigarh.
Subject: Refund of Earnest Money.
Sir,
Dated:11/12/98
It is stated that the Board has been making refunds
B
c
to the members of societies by deducting 10% of the
revised density in terms of the Chandigarh Administration
D
letter No.30/11/FTl-31-93/5149 dated (copy enclosed).
As per instruction issued vide your letter No.5158UTIF (4) 97/20685 dated 6.11.1997, the Board demanded
balance 15% to complete 25% earnest money alongwith
interest @ 18% p.a. for the period from 1.6.1992 to
18.12.1996 from the petitioner societies. Now some of the
societies after paying the above amount of earnest money
E
F
and interest have sought refund in respect of their certain
members. The instructions of Chandigarh Administration
dated 9.6.1993 provide for refund of earnest money after
forfeiting 10% of revised density but no guidelines are
available with the Board whether it should also refund the
interest paid by the members for the period 1.6.1992 to
18.12.1996 or not. You are requested to decide the matter
and decision taken may kindly be conveyed at the earliest
G
to decide such pending cases.
Yours faithfully,
Secretary,
Chandigarh Housing Board."
H
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(2010] 12 S.C.R.
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11. However without waiting for the decision of the Finance
Secretary, the Chief Accounts Officer of the Board suo motu
remitted the amount of earnest money to the Societies after
deducting 10% in accordance with the instructions issued by
the Finance Secretary vide memo dated 9.6.1993 and directed
B that the same be paid to the members.
12. In the meanwhile, the Finance Secretary constituted a
committee consisting of Chief Executive Officer of the Board,
Officer on Special Duty (CP}, Chandigarh Administration and
Joint Registrar, Co-operative Societies, Chandigarh to look into
C various pending issues of the Societies. After considering the
recommendations of the committee and guidelines given by the
Deputy Commissioner-cum-Estate Officer, the Finance
Secretary issued memo dated 9.3.2000, the relevant portions
D
E
F
of which are reproduced below:
"7. Full refund of earnest money will hence forth be made
to the societies/and its members without forfeiting 10% of
the 25% earnest money deposited.
11. The interest paid by the Societies on the earnest money
deposited with the Board in pursuance of High Court's
judgment dated 18.12.96 is not to be refunded if the
Society seek refund of earnest money as a whole or in
respect of any member, as it is not part of the earnest
money."
13. The members of the Societies, who felt aggrieved by
the action of the Board to forfeit 10% earnest money and the
direction given by the Finance Secretary not to refund 18%
interest, filed complaints under Section 12 of the Consumer
G Protection Act, 1986 (for short, 'the Act'). They specifically
averred that till the making of applications for refund, the Board
had not allotted land to the Societies. They pleaded that action
and decision complained against were not only contrary to the
provisions of the Chandigarh Lease Hold of Sites and Buildings
H Rules, 1973 (for short, 'the 1973 Rules'), the 1991 Scheme but
CHANDIGARH HOUSING BOARD v. AVTAR SINGH
117
AND ORS. [G.S. SINGHVI, J.]
were also discriminatory inasmuch as the applications made
A
by Kuldip Singh son of Gurdin Singh and Smt. Subh Lata w/o
Shri Tarlochan Singh for refund of the amount was accepted
without any deduction but in their cases 10% of the earnest
money and 18% interest were arbitrarily forfeited.
14. The Finance Secretary, Chandigarh Administration,
through whom the Union of India was impleaded as a party to
the complaints did not file written statement and it was left to
B
the Board to contest the complaints. In the written statement
filed on behalf of the Board, an objection was raised to the very
C
maintainability of the complaints on the ground that there was
no privity of contract between the complainants and the Board.
On merits, it was pleaded that there was no deficiency in
service or negligence on the Board's part and the provisions
of the Act cannot be invoked by the complainants. It was further
pleaded that the decision of the Chandigarh Administration not
D
to refund 18% amount paid by the members of the Societies
was in consonance with the 1991 Scheme and without
challenging the same, the complainants were not entitled to any
relief. Another plea taken by the Board was that 18% interest
was not refunded because it did not form part of the earnest
E
money. The allegation of discrimination was controverted by
asserting that in the cases of Shri Kuldip Singh and Smt. Subh
Lata, 10% of the 25% earnest money was forfeited in
accordance with the instructions dated 29. 7.1993 issued by the
Finance Secretary but the amount was refunded to them in the
F
month of March 1998.
15. The District Forum noted that till the making of
applications by the complainants for refund of the earnest
money and 18% interest by specifically mentioning that they
G
were no longer interested in the flats, the Board had not allotted
land to the Societies and held that forfeiture of 10% earnest
money in terms of the decision contained in memo dated
9.6.1993 and non-refund of 18% interest were contrary to the
1991 Scheme and the 1973 Rules and the same amounted to
H
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(2010] 12 S.C.R.
A deficiency in service and unfair trade practice. The District
B
c
D
E
Forum also accepted the plea of discrimination and observed:
"The complainant has also alleged discrimination against
him vis-a-vis two other applicants members of OP-2
namely Sh. Kuldeep Singh and Smt. Subh Lata to her. The
interest component of their deposits was refunded without
its forfeiture. On this point the reply of the OP-1 is round
about.