Consumer Fora have Jurisdiction to decide the legality of Statutory Fees.

The Hon’ble Supreme Court vide its order dated 16.09.2019, passed by three- judges Bench in Punjab Urban Planning and Development Authority (Now GREATER LUDHIANA AREA DEVELOPMENT AUTHORITY i.e GLADA) versus Vidya Chetal bearing SLP (C) No. 4272/2015, overruled the judgment in HUDA vs. Sunita (2005) 2 SCC 479 and held that the Consumer Fora have the jurisdiction to deal with the legality of the Statutory Fees imposed by the Statutory Authorities.  

Challenge

The Hon’ble Supreme Court, vide this judgment, overruled the judgment of the division bench in HUDA vs. Sunita (2005) 2 SCC 479, wherein it was decided that the National Consumer Dispute Redressal Commission had no jurisdiction to adjudicate the legality behind the demand of “composition fee” and “extension fee” made by HUDA, as the same being statutory obligation, does not qualify as “deficiency of services”.

The Hon’ble Court in the present case was deciding the jurisdiction of the Consumer Forums to adjudicate the legality of statutory obligations as “deficiency of services”.

The counsel for the Petitioner argued that the decision in Sunita case (Supra)is well reasoned as the NCDRC lacks jurisdiction to decide the legality of demand of “Composition fee” and “extension fee” being statutory objections.  He further argued that though the Consumer Protection Act, 1986 is beneficial in nature, it cannot be given such a liberal construction as to extend the ambit of the Act by bringing in remedies which were not intended to by the legislature.

The counsel of the Respondent argued that the decision in Sunita (Supra) is liable to be overruled as it has not followed the precedent and has overlooked the earlier decisions of the Hon’ble Supreme Court in Lucknow Development Authority vs. M.K. Gupta (1994) 1 SCC 243 and Ghaziabad Development Authority vs. Balbir Singh (2005) 5 SCC 65 wherein the Hon’ble Court has held that NCDRC has Jurisdiction to protect consumers against the defective services rendered by Statutory bodies.

Held

The Hon’ble Supreme Court overruled the decision in Sunita Case (Supra) while upholding the law laid down earlier in Lucknow Development Authority and Ghaziabad Development Authority (Supra). The Hon’ble Court while deciding the present case, considered the definition of “service” as provided in Section 2 (1) (o) of the Act and definition of “deficiency” as provided in Section 2 (1) (g) of the Act and held that these definitions are not exhaustive indicating liberal interpretation of the same in the line of the purpose of the act i.e. to protect the interest of the consumers.

The Hon’ble Court further held that sovereign functions like judicial decision making, imposition of taxes, policing etc. are exempted from the ambit of the Act but the welfare activities through economic adventure undertaken by the Government or Statutory Authorities are within the ambit of the Act and even in departments discharging sovereign functions, if there are units/ wings which are providing services/ supply goods for a consideration and they are severable, then they can be considered as to come within the ambit of the Act. The Hon’ble Court also observed that if a Statutory Authority, other than the core sovereign duties, is providing services then, unless the Statute exempts or provides for alternative forum, the Consumer Forum would continue to have jurisdiction to deal with the same.

The Hon’ble Court, while differentiating different types of statutory fees for the purpose of bringing them within the jurisdiction of the Consumer Forums, observed that tax and cess are a form of exactions which are common burden or for specific purpose respectively and does not involve the element of quid pro quo and therefore, are not amenable to the jurisdiction of Consumer Fora however, the statutory fees which are exacted in lieu of a service rendered, would be amenable to the jurisdiction of Consumer Forums.