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Association of persons can also file consumer complaints

Source : BUSINESS_STANDARD
Last Updated: Wed, Oct 03, 2012 19:40 hrs

Ansal Properties and Industries floated a Pushpanjali Farms Scheme in 1979. It envisaged development of individual farms on which Ansals would build farmhouses for the respective purchasers. The original scheme comprised of 189 farms of 1.5 acres each, which was later modified to 78 farms of 2.5 acres each. The project also included development of infrastructure like roads, water supply, electrification, sewage disposal and so on. A special attraction was the provision of a country club with facilities of swimming pool, tennis and badminton courts, sauna and steam baths. The scheme also took care of maintenance of common areas and provision of common facilities by a company called Star Estate Management.

As there was abnormal delay in execution of the development works and construction of club house, the farm owners formed an association to take up these issues. The common grievances were that the internal roads neither had the required width and no drainage facility; that the roads were not handed over to the Municipal Corporation of Delhi, Ansals did not have all the ownership documents, tube-wells and electricity connection were not provided and the country club was not constructed. Meetings with the Ansals proved futile, in 1995 the association filed a complaint before the National Commission.

Ansals opposed the complaint, contending that it was belated. The sale deeds which had been executed and registered during the period 1983-1988 did not contain any provision for the country club. The delay was attributed to change in the municipal bye-law which revised the minimum size for farmhouse plots from 1.5 acres to 2.5 acres. Ansals claimed that the plans for the internal road had to be revised because of the change in the municipal bye-laws; that drainage had been provided but the condition had deteriorated because of non-payment of maintenance charges by the farm owners. The country club was not constructed as it was economically unviable due to the low occupancy of the farmhouses and their unwillingness to pay the maintenance charges. As an alternative, an offer was made to provide membership of Chancellor Club which was 3 kms away. Other technical and legal objections were also raised, challenging the right of the association to represent the individual farm owners.

The Commission observed that the complaint filed by the association was accompanied by an application signed by some of the farm owners stating that the all of them had a common interest as they had suffered due to identical deficiencies in service, for which the evidence would be identical. Hence, permission was sought to file the complaint for and on behalf and for the benefit of all the farm owners. Going by the definition of ‘person’ under the Consumer Protection Act (CPA), as interpreted by the Supreme Court, the Commission held that an association of persons, whether registered or not, would be entitled to file a consumer complaint, when the cause of action is common and the interest of the persons they represent are the same. The Commission ruled that the Association was legally entitled to filed the complaint and be heard on behalf of all the farm owners.

The issue of limitation regarding the construction of the Country Club house was also considered. Even though this issue had been taken up after 15 years, the Commission noted that at no point of time had Ansals ever communicated their decision not to construct the Country Club. The unilateral decision not to construct the Country Club was communicated on 19.3.1995, and the alternative offer of providing membership of Chancellor Club was informed by a letter dated June 8, 1996. As the agreement had not stipulated the time period for construction of the Country Club, the Commission ruled that limitation would begin to run from the date from September 19,1995 when refusal to construct the Country Club was first communicated. Hence the complaint filed in 1995 was held to be in time.

The delay in the developmental works due to change in municipal bye-laws was found to be satisfactorily explained. The Commission observed that Ansals were try to confuse the issue of non-construction of the Country Club by linking it to non-payment of maintenance charges, which were separate and distinct issues. It held that the defence on the Country Club being economic unviable was not permissible in view of the commitment having been given to construct it.

Vinay Kumar, delivering the judgment on behalf of the Bench, held Ansals to be guilty of deficiency in service as well as engaging in unfair trade practice. It observed that consumer forums have a duty to ensure that service providers do not benefit by reneging on their commitments, thereby causing loss to consumer. The Commission directed Ansals to pay a compensation of Rs 25,000 to each farm purchaser. In addition, it imposed Rs 1 crore as punitive damages to be paid by Ansals to the Consumer Welfare Fund. The Association was awarded costs of Rs 5 lakh. The time for compliance of the order was three months, and amounts would carry 10 per cent interest in case of delay.

It is necessary of other consumer fora to follow suit and impose punitive damages which alone will serve as a deterrent to others from adopting similar malpractices.


The writer is a consumer activist




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