REPORTABLE    

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1866 OF 2002

LUDHIANA IMPROVEMENT TRUST, LUDHIANA & ANR. … APPELLANTS

VERSUS

SHAKTI CO-OPERATIVE HOUSE BUILDING SOCIETY LTD. … RESPONDENT

J U D G M E N T

D.K. JAIN, J.

This  appeal  by  special  leave  is  directed  against  the  order

dated 22nd March, 2001 passed by the National Consumer Disputes

Redressal Commission, New Delhi, hereinafter referred to as “the

Commission” whereby the Revision Petition No. 705 of 1999 filed by

the appellants against the decision of the State Consumer Disputes

Redressal Commission, Punjab (for short “the State Commission”)

directing delivery of possession of a plot of land to the respondent

has been dismissed.  

2. Material facts, giving rise to the appeal are as under:

3. In the year 1970, the appellant—Ludhiana Improvement Trust,

Ludhiana, hereinafter referred to as “the Trust”, formulated a

scheme, styled as Model Town Extension Scheme Part II. For

the said purpose, proceedings for acquisition of land in certain

villages were initiated. Lands owned by several co-operative

housing  societies  were  also  notified  as  part  of  the  land

proposed to be acquired. However, before the announcement

of  awards  in  respect  of  the  lands  to  be  acquired,

representations were made by several societies to the Trust

as  also to  the Government  seeking exemption  of  their  land

from acquisition. The Trust acceded to the request by some of

the societies and recommended to the Government that the

land of these societies be exempted from acquisition, which

was accepted  by the  Government.  The respondent  Society

was  also  amongst  those  societies  who  were  granted

exemption. Notwithstanding making of the awards, the Trust

neither  took  possession  of  the  land  belonging  to  the

respondent nor paid any compensation. Subsequently in the

year 1981-82, the Government also issued a notification under

Section  56 of  the  Punjab Town Improvement  Act,  1922 for

abandonment of proposal for acquisition of lands belonging to

these  societies,  the respondent  Society being one of  them.

2

The  exemption  was  on  certain  terms  and  conditions  with

which we are not directly concerned in this appeal.

4. It  appears  that  after  the  issue  of  the  said  exemption

notification,  the  respondent  Society  requested  the  Trust  to

allot plots to their members as large portions of their land were

under encroachment.  Apparently,  the request  of the Society

was not legally correct inasmuch as due to the exemption, the

Society  remained  owner  of  their  land  and  the  Trust  was

neither  competent  nor  under  any obligation  to  allot  plots  to

them.  Thus,  the  Trust  did  not  accept  the  request  of  the

Society  for allotment  of  plots  and till  the year 1990 nothing

tangible seems to have happened. However, when one B.D.

Aggarwal took over as Chairman of  the Improvement Trust,

the  process  for  allotting  plots  to  certain  societies  suddenly

gained momentum. So much so, the land of one Society was

exchanged with the land of  another  Society and plots  were

allotted even on the land belonging to the Trust. In the case of

the  respondent  Society,  as  per  condition  of  exemption,  the

Society  could  carve  out  plots  in  area  admeasuring  upto

23,000 sq. yds. but the Trust carved out 154 plots in 23,800

sq.  yds.  Out  of  these,  123 plots  were given to  the  Society

including 25 plots in the land belonging to other societies and

3

3 plots  on Trust’s  land.  It  seems that  the  Society  was not

satisfied with the said allotment,  inasmuch as its stand was

that the Trust, through its Chairman had taken over the land of

the Society by acquisition and had promised to allot about 151

plots. Out of 151 plots the possession of one plot bearing No.

32, measuring 150 sq. yds situated in Model Town Extension

Part II Block C, Dugri Road, Ludhiana, was not given by the

Trust to the Society on the ground that a suit in respect of the

private  land,  which  was  subject  matter  of  Plot  No.  32  had

been filed. The said civil suit was decreed and land on which

Plot No. 32 had been carved out was held to be belonging to

one Gurcharan Singh. After the decree, the Society requested

the appellant to allot alternative plot to them in lieu of Plot No.

32.  

5. Having failed to get any response from the appellant, on 1st

March,  1996,  the  Society,  through  its  secretary  filed  a

complaint  before  the  District  Consumer  Disputes  Redressal

Forum  (“District  Forum”  for  short)  under  the  Consumer

Protection Act, 1986 (for short “the Act”) for issuing a direction

to the appellant to allot an alternative plot in lieu of Plot No.

32.

4

6. At  this  juncture,  it  is  pertinent  to  note  that  when  the

irregularities committed by the former Chairman and Executive

Officer  of  the Trust  came to the notice of  the Government,

vide  his  order  dated  19th December,  1996,  the  Principal

Secretary,  Local  Government  directed  the  Director,  Local

Government to conduct an inquiry into the affairs of the Trust.

The enquiry officer  found grave irregularities  in  allotment  of

plots  by  the  said  two  office  bearers  of  the  appellant  in

connivance with the management  of the societies.  Some of

the irregularities listed by the enquiry officer, and which have

significant bearing on the present appeal are extracted below.

“Firstly, the Trust was under no obligation to allot plots to  the  societies  whose  land  has  been  exempted because after the abandonment of acquisition u/s 56 (1), the societies continued to be the owners of their land.  The notification  of  exemption no where states that  the Trust  will  allot  plots  to the societies  whose land has been exempted. The only obligation placed on the Trust is to ensure that the colony of the Society comes up in consonance with the over-all lay out plan of the scheme. This colony is to come up in Society’s own land. Therefore, there was no need for the Trust to allot plots to the societies. The fact that the Trust has  deliberately  taken  upon  itself  the  burden  of allotting plots to the various societies when it had no obligation to do so clearly shows that all this had been done with an ulterior motive.

Secondly,  the  Trust  had  no  legal  competence  to exchange  the  land  of  one  Society  with  the  land  of another because due to the exemption it was not the owner of this land. However, by allotting one Society exempted land to  other  societies,  the Trust  officials

5

have  made  illegal  allotments.  This  situation  would have  not  arisen,  if  all  the  plots  of  the  Society  had been  carved  out  in  its  own  land  and  given  to  the Society. In that case, the Court would not have even entertained  the  claim  of  the  Society  that  the  Trust should give alternative plots. Now the trust will have to fight tough legal battles to counter the illegal acts of the Trust officials.

Thirdly, there was no logical reason for allotting plots to any Society in the Trust land. Instead of getting the lay out plan revised Shri B.D. Aggarwal and Shri K.R. Garg, E.O. allotted 54 plots measuring 8000 sq. yds. falling in Trust land to some of the Co-op. Societies without  taking any sale money. This gifting  away of valuable Trust land has caused heavy financial loss to the Trust.

Fourthly, the Trust officials did not bother to recover full development charges from some of the societies as  per  letter  of  allotment.  Nor  did  they  bother  to execute any agreement for fulfillment of condition laid down for exemption and for vesting of the open land of the Society in the trust as per letter of allotment. In the absence of this agreement some of the societies are exploiting the situation and in some cases have even sold off land which was meant to be kept vacant for parks etc.

Fifthly,  from the  perusal  of  the  affidavit  filed  by the members of the societies it appears that many of the members  of  the  societies  are  bogus  and  further enquiry  in  to  this  aspect  will  also  reveal  grave irregularities.”

7. It seems that thereafter criminal cases were registered against

the said B.D. Aggarwal,  K.R. Garg on the basis of the said

report.  The District  Forum, vide order dated 30th July, 1997,

allowed the complaint  and directed the appellant to allot  an

6

alternative plot in an equally developed scheme within three

months and pay cost of    Rs. 2000.

8. Aggrieved by the said order, the appellant went in appeal to

the  State  Commission.  The  State  Commission  vide  order

dated 30th July, 1997 held that though the Society was given

the exemption,  the area was developed by the Trust  and it

was then offered to the Society in the form of possession of

151 residential plots of 150 sq. yds. each, and therefore, not

handing over a plot in lieu of Plot No.32 amounted to “unfair

trade practice”  on the part  of the appellant  Trust.  Thus,  the

decision of the District Forum was affirmed. As noted earlier,

the  National  Commission  has  dismissed  appellant’s  petition

on the ground that since both the fora below  have given their

verdict  in favour of the respondent there was no ground for

interference.  Being  aggrieved,  the  appellant-Trust  and  its

Chairman are before us in this appeal.

9. Mr.  Pradeep  Gupta,  learned  counsel  appearing  for  the

appellants  strenuously urged that  the National  Commission,

as  also  the  State  and  District  Forums  erred  in  relying  on

appellant’s  letter  dated 23rd October,  1990,  whereunder 151

plots  were purportedly  offered  to  the respondent  for  further

allotment  to  its  bona  fide  members.  The  said  offer  was

7

pursuant to and in furtherance of the Government Notification

No. 747, dated 7th October, 1982 which was adopted by the

Trust  vide  Resolution  No.  594,  dated  29th August,  1990

without  appreciating  that  the  said  resolution  had  been

specifically  rescinded  by the  State  Government  vide Memo

dated  29th May,  1997.  It  was submitted  that  even if  it  was

assumed that the appellant had devised a plan to develop the

land belonging to the societies, yet it  could not be said that

there was any “unfair  trade practice”  by the Trust  because,

admittedly,  the  Society  had  itself  failed  to  comply  with  the

terms and conditions stipulated in appellant’s letter dated 23rd

October,  1990.  It  was pleaded that  neither  full  development

charges were paid nor the requisite documents were executed

by the  Society  or  its  members.  It  was also  contended  that

since a complicated question of fact was involved, this could

be  adjudicated  only  in  a  Civil  Suit  and  not  in  summary

proceedings before the three Consumer fora.

10. Per  contra,  Mr.  Jagjit  Singh  Chhabra,  learned  counsel

appearing for  the respondent  supported  the decision by the

District  Forum,  as  affirmed  by  the  State  and  National

Commissions. It was contended that having offered plots vide

letter dated 23rd October, 1990, the appellant could not resile

8

from its obligation under the said communication and having

allotted Plot No. 32, it was bound to deliver its possession or

of some other plot in lieu thereof, notwithstanding annulment

of  Resolution No. 594, dated 29th August,  1990 by virtue of

letter dated 29th May, 1997. Lastly, it was argued that all the

three fora having recorded concurrent findings in favour of the

respondent, this Court should be loath to interfere therewith.

11. Thus,  the  short  question  to  be  examined  is  whether  non-

delivery of a plot in lieu of Plot No. 32 by the appellant to the

respondent  amounts  to  “unfair  trade  practice”  within  the

meaning of Section 2(r) of the Act?

12. Prior  to  the  substitution  of  Clause  (r)  in  sub-Section  (1)  of

Section 2 of the Act with retrospective effect from 18th June,

1993,  there  was  no  separate  definition  of  the  term  “unfair

trade practice” and the said term was given the same meaning

as  in  Section  36A of  the  Monopolies  and Restrictive Trade

Practices Act, 1969 (for short “the MRTP Act”). But now after

the  said  amendment,  the  definition  of  the  term  has  been

specifically provided in Section 2(r), although the definition is

practically  verbatim reproduction  of  the definition  in  Section

36A of the MRTP Act. The basic ingredients of “unfair trade

practice”  are:  (i)  it  must  be  a  trade  practice;  (ii)  the  trade

9

practice must be employed for the purpose of promoting the

sale, use or supply of any goods or for the provision of any

service; and (iii) the trade practice adopts any unfair method

or unfair or deceptive practice including any of the practices

enumerated in clauses (1)  to (6)  of  Section 2(r)  of  the Act.

Therefore, any trade practice which is adopted for the purpose

of promoting the sale, use or supply of any goods or for the

provision of  any service,  by adopting any unfair  method  or

unfair or deceptive practice has to be treated as “unfair trade

practice” for which an action under the provisions of the Act

would lie, provided, the complainant is able to establish that

he is a consumer within the meaning of Section 2(1)(d) of the

Act.

13. The  scope  of  the  term  “unfair  trade  practice”  as  used  in

Section 36A of the MRTP Act was considered by this Court in

M/s Lakhanpal National Ltd. Vs. M.R.T.P. Commission &

Anr.1 and it was observed thus:

“When a problem arises as to whether a particular act can be condemned as an unfair trade practice or not, the key to the solution would be to examine whether it contains a false statement and is misleading and further what is the effect of such a representation made by the manufacturer on the common man? Does it lead a reasonable person in the position of a buyer to a wrong conclusion? The issue can  not  be  resolved  by  merely  examining  whether  the representation is correct or incorrect in the literal sense. A

1  (1989) 3 SCC 251

1

representation  containing a statement  apparently correct in the technical sense may have the effect of misleading the buyer by using tricky language. Similarly a statement, which may be inaccurate in the technical literal sense can, convey the truth  and sometimes more effectively than a literally  correct  statement.  It  is,  therefore,  necessary  to examine  whether  the  representation,  complained  of, contains  the  element  of  misleading  the  buyer.  Does  a reasonable  man  on  reading  the  advertisement  form  a belief  different  from what  the  truth  is?  The position  will have  to  be  viewed  with  objectivity,  in  an  impersonal manner”.

14. At this juncture, we may also note that though a mild attempt

was made by the learned counsel for the appellant to argue

that  the  respondent  Society  could  not  be  treated  as  a

“consumer” within the meaning of Section 2(1)(d) but when his

attention was invited to the exhaustive definition of the word

‘consumer’  in  the  said  Section,  particularly,  in  clause  (ii)

thereof,  learned counsel  did  not  press  the  point.  Moreover,

this  issue  having  not  been  raised  before  any  of  the  fora,

having  regard  to  the  facts  of  the  present  case,  we do  not

propose to deal with the question.

15. Having  examined  the  matter  in  the  light  of  the  factual

scenario,  noted above, we are of the opinion that answer to

the question formulated above has to be in the negative.

16. It is true that the Consumer Protection Act being a benevolent

piece of  legislation  intended to  protect  the  consumers  from

1

exploitation,  the  provisions  thereof  should  receive  a  liberal

construction;  technicalities  should  be  eschewed  and

grievances  of  the  consumers  deserve  to  be  redressed

expeditiously. Yet, the power exercised by the three consumer

fora for redressal of consumer complaints being quasi-judicial

in nature, they are required to take into consideration all the

relevant factors and  the material brought on record by both

the parties. The averments in the complaint by the consumer

cannot  be taken as a Gospel  truth.  To support  a finding of

“unfair trade practice”, there has to be some cogent material

before  the  Commission  and  any  inferential  finding  is  not

sufficient  to  attract  Section  2(r)  of  the  Act.  Of  course,  the

burden of  proof,  the  nature  of  proof  and adequacy  thereof

depends upon the facts and circumstances of each case.

17. In the present case, in its brief order, the National Commission

has held that since both the fora have upheld the contention of

the  respondent  Society  to  the  effect  that  it  is  entitled  to

allotment of alternative plot in lieu of Plot No. 32 in the same

scheme,  there  is  no  ground  to  interfere  in  exercise  of  its

jurisdiction under Section 21(b) of the Act.  Unfortunately, we

have  not  been  able  to  decipher  from  the  order  of  the

Commission and for that matter even from the orders of the

1

District Forum and State Commission, any reason in support

of the conclusion that the appellant was obliged to deliver to

the respondent possession of Plot No. 32 or an alternative plot

in lieu thereof. It is manifest from the orders of the State and

District  Forum  that  both  the  fora  have  proceeded  on  the

assumption  that  there  was an obligation on the part  of  the

appellant  to  develop  and  deliver  possession  of  151  plots,

including Plot  No. 32,  to the respondent.  Their presumption

was based on letter dated 23rd October, 1990 from appellant

to  the respondent,  communicating  delivery of  possession of

151  plots  which  included  Plot  No.  32  also.  They  failed  to

appreciate that on passing of order by the State Government

under Section 56 of the Punjab Town Improvement Act, 1922,

the  acquisition  proceedings  in  respect  of  respondent’s  land

stood abandoned and it  reverted back to the respondent on

fulfilment  of  certain  conditions,  enumerated  in  appellant’s

letter  dated  23rd October,  1990.  It  is  amply  clear  that  the

exemption notification did not contemplate that the appellant

trust  was  to  allot  plots  to  the  members  of  the  respondent

Society,  whose  land  had  been  exempted  from  acquisition

under  the  said  notification.  The  only  obligation  on  the

appellant  was  to  ensure  that  the  colony  of  the  respondent

1

comes up in consonance with the overall  layout plan of the

scheme.  In  furtherance  of  that  object,  it  seems  that  the

appellant formulated the scheme for development of the land;

perhaps developed it and vide letter dated 23rd October, 1990,

delivered  the  plots  to  the  respondent  on  fulfilling  certain

conditions including payment of development charges. Apart

from the fact that Resolution No. 594, dated 29th August, 1990

stood annulled vide order dated 29th May, 1997 passed by the

Department of Local Government, Government of Punjab, the

scheme for development was scrapped, no evidence was led

by the respondent to show that all the conditions stipulated in

letter dated 23rd October, 1990 had been complied with. As a

matter of fact, it had been highlighted in the report submitted

by  the  enquiry  officer  that  the  appellant  was  under  no

obligation to allot plots to the societies whose land had been

exempted  because  after  the  abandonment  of  acquisition  in

terms of Section 56(1) of the Punjab Town Improvement Act,

1922 they had failed to recover full development charges from

some of the societies and even the members of the societies

also appeared to be bogus. Furthermore, in view of the Civil

Suit in respect of the land out of which Plot No. 32 had been

carved out having been decreed in favour of the landowner, it

1

was clear  that  the said piece of  land did not  belong to the

Society, which could be placed at the disposal of the appellant

for development and yet, it seems that in connivance with the

officials of the appellant, they succeeded in getting it included

in their list of allotted plots with an ulterior motive to get a plot

in lieu thereof. We are convinced that all these were relevant

factors  which have been ignored  by all  the three fora  and,

therefore, their finding that the non-delivery of Plot No. 32 or

an alternative  plot  in  lieu  thereof  amounted to  “unfair  trade

practice”  on  the  part  of  the  appellant  Trust,  cannot  be

sustained.  It  is  evident  that  even  the  implication  of

abandonment  of  acquisition  under  Section  56  and  the

annulment of Resolution No. 594, dated 29th August, 1990 by

the State Government have not been taken into consideration

by any of the three fora. In our judgment, there is no material

on record to return a finding that the appellant had indulged in

“unfair trade practice”.

18. For  the  foregoing  reasons,  the  appeal  is  allowed  and  the

impugned  order  passed  by  the  Commission  ,  affirming  the

finding of the State Commission and the District Forum that

the appellant had indulged in “unfair trade practice”, attracting

1

Section 2(r) of the Act, is set aside with costs, quantified at

Rs.20,000/-.

…………………………………………J. (D.K. JAIN)

…………………………………………J.  (R.M. LODHA)

NEW DELHI, APRIL 13, 2009.

1