1                          Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3911 of 2003

Bihar School Examination Board .. Appellant (s)

-versus-

Suresh Prasad Sinha ..       Respondent (s)

WITH

C.A. Nos. 676/2006, C.A. No. 1739/2006, C.A. No. 1764/2006, C.A. No.  2236/2006,  C.A.  No.  2476/2006,  C.A.  No.  3718/2005  &  C.A  No.6032/2009 @ SLP(C) No. 2844/2006

JUDGMENT

MARKANDEY KATJU, J.

This appeal by special leave has been filed against the impugned  

judgment  and  order  dated  24.10.2002  in  R.P.  No.  2167/02  of  the  

National Consumers Disputes Redressal Commission, New Delhi.

                                                                                                                                     2 2. Heard learned counsel for the parties and perused the record.

3. It appears that a complaint was filed before the District Consumer  

Forum, Hazaribagh  under  Section  11  of  the  Consumer  Protection  Act  

1986 (hereinafter referred to as the Act).  The complaint was filed by the  

respondent,  Suresh  Prasad  Sinha  on  behalf  of  his  minor  son  Rajesh  

Kumar.   In  the  said  complaint  it  was  mentioned  that  Rajesh  Kumar  

appeared in the Bihar Secondary School Examination in 1998.   Rajesh  

Kumar and another student  Sunil  Kumar Singh were allotted the same  

Roll  No.  496.   Hence,  the  Centre  Superintendent  allotted  to  Rajesh  

Kumar Roll No.496A and this was communicated to the Board office at  

Patna.  The result of Rajesh Kumar was not published in spite of several  

letters  written  by  him  and  hence  he  had  to  re-appear  in  the  Board  

Examination the following year, and thus he had to suffer a loss of one  

year allegedly due to the fault  of the Bihar School Examination Board  

(hereinafter referred to as the ‘Board’).  The result of Roll No.496A was  

not declared and it is alleged that this was because Rajesh Kumar had  

been  given  another  Roll  number.  Hence  the  complainant  prayed  for  

compensation from the District Consumer Forum.   

4. In its written statement in reply the Board stated that the Consumer  

Forum had no jurisdiction in the matter as the complainant  was not  a

                                                                                                                                     3 consumer, as defined in Section 2(1)(d) of the Act.  It was also alleged  

that on the application of the examinee the strong room was searched and  

it  was  found  that  the  serial  number  of  his  answer  book  of  Advanced  

Maths  did  not  tally  with  the  serial  number  in  the  attendance  sheet.  

While  the  answer  book  of  the  student  found  in  the  strong  room was  

bearing serial  number 148774, the attendance sheet  serial  number was  

148744.  Hence, the result was not published.

5. The District Consumer Forum found that the complainant had filed  

the Registration Receipt as well as the Admit Card, and the case of the  

complainant was admitted so far as appearance of Rajesh Kumar in the  

examination was concerned.  It was held that if the serial number of the  

answer book did not tally with that which was noted in the attendance-

sheet,  that  has  to  be  explained  by the  Board  and  not  by  the  student.  

Hence the District Consumer Forum allowed the complaint and ordered  

the Board to pay compensation of Rs.12,000/- with an interest of 12% to  

the complainant.

6. Against the said order the Board filed an appeal before the State  

Consumer Redressal Commission under Section 14 of the Act,which was  

dismissed on 9.9.2002.  In the order dated 9.9.2002, it  has been again  

stated in para 6 thereof that one of the contentions raised by the Board

                                                                                                                                     4 was that the complainant is not a consumer within the meaning of section  

2(1)(d) of the Act.  It seems that that plea was not, in fact, decided by the  

State Consumer Commission.

7. The appellant Board then filed a further appeal before the National  

Consumer  Commission  under  Section  19  of  the  Act,  which  has  been  

dismissed by the impugned judgment dated 24.10.2002.  Against the said  

impugned judgment and order this appeal has been filed by the Board  

under Section 23 of the Act.

8. The  question  that  arises  for  our  consideration  is  whether  a  

statutory School  Examination  Board  comes within  the  purview of  the  

Consumer Protection Act. There is some confusion and divergence in the  

decisions of the National Commission on this issue. In some cases, it has  

been held that Examination Boards do not come within the purview of  

the  Act.  In  some  other  cases,  the  Commission  has  held  that  though  

holding of examinations is a statutory function, issue of mark-sheets and  

certificates  etc.,  is  an  administrative  function,  and  therefore,  the  

Examination Boards are amenable to the jurisdiction of consumer fora if  

there  is  negligence  amounting  to  deficiency  in  service,  in  such  

consequential administrative functions.  

                                                                                                                                     5  9. The definitions of the terms ‘service’ and ‘deficiency’ in clauses  

(o)  and (g)  of  Section  2  of  the  Act  which  are  relevant,  are  extracted  

below:  

“Section 2(o): ‘Service’ means service of any description which is  made available to potential users and includes, but not limited to, the  provisions  of  facilities  in  connection  with  banking,  financing,  insurance, transport, processing, supply of electrical or other energy,  board  or  lodging  or  both,  housing  construction,  entertainment,  amusement or the purveying of news or other information, but does  not include the rendering of any service free of charge or under a  contract of personal service;  

Section  2(g):  ‘Deficiency’  means  any  fault,  imperfection,  shortcoming  or  inadequacy  in  the  quality,  nature  and  manner  of  performance which is required to be maintained by or under any law  for the time being in force or has been undertaken to be performed by  a person in pursuance of a contract or otherwise in relation to any  service.”

According to the definition of 'consumer' in Section 2(d) of the Act, a  

person  who  hires  or  avails  of  any  services  for  a  consideration,  is  a  

consumer.  The  following  category  of  service-availors  will  not  be  

consumers:  (i)  persons  who  avail  any  service  for  any  commercial  

purpose; (ii) persons who avail  any free service; and (iii)  persons who  

avail any service under any contract of service. A consumer is entitled to  

file  a  complaint  under  the  Act  if  there  is  any  deficiency  in  service  

provided or rendered by the service-provider.

                                                                                                                                     6 10. The  Board  is  a  statutory  authority  established  under  the  Bihar  

School Examination Board Act, 1952. The function of the Board is to  

conduct  school  examinations.  This  statutory function  involves  holding  

periodical  examinations,  evaluating  the  answer  scripts,  declaring  the  

results  and issuing  certificates.   The process  of  holding  examinations,  

evaluating  answer scripts,  declaring results  and issuing  certificates  are  

different stages of a single statutory non-commercial function. It is not  

possible  to  divide  this  function  as  partly  statutory  and  partly  

administrative. When the Examination Board conducts an examination in  

discharge of its statutory function, it does not offer its “services” to any  

candidate.  Nor  does  a  student  who  participates  in  the  examination  

conducted by the Board, hires or avails of any service from the Board for  

a consideration. On the other hand, a candidate who participates in the  

examination conducted by the Board, is a person who has undergone a  

course of study and who requests the Board to test him as to whether he  

has  imbibed  sufficient  knowledge  to  be  fit  to  be  declared  as  having  

successfully completed the said course of education; and if so, determine  

his  position  or  rank  or  competence  vis-à-vis  other  examinees.  The  

process  is  not  therefore  availment  of  a  service  by  a  student,  but  

participation  in  a  general  examination  conducted  by  the  Board  to  

ascertain  whether  he  is  eligible  and  fit  to  be  considered  as  having

                                                                                                                                     7 successfully completed the secondary education course. The examination  

fee  paid  by the  student  is  not  the  consideration  for  availment  of  any  

service,  but  the  charge  paid  for  the  privilege  of  participation  in  the  

examination.

11. The object  of  the  Act is  to  cover  in its  net,  services  offered or  

rendered for a consideration. Any service rendered for a consideration is  

presumed to  be a commercial  activity  in  its  broadest  sense  (including  

professional activity or quasi-commercial activity). But the Act does not  

intended to cover discharge of a statutory function of examining whether  

a  candidate  is  fit  to  be  declared  as  having  successfully  completed  a  

course by passing the examination. The fact that in the course of conduct  

of  the  examination,  or  evaluation  of  answer-scripts,  or  furnishing  of  

mark-sheets or certificates, there may be some negligence, omission or  

deficiency,  does  not  convert  the  Board  into  a  service-provider  for  a  

consideration, nor convert the examinee into a consumer who can make a  

complaint under the Act. We are clearly of the view that the Board is not  

a  ‘service  provider’  and a  student  who takes  an examination  is  not  a  

‘consumer’  and  consequently,  complaint  under  the  Act  will  not  be  

maintainable against the Board.  

                                                                                                                                     8 12. The  learned  counsel  for  the  respondent  placed  considerable  

reliance on the decision of this Court in Lucknow Development Authority   

vs. M. K. Gupta [1994 (1) SCC 243] to contend that a statutory authority  

that  offers  any  kind  of  service  for  which  a  fee  is  charged,  will  be  

amenable to the jurisdiction of the consumer fora.  He relied upon the  

following passages from paras 4 and 6 in support of his contention :

“In absence of any indication, expressed or implied there is no reason  to hold that authorities created by the Statute are beyond purview of  the  Act…..  The  legislative  intention  is  thus  clear  to  protect  a  consumer  against  services  rendered even by statutory bodies.  The  test, therefore, is not if a person against whom complaint is made is a  statutory  body  but  whether  the  nature  of  the  duty  and  function   performed by it is service or even facility”. (Vide para 4).  

…….the entire purpose of widening the definition (of ‘service’ under  section 2(o) of the Act) is to include in it not only day to day buying  and selling activity undertaken by a  common  man but  even such  activities  which  are  otherwise  not  commercial in  nature  yet  they  partake  of  a  character  in  which  some benefit  is  conferred  on  the  consumer”. (vide para 6)

13. Let us examine whether the said decision has any relevance. To  

understand a decision correctly it is necessary to first know the facts of  

the case.  The facts in  Lucknow Development Authority  were that even  

after  the  payment of  the  entire  amount  by the  respondent  for  the  flat  

which was allotted to him, possession was not given to him and the work  

of  constructing  the  flat  was  still  incomplete,  although  the  time  for  

handing over the  possession  had expired.   In these circumstances,  the  

National  Consumer  Commission  ordered  possession  of  the  flat  to  be

                                                                                                                                     9 handed over without delay after completing the construction work and it  

further directed payment of 12% simple interest on the deposit made by  

the respondent.  The question that was considered was whether any act or  

omission by the Development Authority relating to housing activity such  

as delay in delivery of  possession  of the houses  to the  allottees,  non-

completion of the flat  within the stipulated time or defective or faulty  

construction  etc.  will  come  within  the  purview  of  the  Act.   The  

submission before this Court in that case was that Statutory Development  

Authorities do not come within the purview of the Act. While negativing  

the  said  contention,  this  Court  observed  that  activities  which  are  not  

otherwise commercial, but professional or service oriented in nature will  

come within the purview of the definition of ‘service’ in Section 2(o) of  

the Act. But the said observation is of no relevance. The Board is not  

carrying on any commercial, professional or service-oriented activity. No  

‘benefit’ is conferred nor any ‘facility’ provided by the Board for any  

consideration. Therefore, the said decision is inapplicable.  

14. The  courts  should  guard  against  the  danger  of  mechanical  

application of an observation without ascertaining the context in which it  

was  made. In  C.I.T  vs.  Sun Engg.  Works  (P)  Ltd. - 1992(4) SCC 363  

(vide para 39) this Court observed :

                                                                                                                                     10

“It  is  neither  desirable  nor  permissible  to  pick  out  a  word  or  a  sentence from the judgment of this Court, divorced from the context  of the question under consideration and treat it to be complete `law’  declared by this Court.  The judgment must be read as a whole and  the observations from the judgment have to be considered in the light  of the questions which were before this Court.  A decision of this  Court  takes its  colour from the  questions  involved in  the  case  in  which it is rendered and while applying the decision to a later case,  the courts must carefully try to ascertain the true principle laid down  by the decision of this Court and not to pick out words or sentences  from the judgment, divorced from the context of the questions under  consideration by this Court, to support their reasonings.”       

It is also necessary to keep in mind the following principles laid down in  

Government of Karnataka & Ors. vs. Gowramma & Ors. (AIR 2008 SC  

863) with reference to precedential value of decisions:

“Reliance on the decision without looking into the factual background  of the case before it is clearly impermissible. A decision is a precedent  on  its  own  facts.  Each  case  presents  its  own  features.  It  is  not  everything said by a Judge while giving a judgment that constitutes a  precedent. The only thing in a Judge’s decision binding a party is the  principle  upon  which  the  case  is  decided  and  for  this  reason  it  is  important to analyse a decision and isolate from it the ratio decidendi.  According  to  the  well-settled  theory  of  precedents,  every  decision  contains three basic postulates (i) findings of material facts, direct and  inferential.  An inferential finding of facts is the inference which the  Judge draws from the direct, or perceptible facts; (ii) statements of the  principles  of  law applicable  to  the  legal  problems disclosed  by the  facts; and (iii) judgment based on the combined effect of the above. A  decision is an authority for what it actually decides.  What is of the  essence  in  a  decision  is  its  ratio  and  not  every  observation  found  therein nor what logically flows from the various observations made in  the judgment.  The enunciation of the reason or principle on which a  question  before  a  Court  has  been  decided  is  alone  binding  as  a  precedent.  (See: State of Orissa v. Sudhansu Sekhar Misra and Ors.  (AIR 1968 SC 647) and Union of India and Ors. v. Dhanwanti Devi  and Ors. (1996 (6) SCC 44).  A case is a precedent and binding for  what it explicitly decides and no more.  The words used by Judges in  their judgments are not to be read as if they are words in an Act of  Parliament.  In  Quinn  v.  Leathem  (1901)  AC  495  (H.L.),  Earl  of  Halsbury LC observed that every judgment must be read as applicable

                                                                                                                                     11 to  the  particular  facts  proved  or  assumed  to  be  proved,  since  the  generality of the expressions which are found there are not intended to  be  exposition  of  the  whole  law but  governed  and  qualified  by the  particular facts of the case in which such expressions are found and a  case is only an authority for what it actually decides.

Courts should not place reliance on decisions without discussing as to  how the factual situation fits in with the fact situation of the decision  on which reliance is placed. Observations of Courts are neither to be  read as Euclid’s theorems nor as provisions of the statute and that too  taken out  of  their  context.  These  observations  must  be  read in  the  context in which they appear to have been stated. Judgments of Courts  are not  to be construed as statutes.  To interpret  words,  phrases and  provisions of a statute, it may become necessary for judges to embark  into lengthy discussions but the discussion is meant to explain and not  to  define.  Judges interpret  statutes,  they do not  interpret  judgments.  They interpret words of statutes; their words are not to be interpreted as  statutes.  

The  following  words  of  Lord  Denning  in  the  matter  of  applying  precedents have become locus classicus:

Each  case  depends  on  its  own  facts  and  a  close  similarity between one case and another is not enough  because even a single significant detail may alter the  entire  aspect,  in  deciding  such  cases.   One  should  avoid  the  temptation  to  decide  cases  (as  said  by  Cardozo) by matching the colour of one case against  the colour of another. To decide therefore, on which  side of the line a case falls, the broad resemblance to  another case is not at all decisive.

*** *** *** Precedent should be followed only so far as it marks  the  path of justice, but you must  cut the   dead wood  and trim off  the  side  branches else you will  find  yourself lost in thickets and branches. My plea is to  keep the path to justice clear  of  obstructions  which  could impede it.”   

(emphasis supplied)

15. In  Sarva  Shramik  Sanghatana  (K.V),  Mumbai  vs.  State  of   

Maharashtra & Ors. -  AIR  2008  SC 946, this Court cited the following

                                                                                                                                     12 passage from Quinn v. Leathem [1901 AC 495] with approval :

"Now before discussing the case of  Allen v. Flood  (1898) AC 1 and what was decided therein, there  are two  observations of a general character which  I wish to make, and one is to repeat what I have  very often said before, that every judgment must  be read as applicable to the particular facts proved,  or assumed to be proved,  since the generality of  the expressions which may be found there are not  intended to be expositions of the whole law, but  are governed and qualified by the particular  facts  of  the case in which such expressions  are  to  be  found. The other  is that a case is only an authority  for  what it actually decides.  I entirely deny that it  can be quoted for a proposition that may seem to  follow  logically  from  it.   Such  a  mode  of  reasoning  assumes  that  the  law  is  necessarily  a  logical  Code,  whereas  every  lawyer  must  acknowledge that the law is not always logical at  all."

16. In Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd - (2003)  

2 SCC 111 (vide paragraph 59), this Court observed :

"It is well settled that a little difference in facts or additional facts  may make a lot of difference in the precedential value of a decision."

17. As  held  in  Bharat  Petroleum  Corporation  Ltd.  & another  vs.   

N.R.Vairamani & another - (AIR 2004 SC 4778), a decision cannot be  

relied on without disclosing the factual situation.  In the same judgment  

this Court also observed:-

"Courts should not place reliance on decisions without  discussing  as to how the factual situation fits in with the fact situation of the  

                                                                                                                                     13 decision  on  which  reliance  is  placed. Observations  of  Courts  are  neither  to  be  read  as  Euclid`s  theorems  nor  as  provisions  of  the  statute and that  too taken out  of the context.   These observations  must  be  read  in  the  context  in  which  they appear  to  have  been  stated.”

(emphasis supplied)

18. We have referred to the aforesaid decisions and the principles laid  

down therein, because often decisions are cited for a proposition without  

reading the facts of the case and the reasoning contained therein.    

19. For the reasons mentioned above, we are of the view that the Bihar  

School  Examination  Board  is  not  rendering  any  ‘service’  as  defined  

under  the  Consumer  Protection  Act,  1986.   The  appeal  is,  therefore,  

allowed.  The impugned orders of the Consumer Fora are set aside. No  

costs.    

C.A. Nos. 676/2006,  C.A. No. 1739/2006,  C.A. No. 1764/2006,  C.A.  No.  2236/2006,  C.A.  No.  2476/2006,  C.A.  No.  3718/2005  &  C.A  No.6032/2009 @ SLP(C) No. 2844/2006

20. Leave granted.  

21. In view of the order passed in Civil Appeal No. 3911/2003, these  

appeals stand allowed in terms of the said decision. The impugned orders

                                                                                                                                     14 of  the  Consumer  Fora  are  set  aside  and  the  complaints  filed  by  the  

respondents  against  the  Board  or  University  are  held  to  be  not  

maintainable.  No costs.

……………………………J. (R. V. Raveendran)

……………………………J. (Markandey Katju)

New Delhi; September 4, 2009.