Court case(1994) 1 SCC 243

The respondent, M.K. Gupta, registered with the Lucknow Development Authority, a statutory body created under the Uttar Pradesh urban planning law, for a flat under one of its housing schemes and paid the amounts demanded. The Authority failed to complete the construction and hand over possession within the time it had promised. He complained to the District Forum under the Consumer Protection Act 1986, which directed the Authority to complete the work and deliver possession and awarded relief; the State Commission and the National Commission did not interfere. A number of similar complaints against development authorities, housing boards and other public bodies, raising the same question of jurisdiction, were heard with the Authority's appeal. The Authority contended that a statutory body developing land and constructing houses in discharge of its statutory functions does not hire out any service to anyone, that "housing construction" was added to the definition of service only in 1993 and could not apply earlier, and that the fora had no power to award compensation against it.

The Supreme Court (R.M. Sahai J. delivering the judgment) dismissed the appeals. The Act is a social-benefit statute to be construed liberally in favour of the consumer. The definition of service uses the words "of any description" and "includes"; the listed items are illustrative, and the definition covers every service made available to potential users for consideration, whether by a private person or a statutory body. A development authority that undertakes to build and allot houses for payment renders a service, and delay or defect in it is a deficiency; the words "housing construction" added in 1993 only made explicit what was already covered. Public authorities enjoy no immunity: when their officers act arbitrarily or oppressively and cause harassment and mental agony to citizens, the forum may award compensation for that injury as well as for the monetary loss. Because such compensation is paid from public funds for the misconduct of officers, the authority should fix responsibility and recover the amount from the officers responsible.