Legal Advice

Does development authority come under consumer forum

Query

Five shops were allotted by development authority in the year 2001 and I deposited almost 50% amount but after 3 years of allotment construction work is stopped by the authority by saying that permission of the government regarding the development area is under review. I have stopped to pay a further instalment, the authority sent a notice to me with a direction to deposit due amount in next 6 months otherwise allotment will be concealed. I want to file a case before consumer forum so I want to know whether my case will be maintainable or not.

Advice

Yes, your case is maintainable before consumer forum. you may file a case for deficiency of service, enlargement of time to pay the instalment and penal interest on the amount already paid.

Development authority which is allotting sites with the promise of development is amenable to the jurisdiction of consumer forum in case of deficiency of service as per the agreement [Karnataka Industrial Authority vs Nandi Cold Storage (P) Ltd. (2007) 10 SCC].

Section 2(1)(O) of the Consumer Protection Act defines the word service and services provided by the development authority comes under this definition. Development authority is an agency of government so you can file a case against the government for the compensation [LDA vs M. K. Gupta (1994)1 SCC].

In the above-mentioned case of LDA, it is also held that when a statutory authority develops lands, plots or houses for the benefits of common man it is as much service as by a builder. If service is defective then it would be unfair trade practice as defined under section 2(1)(O) of Consumer Protection Act.

But you must pay instalments because stopping of payment is declared unfair and illegal in Municipal Corporation Chandigarh vs Shantikunj Investment Private Limited (2006) 4 SCC.

Shivendra Pratap Singh

Advocate

High Court Lucknow

Civil Law

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