By I C Naik
The Consumer forums have started taking the developers to tasks for lapses as MOFA 1963 failed miserably: granting relief to housing societies and home buyers for unfair-practices / deficiency in services. In 1993 the “housing construction” service was brought under Consumer Protection Act 1986 (CPA). The district forums also extended the CPA coverage to common services provided by housing society to its members. In one case the forum held “We are of the view that the complainant (the member) has proved deficiency of service on the part of the opponent (Rishi Dayaram Giduaml CHS). Read More:
https://www.indiancooperative.com/nchf-2/deficiency-in-service-by-the-housing-society/
Several issues under CPA reached the Apex Court. A landmark judgment of the Apex Court is of the Lucknow Development Authority’s case [ AIR 787, 1994 SCC (1) 243 ]. Per Section 2(O) of CPA “’service’ means service of any description which is made available to potential users” That case focused on the “services” and not on who was the service provider. A government or semi-government body or a local authority is as much amenable to this act as any other private body rendering similar service; The test to be adopted is not the type of person or authority; but it is the nature of duty and function performed by it regardless of status of person and authority; The clarification that relief under CPA was in addition to any other relief under any existing law and the consumer was free to approach consumer forums also has come handy to the consumers. In the process Housing societies have also been branded as service providers and its members as consumers in terms of provisions of the Consumer Protection Act 1986 (CPA).
Though disputes between members and the society are covered under Section 91 of the MCS Act 1960 orders are being passed by Consumer Courts directing housing societies to take corrective steps in providing services. Read more on…https://www.indiancooperative.com/nchf-2/chs-ubiquitous-issue-of-leaking-bathroom/ “”There is no doubt that since the complainant was a member of the society, (Mithul Enclave Housing Society Ltd in Chembur, Mumbai) he was its consumer and the society was a service provider. It is responsible to pay the complainant,” the forum said.
Housing societies were born much ahead of CPA (1986). The S C had on several occasions expressed its views on housing societies with tremendous clarity. For example in Zoroastrian Co-Operative Housing Society Gujarat [Rd-Sc 253 (15 April 2005)] at Para 15 it is clarified that “Membership in a co-operative society only brings about a contractual relationship among the members forming it” International Cooperative Alliance [ICA] in a statement inter alia states “A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically controlled enterprise.” As per Clauses (27) and (16) of Section 2 of the MCS Act 1960 a co-operative housing society is an association of persons united voluntarily, who jointly own and democratically control the’ enterprise’ with a view to provide its members common amenities and services; The registered bye-laws of every housing society embody the contracts inter se all members as every signatory to proposed Bye-Laws has signed the same with every other signatory with an undertaking that every member will abide by the same. What is a jointly owned and democratically controlled enterprise” is the “property of the housing society” comprising individual flats, common areas in the building, common open land and common assets acquired to provide common amenities and services. The term jointly owned means “the aggregate” of each individual member’s share in the capital/interest of “the property of the society”. Joint control over this enterprise is vested in its joint owners who make decisions in the meetings of the general body of these members, summoned in such manner as is specified in these Bye-laws .
With this background let us understand what exactly is meant by the ‘“Consumer” & “Service’ as contemplated under CPA. While claiming a redress under CPA a member must prove beyond doubt that his grievance against the society fell under the scope of CPA.
As per CPA, (i)_’A Consumer’ means any person who hires or avails of any services for a consideration which has been paid or promised and (ii) “Service” means service of any description which is made available to potential users but does not include the rendering of any service free of charge or under a contract of personal service.
A member must make out a case that he has observed “deficiency in service provided” by his housing society which was agreed to be provided to him for a “price”.
In the Lucknow Development Authority (supra) the Apex Court almost summarized very succinctly In Paragraph 3 of the order, that “The Act thus aims to protect the economic interest of a consumer as understood in commercial sense as a purchaser of goods and in the larger sense of user of services. The common characteristics of goods and services are that they are supplied at a price to cover the costs and generate profit or income for the seller of goods or provider of services.”
It is now necessary to understand the modus operandi of a housing society. The Housing Societies are governed by its own internal regulations codified in their respective registered bye-laws. Providing services is agreed by and between the members as objects of the society. Housing society recovers costs of services and amenities strictly in accordance with a detail scheme meticulously built in these regulations. The managing committee of the concerned housing society is obliged to apportion the outgoings under each and every head listed out there in on the specified basis to all the flats and arrive at the amount to be contributed by each flat holder. It is communicated by a written demand and payable as per time table specified by the Committee. The society i.e. members in general body meeting does not have a say in the matter. This is laid down under the Bye-Laws and which are superior to any decision of the members’ meeting.
In this situation where does on sees two separate entities namely (i) the deficient service provider and (ii) the complaining service consumer? And where is the profit accruing to the service provider as visualized by the Apex Court at Para aforesaid.
In a recent order (Jan 2015) Mumbai based Customs Excise and Service Tax Appellate Tribunal ruled in case of Tahnee Heights and Mittal Tower cooperative societies that member’s contribution are not liable to service tax as charges that are collected are in the nature of reimbursement by members to their collective body exclusively formed of the members only. It is an admission of fact by a Tax Tribunal that there was no case of the society rendering any service at a price. The Committee was supervising the flow of services to members for which actual costs are reimbursed by the users of those facilities which included water charges, electricity for common areas (lifts, stairways, lobbies), security , lift maintenance or repairs, and maintenance of common areas.