RAJASTHAN FINANCIAL CORPORATION vs M.K. Bhoot And Anr.

RAJASTHAN Financial Corporation -petitioner herein, which was the opposite party before the District Consumer Disputes Redressal Forum, Sirohi (hereinafter referred to as the District Forum'' for short), has filed the present Revision Petition against the Order dated 8.12.2005 in Appeal No. 886 of 1997 passed by the Rajasthan State Consumer Disputes Redressal Forum, Jaipur, Rajasthan (hereinafter referred to as the State Commission'' for short). The State Commission, by the impugned Order, has set aside the Order passed by the District Forum. District Forum had dismissed the complaint holding that the respondent/complainant was not a consumer'' within the meaning of Section 2(l)(d) of the Consumer Protection Act, 1986 (hereinafter referred to as the Act'' for short).

BRIEFLY stated, the facts of the case are: The complainant/respondent partici -pated in the auction held by the petitioner. The auction was in respect of movable and immovable properties. Complainant''s bid of Rs. 34,50,000 being the highest, was accepted and, later on, approved by the State Government. The complainant deposited a sum of Rs. 1,75,000 at the time of giving the bid. As the complainant could not deposit the balance amount, the petitioner forfeited the deposited amount. Aggrieved by this, the complainant filed the complaint before the District Forum.

DISTRICT Forum dismissed the complaint holding that the complaint was not maintainable as the dispute between the parties could not be adjudicated by the Foras under the Act as the respondent was not a consumer'' within the meaning of Section 1(1)(d) of the Act. Aggrieved by the Order passed by the District Forum, respondent/ complainant filed an Appeal before the State Commission. State Commission without appreciating the question of law involved, allowed the Appeal and set aside the Order of the District Forum. The only reason given by the State Commission for setting aside the Order of the District Forum is as under: "There is no dispute on the point that the amount of Rs. 1,75,000 was deposited by the appellant and thus this amount belongs to him and in our considered opinion this amount must have been paid to him and for that the observations of the D.F. that complainant must approach Civil Court could not be sustained now."

SINCE the respondent or his Counsel is not present today despite service of notice, the respondent is proceeded ex parte.

PETITIONER is a Financial Corporation of the State of Rajasthan formed under the provisions of State Financial Corporations Act, 1951 (herein after referred to as the Act of 1951'' for short). Petitioner is engaged in providing financial assistance to various industrial units in the State. The financial assistance is granted against mortgage of land, building, plant and machinery of the borrower. If the borrower unit fails to pay the dues as per agreement, the Corporation is entitled to take over the assets thereof in exercise of powers under Sections 29 and 31 of the Act of 1951 and sell them by auction or otherwise for the purposes of recovery of its dues. The petitioner is otherwise not dealing in any business of sale of property but sale of properties are occasioned and occur on account of such eventualities as aforesaid which is merely incidental to its main functions.

M /s. Geo International Private Limited, one of the borrowers of the petitioner, failed to repay its dues and, consequently, the petitioner took over the assets of the borrower and placed them for sale on "AS IS WHERE IS BASIS" by public auction. Clause 2 of the Terms of Auction stipulated that the sale was on "AS IS WHERE IS BASIS". Clause 1, thereof, envisaged the participant to deposit 5% of the proposed bid amount as earnest money and Clause 4, stipulated that the successful bidder shall deposit 25% of the bid amount within 30 days of the acceptance of the bid failing which the earnest money deposited shall be forfeited.

THE complainant participated in the auction upon duly understanding the aforesaid terms and conditions. Complainant had deposited 5% of the proposed bid amount. Complainant had submitted a bid of Rs. 34,50,000 . His bid of Rs. 34,50,000 was accepted and the State Government granted approval for the same. The complainant failed to deposit the balance amount of 25% of the bid amount within 30 days of the acceptance of the bid. Petitioner forfeited the earnest amount of Rs. 1,75,000 in terms of auction notice.

AGGRIEVED by the forfeiture of the sum of Rs. 1,75,000, complaint was filed which was dismissed by the District Forum but allowed by the State Commission as mentioned in the foregoing paragraphs. The point, which falls for consideration, is as to whether the complainant was a consumer'' and the dispute alleged is a consumer dispute and whether the dispute raised can be adjudicated under the Act?

IN our considered view, no consumer dispute can arise out of a relationship of a seller and a purchaser in an auction under the provisions of the Consumer Protection Act, 1986. This Commission, in a number of decisions, has taken the view that no relief under the Act can be granted where transaction has arisen out of auction. Consumer Foras cannot grant any relief in a matter arising out of auction sale as there is no arrangement of hiring of service for consideration between the parties.

REFERENCE may be made to a 3 -Member Bench decision in Panjim Planning and Development Authority v. Mrs. Rashmi A. Sisat and Others, Revision Petition No. 258/1992 decided on 10.1.1994, (1986 -95 (I) Consumer 8 -9), wherein it was observed as under: "The revision petitioner is well founded in his contention that since this is a case of sale of plots by public auction and a plot purchased by the complainant at the said auction, there was no arrangement of hiring of service for consideration as between the respondents and the revision petitioner. The complaint ought to have been rejected by the District Forum on the said ground. Unfortunately, this point has escaped the notice of the State Commission also. The orders passed by the District Forum and the State Commission which are illegal and without jurisdiction are set aside and the complaint petition is hereby dismissed. No costs."

THIS view was reiterated in Tamil Nadu Housing Board v. R. Sivasubramaniayan, 1989 Consumer 3587 (NS), wherein a 4 -member Bench of this Commission observed as under: "6. This case is one where the allotment of the plot has been made for the highest bidder in a public auction. We do not intend to go into the merits of the case as we consider that the matter does not fall within the jurisdiction of Consumer Fora. We have held in similar matters vide Panjim Planning and Development Authority v. Mrs. Rashmi A. Sirsat and Ors., Revision Petition No. 258 of 1992 decided on 10.1.1994, (1986 -95 Consumer Vol. I PP 8 -9) and Shiela Constructions Pvt. Ltd. and Anr. v. Nainital Lake Development Authority and Ors., Original Petition Nos. 230 and 249/93 decided on 21.6.1996, (1996 (2) CCC 743 (NS) : III (1996) CPJ (NC) PP 11 -13) that Consumer Fora cannot grant any relief in matters where the transaction has arisen out of auction sale which tantamount to outright sale of immovable property and, therefore, there is no arrangement of hiring of service for consideration between the parties."

WE respectfully follow the view taken earlier in the aforesaid judgments.

THE State Commission has acted in perverse manner in allowing the Appeal without even referring to the nature of dispute between the parties and meeting any of the reasons given by the District Forum while dismissing the complaint. The State Commission, being the first Court of fact as well as of law, should have dealt with the points, relying upon which the District Forum had dismissed the complaint. The State Commission has acted with material irregularity in exercise of its jurisdiction in doing so. The Order under Appeal cannot be sustained.

THE Revision Petition is accepted. The Order passed by the State Commission is set aside and that of the District Forum is restored. The complaint is ordered to be dismissed. As the respondent is not represented, we make no orders as to costs. R.P. allowed.