This revision petition filed under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) assails the order dated 28.09.2018 in First Appeal no. 1652 of 2014 of the Karnataka State Consumer Disputes Redressal Commission, Bengaluru (in short, ‘the State Commission’) arising from the order dated 25.10.2014 of the District Consumer Disputes Redressal Forum, Mysore (in short, ‘the District Forum’) in CC no. 434 of 2013.

2.     The facts, in brief, as stated by the petitioner are that the petitioner is a welfare association of employees of Corporation Bank registered under the Karnataka Societies Act, 1960 which also undertakes to provide residential sites to its members at a nominal rate, including 25% of sites to outsiders on a membership basis. The respondent had approached the petitioner in June 2006 and sought allotment of residential site measuring 4000 sq ft by paying a sum of Rs.7,36,050/- In view of delays in obtaining land from Mysore Urban Development Authority in order to form sites, the respondent sought refund of the amount deposited with the petitioner on 29.04.2013 which was refunded on 22.05.2013. Thereafter, on 13.06.2013 the respondent sent a legal notice seeking interest and compensation of Rs.14,27,423/-. The petitioner replied to the legal notice stating that there was no procedure for payment of interest on deposits when the member voluntarily seeks cancellation and that land was available for allotment and that allotment had commenced on the basis of seniority of members. However, the respondent filed consumer complaint no. 434 of 2013 before the District Forum at Mysore which was allowed on 25.10.2014 on contest. The District Forum held the respondent entitled to receive interest on Rs.7,36,050/- paid by him @ 18% per annum from the date of payment of advance till realization along with Rs.5000/- towards mental agony and Rs.2000/- towards cost within one month failing which further interest @ 10% per annum was liable to be paid. The petitioner herein preferred Appeal No. 1652 of 2014 before the State Commission on 25.11.2014 which was dismissed vide order dated 28.09.2018 while the order of the District Forum was confirmed.

3.     This order is impugned in this revision petition with the prayer to stay the operation of the order of the District Forum and pass orders as deemed fit.

4.     I have heard the learned counsel for both the parties and perused the material on record. Learned counsel for the petitioner has filed his short synopsis of arguments. Respondent has not filed his written synopsis.

5.     Learned counsel for the petitioner has stated that the Corporation Bank Employees Welfare Association (Registered) was formed during March 2006. The membership was restricted to 75% for the staff of Corporation Bank and 25% to public (other than Corporation Bank staff). Learned counsel for the petitioner states that the respondent applied for a 50 x 80 feetsite and remitted a sum of Rs.7,35,000/- towards the tentative cost of the site. Learned counsel further states that the petitioner association purchased the land and applied for change of land use from ‘agricultural’ to ‘residential’ purpose to the Mysore Urban Development Authority (MUDA). On 24.01.2009, the Deputy Commissioner, Mysore District vide its order no.215/2008-09 conveyed the alienation of the lands. Learned counsel further submitted that the land owners from whom petitioner purchased the land, in collusion with the land mafia, filed 12 civil suits before the Civil court and obtained a temporary injunction on the process due to which the process of formation of lay out was obstructed. Learned counsel for the petitioner submits that the respondent had attended 5 out 6 General Body Meetings and was fully aware of all the facts and circumstances. Vide letter dated 29.04.2013 the respondent requested the petitioner association for cancellation of the allotment of site and refund of the amount paid by him. Learned Counsel for the petitioner states that the amount of Rs.7,35,000/- was refunded on 21.05.2013 as sought by the respondent. It is also stated that the petitioner association had already commenced allotting the sites on seniority basis without any escalation in site value and responded was asked to reconsider the decision to seek refund. Learned counsel for the petitioner submits that it is a non-profit organization and the impugned order be set aside in the interest of justice since it puts the bonafide members to disadvantage.

6.     It is not disputed that the petitioner is a welfare society for the primary benefit of its members who are employees of Corporation Bank. Its activities, inter alia, also include the development of residential sites for which purpose it also admits 25% of non-Corporation Bank employees. It is evident from complaint no. 434 of 2013 before the District Forum that the respondent herein was not an employee of Corporation Bank.  It is also evident from the facts that while a sum of Rs.7,36,050/- was accepted by the petitioner towards the cost of the plot of land measuring 50 ft x 80 ft (4000 sq ft) by the petitioner from the respondent, there was no commitment with regard to the period of time in which the said plot would be handed over. The petitioner has submitted that there was delay in obtaining the land from the local Urban Development Authority on account of land acquisition matters and this issue was brought to the notice of the members of the cooperative society which included the respondent who attended the said meetings from time to time. The case of the respondent, on the other hand is that delay in handing over the flat after receiving the full sale consideration was inordinate and that he is entitled to compensation on account of this delay.

7.     From the record it is evident that the petitioner is not a professional builder or land developer engaged in the business of developing real estate projects; rather, it is a welfare organization of employees which works for the benefit of its members who are also employees of the same organization namely, viz., Corporation Bank, a public sector bank. 25% of its members, however, are non-employees or “outsiders’’. The respondent herein falls under the category of members.

8.     The delay in the allotment of land is evidently on account of the delay in the acquisition of the land and court proceedings. This is not disputed by the petitioner. It is admitted that the land was available on 13.06.2013 and the delay was not attributable to the petitioner. While revisional jurisdiction of this Commission under section 21 of the Act, as held by the Hon’ble Supreme Court in Sunil Kumar Maity vs State Bank of India and Anr. 2022 SCC Online SC 77 decided on 21.01.2022 this can be invoked in case of jurisdictional error or material irregularity. In the instant case, the petitioner is a welfare cooperative society established for the welfare of its members and is not a commercial organization. The lower fora have failed to appreciate this and thereby acted on a material irregularity in awarding compensation as interest on what is clearly a commercial rate of 18%. A cooperative body functioning on a no profit basis cannot be equated with a commercial entity and saddled with a penalty on commercial rates.

9.     In view of the foregoing reasons, there is merit in the revision petition. The contention of the respondent cannot be accepted in entirety although having deposited Rs.7,36,050/- with the petitioner and having waited for nearly 7 years, the respondent is entitled to some compensation. Keeping in view, however, that the petitioner is a cooperative society registered under the relevant Act and was formed with an objective of meeting the welfare needs of its constituent members, it is not considered appropriate to saddle it with interest at a commercial rate of interest as has been done by the District Forum.  The society cannot be said to be engaged in any commercial activity. In Ghaziabad Development Authority vs Balbir Singh (204) 5 SCC 65 it has been held that the quantum of compensation has to be fair and just. It would not be fair to impose commercial rate of interest on a cooperative society which seeks to provide certain benefits to its members who are members of a public sector bank.

10.   The order of the State Commission has relied upon the contention of the respondent that there were such other cases of refund where plots had not been allotted. In view of the fact that there is no evidence on record with regard to any discrimination against the respondent, the conclusion of the State Commission can only be concluded to be based on surmises and conjectures. For these reasons, the same is liable to be set aside.

12.   In view of the foregoing discussion, the revision petition is allowed in part and the impugned order of the State Commission in Appeal no. 1652 of 2014 is set aside. The order of the District Forum is also modified with the following directions:

1. Respondent shall be paid compensation by way of interest @ 6% per annum from the date of respective deposits till the date of refund;
2. In view of this compensation being awarded there shall be no payment towards compensation and litigation costs; and
3. This Order shall be complied with within eight weeks of this order failing which the rate of interest shall be 9% simple interest per annum.