2024 (8) TMI 1392 - SC - Indian Laws

Real estate company held consumer despite business status when purchasing flat for director's personal residence

OMKAR REALTORS AND DEVELOPERS PVT. LTD. Versus KUSHALRAJ LAND DEVELOPERS PVT. LTD. & ANR.

The SC dismissed the appeal in a consumer dispute involving property allotment. The respondent company, despite being in real estate business, was held to ... Maintainability of the complaint of the respondent-claimant on the plea that it is not a consumer under the Consumer Protection Act, 2019 or not - deficiency in service or unfair trade practice on part of the appellant in the matter of allotment of the flat in question in favour of the respondent and in its cancellation resulting in the forfeiture of the amount deposited. Maintainability of the complaint of the respondent-claimant on the plea that it is not a consumer - HELD THAT:- The issue is no longer res integra. It is more or less covered by the two decisions which have been relied upon by the NCDRC. In LILAVATI KIRTILAL MEHTA MEDICAL TRUST VERSUS M/S. UNIQUE SHANTI DEVELOPERS & ORS. [2019 (11) TMI 1824 - SUPREME COURT], the Medical Trust that had purchased houses for the nurses was held to be a ‘consumer’ under the Act and its action in purchasing the houses was not held to be a commercial activity. In CROMPTON GREAVES LIMITED AND ORS. VERSUS DAIMLER CHRYSLER INDIA PRIVATE LIMITED AND ORS. [2016 (7) TMI 1700 - NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI], the services availed for the personal use of the director of the company were not held to be for commercial purposes. In the case at hand, the complainant specifically mentions that the flat was being purchased for the purpose of residence of one of its Directors and his family and that the company is a family owned company. The mere fact that the respondent-company is a real estate company, it does not mean that the flat was purchased by it for commercial purpose or for resale so as to earn profits. It is the appellant who is contending that the respondent is not a consumer and as such the complaint is not maintainable, therefore, the burden lies heavily upon it to lead evidence to prove that the respondent in purchasing the flat in question is indulging in real estate business. There is no evidence on record to show that the flat so purchased by the respondent was in any way connected with the real estate business rather than for personal use of its Director and his family. There are no error or illegality in the finding of the NCDRC that the purchase of the aforesaid flat was for personal use and not as part of the commercial activity and as such the complaint filed by the respondent was maintainable. Deficiency in service or unfair trade practice on part of the appellant in the matter of allotment of the flat in question in favour of the respondent and in its cancellation resulting in the forfeiture of the amount deposited - HELD THAT:- The appellant instead of refunding the amount deposited by the respondents, forfeited the same vide letter dated 18.11.2017. Since the very cancellation/ termination of the allotment of the respondents in the facts and circumstances of the case is not justified, consequently the forfeiture is also bad in law. The NCDRC upon consideration of the above facts and circumstances, irrespective of the fact that the appellant may have the power to advance the date of delivery of possession of the flat allotted or offer possession on the basis of part occupancy certificate, rightly held that the appellant was guilty of adopting unfair trade practice and since there was double allotment of the flat, there was deficiency in service. Thus, the complaint of the respondents was maintainable and that since the services rendered by the appellant were held to be deficient. It has thus rightly issued directions to refund the forfeited amount of Rs. 7,16,41,493/- along with the delay compensation @ 6% per annum from the date of deposit till refund within two months, failing which the interest would be payable @ 9% per annum. The appellant is directed to refund a sum of Rs. 3,00,00,000/- (Rupees Three Crore only) out of the total amount, as directed to be refunded, within a period of two weeks from today and the balance be refunded on or before 31st December, 2024 either in lump sum or in piecemeal, failing which it will be open for the Collector concerned to recover the entire amount as arrears of land revenue. Appeal dismissed. Issues:1. Whether the respondent qualifies as a 'consumer' under the Consumer Protection Act, 2019.2. Whether there was a deficiency in service or unfair trade practice by the appellant in the allotment and subsequent cancellation of the flat, leading to the forfeiture of the deposited amount.Analysis:Issue 1:The National Consumer Disputes Redressal Commission (NCDRC) held the respondent to be a 'consumer' under the Act, citing previous court decisions. The Act defines a 'consumer' as a person who buys goods for personal use, excluding those for resale or commercial purposes. The Supreme Court affirmed this interpretation, emphasizing that the dominant intention behind the purchase determines if it was for commercial purposes. In this case, the respondent bought the flat for personal use, not for commercial gain, as evidenced by the purpose of residence for a director and his family. The burden of proving commercial intent lay with the appellant, who failed to provide evidence connecting the purchase to real estate business. Therefore, the complaint was deemed maintainable.Issue 2:Regarding the second issue, the Court found that the appellant had committed a deficiency in service and unfair trade practice. The confusion arose due to the double allotment of the flat to both the respondent and another individual. This confusion persisted until resolved by a rectification deed in 2018. The Court ruled that the appellant unjustly terminated the allotment and forfeited the deposited amount before resolving the double allotment issue. As a result, the appellant's actions were deemed unfair, leading to a deficiency in service. The Court upheld the NCDRC's decision to direct the refund of the forfeited amount with compensation. The appellant was instructed to refund the amount within a specified timeframe, failing which the Collector could recover the sum as arrears of land revenue.In conclusion, the Supreme Court dismissed the appeal, affirming the NCDRC's decision on both issues and directing the appellant to refund the amount as ordered.