Consumer; Bunga Daniel Babu Vs. M/s Sri Vasudeva Constructions [Supreme Court of India, 22-07-2016]

Consumer Protection Act, 1986 – Section 2(1)(d) – “consumer” – “commercial purpose” – “joint venture” – definition under – agreement for construction and sharing flats – Held, commercial purpose is required to be interpreted considering the facts and circumstances of each case – the National Commission has affirmed the order passed by the State Commission on the ground that the complaint is not a consumer as his purpose is to sell flats and has already sold four flats – the whole approach is erroneous – what is required to be scrutinised whether there is any joint venture agreement between the appellant and the respondent – the MOU that was entered into between the parties even remotely does not indicate that it is a joint venture – the appellant is neither a partner nor a co-adventurer – he has no say or control over the construction – he does not participate in the business – he is only entitled to, as per the MOU, a certain constructed area – the extent of area does not make a difference – therefore, the irresistible conclusion is that the appellant is a consumer under the Act.



[Dipak Misra] and [N.V. Ramana] JJ.

July 22, 2016


(@ Special Leave Petition (Civil) No.1633 of 2015)





Dipak Misra, J.

The assail in the present appeal, by special leave, is to the judgement and order passed by the National Consumer Disputes Redressal Commission, New Delhi (for short “the National Commission”) in Revision Petition No. 258 of 2013 whereby the said Commission has approved the decision of the State Consumer Disputes Redressal Commission, Hyderabad which had reversed the view of the District Consumer Forum that the complainant is a “consumer” within the definition under

Section 2(1)(d) of the Consumer Protection Act, 1986

(for brevity, “the Act”) as the agreement of the appellant with the respondents was not a joint venture. The District Forum had arrived at the said decision on the basis of legal principles stated in

Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd. and anr., (2008) 10 SCC 345

The State Commission had opined that the claim of the appellant was not adjudicable as the complaint could not be entertained under the Act inasmuch as the parties had entered into an agreement for construction and sharing flats which had the colour of commercial purpose. Thus, the eventual conclusion that the State Commission reached was that the complainant was not a consumer under the Act. The said conclusion has been given the stamp of affirmance by the National Commission.

2. The factual score that is essential to be depicted is that the appellant is the owner of the plot nos. 102, 103 and 104 in survey no. 13/1A2, Patta no. 48 admeasuring 1347 sq. yards situate at Butchirajupalem within the limits of Visakhapatnam Municipal Corporation. Being desirous of developing the site, the land owner entered into a Memorandum of Understanding (for short “the MOU”) with the respondents on 18.07.2004 for development of his land by construction of a multi-storied building comprising of five floors, with elevator facility and parking space. Under the MOU, the apartments constructed were to be shared in the proportion of 40% and 60% between the appellant and the respondent No. 1. Additionally, it was stipulated that the construction was to be completed within 19 months from the date of approval of the plans by the Municipal Corporation and in case of non-completion within the said time, a rent of Rs. 2000/- per month for each flat was to be paid to the appellant. An addendum to the MOU dated 18.07.2004 was signed on 29.04.2005 which, inter alia, required the respondents to provide a separate stair case to the ground floor. It also required the respondents to intimate the progress of the construction to the appellant and further required the appellant to register 14 out of the 18 flats before the completion of the construction of the building in favour of purchasers of the respondents.

3. As the factual matrix would further unfurl, the plans were approved on 18.05.2004 and regard being had to schedule, it should have been completed by 18.12.2005. However, the occupancy certificates for the 12 flats were handed over to the occupants only on 30.03.2009, resulting in delay of about three years and three months. In addition, the appellant had certain other grievances pertaining to deviations from sanction plans and non-completion of various other works and other omissions for which he claimed a sum of Rs.19,33,193/- through notices dated 6.6.2009 and 27.6.2009. These claims were repudiated by the respondents vide communications dated 17.07.2009 and 16.08.2009.

4. Being aggrieved by the aforesaid communications, the appellant approached the District Forum for redressal of his grievances. The District Forum appreciating the factual matrix in entirety framed two issues for determination, which in essence are, whether the complainant was a “consumer” within the definition of Section 2(1)(d) of the Act; and whether there was any deficiency in services on the part of the opposite party. The District Forum after analysing various clauses of the MOU and the addendum and placing reliance on the decision of the Court in Faqir Chand Gulati (supra) came to hold that the transaction between the parties could not be termed as a joint venture, in order to exclude it from the purview of the Act. Accordingly, the District Forum opined that the complainant came under the definition of Consumer under Section 2(1)(d)(ii) of the Act. On the second point of deficiency as well, it partly allowed the claim in favour of the appellant-complainant by awarding a sum of Rs. 15,96,000/- towards rent for delayed construction, Rs. 19,800/- as reimbursement of vacant land tax, Rs. 70,000/- as cost for rectification of defects in the premises and Rs. 25,000/- for mental agony. It was further directed that the abovesaid sum shall carry interest @ 9% per annum from the date of filing of the complaint. Be it stated, cost of Rs. 10,000/- was also awarded.

5. The respondent constrained by the decision of the District Forum preferred an appeal before the State Commission which did not agree with the finding of the District Forum and came to hold that the appellant-complainant did not come within the ambit of definition of “consumer” under the Act and accordingly dismissed his claims as not maintainable. The appellate forum expressed the view that as the agreement was entered into by the appellant-complainant for more than two plots and there was an intention to sell them and let them on rent and earn profit, the transaction was meant for a commercial purpose. Grieved by the said decision, the appellant-complainant invoked the revisional jurisdiction of the National Commission which concurred with the view expressed by the State Commission by holding that the State Commission had rightly distinguished the authority in Faqir Chand Gulati’s case on facts because the flats were not for personal use and the complainant had already sold four of the twelve flats.

6. The seminal issue that emanates for consideration is whether the appellant-complainant falls within the definition of “consumer” under Section 2(1)(d) read with the Explanation thereto of the Act. The issue that further arises for determination is whether the National Commission has rightly distinguished the authority in Faqir Chand Gulati’s case. It is necessary to mention that the controversy involved in the case had arisen prior to the 2002 amendment by which the definition of the term “consumer” has been amended in the dictionary clause.

7. To appreciate the heart of the dispute, we think it apposite to x-ray the definition of the term “consumer” from the inception till today. Section 2(1)(d) at the commencement of the Act read as follows:-

“Section 2(1)(d) “consumer” means any person who — (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person;”

The aforesaid definition, as is manifest, did not include a person who obtained such goods for resale or for any commercial purpose.

8. In