SC quashes NCDRC Order which held Land owner who entered into agreement with builder for construction is not a Consumer [Read Judgment]

Setting aside the orders of National and State Consumer Disputes Redressal Commissions which had held that a complainant land owner who entered into an agreement with a builder for construction and sharing flats, is not a ‘consumer’ since there was an intention to sell them and let them on rent and earn profit, the Supreme Court (BUNGA DANIEL BABU VS. M/S SRI VASUDEVA CONSTRUCTIONS) held that such an approach is erroneous.

The District forum had allowed the complaint of the Land owner against the builder. On appeal by the Builder, the State Commission observed that the agreement was entered into by the complainant for more than two plots and there was an intention to sell them and let them on rent and earn profit, and the transaction was meant for a commercial purpose. The claims of land owner was dismissed on the grounds that he is not a ‘consumer’. This order of State Commission was affirmed by the National Commission. The complainant approached the Supreme Court.

Apex Court Bench comprising of Justices Dipak Misra and Shiva Kirti Singh observed that, what is required to be scrutinised whether there is any joint venture agreement between the land owner and the builder. The Court perusing the agreement observed that, the land owner is neither a partner nor a co-adventurer and has no say or control over the construction. The Court held that the land owner in this case, is a ‘Consumer’ and remanded the issue back to State commission to adjudicate treating the complainant as a ‘consumer’.

The court observed: “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. In our considered opinion, 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, as has been explained in Faqir Chand Gulati (supra).”

Referring to Punjab University v. Unit Trust of India and others, the court observed that “it is clear that “consumer” means any person who hires or avails of any services for a consideration, but does not include a person who avails of such services for any commercial purpose and the “commercial purpose” does not include services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.”

Perusing the agreement entered between the parties the Court held that the complainant land owner is a consumer and observed: “it is clear as day that 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, as has been held in Faqir Chand Gulati (supra) does not make a difference.”

Read the Judgment here.