Auction Purchasers Not Considered Consumers : NCDRC Dismisses Petition Against Urban Improvement Trust, Bikaner

The National Consumer Disputes Redressal Commission, presided by AVM J. Rajendra, held that an auction purchaser is not a consumer, and grievances arising from public auctions do not fall under consumer jurisdiction.

Brief Facts of the Case

The complainant participated in an auction organised by the Urban Improvement Trust/developer for residential plots and purchased a plotpaying 25% of the total amount on the spot. The developer acknowledged the payment and approved the auction. However, when the complainant visited the plot, he found it occupied by another individual, with a name board already placed on it. Further investigation revealed that a legal dispute regarding the plot was pending, with a stay order issued by the court. Despite this, the developer issued a demand notice for the balance payment. In response, the complainant requested a spot inspection and demarcation of the plot, seeking physical possession only after the issue was resolved. The developer did not take any action. The complainant then requested a refund of the deposited amount with interest, but the developer only agreed to refund the amount without interest after nearly three years. The complainant argued that the developer was aware of the legal dispute at the time of the auction, yet proceeded with the sale, causing him financial loss. He claimed this constituted a deficiency in service and unfair trade practice, leading him to file a consumer complaint before the District Forum. The District Forum allowed the complaint and directed the developer to pay the complainant interest at a rate of 9% per annum on the amount of Rs. 4,33,000 along with Rs. 20,000 for mental agony and Rs. 5,000 for litigation costs. Aggrieved, the developer filed an appeal before the State Commission of Rajasthan, which dismissed the appeal. Consequently, the developer filed a revision petition before the National Commission.

Contentions of the developer

The developer argued that the complaint is not maintainable because an auction purchaser is not a consumer under the law, as held by the Supreme Court and NCDRC. The developer claimed that disputes over auctions, including refunds or possession, cannot be treated as consumer disputes. The auction was conducted on an “as is where is” basis, and the complainant was aware of the risks. The developer refunded Rs. 4,33,000 without forfeiture, acting fairly, but could not legally grant interest. The developer contended that the District and State Commissions exceeded their jurisdiction by focusing on interest, as the issue was a civil dispute, not a consumer case.

Observations by the National Commission

The National Commission observed that the complainant, who purchased a plot in an auction organised by the developer, is not a consumer under the Consumer Protection Act. The complainant paid 25% of the plot price, but later discovered that the plot was under a legal dispute and could not be transferred. Despite this, the developer demanded the remaining payment. The Supreme Court, in UT Chandigarh Administration & Anr. vs. Amarjeet Singh & Ors., held that an auction purchaser is not a consumer, and grievances arising from public auctions do not fall under consumer jurisdiction. The Commission also cited Mohd Siddique Khan vs. Forest Division Officer, reinforcing the view that auction purchasers are not considered consumers. As a result, the revision petition was allowed, and the orders of the District and State Commissions were set aside. The complainant's case was dismissed, but they retain the right to seek relief in appropriate legal forums.

Case Title: Urban Improvement Trust, Bikaner Vs. Babulal Jat

Case Number: R.P. No. 1057/2020

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