Rajesh Malhotra v. Acron Developers

1. This First Appeal, under Section 19 of the Consumer Protection Act, 1986 (for short the Act), has been filed by the Complainants, who happen to be the parents and their two children, against the order, dated 06/11/2014, passed by the Goa State Consumer Disputes Redressal Commission (for short the State Commission), in CC No. 10 of 2010. By the impugned order, while observing that Complainant No.1, the father, having nowhere stated in the Complaint that he had purchased two Villas in question for the benefit of his two sons, settled abroad, the State Commission has come to the conclusion that the Villas had been purchased for commercial purpose; the Complaint was speculative; the Complainants had deliberately misused the provisions of the Act and has, thus, dismissed the Complaint with costs of 10,000/-.

2. Succinctly put, the facts, giving rise to the present Appeal, as culled out from the Complaint, are that Complainants No. 1 and 2, both Senior citizens, decided to purchase from Opposite Party No.1 a real estate developer, two Villas, being adjoining Villas No. O and P in their project, named, Villa Violeta Complex, Assagaon, Badem Road, Bardez, North Goa @ 3230/- per sq. ft.. The Developer confirmed the booking of Villa O in favour of Complainants No. 1 and 2, along with the Complainant No. 3 - one of their sons Rohan, and that of Villa P favouring Complainants No. 1 and 2, along with Complainant No. 4 the second son, Pravan, for a total consideration of 1,38,14,940/- for both the Villas. The said amount had to be paid in three installments, viz, 1,17,42,000/- within 2 weeks of the booking, 20,00,000/- by December 2006 and balance 72,940/- on possession by April 2007. Two identical Sale Agreements dated 20/06/2006 between the Developer, on the one part and one son and both the parents, as his duly constituted attorneys on the other part, were signed. On 09/08/2006, the Complainants made payment of the first installment of 51,80,000/- each towards the said Villas. Vide their email dated 13/11/2006, when the Developer issued a reminder to the Complainants for payment of the next installment of 10,00,000/- each, on or before 01/12/2006, the Complainants, on 14/11/2006, enquired about the progress on the changes/repairs modified by them at the site. Vide email dated 23/11/2006, Opposite Party No.3, one of the Directors of the Developer, informed the Complainants that the changes requested were in progress. By their email, dated 01/12/2006, the Complainant asked for an update on the notified issues. Instead of responding to the mail, the Developer, vide their email dated 05/12/2006, asked the Complainants to pay the second installment of 10,00,000/-. Complainant No.1 deferred the payment till he could visit the construction site to assess the progress and also because he had just lost his younger sister. The Developer vide their email dated 02/02/2007, while informing the Complainants that despite reminders they had failed to make payment by the due date, requested them to do the needful, failing which, they were threatened with termination of the agreements. According to the Complainants, though the issues raised were yet to be addressed by the Developer, still fearing the same to be a ploy to terminate the agreements and resell the Villas at higher price, the Complainants agreed to make the payment. On 09.02.2007, the amount was remitted to the Developer by cheque, through courier, which was received by them on 15/02/2007, and the cheque was got encashed the same day. Pursuant to the demand made by the Developer, vide their email dated 21/02/2007, for the balance third-installment of 6,91,000/- for each Villa on or before 01/03/2007, the Complainants paid 13,82,000/- in respect of both the Villas vide their cheque dated 01/03/2007. Thus, the entire sale consideration was received by the Developer even before the delivery of possession of the Villas. Vide his emails dated 31/03/2007 and 04/04/2007, Complainant No.1 reminded the Site Engineer of the Developer about incomplete works, who by email, dated 29/05/2007, informed him that only 80% works had been completed. Though the possession of the Villas was to be delivered by April 2007, it was only on 06/10/2007, the Complainants were informed that the Villas were ready. They were asked to pay some additional amounts towards wooden mesh; electricity deposit and meter charges and 38,970/- each and towards maintenance for the year 2007, although physical possession of the said Villas had not been delivered to the Complainants in April, 2007, the scheduled date. According to the Complainants, they were charged for extra area, over and above the agreed 2138 sq. ft. built up area in each of Villas O and P, but when they got the area of the Villas measured by an independent architect, they found that, in fact, the built up area was short by 190 and 167 sq. ft. respectively and, therefore, a total sum of 11,52,496/- was refundable to them. When the Complainants went to the construction site, they found that work was still not complete and, therefore, Complainant No.1, vide his email dated 02/11/2007, sought to know from the Developer as to when, the possession of the complete Villas would be delivered. The Developer vide their email dated 19/04/2008 and letter dated 21/04/2008 informed the Complainants that since they had committed certain defaults of the terms of Sale Agreements, they were required to deposit further amounts of 1,70,319/- and 89,754/- in respect of Villas O and P respectively within 15 days and take physical possession of the two Villas. However, when the Advocate, engaged by the Complainants for managing the registration affairs, vide his letter dated 08/05/2008, sought certain documents, viz., occupancy certificate, house tax receipt etc., the Developer responded by saying that the revised final bill would be sent soon. However, on the advice of their Advocate, in order to complete the registration and take delivery of the Villas, the Complainants paid the additional demanded amounts of 2,60,073/- (i.e. 1,70,319/- for Villa O and 89,754/- for Villa P) and also sent pay orders for 38,970/- and 38,556/- towards maintenance for the year 2007. On 23/05/2008, the Developer furnished bills for the additional amounts of 1,94,200/- (i.e. 1,03,600/- for Villa O and 90,600/- for Villa P), which were also paid by the Complainants. On Complainants paying the amounts towards the stamp duty, registration charges, etc., on 14/07/2008, Sale Deeds for the said Villas were executed and possession of the Villas were handed over to the Complainants. On Complainants complaining about deficiency in water supply, the Manager of the Villa Violeta Association informed the Complainants that cleaning/deepening by 2-3 meters of the well would be required, which will cost 2500/- per day for 15 days and 2,15,000/- for another borewell, after getting the requisite permissions.

3. Perhaps, incensed by the conduct of the Developer in not providing either the services or the quality of construction, commensurate with the amounts charged as costs of Villas and for related services and the assurances given at the time of booking the Villas, the Complainants filed the afore-noted Complaint before the State Commission, praying for a direction to theinter-alia Developer to refund a sum of 14,10,981/-, being the overcharged amount with interest @ 13% per annum from the date of payment till the date of repayment along with 9,00,000/- as damages for the losses on account of delay in delivery of possession and 24,00,000/- towards compensation for the mental trauma, agony and stress suffered by them.

4. The Developer contested the Complaint on diverse grounds, including its maintainability on the pleas that the Complaint was barred by limitation as it was filed two years after the transfer of the Villas in question and was also bad for misjoinder of parties as Opposite Parties No. 2 and 3, the Directors of the Developer Company, had never agreed to provide any services to the Complainants in their individual capacity. On merits, it was pleaded that the Villas were constructed as per the approved plans, specifications and the terms and conditions mentioned in the respective agreements, which the Complainants had signed after reading and understanding the same; it was after agreeing to the terms and conditions of the agreements that the Villas had been purchased by the Complainants and at no point of time any grievance was made; the possession of the Villas had been accepted by the Complainants after due inspection and fully satisfying themselves of the construction in all respects; and after delivering peaceful possession of the Villas, all obligations on the part of the Developer under the said agreements stood fulfilled. The allegations of overcharging, difference in area, unfair trade practice and sufferings, etc. were also denied. In so far as the allegation that the Developer did not deliver the Villas and services by the agreed time, for which payment was made, it was contended on their behalf that in fact, citing personal reasons, the Complainants did not take possession of the Villas, when they were called upon to do so.

5. At the threshold, the State Commission framed two issues for consideration, viz. (i) whether the Complainants were consumers within the meaning of Section 2 (1) (d) of the Act and (ii) whether they had rightly invoked the jurisdiction of the Commission?

6. Laying emphasis on two narrative statements in the complaints, viz. that they had purchased the Villas as good value for money and as they would provide good monetary returns through rentals, the State Commission has drawn the inference, and in our opinion erroneously, that since instead of one, two Villas had been purchased by the Complainants, these were purchased for commercial purpose, either for re-sale or for letting them for profit and, therefore, they were are not consumers as defined in the Act. The State Commission has dismissed the Complaint observing as under:-

26. Admittedly, the Complainant Nos. 1 & 2, are presently settled and we assume in peace and comfort, at Gurgaon, Haryana while Complainant No.3 and Complainant No.4 are settled elsewhere. We assume that complainants have no intention to settle at Assagao. Why does one family of consumers require two villas at a far away place in Goa? We certainly can understand that the complainants and or their family wanted to have a holiday villa far away in Goa so that they could come sometimes on a holiday and at other times lease it out on rent. But, we are unable to understand why a family should invest in two villas, if not to rent them out and earn great monetary returns through In the entire correspondence on record, there is no whisper that therental or sell them? complainants ever asked the OPs to complete the villas so that they could come and stay sometime on a holiday or on permanent basis. The talk has always been of renting them out and earning money. Out of 56 months which the complainants say they have been in possession of the villas, the complainants do not say as to how many days or months they have occupied the villas to live in peace and comfort but they only say that they were able By letter dated 03.12.2007 (copy at pages 161) theto lease them out only for 14 days. complainants complain that they are unable to take advantage of the villas being rented out for the period from December 20 January 5 at Rs.1 lac per villa. The complainants inth th their letter dated 26.06.2008 (copy at page 182) complaint that delayed possession is preventing them from renting out the Villas leading to monetary losses. By letter dated 18.10.2007 (copy at page 153) the complainants informed the OPs that they could take possession of the Villas so that their lessee could occupy the guest room on time. Finally, the complainants let the cat out of the bag, when they by their letter dated 20.10.2007 (copy at page 152) informed the OPs that they would come to Goa and make the final payment and that they would also like to meet and discuss the sale and/or rental of the villas. The complainants also requested one Analsa from the OP to take them around to similar properties and propose meetings with people including buyers/lessees/lawyers who could help them to achieve the optimum results. It is, therefore, very clear, as contended by the OPs, that the real intention of the complainants in purchasing the two villas O and

P was to either rent them out or sell them and make profit therefrom. This is a clear case where two villas were purchased, not one, by the complainants and the inference is that they were purchased for a commercial purpose, i.e. either for resale or rent them out, for profits and therefore the complainants would not be consumers as defined under the C.P. Act. (Emphasis supplied by us) Finally, it held as under:- In conclusion, we hold that the complainants have failed to market their story, if we may use that expression, that they are consumers. This is a clear case where the complainant No.1 had in fact purchased two villas for a commercial purpose. That Complainant No.1 had purchased the same for the benefit of his two sons, is nowhere stated by the Complainants. However, in law, the complainant No.1, having purchased the same in names of different parties, the complainants ought to have filed two separate complaints and on proper valuation, before the District Forum. We, therefore, proceed to dismiss the complaint with liberty to the complainants to approach a Civil Court.

7. It is manifest from the afore extracted paragraphs that the State Commission has concluded that the Complainants are not consumers, as they had purchased two Villas either for re-sale or renting them out, and the same being for a commercial purpose, the dispute raised by them would be required to be decided by a Civil Court. Having held so, the State Commission not only went on to hold that since two separate Villas were purchased by two sets of parties, the father and the mother remaining common, by two separate agreements and two separate sale deeds etc., the complainants ought to have filed two separate complaints in relation to the said two Villas before the District Forum and that the Complainants had inflated the reliefs, thought it advisable to record certain findings on the merits of the Complainants case as well. It hasprime-facie observed as follows:- Although we have concluded that the complainants are not consumers as they had purchased the suit villas for a commercial purpose and the dispute raised by them would be required to be decided by the Civil Court, nevertheless, certain prima-facie findings will not be out of place. We say that the findings are prima facie, for the simple reason that the findings of merits will have to be given by the Civil Court. The Complainants complaint is verbose and is based on the self serving averments of complainant No.1 and contrary to three basic written documents to which the Complainant No.1 is a party and which he duly signed as attorney of other complainants. The OPs would also be partly right in stating that the complaint is a copy and paste of the provisions of the C.P. Act. The OPs would also be right in contending that the complaint has been filed with the sole purpose of extracting monies from the OPs. We say so because, the complainants have stated that when court notices were sent to the OPs, they had ideal opportunity to call for discussion and settle the matter personally or through the lawyers but showed their defiant attitude by choosing not to do so. This means that the complainants filed the complaint with a view to drag the OPs to the Commission, with a view to force a settlement, so that the complainants get some money. Many times such settlements are cheaper than the cost of litigation.

8. Aggrieved, the Complainants are before us.

9. The core issue for determination is that since the Complainants had booked more than one flat with the Developer, whether or not they are consumers, entitled to invoke the jurisdiction of a consumer fora, constituted under the Act?

10. The expression Consumer, as defined in Section 2 (1) (d) of the Act, is comprehensive, aimed at covering every person, who pays money as the price or cost of the goods or services. However, the definition excludes from the scope and ambit of the expression Consumer any person, who obtains such goods or services for any commercial purpose, save and except the goods bought and used by him and services availed by him are exclusively for the purpose of earning the livelihood by means of self-employment.

11. In (1995) 3 SCC 582, explainingLaxmi Engineering Works Vs. P.S.G. Industrial Institute the meaning and ambit of the expression any commercial purpose with reference to the definition of the expression consumer in Section 2 (1) (d) of the Act, the Honble Supreme Court had observed as follows:- Controversy has, however, arisen with respect to meaning of the expression

commercial purpose. It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. Commercial denotes pertaining to commerce ( ); it means connected with, or engaged inChambers Twentieth Century Dictionary commerce; mercantile; having profit as the main aim ( )Collins English Dictionary whereas the word commerce means financial transactions especially buying and selling of merchandise, on a large scale ( ). The NationalConcise Oxford Dictionary Commission appears to have been taking a consistent view that where a person purchases goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit he will not be a consumer within the meaning of Section 2( d )( ) of the Act. Broadly affirming the said view and more particularly with a view toi obviate any confusion the expression large scale is not a very precise expression Parliament stepped in and added the explanation to Section 2( ) ( ) byd i Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression commercial purpose a case of exception to an exception. Let us elaborate: a person who buys a typewriter or a car and uses them for his personal use is certainly a consumer but a person who buys a typewriter or a car for typing others work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for commercial purpose would not yet take the purchaser out of the definition of expression consumer. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a consumer. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e., by self-employment, for earning his livelihood, it would not be treated as a commercial purpose and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a commercial purpose, to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to.

12. Therefore, in order to determine whether the goods are purchased for commercial purpose, the basic pre-requisite would be whether the subject goods have been purchased or the services availed of with the prime motive of trading or business activity in them, for the purpose of making profit, which, as held in is always a question of fact to be decided inLaxmi Engineering (supra) the facts and circumstances of each case.

13. Recently, in two orders, dated 12.02.2015 in (KavitaConsumer Complaint No. 137 of 2010 Ahuja Vs. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd.) and 11.08.2015 in First [GVSN Murthy Vs. M/s. Suchir India Infratech (P) Ltd.], this CommissionAppeal No. 65 of 2014 has held that unless there is evidence on record to show that the Complainant had bought more than one flat for the purpose of trading in the same, a bald assertion by the Opposite Party that these had been bought for the purpose of making profits is not sufficient to hold that the same were for commercial purpose..

14. Having examined the question, formulated above, on the touchstone of the aforesaid broad principles, we are of the opinion that in the absence of any evidence adduced by the Opposite Parties in support of the said preliminary objection, the State Commission fell into an error in arriving at the conclusion that the two Villas in question had been purchased by the Complainants for commercial purpose.

15. Pertinently, apart from the fact that there was no such specific averment in the written version, filed on behalf of the Opposite Parties in opposition to the Complaint, both the aforenoted issues were framed by the State Commission barely on the basis of the two sentences in the Complaint, viz; (i) they had purchased the Villas as good value for money and (ii) the Villas would provide great monetary returns through rentals. In our opinion, the two isolated sentences did not partake the character of an admission on the part of the Complainants providing the foundational fact for framing the issues suo-motu by the State Commission. Having carefully perused the written version filed on behalf of the Developer and its Directors, wherein certain specific preliminary objections, regarding maintainability of the complaint on the grounds of mis-joinder of parties; mis-joinder of cause of action and that the complaint was barred by limitation, had been raised, there is not even a whisper of the transaction being for commercial purpose. Similarly, in the written arguments, filed on behalf of the Developer, except for a bald averment that these Villas were purchased by the Complainants as investments for rental and possible future sale there is not an iota of evidence on record to even remotely suggest that the subject Villas had been purchased by the Complainants for the purpose of trading in them for profits. In our opinion, a mere letting out of a residential house/flat/villa would not amountper se to commercial purpose, as stipulated in Section 2 (1) (d) of the Act. In our view, therefore, the conclusion of the State Commission to the effect that the Complainants were not consumers, because it was unable to fathom any reason why a family should invest in two Villas, if not to rent them out and earn great monetary returns through rental or sell them, is not only based on conjectures and surmises, a fundamentally flawed absolute proposition that purchase of more than one Villa/Flat amounts to commercial purpose, cannot be countenanced. Furthermore, inper se the present case, the purchase of two adjacent Villas by two brothers, by two separate sale deeds, with both their parents as their duly constituted attorneys, tends to lend credence to the stand of the Complainants that the object for purchase of two Villas was for independent enjoyment by the two brothers and not to make profit.

16. We are also constrained to observe that having decided to relegate the Complainants to an alternative remedy, the State Commission should have refrained from expressing even its view on the merits of the complaint.prima-facie

17. In view of the aforegoing discussion, the Appeal is allowed; the impugned order is set aside and the complaint is restored to the board of the State Commission for de-novo adjudication in accordance with law, after affording adequate opportunity to both the parties to adduce evidence in support of their respective pleas, uninfluenced by any observations in the impugned order as well as in this order. The Complainants shall also be entitled to costs, quantified at 25,000/-.

18. The parties/their Counsel are directed to appear before the State Commission on 04.12.2015, for further proceedings. ......................J D.K. JAIN PRESIDENT ...................... M. SHREESHA MEMBER