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Smart Summary

Factual and Procedural Background

The Appellant, Akshay Sood, filed a Consumer Complaint No. 49/2010 before the State Consumer Disputes Redressal Commission, Delhi, challenging certain actions by the Respondents, M/s. Pal Infrastructure & Developers Pvt Ltd. and R.K. Properties. The complaint concerned the purchase of residential flats by the Appellant. Initially, the Appellant had booked three flats but later reduced the number to two, all in his name. The State Commission dismissed the complaint on the ground that the Appellant was not a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986, holding that purchasing more than one residential unit excludes a person from the definition of consumer. The Appellant challenged this order by filing the present First Appeal.

Legal Issues Presented

  1. Whether a person who purchases more than one residential flat can be regarded as a 'consumer' within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986.
  2. Whether the Appellant’s purchase of two flats was for personal use or commercial investment purposes, thereby affecting his status as a consumer under the Act.
  3. Whether the impugned order dismissing the complaint on the basis that purchasing multiple flats excludes consumer status was legally sustainable.
  4. Whether the case should be referred to a Larger Bench due to alleged divergence of opinion on the issue.

Arguments of the Parties

Appellant's Arguments

  • The Appellant contended that he did not own any residential property prior and had purchased the flats for his family’s own use, specifically for his ailing ex-army father-in-law and mother-in-law.
  • He asserted that the Developer was aware that the flats were purchased for personal use, not for commercial purposes.

Respondents' Arguments

  • The Respondents, particularly the Real Estate Developer, raised a preliminary objection that the Appellant was not a consumer under the Act.
  • They argued that the Appellant was residing in his own residence and had purchased the flats with a commercial motive to earn profits, especially after a slowdown in the real estate market.
  • The Developer alleged that the Appellant initiated litigation to avoid complying with the terms of the agreement, characterizing him as an investor rather than a consumer.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Sai Everest Developers & Anr. V. Harbans Singh Kohli & Ors (First Appeal No. 530 of 2015) Establishes that mere purchase of more than one residential unit does not automatically exclude a person from being a consumer unless there is cogent material showing regular trading for profit. The Court relied on this precedent to reject the State Commission’s abstract proposition that purchasing multiple flats excludes consumer status.
Rajesh Malhotra & Ors. V. Acron Developers Pvt. Ltd. & Ors., II (2016) CPJ 125 (NC) Reinforces the principle that purchasing multiple residential units does not per se indicate commercial intent unless proven otherwise by cogent evidence. The Court applied this principle to conclude that the Developer failed to discharge the burden of proving commercial intent, thus the Appellant remains a consumer.

Court's Reasoning and Analysis

The Court carefully considered the pleadings, written submissions, and evidence on record. It noted that the Developer’s objection that the Appellant was not a consumer rested on a bald assertion of commercial motive without any supporting evidence. The onus to prove that the flats were purchased solely for trading or commercial purposes lay on the Developer, which was not discharged. The Court referred to its earlier decisions, which clarified that purchasing more than one residential unit does not automatically exclude a person from the definition of consumer unless there is cogent evidence of regular trading for profit. The Court found the State Commission’s reasoning, which dismissed the complaint solely because the Appellant purchased two flats, to be unsustainable. The Court also considered and rejected the Developer’s request to refer the matter to a Larger Bench, noting the absence of a current divergence of opinion on the issue.

Holding and Implications

The Appeal is allowed. The impugned order of the State Commission dismissing the complaint is set aside. The complaint is restored to the State Commission for adjudication on merits.

The Appellant is entitled to costs quantified at ₹20,000/-. The Court directed the State Commission to dispose of the complaint expeditiously, preferably within three months from the receipt of the order, since the case is ripe for final hearing. No new precedent was established beyond reaffirming that multiple purchases do not per se negate consumer status without evidence of commercial intent.

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    Akshay Sood v. Pal Infrastructure & Developers Pvt Ltd.

    NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

    NEW DELHI

    FIRST APPEAL NO. 237 OF 2015

    (Against the Order dated 28/01/2015 in Complaint No. 49/2010 of the State Commission Delhi)

    1. AKSHAY SOOD

    S/O. SHRI UMESH KUMAR SOOD, THROUGH IS

    ATTORNEY SHRI UMESH KUMAR SOOD, SON OF LATE

    SHRI R.C. SOOD, R/O. HOUSE NO. 693, SECTOR-17, FARIDABAD-121002

    HARYANA ...........Appellant(s)

    Versus

    1. M/S. PAL INFRASTRUCTURE & DEVELOPERS PVT LTD. & ANR.

    THROUGH ITS MANAGING DIRECTOR, REGISTERED

    OFFICE AT B-45, SHAKTI APARTMENT, SECTOR-09,

    ROHINI,

    DELHI-110085

    2. R.K. PROPERTIES

    THROUGH ITS PROPRIETOR SHRI BUNTY KUKREJA,

    OFFICE AT 5E-12, SP NIT FARIDABAD HARYANA ...........Respondent(s)

    BEFORE:

    HON'BLE MR. JUSTICE D.K. JAIN,PRESIDENT HON'BLE MRS. M. SHREESHA,MEMBER For the Appellant : Mr. S.S. Ahluwalia, Advocate Mr. Jatin Teotia, Advocate

    For the Respondent : Mr. Sudhir K. Makkar, Sr. Advocate Ms. Saumya Gupta, Advocate

    Mr. Manav Chandra, Director of R-1, in person Dated : 02 Jan 2017

    ORDER

    1. Challenge in this Appeal, by the Complainant, is to the order dated 28.01.2015, passed by the State Consumer Disputes Redressal Commission, Delhi at New Delhi (for short "the State Commission") in Consumer Complaint No. 49/10. By the impugned order, the State Commission has dismissed the Complaint, filed by the Appellant on the ground that he is not a 'Consumer' within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 (for short "the Act"), as he had initially booked three flats, later on changed to two flats, all in his name. The State Commission has come to the conclusion that if a 'consumer' purchases more than one residential unit, he knocks himself out of the ambit of the term 'consumer'.

    2. Having heard learned Counsel for the parties, we are of the opinion that the order

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    impugned in this Appeal is unsustainable.

    3. In the reply filed on behalf of the Opposite Party, a Real Estate Developer, a preliminary objection was raised to the following effect:

    "2. That the complainants are not a consumer within the meaning of Consumer Protection Act. The complainant even at presently is residing in their own residence. The complainants with a sole motive to earn some good profits made the investments in the residential project of the O.P. No.1 and after their was slowdown/crash in the real estate market the complainants instead of complying with the terms of the agreement initiated the present litigation. The Complainant is an investor with the commercial motive."

    4. The said averment in the Written Version was contested by the Appellant/Complainant in his rejoinder by clearly stating that he did own any residential property and had purchased the flats for his family's own use and for the use of his ailing ex-army father-in-law and mother-in-law. It was also stated that the Developer was aware of the fact that the Complainant had purchased the flats for his own use.

    5. In the evidence by way of affidavit, filed on behalf of the Developer, it was stated that the Complainant had made the investments in its residential project with the sole motive to earn some good profit but after the slowdown/crash in the real estate market, instead of complying with the terms of the agreement, he initiated the present litigation. In other words, it was reiterated that the Complainant had purchased both the flats as an investment with the commercial motive.

    6. Having heard learned Counsel for the parties and carefully perused the material on record, we find that except for the aforesaid bald assertion, the Developer has failed to adduce even an iota of evidence in support of the aforesaid preliminary objection. Having raised the aforesaid specific plea, undoubtedly, onus to prove that the flats in question had been purchased by the Complainant for the sole purpose of trading in them was on the Developer, which it has failed to discharge.

    7. In view of the above and in the light of several decisions by this Bench, including orders dated 21.07.2015 and 05.11.2015 passed in Sai Everest Developers & Anr. V. Harbans Singh Kohli & Ors. (First Appeal No. 530 of 2015) and other connected Appeals and Rajesh Malhotra & Ors. V. Acron Developers Pvt. Ltd. & Ors., II (2016) CPJ 125 (NC), wherein it has been held that unless it is shown by brining on record some cogent material that the purchaser is engaged in the purchase and sale of flats/houses on regular basis, with a view to make profit by sale of flats/houses, a mere purchase of more than one flat would not per se be sufficient to hold that the purchase was for commercial purposes, the decision of the Fora below, laying down an abstract proposition that if more than one residential unit is purchased by one person, he ceases to be a 'consumer', cannot be sustained.

    8. At this stage, it is submitted by learned Senior Counsel, appearing for the Developer,

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    that since there is a divergence of opinion between the Benches of this Commission on the afore-noted issue, the case may be referred to a Larger Bench.

    9. Having regard to the pleadings in the case and the fact that lately there appears to be no divergence of opinion on the point, we do not find it to be a fit case for reference to the Larger Bench. Accordingly, the prayer is rejected.

    10. Consequently, the Appeal is allowed; the impugned order is set aside; and the Complaint is restored to the board of the State Commission for adjudication on merits. The Appellant shall be entitled to costs, which are quantified at ₹20,000/-.

    11. Since the Complaint was filed as far back as in the year 2010, we request the State Commission to take a final decision in the case as expeditiously as practicable and in any case not later than three months from the date of receipt of a copy of this order, more so, when it is pointed out that the case is ripe for final hearing, inasmuch as even the written submissions have also been filed by the parties.

    12. The parties/their Counsel are directed to appear before the State Commission on 13.02.2017 for further proceedings.

    13. The Appeal stands disposed of in the above terms.

    ......................J

    D.K. JAIN

    PRESIDENT

    ......................

    M. SHREESHA

    MEMBER

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    Akshay Sood v. Pal Infrastructure & Developers Pvt Ltd.
    (Jan 2, 2017)