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Monday, July 25, 2016

whether the appellant-complainant falls within the definition of “consumer” under Section 2(1)(d) read with the Explanation thereto of the Act. = 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. Therefore, the irresistible conclusion is that the appellant is a consumer under the Act. = As the impugned orders will show, the District Forum had allowed the claim of the appellant. The State Commission had dismissed the appeal holding that the claim of the appellant was not entertainable under the Act, he being not a consumer and the said order has been given the stamp of approval by the National Commission. Therefore, there has to be appropriate adjudication with regard to all the aspects except the status of the appellant as a consumer by the appellate authority. Consequently, the appeal is allowed, the judgments and orders passed by the National Commission and the State Commission are set aside and the matter is remitted to the State Commission to re-adjudicate the matter treating the appellant as a consumer. We hereby make it clear that we have not expressed any opinion on the merits of the case. In the facts and circumstances of the case, there shall be no order as to costs.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO. 944  OF 2016
             (@ Special Leave Petition (Civil) No.1633 of 2015)


BUNGA DANIEL BABU                               Appellant (s)

                                   VERSUS

M/S SRI VASUDEVA CONSTRUCTIONS    Respondent(s)
& ORS


                               J U D G M E N T

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.[1].   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 Morgan Stanley Mutual Fund v.  Kartick  Das[2]  the  question  that
arose before a three-Judge Bench was whether  the  prospective  investor  in
future goods could be treated as a  consumer.   Answering  the  question  in
favour of the appellant, the Court opined that a prospective  investor  like
the respondent was not a consumer.   However,  a  passage  relating  to  the
description of consumer from the said authority is worth reproducing:-

“The consumer  as  the  term  implies  is  one  who  consumes.  As  per  the
definition, consumer is the one who  purchases  goods  for  private  use  or
consumption. The meaning of the word ‘consumer’ is  broadly  stated  in  the
above definition so as to include anyone who consumes goods or  services  at
the end of the chain of production. The  comprehensive  definition  aims  at
covering every man who pays  money  as  the  price  or  cost  of  goods  and
services. The consumer deserves to get what he pays  for  in  real  quantity
and true quality. In every society, consumer remains the centre  of  gravity
of all business and  industrial  activity.  He  needs  protection  from  the
manufacturer, producer, supplier, wholesaler and retailer.”


9.    In Lucknow Development  Authority  v.  M.K.  Gupta[3],  the  two-Judge
Bench adverted to the concept  of  “consumer”  as  defined  under  the  Act.
Analysing the definition in the context of the Act, the Court held:-

“It is in two  parts.  The  first  deals  with  goods  and  the  other  with
services. Both parts first declare the meaning of goods and services by  use
of wide expressions. Their ambit is further enlarged  by  use  of  inclusive
clause. For instance, it  is  not  only  purchaser  of  goods  or  hirer  of
services but even those who use  the  goods  or  who  are  beneficiaries  of
services with approval of the person who purchased the goods  or  who  hired
services are included in it. The legislature has taken precaution  not  only
to define ‘complaint’, ‘complainant’, ‘consumer’  but  even  to  mention  in
detail what would amount to unfair trade practice  by  giving  an  elaborate
definition in clause (r) and even to define  ‘defect’  and  ‘deficiency’  by
clauses (f) and (g) for which a consumer can approach  the  Commission.  The
Act thus aims to protect the economic interest of a consumer  as  understood
in commercial sense as a purchaser of goods and in the larger sense of  user
of services. The common characteristics of goods and services are that  they
are supplied at a price to cover the costs and  generate  profit  or  income
for the seller of goods or provider of services. But the defect in  one  and
deficiency in other may have to be removed and compensated differently.  The
former is, normally, capable of being  replaced  and  repaired  whereas  the
other may be required to be compensated by award of the just  equivalent  of
the value or damages for loss.”

10.   While adverting to the term “service” as defined in  clause  (o),  the
Court ruled:-

“In other words service which is not  only  extended  to  actual  users  but
those who are capable of using it are covered in the definition. The  clause
is thus very wide and extends to any or all actual or potential  users.  But
the legislature did not stop there. It expanded  the  meaning  of  the  word
further in modern sense by extending it  to  even  such  facilities  as  are
available to a consumer in connection with banking, financing etc.  Each  of
these are wide-ranging activities in day to day life.  They  are  discharged
both by statutory and private bodies. In absence of any indication,  express
or implied there is no reason  to  hold  that  authorities  created  by  the
statute are beyond purview of the Act.”


11.   The abovementioned definition  was  amended  in  the  year  1993.  The
definition  under  Section  2(1)(d)  that  defined  “consumer”   after   the
amendment of 1993 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 or avails of 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 or avails of 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;

Explanation.—For the purposes of sub-clause (i), “commercial  purpose”  does
not include use by a consumer of goods bought and used  by  him  exclusively
for the purpose of earning his livelihood, by means of self-employment.”



12.   In Laxmi Engineering Works v. P.S.G.  Industrial  Institute[4],  while
dealing  with  the  connotative  expanse  of  the  term  “consumer”  in  the
unamended definition, the Court considering the  Explanation  added  by  the
Consumer Protection (Amendment) Act, 1993 (50 of 1993) ruled that  the  said
Explanation  is  clarificatory  in  nature  and  applied  to   all   pending
proceedings.  Further proceeding, the Court held that:-

“……..
(ii) Whether  the  purpose  for  which  a  person  has  bought  goods  is  a
“commercial purpose” within the meaning  of  the  definition  of  expression
‘consumer’ in Section 2(d) of the Act is always a question  of  fact  to  be
decided in the facts and circumstances of each case.

(iii) A person who buys goods and uses them  himself,  exclusively  for  the
purpose of earning his livelihood, by means  of  self-employment  is  within
the definition of the expression ‘consumer’.”

13.   It is necessary  to  state  here  that  in  the  said  case  prior  to
recording  its  conclusions,  the  Court  has  elaborately  dealt  with  the
definition of “consumer” under Section 2(1)(d)(i) and Explanation  added  by
1993 amendment Act.  Because of what we are going to ultimately say in  this
case, we think seemly to reproduce the relevant  discussion  from  the  said
authority:-

“11. Now coming back to the  definition  of  the  expression  ‘consumer’  in
Section 2(d), a consumer means insofar as is relevant  for  the  purpose  of
this appeal, (i) a person who  buys  any  goods  for  consideration;  it  is
immaterial whether the consideration is paid or  promised,  or  partly  paid
and partly promised, or whether the payment of  consideration  is  deferred;
(ii) a person who uses such goods with the approval of the person  who  buys
such goods for consideration; (iii) but does not include a person  who  buys
such goods  for  resale  or  for  any  commercial  purpose.  The  expression
‘resale’ is clear enough. 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” (Chamber’s  Twentieth
Century Dictionary); it means  “connected  with,  or  engaged  in  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” (Concise  Oxford  Dictionary).
The National 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)(i)
of the Act. Broadly affirming the said view and  more  particularly  with  a
view to obviate any confusion — the expression “large scale” is not  a  very
precise expression — Parliament stepped in  and  added  the  explanation  to
Section 2(d)(i) by 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.”

14.   In Kalpavruksha Charitable Trust v. Toshniwal Brothers  (Bombay)  Pvt.
Ltd. and another[5]  reiterating the principles stated in Laxmi  Engineering
Works (supra), the Court ruled  whether  a  person  would  fall  within  the
definition of “consumer” or not would be a question of fact in  every  case.
In the said case, the National Commission had  already  returned  a  finding
that the appellant therein  was  not  a  “consumer”  as  the  machinery  was
installed for  commercial  purpose.   An  argument  was  advanced  that  the
activity of a charitable institution, though commercial  in  nature,  was  a
part of charitable activity. For the said purpose, reliance  was  placed  on
CIT v. Surat Art Silk Cloth  Manufacturers’  Association[6].  The  two-Judge
Bench distinguished the said verdict on the ground that it  was  a  decision
rendered under the Income Tax Act.  It was also  urged  there  that  if  the
dominant object of the trust or  institution  is  charitable,  the  activity
carried on by it would not be treated as an activity for profit. To  bolster
the said submission, the authority in CIT v. Federation of  Indian  Chambers
of Commerce and Industries[7] was commended to the Court but  the  same  was
not accepted on the foundation that  the  verdict  was  in  the  context  of
Income Tax Act. Eventually, the Court held thus:-

“In the instant case, what is to be considered is whether the appellant  was
a “consumer” within the meaning of the Consumer Protection  Act,  1986,  and
whether the goods in question were obtained by him for “resale” or  for  any
“commercial purpose”. It is the case of the  appellant  that  every  patient
who is referred to the Diagnostic Centre of  the  appellant  and  who  takes
advantage of the CT scan, etc. has to pay for it and  the  service  rendered
by the appellant is not free. It is also the  case  of  the  appellant  that
only ten per cent of the patients are provided free service. That being  so,
the “goods” (machinery) which were obtained  by  the  appellant  were  being
used for “commercial purpose”.”

15.   The purpose  of  referring  to  the  aforesaid  pronouncements  is  to
appreciate the views expressed by this Court from time to time prior to  the
amendment in 2002 and also the philosophy  behind  the  consumer  protection
and the concept of rendition of service.  It is necessary  to  mention  here
that the definition of the term “consumer” has been amended by the  Consumer
Protection (Amendment) Act, 2002 (62 of 2002) with effect  from  15.03.2003.
Be it stated, clause 2(1)(d)(ii) was substituted.   We think it  appropriate
to reproduce the same:-

“Section 2(1)(d) "consumer" means any person who—

        x        x           x          x          x

(ii) hires or avails of 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 or avails of 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 but does not include a person who avails of  such
services for any commercial purpose;

Explanation.—For the purposes of this clause, “commercial purpose” does  not
include use by a person of  goods  bought  and  used  by  him  and  services
availed by him exclusively for the purposes of  earning  his  livelihood  by
means of self-employment.”



16.   The bold portions indicate the nature of amendment in  the  definition
of the word “consumer”.  In the first part  it  excludes  services  for  any
commercial purpose.  After  the  amendment  the  decisions  that  have  been
rendered by this Court require careful consideration.  As  has  been  stated
earlier, on behalf of the complainant  heavy  reliance  was  placed  on  the
authority in Faqir Chand Gulati (supra) but the same has been  distinguished
by the National Commission.

17.   The decision in Faqir Chand Gulati (supra), we are disposed to  think,
requires appropriate appreciation.  Be it noted, it is relatable to a  stage
where the amended definition had  not  come  into  existence.   Despite  the
same, it is noticeable that the principles laid down therein  are  pertinent
and significant to the existing factual scenario.  In  the  said  case,  the
Court while  dealing  with  a  building  construction  agreement  between  a
landowner and a builder, was required to decide whether the owner of a  plot
of land could maintain a complaint under the Act  claiming  that  he  was  a
consumer and the builder, a service provider.   The  two-Judge  Bench  after
referring to various authorities opined thus:-

“20. There is no dispute or doubt that a complaint under  the  Act  will  be
maintainable in the following circumstances:
(a) Where the owner/holder of a land who has entrusted the  construction  of
a house to a contractor, has a  complaint  of  deficiency  of  service  with
reference to the construction.
(b) Where the purchaser or intending purchaser  of  an  apartment/flat/house
has  a  complaint  against   the   builder/developer   with   reference   to
construction or delivery or amenities.

But we are concerned with a third hybrid category which is popularly  called
as “joint-venture agreements” or “development agreements” or  “collaboration
agreements” between a landholder and a builder. In  such  transactions,  the
landholder provides the land. The builder puts up  a  building.  Thereafter,
the landowner and builder share the constructed area. The  builder  delivers
the “owner’s share” to the landholder and  retains  the  “builder’s  share”.
The landholder sells/transfers undivided share(s) in the land  corresponding
to the builder’s share of the building to the builder or his nominees. As  a
result each  apartment  owner  becomes  the  owner  of  the  apartment  with
corresponding undivided share in the land and  an  undivided  share  in  the
common areas of the building. In such a contract, the owner’s share  may  be
a single apartment or several  apartments.  The  landholder  who  gets  some
apartments may retain the same or may dispose of  his  share  of  apartments
with corresponding undivided shares to others. The usual  feature  of  these
agreements is that the landholder  will  have  no  say  or  control  in  the
construction. Nor will he have any say as to  whom  and  at  what  cost  the
builder’s share of apartments are to be dealt with or disposed of. His  only
right is to demand delivery of his share of constructed area  in  accordance
with the specifications. The  builders  contend  that  such  agreements  are
neither contracts for construction, nor contracts for  sale  of  apartments,
but are contracts entered for mutual  benefit  and  profit  and  in  such  a
contract, they are not “service providers” to  the  landowners,  but  a  co-
adventurer with the landholder in a “joint venture”, in developing the  land
by putting up multiple-housing (apartments) and sharing the benefits of  the
project. The question is whether such agreements are  truly  joint  ventures
in the legal sense.
               x           x          x          x          x
25. An  illustration  of  joint  venture  may  be  of  some  assistance.  An
agreement between the owner of a land and a  builder,  for  construction  of
apartments and sale of those apartments so as to  share  the  profits  in  a
particular ratio may be a joint  venture,  if  the  agreement  discloses  an
intent  that  both  parties  shall   exercise   joint   control   over   the
construction/development  and  be  accountable  to  each  other  for   their
respective acts with reference to the project.

      x          x           x          x          x
29. It is, however, true that where the contract is  a  true  joint  venture
the scope of which has been pointed  out  in  paras  21  to  25  above,  the
position will be different. In a true joint venture  agreement  between  the
landowner and another (whether a recognised builder or fund  provider),  the
landowner is a true partner  or  co-adventurer  in  the  venture  where  the
landowner has a say or control in the construction and participates  in  the
business and management of the  joint  venture,  and  has  a  share  in  the
profit/loss of the venture. In such a case, the landowner is not a  consumer
nor is the other co-adventurer in the joint  venture,  a  service  provider.
The  landowner  himself  is  responsible  for  the  construction  as  a  co-
adventurer in the venture. But such true joint  ventures  are  comparatively
rare. What is more prevalent are agreements of  the  nature  found  in  this
case, which are a hybrid agreement for construction  for  consideration  and
sale and are pseudo joint ventures.  Normally  a  professional  builder  who
develops properties of others is not interested in sharing the  control  and
management of the business or the control over  the  construction  with  the
landowners. Except assuring the landowner a certain constructed area  and/or
certain  cash  consideration,  the  builder  ensures  absolute  control   in
himself, only assuring the quality of construction and compliance  with  the
requirements of local and municipal laws, and  undertaking  to  deliver  the
owners’ constructed area of the building with all  certificates,  clearances
and approvals to the landowner.”
                                                            [Emphasis added]

18.   It worthy to note that in the said case  a  stand  was  taken  by  the
respondent that the agreement was a ‘collaboration agreement’ as it  was  so
titled.  Emphasis was laid  on  the  fact  that  the  agreement  showed  the
intention to collaborate and, therefore, it was a joint venture.  The  Court
ruled that the title or caption or nomenclature of  the  instrument/document
is   not   determinative   of   the   nature   and    character    of    the
instrument/document, though the name usually gives some  indication  of  the
nature of the document and, therefore, the use of the words ‘joint  venture’
or ‘collaboration’ in the title of an agreement or even in the body  of  the
agreement will not make the transaction a joint venture,  if  there  are  no
provisions  for  shared  control  of  interest  or  enterprise  and   shared
liability for losses.   After so stating, the  Court  proceeded  to  observe
that if there is a breach by the land owner of his obligations, the  builder
will have to approach a civil court as the land owner is not  providing  any
service to the builder but merely  undertakes  certain  obligations  towards
the builder, breach of which would furnish a cause of  action  for  specific
performance and/or damages.  It has also been stated therein that while  the
builder commits breach of his obligations, the owner  has  two  options;  he
has the right to  enforce  specific  performance  and/or  claim  damages  by
approaching civil court or  can  approach  consumer  forum  under  the  Act.
In the course of delineation, the Court proceeded to state:-

“But the important aspect is the availment of services  of  the  builder  by
the landowner for a house construction (construction of  the  owner’s  share
of the building) for a consideration. To that extent,  the  landowner  is  a
consumer, the builder is a service provider and if there  is  deficiency  in
service in regard to construction, the dispute raised by the landowner  will
be a consumer dispute. We may mention that it makes no difference  for  this
purpose  whether  the  collaboration  agreement  is  for  construction   and
delivery of one apartment or one floor to the owner or  whether  it  is  for
construction and delivery of multiple apartments or more than one  floor  to
the owner. The principle  would  be  the  same  and  the  contract  will  be
considered as one for house construction for consideration….”

19.    In  our  considered  opinion,  the  aforesaid  passage  is  extremely
illuminative.  It can be unhesitatingly stated that though  the  controversy
in the said case had arisen before the amendment  of  2002,  the  principles
laid down  therein  would  apply  even  after  the  amendment  if  the  fact
situation comes within the four corners of the aforestated  principles.   In
this context, we may usefully refer to the recent  pronouncement  in  Punjab
University v. Unit Trust of India and others[8] wherein a  two-Judge  Bench,
while dealing with the term “consumer”,  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.   Be  it  noted,  the  Court  was
considering whether the deposit of money in mutual fund scheme could  amount
to  availing  of  services  for  “commercial  purposes”.   The  Court  after
referring to few passages from Laxmi Engineering Works (supra) has  observed
that:-

“21. It is thus seen from the above extracts from Laxmi Engg. Works  (supra)
that Section 2(1)(d)(i) is discussed exclusively by this Court.  We  are  of
the opinion that clauses (i) and (ii) of Section 2(1)(d) of the Act must  be
interpreted harmoniously and  in  light  of  the  same,  we  find  that  the
Explanation following Section 2(1)(d)(ii) of the Act would be  clarificatory
in nature and would apply to the present case and as held by this  Court  in
Laxmi  Engg.  Works  (supra),  the  term  “commercial   purpose”   must   be
interpreted considering the facts and circumstances of each case.”


      Though the said decision was rendered in a different context, yet  the
principle that commercial purpose is required to be interpreted  considering
the  facts  and  circumstances  of  each  case  has  been  reiterated.    We
respectfully concur with the same.
20.   The obtaining factual matrix has to be tested  on  the  touchstone  of
the aforestated legal position.  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).  We  think  it
appropriate to reproduce the relevant clauses from the MOU:-
“3.   The apartments shall be shared by the owner and  the  builder  in  the
proportion of 40% and  60%  respectively  in  the  built-up  area  including
terrace rights all  additional  constructions  in  the  said  complex.   The
common areas shall be enjoyed jointly.
                                 xxxxx xxxxx

5.    The builder shall commence construction and complete the  same  within
a period of nineteen months from the date of granting of  approval  for  the
plans  by  the  Municipal  Corporation,  Visakhapatnam.   In  case  of  non-
completion of the constructions in the complex within  the  above  mentioned
time, builder should pay rent Rs.2,000/- per month for each flat  in  a  40%
share of the owner.

                                 xxxxx xxxxx

11.   The builder shall pay a sum of Rs.5 lakhs (Rupees five lakhs only)  to
the owner as interest free security deposit.  The security deposit  of  Rs.5
lakhs shall be refunded at the time of completion of the  apartment  by  way
of cash.

                                 xxxxx xxxxx

15.   The owner hereby agrees that out of his  40%  share  in  the  built-up
area of the Apartment complex to be given to him by the builder,  the  owner
shall register one flat of his choice of a value  of  Rs.6,00,000/-  in  the
fourth floor of the said building in favour of the builder  or  his  nominee
towards the cost of the items set out in the specifications hereto  attached
agreed to be provided by the builder for the benefit of  the  owner  in  the
apartments intended for the share of the owner.  In case  the  cost  of  the
flat is found to be more or less than Rs.6 lakhs, then  both  parties  shall
adjust the difference by payment of the same by way of cash.”


21.   On a studied scrutiny of the aforesaid clauses, 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.  Therefore,  the  irresistible  conclusion  is  that  the
appellant is a consumer under the Act.

22.   As the impugned orders will show, the District Forum had  allowed  the
claim of the appellant.  The  State  Commission  had  dismissed  the  appeal
holding that the claim of the appellant  was  not  entertainable  under  the
Act, he being not a consumer and the said order has been given the stamp  of
approval  by  the  National  Commission.   Therefore,  there   has   to   be
appropriate adjudication with regard to all the aspects  except  the  status
of the appellant as a consumer by the  appellate  authority.   Consequently,
the appeal is allowed, the judgments  and  orders  passed  by  the  National
Commission and the  State  Commission  are  set  aside  and  the  matter  is
remitted to the State Commission to re-adjudicate the  matter  treating  the
appellant as a  consumer.   We  hereby  make  it  clear  that  we  have  not
expressed any opinion  on  the  merits  of  the  case.   In  the  facts  and
circumstances of the case, there shall be no order as to costs.



                                                   ………...................J.
[Dipak Misra]



New Delhi.
.............................J.
July 22, 2016.                               [N.V. Ramana]
-----------------------
[1]

      [2] (2008) 10 SCC 345
[3]

      [4]  (1994) 4 SCC 225
[5]

      [6] (1994) 1 SCC 243
[7]

      [8]  (1995) 3 SCC 583
[9]

      [10] (2000) 1 SCC 512
[11]

      [12] (1980) 2 SCC 31
[13]

      [14] (1981) 3 SCC 156
[15]

      [16] (2015) 2 SCC 669


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