Omkar Realtors And Developers Pvt. Ltd vs Kushalraj Land Developers Pvt. Ltd

2024 INSC 629 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.858 OF 2023

OMKAR REALTORS AND DEVELOPERS PVT. LTD. …APPELLANT(S)

VERSUS

KUSHALRAJ LAND DEVELOPERS PVT. LTD. & ANR. …RESPONDENT(S)

JUDGMENT

PANKAJ MITHAL, J.

1. This is a statutory appeal under Section 67 of the

Consumer Protection Act, 20191.

2. The challenge in the appeal is to the judgment and order

dated 23.12.2022 passed by the National Consumer

Disputes Redressal Commission2 in Consumer Complaint

No.141 of 2020. NCDRC by the said judgment and order Signature Not Verified Digitally signed by Indu Marwah has partly allowed the complaint of the respondent and Date: 2024.08.23 18:35:26 IST Reason:

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hereinafter referred to as ‘the Act’ 2 in short ‘NCDRC’

1 directed the appellant to refund within 2 months an

amount of Rs.7,16,41,493/- (Rupees Seven Crore Sixteen

Lakh Forty One Thousand Four Hundred and Ninety

Three only) along with delay compensation @ 6% per

annum from the respective dates of deposits till its

payment, failing which the rate of interest payable would

stand increased to 9% per annum.

3. The respondent is a private limited company in the

business of real estate development. It booked a flat for

residential use of one of its directors and his family

members with the appellant on 22.09.2015 in its project

‘Omkar 1973 Worli’ on payment of booking amount of

Rs.51,00,000/- (Rupees Fifty One Lakh only).

Subsequently, respondent paid part consideration i.e. a

total of Rs.6,79,97,071/- (Rupees Six Crore Seventy Nine

Lakh Ninety Seven Thousand and Seventy One only) to

appellant.

4. Thereafter, the respondent was issued an Allotment

Letter dated 29.06.2016 with addenda dated 30.06.2016

whereby Flat No.5001, 50th Floor, Tower-B of the said

project was allotted to it on a total sale consideration of

2 Rs.34,50,00,000/- (Rupees Thirty Four Crore Fifty Lakh

only). The date of possession was mentioned as latest by

31.12.2018 in the letter of allotment.

5. The appellant on 08.03.2017 advanced the date of

possession from 31.12.2018 to the first quarter of 2017.

On the basis of the part occupancy certificate received by

appellant on 07.03.2017 from Slum Rehabilitation

Authority, the respondent was asked to take possession

of the allotted flat immediately and was directed to pay

the balance amount of Rs.28,87,80,526/- (Rupees

Twenty Eight Crores Eighty Seven Lakhs Eighty

Thousand Five Hundred Twenty Six only) within 30 days.

6. The respondent tried to arrange necessary finance for the

purpose through financial institutions but failed. The

respondent, through the correspondence with the

financial institutions, came to know that the flat allotted

to him, is already reserved/allotted to one Mr. Nakul

Arya. The respondent on 18.03.2017, probably for want

of arrangement of necessary funds, part occupancy

certificate and due to the allotment of the said flat to one

another person, declined to take possession and to pay

3 the balance amount as required by the appellant. The

appellant, thus, cancelled the booking/allotment of the

respondent vide Termination Letter dated 31.08.2017.

7. The respondent, thus, issued a letter dated 22.09.2017

seeking refund of the entire amount of Rs.7,16,41,493/-

(Rupees Seven Crore Sixteen Lakh Forty One Thousand

Four Hundred and Ninety Three only) along with interest.

The appellant, instead of refunding the amount, vide

letter dated 18.11.2017 forfeited the amount deposited by

the respondent.

8. In the above background, the respondent approached the

NCDRC complaining about the deficiency in services and

of adopting unfair trade practices with the prayer to

refund the entire amount deposited by it with 18%

interest along with litigation expenses and compensation

for mental harassment and torture.

9. The appellant contested the complaint by filing its written

reply alleging that the respondent is not a consumer

within the purview of Section 2 (7) of the Act. It alleged

that since respondent is a real estate development

company and that it had purchased the flat for

4 commercial purpose, therefore, the complaint is not

maintainable. The allotment of the respondent was rightly

cancelled as despite demand it failed to pay the balance

sale consideration. The appellant had the right to

advance the date of delivery of possession and that there

was no stipulation that the possession would be offered

to the respondent only on the receipt of full occupancy

certificate.

10. Basically, two points arose before the NCDRC for

adjudication. First, whether the complaint, as filed by the

respondent, was maintainable inasmuch as respondent

was alleged not be a ‘consumer’ within the meaning of

Section 2(7) of the Act. Secondly, whether there was any

deficiency in service on part of the appellant or whether

the appellant was justified in terminating the allotment of

the respondent and forfeiting the deposits.

11. The NCDRC allowed the complaint holding the

respondent to be a ‘consumer’ under Section 2 (7) of the

Act, relying upon the decisions of this Court in Lilavati

Kirtilal Mehta Medical Trust vs. Unique Shanti

5 Developers and Others3 and Crompton Greaves

Limited and Others vs. Daimler Chrysler India Private

Limited4. In context with the deficiency and unfair trade

practice, if any, adopted by the appellant, NCDRC opined

that the appellant had created confusion by double

allotment of the flat in question. It was first allotted to

one Nakul Arya on 10.04.2013 and then to the

respondent on 29/30.06.2016. The controversy with

regard to the aforesaid double allotment was resolved by

the rectification deed executed on 17.03.2018. Therefore,

the NCDRC held that the appellant was not justified in

cancelling the booking/allotment of the respondent and

forfeiting the amount deposited by respondent before

resolving the controversy of double allotment. Thus, it

was held that there was deficiency in service on the part

of appellant.

12. We have heard Shri Vinay Navare, learned senior counsel

for the appellant and Smt. Malvika Kapila, learned

counsel for the respondent and have perused the

3 (2020) 2 SCC 265 4 2016 SCC OnLine NCDRC 2121

6 impugned judgment and order of the NCDRC as well as

the other relevant documents relied upon by the parties.

13. The first issue regarding the maintainability of the

complaint of the respondent-claimant on the plea that it

is not a consumer, is no longer res integra. It is more or

less covered by the two decisions which have been relied

upon by the NCDRC. In Lilavati case (supra), the

Medical Trust that had purchased houses for the nurses

was held to be a ‘consumer’ under the Act and its action

in purchasing the houses was not held to be a

commercial activity. In Crompton Greaves case (supra),

the services availed for the personal use of the director of

the company were not held to be for commercial

purposes.

14. Section 2 (7) of the Act defines “consumer” to mean any

person who buys any goods for a consideration but does

not include a person who obtains such goods for resale or

for any commercial purpose. Therefore, purchase and

sale of goods for resale or for commercial purpose is

excluded from the purview of the definition of

“consumer”.

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15. In a very recent decision of this Court in M/s Daimler

Chrysler India Pvt. Ltd. vs. M/s Controls &

Switchgear Company Ltd. & Anr., Civil Appeal No. 353

of 2008 decided on 09.07.2024 wherein one of us

(Hon’ble P. Mithal, J.) was a member, this Court after

considering all earlier decisions on the subject including

Lilavati Kirtilal Mehta Medical Trust (supra) and

National Insurance Company Ltd. vs. Harsolia

Motors and Ors.5 ruled that in sum and substance to

determine whether the goods purchased by a person

(which would include a legal entity like a company) were

for commercial purpose or not within the meaning of the

Act would depend upon the facts and circumstances of

each case. However, ordinarily “commercial purpose” is

understood to include manufacturing/industrial activity

or business-to-business transactions between

commercial entities. The purchase of the goods should

have a close and direct nexus with a profit generating

activity. If it is found that the dominant purpose behind

purchasing the goods was for the personal use and

5 (2023) 8 SCC 362

8 consumption of the purchaser and/or the beneficiary, or

was otherwise not linked with other commercial activities,

the question whether such a purchase was for the

purpose of “generating livelihood by means of self-

employment” need not be looked into. In short, the

dominant intention or the dominant purpose of the

transaction is to be looked into to find out if it had any

nexus with some kind of profit generation as part of the

commercial activities.

16. In the case at hand, the complainant specifically

mentions that the flat was being purchased for the

purpose of residence of one of its Directors and his family

and that the company is a family owned company. The

mere fact that the respondent-company is a real estate

company, it does not mean that the flat was purchased

by it for commercial purpose or for resale so as to earn

profits. It is the appellant who is contending that the

respondent is not a consumer and as such the complaint

is not maintainable, therefore, the burden lies heavily

upon it to lead evidence to prove that the respondent in

purchasing the flat in question is indulging in real estate

9 business. There is no evidence on record to show that the

flat so purchased by the respondent was in any way

connected with the real estate business rather than for

personal use of its Director and his family.

17. In view of the aforesaid facts and circumstances of the

case and the law as has been culled out above, we do not

find any error or illegality in the finding of the NCDRC

that the purchase of the aforesaid flat was for personal

use and not as part of the commercial activity and as

such the complaint filed by the respondent was

maintainable.

18. The second issue is regarding deficiency in service or

unfair trade practice on part of the appellant in the

matter of allotment of the flat in question in favour of the

respondent and in its cancellation resulting in the

forfeiture of the amount deposited.

19. Undisputedly, the flat in question was allotted in favour

of the respondent vide letter dated 29.06.2016 with an

addendum dated 30.06.2016. The delivery of possession

was notified by the appellant as latest by 31.12.2018 but

was advanced to the first quarter of 2017. Thus, in order

10 to make finance arrangements, respondent entered into

negotiation with the finance company whereupon it was

revealed that the said flat stood already reserved/allotted

in favour of one Mr. Nakul Arya. The aforesaid fact of

reservation/allotment of the flat in favour of Mr. Nakul

Arya is not in dispute. The explanation is that the flat

allotted to the respondent and Mr. Nakul Arya were

different but there was confusion with regard to the

number of the flat allotted to each one of them. This

confusion with regard to double allotment of the flat

persisted till it was resolved by the appellant as per the

deed of rectification dated 17.03.2018. It means that the

confusion of double allotment of the flat notwithstanding

some litigation in court prevailed and was finally resolved

on 17.03.2018. In this view of the matter, the appellant

could not have insisted for transferring possession of the

flat and could not have terminated the allotment of the

respondents vide its letter dated 31.08.2017 i.e. prior to

the resolution dated 17.03.2018. At the same time, the

appellant instead of refunding the amount deposited by

the respondents, forfeited the same vide letter dated

11 18.11.2017. Since the very cancellation/ termination of

the allotment of the respondents in the facts and

circumstances of the case is not justified, consequently

the forfeiture is also bad in law. The NCDRC upon

consideration of the above facts and circumstances,

irrespective of the fact that the appellant may have the

power to advance the date of delivery of possession of the

flat allotted or offer possession on the basis of part

occupancy certificate, rightly held that the appellant was

guilty of adopting unfair trade practice and since there

was double allotment of the flat, there was deficiency in

service.

20. In the light of the above discussion, we agree with the

NCDRC that the complaint of the respondents was

maintainable and that since the services rendered by the

appellant were held to be deficient. It has thus rightly

issued directions to refund the forfeited amount of

Rs. 7,16,41,493/- along with the delay compensation @

6% per annum from the date of deposit till refund within

two months, failing which the interest would be payable

@ 9% per annum.

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21. The appellant is directed to refund a sum of

Rs. 3,00,00,000/- (Rupees Three Crore only) out of the

total amount, as directed to be refunded, within a period

of two weeks from today and the balance be refunded on

or before 31st December, 2024 either in lump sum or in

piecemeal, failing which it will be open for the Collector

concerned to recover the entire amount as arrears of land

revenue.

22. The present appeal thus lacks merit and is dismissed

with no order as to costs.

...................………………………….. J.

(PAMIDIGHANTAM SRI NARASIMHA)

.............……………………………….. J.

(PANKAJ MITHAL) NEW DELHI;

AUGUST 23, 2024.

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