Builder directed to pay interest at the same rate he levied on delayed payment


BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, MAHARASHTRA, MUMBAI

                                                   Consumer Complaint No.CC/13/198

Mrs. Shruti Kirti Laddha,

Mr.Kirti Shivchandra Laddha,

Both R/at: 15, Staff Quarters, 2nd Floor, Institute of Chemical Technology, Matunga (E), Mumbai 400 019. …..                                                                                               Complainant(s)

                                         Versus

M/s. G.A. Builders (RNA Corpn. Group Company),

Through its Group Chairman,

Mr.Anil Aggarwal

            and

Managing Director Mr. Anubhav Aggarwal,

Having their office at: RNA Corporation Park, Next to Collector’s Office, Kalanagar, Bandra (E), Mumbai 400 051. ………………….Opponent(s)

 

BEFORE: Hon’ble Mr. Justice A.P. Bhangale, President Hon’ble Mr. Narendra Kawde, Member

For the Complainant: Advocate Mr.Vinay Rathi.

For the Opponent: None.

 

ORDER Per Hon’ble Mr.Narendra Kawde – Member:

(1) Allegations levelled by filing this consumer complaint against the opponent builder developer for failure to deliver vacant and peaceful possession of flat no.1102 on 11th floor, in the project named RNA Sagar, situated at Plot No.57, behind Apna Bazar, Pantnagar, Ghatkopar (East), Mumbai, agreed to have been sold to the complainants for total consideration of Rs.47,15,880/- even though complainants have paid substantial mount of Rs.38,04,488.15. Aggrieved thereby consumer complaint has been filed praying for directions to CC/13/198 2/7 handover legal possession of the Flat and also claimed compensation of Rs.10,00,000/- for mental and physical harassment with costs of Rs.1,00,000/-.

 

(2) It is not in dispute that the complainants have booked flat bearing no.1102 in the project developed by opponent by paying booking amount of Rs.5,00,000/- on 24/12/2009 by cheque bearing no.605889. Subsequently the complainants have paid amount of Rs.17,84,488/- by way of cheque payments which is not in dispute. Thus, the total amount paid by cheque is Rs.22,84,488/- as against the agreed consideration of Rs.47,15,880/-. It is the contention of complainants that amount of Rs.15,20,000/- was paid in cash on 24/12/2009 at the time of issuing the allotment letter. However, opponent did not issue receipt for cash payment alleged to have been paid. According to the complainants even though substantive amount against the agreed consideration is paid and they are willing to pay the balance consideration, yet, for the reasons best known to them, opponents have failed to deliver the possession.

 

(3) Opponents by filing written version tried to defend themselves on the ground that this being a redevelopment project with the co-operative society, the dispute cropped up pertaining to the use of Floor Space Index (‘F.S.I.’ in short) at the behest of co-operative housing society the matter was referred to arbitration and it was decided by the Arbitrator to restrict use of F.S.I. to 2.4 instead of 2.5 as was originally planned. Since it is redevelopment project first preference is for those old occupiers and only surplus flats constructed would have been available for sale. In view of the restrictions for use of F.S.I., construction was limited only to 11th floor instead of 16th floor as originally planned. In view of this CC/13/198 3/7 changed condition opponents are unable to accommodate the complainants to allot flat no.1102 as it was not available for sale. Opponents have always shown their willingness to refund the amount of Rs.22,84,488.15 together with interest @9% per annum under the provisions of Maharashtra Ownership of Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act (45 of 1963) (hereinafter referred to as ‘MOFA’ in short). However, the complainants have refused to accept the refund and continued to litigate. According to Opponents cost of flat was agreed to Rs.31,95,880/- and not Rs.47,15,880/- as presumed by the complainants. Opponents stoutly denied receipt of cash amount of Rs.15,20,000/- as alleged by the complainants. In view of the developments narrated above the allotment was cancelled and accordingly, complainants were repeatedly informed by e-mails, by letters to take refund of the amount paid as narrated supra.

 

(4) Heard Advocate Mr.Vinay Rathi for the complainant. None appeared for the opponent. We have perused the record and documents relied upon by the parties

 

(5) It is not in dispute that amount of Rs.22,84,488.15 has been received by the opponents. Complainants did not demonstrate the proof of cash payment of Rs.15,20,000/-. The booking form duly signed by the complainants and opponents on 24/12/2009 indicates allotment of flat 1102 with 610 sq.ft. area on 11th floor, RNA Sagar, and also it shows payment schedule attached thereto. However, total agreed consideration is not mentioned therein. It is the contention of the opponents that the total consideration was Rs.31,95,880/-. Even if it is presumed to be correct, in that CC/13/198 4/7 case even substantial amount of Rs.22,84,488.15 was accepted by the opponent in a staggering mode after booking of the flat on 24/12/2009, knowing fully that there are restrictions for use of FSI and the flat in question cannot be allotted to the complainants after accommodating the original flat owners in the redeveloped project. According to the opponents themselves, arbitration Petition 326 of 2011 before the Hon’ble Bombay High Court and the order passed therein on 05/05/2011, restricted use of the F.S.I. Even thereafter also the opposite party continued to accept the balance payment by cheques. Even though complainants have paid substantial amount, opponent failed to execute registered agreement under the provisions of Section 4 of MOFA. Non-compliance of statutory obligation to execute registered Sale Deed, per se, amounts to deficiency of service on the part of the opponents. Since it was within the knowledge of the opponent that issue pertaining to use of F.S.I. was raised and referred to arbitration, at this point of time opponents ought to have made known these developments and their inability to fulfil the obligation to allot flat to the complainants.

 

(6) According to the opponents construction upto 11th floor was permitted with certain modifications. However, there is no approved modified development plan available on record. By their own admission construction could be done upto 11th floors, it would have been possible to accommodate allotment of flat bearing no.1102 as per booking since it was located on 11th floor. There is no reason to cancel the allotment without following the due procedure and moreover, after having accepted substantial amount of more than 80% of the agreed consideration of Rs.31,95,880/-. In case the CC/13/198 5/7 said flat was not available alternate flat ought to have been made available by accepting the balance consideration for which the complainants were ready and willing. Despite submissions on various counts disputing the claim we do not find opponents have made alternative offer of availability of flat of same size to the complainants.

(7) Failure of opponent builder to execute registered agreement and handover vacant and peaceful possession of the flat by accepting balance consideration amounts not only to glaring deficiency of service but it is unfair trade practice as well on their part and therefore, they are liable for their failure as such. At the time of arguments neither Advocate nor opponent were present and therefore, Commission could not obtain present status of the project, i.e. as to how many floors are constructed, how many flats are available etc. There is no record to substantiate that the project has been completed upto 11th floor or otherwise. Accepting the huge sum and mis-utilizing for the long period without appropriating such receipted amount for the project for which it was meant is also a serious issue nothing short of unfair trade practice. Non-fulfillment of contractual and statutory obligations on the part of the opponent is undoubtedly deficiency of service and unfair trade practice under the provisions of Section 2(1)(g) and 2(1)(r) of Consumer Protection Act, 1986.

 

(8) In view of the observations aforesaid, the contractual relations still subsists between the complainants and opponent builder as consumer and service provider under the provisions of Consumer Protection Act, 1986. It is only belatedly, that the opponents tried to refund the amount with interest @9% per annum without valid and justifiable CC/13/198 6/7 reason as the documents do not demonstrate as to how the flat booked on 11th floor and use of F.S.I. was permitted upto 11th floor could not be allotted to the complainants. There is no justification on the part of the opponent for their failure to fulfil the contractual and statutory obligation under the provisions of MOFA by handing over vacant and peaceful possession of the flat in question by accepting the balance consideration of Rs.9,11,391.85/- or to offer alternative flat of the same size in the vicinity in case it is imfeasible to fulfil the obligations.

(9) On perusal of the demand notice dated 21st April, 2010 the opponents have claimed interest @21% per annum for default payment. Therefore, the refund of amount, if any, as claimed shall carry the same rate of default interest as demanded by the opponents with a view to maintain balance of equity.

 

(10) In view of the above, we hold the opponents have resorted to unfair trade practice and indulged in deficiency of service and therefore, complaint is allowed against the opponents with following directions:

 

ORDER

 

(I ) Consumer complaint is allowed with costs quantified to Rs.30,000/- (Rupees Thirty Thousand only) payable jointly and severally by the opponents to the complainants.

 

(ii) The opponents are directed to handover jointly and severally vacant and peaceful possession of Flat bearing No.1102 on 11th floor, in the building RNA Sagar, Building No.1 at Ghatkopar East, Mumbai or CC/13/198 7/7 alternative flat of same size of 610 sq.ft in the same project or in the vicinity by accepting balance consideration of Rs.9,11,391.85/- (Rupees Nine Lacs Eleven Thousand Three Hundred Ninety One and Paise Eighty Five Only) from the complainants within a period of 45 days from the date of this order.

(iii) Complainants to pay Rs.9,11,391.85 (Rupees Nine Lacs Eleven Thousand Three Hundred Ninety One and paise Eighty Five only) to the opponents within 60 days from today. In case Opponents refuse to accept the amount, the complainants are at liberty to deposit the amount with State Commission within eight days from refusal, if any. OR Alternatively at the option of the complainants to refund the amount of Rs.22,84,488/- (Rupees Twenty Two Lacs Eighty Four Thousand Four Hundred Eighty Eight only) together with default interest @21% per annum from the date of each such deposit within a period of 45 days from the date of this order. Non-compliance shall enhance the rate of interest @24% per annum on the amount to be paid till realization.

(iv) One set of complaint compilation be retained for our record and rest of the sets be returned to the complainant.

 Pronounced on 26th September, 2016.
[Justice A.P.Bhangale] President                          [Narendra Kawde] Member

Revisionary Powers of the National Consumer Commission – Section 21 (b) of the Consumer protection Act

 

Builders often drag flat purchasers through a series of litigation to discourage them from approaching courts. National Consumer Commission is discouraging such practice.

 

“Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21 (b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view that what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. IN this view of the matter, we are of the considered opinion that that the jurisdiction conferred on the National Commission under Section 21(b) of the Act has been transgressed. It was not a case where such a view could have been taken, by setting aside the concurrent finding of two fora.

  

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

     NEW DELHI

 

REVISION PETITION NO.   1566    OF 2010
(From the order dated  30.10.2009   in Appeal No. 728/2009

of the State Commission,  Maharashtra)

 

M/s R.N.A. BUILDERS (NG)

Raja Bahadur Building,

28, Bombay Samachar Marg,

fort, Mumbai-400023.                                                          … Petitioner (s)

Versus

Shri Kalikant Mishra

R/0 F-75, Sagar Kiran,

ONGC Employees CHS Ltd.,

Navghar Road, Bhayander (E),

District Thane-401105.                                            … Respondent (s)

 

For the Petitioner      :        Mohd. Wasay Khan, Advocate      

For the Respondent  :        Mr. Nagaraj V. Hoskeri, Advocate

 

REVISION PETITION NO.   1567    OF 2010
(From the order dated  30.10.2009   in Appeal No. 729/2009

of the State Commission,  Maharashtra)


M/s R.N.A. BUILDERS (NG)

Raja Bahadur Building,

28, Bombay Samachar Marg,

Fort, Mumbai-400023.

Through Mr. Narender Gupta                                … Petitioner (s)

Versus

Shri Sujit Kumar Mishra 

Through his Attorney holder

Kalikant Mishra,

R/0 F-75, Sagar Kiran,

ONGC Employees CHS Ltd.,

Navghar Road, Bhayander (E),

District Thane-401105.                                            … Respondent (s)

 For the Petitioner                :        Mohd. Wasay Khan, Advocate 

 

BEFORE:

 

HON’BLE MR.JUSTICE  V.B. GUPTA, PRESIDING MEMBER

HON’BLE MR.SURESH CHANDRA, MEMBER
                                                                                                                  

Dated 05th July, 2011

 

ORDER

 

PER JUSTICE MR. V.B. GUPTA, PRESIDING MEMBER

 

          Consumer Disputes Redressal Commission, Mumbai, Maharashtra (For short ‘State Commission’) vide common order dated 30th October, 2009 disposed of two appeals (No. 728 & 729/2009) filed by respondents Kalikant Mishra and Sujit Kumar Mishra as issues involved in these appeals were common and the builder (i.e. petitioner) is also common.

  1. Respondent/Complainant (Kalikant Mishra) filed complaint (No. 390/2007) whereas respondent/complainant (Sujit Kumar Mishra) filed complaint (No. 398/2007) before District Consumer Forum, Thane, for not giving possession of two flats to them.  According to their complainants they had purchased flat no. 401 & 402 on 4th floor in “A” Wing in the building known as ‘NG VIKAS’ and each flat is measuring 379.88 sq. ft. in area.  Cost of flat no. 401 was Rs.8,24,600/-.  Accordingly, agreement for sale was registered on 25-04-2006.  As per complainant, he paid Rs. 5,50,000/- out of Rs.8,24,600/- to the O.P. as part consideration.  Complainant further submits that he approached O.P. and requested for possession of the flat after receipt of balance consideration amount.  However, O.P. failed to hand over the flat to the complainant.

  2. In case of flat no. 402, complainant paid entire amount of Rs.8,24,600/- to the O.P. in full and final settlement of the price.  In spite of having accepted full consideration amount, O.P. failed to hand over possession of flat no. 402 to the complainant. 
  3. Therefore, separate consumer complaints were filed by both
    respondents/complainants alleging deficiency in service on the part of the builder.

  4. O.P./petitioner filed its written statement and denied allegations of the complainants.  It pleaded that cost of flat no. 401 was fixed at Rs.8,24,600/- and cost of flat no. 402 was Rs.7,38,600/- and Rs.86,000/- was fixed by O.P. for providing extra amenities.  Out of Rs.86,000/-, complainant paid only Rs.46,403/- for the extra amenities and failed to pay the balance amount of Rs.46,403/- to the O.P.  it is further pleaded that complainant has not paid entire amount of the flat.  Therefore, possession of the flat was not handed over to the complainant since complainant was facing financial crises and had not paid balance amount to the O.P.  Therefore, there was no deficiency in service on the part of O.P.

  5. After considering documents and affidavits placed before it, District consumer Forum partly allowed the complaints and directed O.P. to refund amount of Rs.5,50,000/- together with interest @ 10% p.a. from 25-04-2006.  It further directed O.P. to pay Rs.7,000/- towards cost and Rs.25,000/- for mental agony in case of flat no. 401, in complaint (no. 398 of 2007).

  6. In case of flat no. 402, in complaint (No. 390 of 2007) District forum directed the O.P. to refund amount of Rs.8,24,600/- together with interest @ 10% p.a. from 05-05-2006.  It further directed O.P. to pay Rs.10,000/- towards cost and Rs.25,000/- for mental agony.

  7. Aggrieved by the order of District Forum, respondents /complainants filed appeals before the State Commission, which vide impugned order, allowed both appeals and ordered that Clause 2 & 3 of the operative part of complaint (No.390/2007) regarding refund of consideration amount be substituted as under:–

“Respondent/Org. O.P. is directed to hand over possession of the flat no. 402 on 4th floor, ‘A’ Wing in the building known as ‘NG VIKAS’ admeasuring 379.88 sq. ft. carpet area to the appellant.”

  1. Similarly, clause Nos. 2 & 3 of the operative part of complaint (No. 398/2007) regarding refund of consideration amount be substituted as under:–

“Respondent/Org. O.P. is directed to hand over possession of the flat no. 401 on 4th floor, ‘A’ Wing in the building known as ‘NG VIKAS’ respondent/Org. O.P. is directed to hand over possession of the flat no. 402 on 4th floor, ‘A’ Wing in the building known as ‘NG VIKAS’ admeasuring 379.88 sq. ft. carpet area to the appellant after accepting balance amount of consideration.

Rest of the order stands confirmed.”

 

  1. It has been argued by learned counsel for the petitioner that respondents have not paid the entire consideration of the flats in question and as such possession cannot be handed over.  Accordingly, there is no deficiency on the part of the petitioner.

  2. It is further argued that Respondents have made alternative prayer in their complaint seeking damages and as such possession of the flats cannot be handed over to them.

  3. On the other hand, it has been argued by learned counsel for respondents that there is no infirmity or legality in the impugned order passed by the State Commission.  Petitioner is bound to hand over the possession of flats to the respondents and respondent in complaint (No. 398/2010) is willing to pay the balance amount of consideration as agreed earlier.

  4. In paras (No. 4 to 7) of both complaints, respondents /complainants have taken specific pleas with regard to the payments made by them during different periods.

  5. In written statement filed by the petitioner, there is no specific denial with regard to the payments made by the respondents /complainants as mentioned in their respective complaint. 
  6. Under these circumstances, as there is no specific denial made by the petitioner, the payments as stated in the complaints shall be deemed to be admitted as correct, except that in complaint (No. 398/2007) respondent in categorical terms has stated that he is always ready and willing to pay the final consideration amount of Rs.2,74,100/- towards the purchase of the flat.  Moreover, there is nothing on record to show that except for the balance consideration amount as admitted by respondent in complaint (No. 398/2007) any other amount is due towards any of the respondents.

  7. State Commission in its impugned order observed:–

          “Perused the record and memo of appeal and we are finding that the order passed by the Forum below in each complaint is erroneous.  Appellant has purchased two flats from Respondent and paid total amount of consideration of Rs.8,24,600/- for flat no. 402 and agreed to pay balance amount of consideration in case of Flat No. 401.  However, O.P. failed to hand over possession of the flat to the complainant.  Forum below awarded refund of consideration amount along with interest @ 10% p.a.  However, appellant has filed present appeals for possession of both the flats as Forum below has awarded only refund of the amount.

 

            We perused copy of complaint, wherein appellant has prayed for possession of both the flats namely flat nos 401 & 402 ‘A’ Wing and ready to pay balance amount of consideration of the flat no. 401.  The real estate prices have been increased tremendously and the complainant/appellant herein will not be able to purchase flat at the same rate, what was prevailing in the year 2006.  Therefore, by allowing both the appeals, we direct the Respondent /org. O.P. to hand over possession of both the flats to the appellants after accepting the balance amount in case of flat no. 401.”

 

  1. Since, it is a case, where purchaser of flat in complaints (No. 390/2007) has paid the entire consideration and purchaser of flat in complaint (No. 398/2007) is ready and willing to pay the balance amount, the petitioner/builder cannot deprive them of their legal right to have possession of both flats.

  2. Petitioner/builder, in the present case “wants to have the cake and eat it too” as in one case, admittedly it has received the entire consideration whereas in other case, certain amount is due, which the purchaser is willing to pay.

  3. Thus, petitioner being the builder, is enjoying possession of both flats as well as substantial amount of considerations paid by the respondents.  On the other hand, both respondents after having paid full amount of consideration in one case and in the other case after having paid substantial amount of consideration, are still without any roof.

  4. In Narsingh Singh through LRs & Ors. Vs. Shanti Devi through LRs & Ors.2010 (115) DRJ 601.  Delhi High Court observed;

          “It is well settled that where two Courts below have given a concurrent findings of facts, this Court under Article 227 of the Constitution of India shall not disturb the findings even if there is some mistake committed in appreciation of some part of evidence.  Under Article 227, this Court does not correct the mistakes of law or mistakes of facts.  The intervention of the this Court under Article 227 has to be only in those exceptional cases where the fora below had either not exercised their jurisdiction or had acted beyond jurisdiction or had ignored the well-settled legal proposition and acted contrary to law.”

 

  1. Supreme Court in Mudigonda Chandra Mouli Sastry vs. Bhimanepalli Bikshalu and others, (AIR 1999 (SC) 3095) observed;

“It was also not open to the High Court in exercise of its revisional jurisdiction to have indulged in a reassessment of evidence and thereby interfered with the finding of the facts recorded by the two Courts below.”

 

  1. Recently, Supreme Court in Rubi (Chandra) Dutta vs. United India Insurance Co. 2011 (3) Scale 654 observed that;

“Also, it is to be noted that the revisional powers of the National Commission are derived from Section 21 (b) of the Act, under which the said power can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order, and only then, may the same be set aside. In our considered opinion there was no jurisdictional error or miscarriage of justice, which could have warranted the National Commission to have taken a different view that what was taken by the two Forums. The decision of the National Commission rests not on the basis of some legal principle that was ignored by the Courts below, but on a different (and in our opinion, an erroneous) interpretation of the same set of facts. This is not the manner in which revisional powers should be invoked. IN this view of the matter, we are of the considered opinion that that the jurisdiction conferred on the National Commission under Section 21(b) of the Act has been transgressed. It was not a case where such a view could have been taken, by setting aside the concurrent finding of two fora.

 

  1. Such type of unscrupulous act on the part of petitioner/builder should be dealt with heavy hands who after grabbing the money from the purchasers enjoy and utilize their money but does not hand over the flats, on one pretext or the other.  Petitioner has made respondents run from one Fora to other Fora during last four years so that respondents cannot have any roof over their head and he (petitioner) can go on enjoying respondent’s money without any hindrance. 

 

  1. Since two Fora below have given detailed and reasoned orders which does not call for any interference nor they suffer from any infirmity or erroneous exercise of jurisdiction, in our opinion, the present petition is nothing but gross abuse of the process of law and the same is totally frivolous in nature, which is required to be dismissed with punitive cost of Rs. 1 Lakh (One Lakh).  Accordingly, we dismiss these petitions with cost of Rs. 1 lakh.

  2. Out of this cost, Rs.25,000/- each shall be paid to each of the respondent’s in these two petitions.

  3. Petitioner is directed to deposit the cost by way of cross cheque for a sum of Rs.50,000/- in the name of “Consumer Legal Aid Account” and two cheques in the sum of Rs.25,000/- each in the name of each of the respondents’ within four weeks from today.

  4. In case the costs are not deposited within the prescribed period, the petitioner shall be liable to pay interest @ 9% p.a. till realization. 
  5. The cost awarded to the respondents shall be paid to them only after the expiry of period of appeal or revision preferred, if any.

  6. Accordingly, both the revision petitions stand disposed of.

  7. List for compliance on 12-08-2011.

  Sd/-

……………………………J.

(V.B. GUPTA)

PRESIDING MEMBER

                                                                                                                                                                                        Sd/-

………………………………

(SURESH CHANDRA)

MEMBER

aj

 

Associate Member of Housing Society can be member of Managing Committee

Kalpit Mankikar

| TNN | Feb 2, 2015, 04.44 AM IST

 

MUMBAI:

In many old societies, senior citizens owned flats but would not show interest, and associate members were barred from participating in managing committee proceedings.


Section 2 (19) of the Maharashtra Cooperative Societies Act says an associate member jointly holds a share of the society with others, but whose name is not first in the share certificate. Rule 56M of the Maharashtra Cooperative Societies Rules, 1961, and Section 2 (19) (b) of the Maharashtra Cooperative Societies Act, 1960, state an associate member can vote and participate in elections but cannot become an office-bearer of the society where his name appears as an associate member in the society register. 

 

The state cooperative election authority (SCEA) has clarified that a housing society’s associate members can be part of the managing committee. This will be a shot in the arm for old cooperative housing societies as more residents can participate in their housing complex’s affairs.

 

http://timesofindia.indiatimes.com/city/mumbai/Associate-member-can-be-part-of-managing-panel/articleshow/46090740.cms

Representative Complaint on behalf of a large number of Consumers

 

In their order dt. 7 October 2016, The NCDRC has passed a detailed order  interpreting Section 12(1)(C) of the Consumer Protection Act, allowing home buyers who have invested in a project to be automatically made party to any case filed against a builder.

Referred to as a representative lawsuit, this can only be done if their interest, complaint or grievance is common to that of the person who has filed the complaint. The order applies to all new cases as well as old ones.

 

                    NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
                                                                     NEW DELHI
 

 

 
                                             FIRST APPEAL NO. 166 OF 2016
           
(Against the Order dated 27/01/2016 in Complaint No. 586/2015 of the State Commission Maharastra)          

 

BEFORE:  
  HON’BLE MR. JUSTICE D.K. JAIN,PRESIDENT
  HON’BLE MR. JUSTICE V.K. JAIN,MEMBER
  HON’BLE DR. B.C. GUPTA,MEMBER

 

For the Appellant :  
Mr. S.K. Sharma, Advocate
Dr. Abhishek Atrey, Advocate

 

For the Respondent :
Mr. Nikhil Jain, Advocate Mr. Anshuman Nandi, Advocate


Dated : 07 Oct 2016

 ORDER
JUSTICE V.K. JAIN, MEMBER
         

 

 Link to the full order:

 http://cms.nic.in/ncdrcusersWeb/GetJudgement.do?method=GetJudgement&caseidin=0%2F0%2FFA%2F504%2F2016&dtofhearing=2016-10-07

Builder constructs illegal flat on car parking area and sells it


Builder constructs illegal flat on car parking area and sells it

 

The Maharashtra State Consumer Commission has ordered Shreekrishna Developers – a builder to pay to a buyer –  the complainant Rs 26 lakh, the 2012 (year of filing the complaint) value of a 525 sq feet flat in the vicinity. The buyer who had taken possession of the flat in 2005 after buying it for Rs 4.95 lakh, realized that anomaly after the society refused to induct him as a member.

“From perusal of the occupancy certificate, it is seen that after getting the occupancy certificate from the corporation, the opponent (Shreekrishna Developers) has constructed the flat without the sanction of the municipal corporation. Thus, there is a clear-cut deficiency in service on the part of the opponent who also adopted unfair trade practice by carrying out the unauthorized construction and allotting the same to the complainant,“ the Maharashtra State Consumer Disputes Redressal Commission said.

The spot where the flat was constructed was to be used for parking. The space will now be handed back to the society .

The complaint was filed by flat purchaser Sunil Gade in 2012. Gade told the commission that after receiving a negative response from the society about his membership, he approached the builder. When he got no response from the builder, he issued a notice through an advocate in November 2011and requested the builder to regularise the flat from the Navi Mumbai Municipal Corporation (NMMC) at its costs. Gade however, received a reply with the remark “not claimed“. In the commission, the builder submitted that Gade himself had chosen to stay on the ground floor. It contended that as the flat was constructed on Gade’s request and the possession had already been handed over, there was no deficiency in service.

The builder further stated that if Gade did not want to continue living in the flat, he could take back his entire payment along with interest and surrender the flat.

The full decision dt. 4 October 2016 is available at the following link:

file:///C:/Users/Eleena/Downloads/judgement2016-10-04.pdf

Order of Consumer Forums – What happens if not complied with

 

A large number of cases are coming up in various Consumer Fora against the builders. They tend to take matters very lightly and tend to disobey them…..
I am reproducing an order of the State Commission, Maharashtra. The concerned builder was sent to jail for three years, unless he complies with the order before that……..

 

BEFORE THE HON’BLE STATE CONSUMER DISPUTES REDRESSAL COMMISSION,              MAHARASHTRA, MUMBAI

Execution Application No. EA/13/10 (Arisen out of order dated 3rd February, 2012 in CC/05/20)

  1. Manherlal C. Shah 47, Carnac Siding Road, Iron Market, Masjid Bunder (East), Mumbai 400 009. New Add:- 101A, Walkeshwar Road, 11, New Indrabhuwan, Near White House, Mumbai – 400006 …..                                                           Executant(s)

                                                                        Versus

1.     M/s. Siddhivinayak Builders (Proprietorship) Tulsi Tower, Second Floor, 51st Road, T.P.S. III, Borivali (West), Mumbai – 400 092. New Add – Benzer Tower, 2nd Floor, Near Sanskruti Enclave, 90ft Road, Next To IBPS, Borivali East, Mumbai 400101

2.      Mr Nitin N. Mehta (Partner of M/s Siddhivinayak Builders ) 1, Homestead, 16, Dattatryaya Road, Santacruz (W), Mumbai 54 New Add Benzer Tower, 2nd floor, Near Sanskruthi Enclave, 90ft Road, Next To IBPS Borivali E Mumbai ……………………………………………………………………………………….Opponent/Accused(s)

 

Mr. Justice A.P. Bhangale, President ….Heard Submission of both the sides on execution application u/sec 27 of Consumer Protection Act, 1986.

 

1. By final order complaint no. CC/05/20 was allowed and opponents were directed to deliver possession of Flat No.702, C- Wing, situate on 7th Floor, having carpet area of 732 sq.ft. in the building known as “Emerald Court to the complainant. While giving possession, occupation certificate was also to be ensured by the Opponents with supply of water and electricity and complainant was required to pay an amount of Rs.17,000/- in view of Clause 45 of the agreement dated 18/08/1997 as stated in Clause 4 of the judgment and award in the Complaint No.CC/05/20. At the time of receiving possession, the executant was and is ready and willing to pay the sum of Rs.17,000/- payable according to Clause 4 of the operative order. Compensation in the sum of Rs.1,00,000/- is payable by the opponent as per Clause 5 of operative part of the final order and litigation costs in the sum of Rs.10,000/- as per Clause 6. of the operative part of the final order.

 

2. In execution application in defence the opponents have stated that they (the opponent) cannot give possession of the flat (aforesaid flat) because the opponent sold the flat to third party. This cannot be valid excuse for non-compliance of the final order passed by this Commission. Ld.Advocate for the Opponents has sought to adduce some copies of documents to pray for time for compliance of final order, tried to show deed of rectification (phtostate copy), we are not impressed by such evasive submissions in respect of final order passed by us. Once order is made final, passed by the State Commission, it is duty of the 3/4 opponent to obey it and no such excuse can be pleaded which cannot be acceptable by any reasonable prudent person; the accused has to undergo jail custody. There is long standing tendency on the part of the builders/developers in city of Mumbai and Suburban areas to enter into agreement in respect of innocent flat purchaser and then to create interest in third parties, inter alia, with a view to avoid statutory obligations under Maharashtra Ownership of Flats Act, 1963 (‘MOFA’ in short). According to law we cannot accept any such excuse for non- obedience of the final order which was passed by us long back on 3rd February, 2012. When final order despite challenged in superior Forum or Court remains final there can be no excuse for non-compliance thereof by the opponents. Hence, once it is brought to our notice that final order is not yet obeyed deliberately though understood by the opponent. Possession of the flat is not given as directed, we have no other option to remand opponent/accused Mr. Nithin Mehta to imprisonment with a direction that until and unless final order is complied with the opponent/accused shall remain remanded to the jail custody and shall be sent to undergo imprisonment alike civil detenue in the jail.

 

  1. We make it clear that in the event opponent want to comply with the final order, reference be made to us through the Superintendent of Jail concerned and Complainant, if reports compliance of final order, we can immediately consider releasing the opponent/accused from detention. The jail custody shall continue for a period of three years maximum period unless and until final order is complied with by the opponents in view of Section 27 of the Consumer Protection Act, 1986. 4/4 4. At this stage, the Ld.Advocate for the opponent/accused has filed an application for bail u/sec 389 of Cr.P.C. on the ground that Commission had taken up the matter for final hearing in the execution proceedings and directed detention of the opponent/accused to the jail custody until the compliance of the final order. Since, our order is self explanatory and since the opponent/accused disobeyed the final order despite the fact that the final order is not complied since long despite evidence recorded in execution proceedings as to whey final order remained disobeyed, no justification was found for deliberate disobedience of final order. Hence, we are not inclined to grant bail as prayed for because we will not suspend our aforesaid order as it would be sending wrong signal to opponent to continue to disobey the order and deprive of the consumers of their legal right. Hence, application is rejected. Certified Copy of the order be expedited. Order accordingly.

                                            [HON’BLE Mr.Justice A.P. Bhangale]                              PRESIDENT
[HON’BLE MR. Narendra Kawde]  MEMBER

   Pronounced Dated 13th June, 2016.

25 flat buyers kept hanging by builder for 22 yrs – get justice in two years

 

The Consumer Forums are taking a much needed tough stand against erring builders who think they are above the law and are resorting to all kinds of unfair and illegal practices…

 

Swati Deshpande| TNN | Updated: Sep 23, 2016, 08.08 AM IST

 

 

MUMBAI: The Maharashtra  State Consumer Commission has come to the rescue of 25 flat buyers who put their service class life savings in booking small homes 22 years ago, only to be asked to cough up Rs 41.5 lakhs each, almost ten times the original price, to get possession. The commission said the escalated demand was nothing but “pressure tactics” and “unfair trade practice” by the builder to get the buyers to accept his offer of Rs 14 lakh and cancel the bookings in “Rajendra Kunj’ a project in Borivli (east).

The commission directed the builder, Truly Creative Developer Pvt Ltd, to hand over possession of flats in two months at the original price and with all agreed amenities. The order is to also pay damages of Rs 50,000 each to 25 buyers for the mental agony that the unprecedented delay has caused them.

The flats were booked between 1994 and 1998 by 112 persons, mostly employees of Excel Industries, at prices that ranged between Rs 4 lakh and Rs 6 lakh. Most had paid over 50% of the flat’s cost. In 2011, the developer demanded Rs 41 lakh more from each buyer and said the market rate in the vicinity was around Rs 80 lakh for similar-sized flats. The developers, Rajendra Barde and Dattatray Barde, directors of the firm, also initially offered them an 8% return on the money they had already paid. The lawyer for the buyers, Dilip Kulkarni, argued that it was not money, but flats they wanted, as entitled in law. The builder wants the buyers out so that he can sell the flats at the current market rate which would attract a price of around Rs 1 crore, they argued.

The commission panel presided over by judicial member Usha Thakare and Dhanraj Khamatkar observed that in some cases, “flats were booked in 1994, agreements executed in 2005. And no possession handed over till date”. The buyers had approached the commission in 2013. The work was stopped for a year in 1998 and three years since 2005 after disputes landed in the city civil court. But there was no stay on construction between 1999 and 2005 and since 2008. Yet the building is far from complete.

The builder’s lawyer, Ajay Karwath, resorted to every legal arsenal to have the buyers’ complaint dismissed. He questioned their status as consumers, calling them investors, and even challenged the jurisdiction of the commission which can hear claims above Rs 20 lakh. The commission said the buyers had claimed damages of Rs 60 lakh with interest. Hence, the jurisdiction was not flawed, and they were all employees who purchased small flats for their residence with a valid agreement and continued to pay amounts which the builder demanded over the years, hoping for completion and possession, hence they were consumers. “They would not have waited for 16 years to get possession if they were investors.”

 

Link to the full news:

http://timesofindia.indiatimes.com/city/mumbai/25-flat-buyers-kept-hanging-by-builder-for-22-yrs-get-justice/articleshow/54471423.cms

One Avigna Park, the first cluster development project in Mumbai……….in serious trouble……………..


One Avigna Park, the first cluster development project in Mumbai……….in serious trouble…………….
.

Mumbai: FIR against builder for FSI fraud that cost govt Rs 2,000 cr

Cops registered FIR against directors of the firm that constructed the 61-storey super luxury project — One Avighna Park at Currey Road — for allegedly forging…
MID-DAY.COM
Read the entire story at the following link: 

http://www.mid-day.com/articles/mumbai-fir-against-builder-for-fsi-fraud-that-cost-govt-rs-2000-cr/17592153

MOFA Act 1963 – FIR

 

 

MOFA Act, 1963 is a powerful Act with stringent provisions against erring builders.
The various provisions contain imprisonment of 3 years, and fine, etc.
In certain circumstances involving breach of trust, the sentence of imprisonment can go upto five years..

The offences are both cognizable as well as non bailable.
For the first time, the Maharashtra Police has issued Circular on 1 July 2016 directing its police to file FIRs under the provisions of MOFA.

The victim Flat Purchasers can take advantage of these new provisions.

There is a Supreme Court Judgement Re: Lalita Devi that all FIRs must be registered within 7 days of receiving the Complaint (later increased to 15 days). Otherwise, the Police have to intimate to the Complainant in writing giving reasons for not registering the FIR.

 

 

 

 

 

Purchase of car for Company Director’s use is not Commercial

Corporate Bodies purchase flats, cars, etc. for the use of their Directors. This latest decision of the National Commission dt. 8 July 2016 clarifies that such purchase does not constitute commercial use.

http://cms.nic.in/ncdrcusersWeb/GetJudgement.do?method=GetJudgement&caseidin=0%2F0%2FOP%2F51%2F2006&dtofhearing=2016-07-08

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI

 

 
CONSUMER CASE NO. 51 OF 2006
         

 

1. CROMPTON GREAVES LIMITED & ANR.
C.G.HOUSE, 6th Floor, Dr. A.B. Road, Worli,
Mumbai – 400 030.
2. MR. SUDHIR M. TREHAN
MANAGING DIRECTOR OF COMPLAINANT NO.1, RESIDING AT FIRST FLOOR, PRIYADARSHINI APTS. PLOT NO. 23, 6th North South Road, JVPD Scheme,
Mumbai – 400 056.
………..Complainant(s)
Versus
1. DAIMLER CHRYSLER INDIA PRIVTE LIMITED & ORS.
(Earlier Known As Mercedes-Benz India Ltd.) Sector 15-A, Chikhali, Pimpri,
Pune-411 018
2. DAIMLER CHRYSLER AG,
THROUGH ITS AGENT DAIMLER CHRYSLER INDIA PVT. LTD., OFFICE AT. SECTOR -15-A, CHIKHALI, PIMPRI,
PUNE-411 018.
3. AUTO HANGER (INDIA) PVT. LTD.
MODAK RUBBERS & TEXTILE LTD. COMPOUND 6, KONDIVITTA ROAD, OPP. MAROL BAZAR, ANDHERI (EAST),
MUMBAI – 400 059.
………..Opp.Party(s)

 

BEFORE:
HON’BLE MR. JUSTICE D.K. JAIN, PRESIDENT
HON’BLE MR. JUSTICE V.K. JAIN, MEMBER
HON’BLE DR. B.C. GUPTA, MEMBER

 

For the Complainant :  
Mr. Amir Singh Pasrich, Advocate
Mr. Sanjay Bajaj, Advocate
Mr. Kalyan Arambam, Advocate
Mr. Kaustubh Seth, Advocate
Ms. Priyanka Raj, Advocate

 

For the Opp.Party :
Mr. M.S. Pandit, Advocate
Mr. Harish Sandhu, Advocate

Dated : 08 Jul 2016

ORDER
JUSTICE V.K. JAIN, MEMBER 

Noticing an apparent conflict in the decisions rendered by this Commission in Controls and Switchgear Company Ltd. Vs. Daimler Chrysler India Pvt. Ltd. and T and T Motors Ltd. IV (2007) CPJ 1 (NC) and General Motors Pvt. Ltd. Vs. G.S. Fertilizers Pvt. Ltd. [First Appeal No. 723 of 2006] decided on 07.02.2013, both rendered by Benches comprising two Members, the following issue was referred to this larger Bench, for decision:-

  • Whether the purchase of a car or any other goods by a company for the use/personal use of its Director amounts to purchase for a commercial purpose, within the meaning of Section 2(1)(d) of the Consumer Protection Act, or not.

 

 

2.      In Controls and Switchgear Company Ltd. (supra), a complaint alleging defects in two Mercedes Benz, cars purchased by the complainant company for the use of its directors, was filed before this Commission. The complaint was resisted inter-alia on the ground that the cars were purchased for a commercial purpose. Rejecting the contention, this Commission inter-alia held as under:

In our view, there is no substance in the aforesaid contention, because:

  • Company is a legal entity and is entitled to file complaint;
  • The cars are purchased for the use of the Directors and are not to be used for any activity directly connected with commercial purpose of earning profit. Cars are not used for hire but are for the personal use of the Directors. Hence, it cannot be said that the complainant company has purchased the cars for commercial purpose.

 

An appeal against the above-referred decision is pending before the Hon’ble Supreme Court.

In General Motors Pvt. Ltd. (supra), a complaint alleging defect in a car purchased by the complainant company for use of its Managing Director was filed before the concerned State Commission. The complaint was resisted inter-alia on the ground that purchase of the vehicle for the use of the Managing Director of the company amounted to  purchase for a commercial purpose. Accepting the said contention, this Commission inter-alia held as under:

“We note that in his complaint before the State Commission the Respondent-Complainant had clearly stated that the vehicle was purchased for the use of its Managing Director.  We agree with Appellants’ contention that this clearly amounts to its purchase for a ‘commercial purpose’ since the Managing Director of a private limited company would obviously not use this vehicle for self-employment to earn his livelihood but for ‘commercial purposes’ as a perk of his office. Counsel for the Respondent-Complainant has sought to challenge this contention by pointing out that since the present case pertains to 1999 and the amendment referred to was made only in 2002, it was not applicable in the instant case.  We are unable to agree with this contention as well because the 2002 Amendment to the Act pertains to Section 2(1)(d)(ii) of the Act relating to hiring or availing of services for a consideration and not to Section 2(1)(d)(i) of the Act which relates to purchase of goods.  In fact, the interpretation of Section 2(1)(d)(i) of the Act relating inter alia to purchase of goods has been well settled by the Hon’ble Supreme Court as far back as in 1995 in its judgment in Laxmi Engineering Works v. P.S.G. Industrial Institute [1995 (3) SCC 583], wherein the Hon’ble Apex Court has ruled as follows:

“… On this interpretation of the definition clause, persons buying goods either for resale or for use in large scale profit-making activity will not be ‘consumers’ entitled to protection under the Act.  It seems to us clear that the intention of Parliament as can be gathered from the definition section is to deny the benefits of the Act to persons purchasing goods either for purpose of resale or for the purpose of being used in profit-making activity engaged on a large scale.  It would thus follow that cases of purchase of goods for consumption or use in the manufacture of goods or commodities on a large scale with a view to make profit will all fall outside the scope of the definition. It is obvious that Parliament intended to restrict the benefits of the Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large-scale manufacturing or processing activity carried on for profit.  In order that exclusion clause should apply it is however necessary that there should be a close nexus between the transaction of purchase of goods and the large-scale activity carried on for earning profit.”

 

            Since the instant case pertains to the purchase of goods admittedly for ‘commercial purposes’ since the vehicle was purchased by a private limited company for its Managing Director, this case is squarely covered by the above judgment of the Hon’ble Apex Court.  The State Commission erred in not taking note of this important fact while deciding the complaint.” 

3.      Section 2(1)(d) of the Consumer Protection Act which defines the term ‘consumer’, to the extent it is relevant, reads as under:-

          “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 but does not include a person who avails of such services for any commercial purposes;

 

It would thus be seen that the emphasis is on the purpose for which the goods are obtained, though the use to which the goods are actually put would be helpful in deciding the purpose for which they were obtained.

4.      The term ‘commercial purpose’ has not been defined in the Consumer Protection Act and as held in Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583], in the absence of a statutory 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” (Collin’s English Dictionary) and the word ‘commerce’ means “financial transactions, especially buying and selling of merchandise on a large scale” (Concise Oxford Dictionary)”.

 4.     Going by the dictionary meaning, a car or for that matter any goods obtained and the services hired or availed by a company can be said to have been obtained or  hired or availed for a commercial purpose, only if the said goods or services are intrinsically connected with, or related to the business or commerce in which the company is engaged. The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services. As observed by the Hon’ble Supreme Court in Laxmi Engineering Works (supra),  it is not the value of the goods but the purpose for which the goods are brought or put to use, which is relevant to decide whether the goods were obtained for a commercial purpose or not. The same would be the position, where services are hired or availed by a company. If the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities.

5.      If a car or other goods are purchased or the services are hired or availed by a company for the personal use of its directors or employees, the purpose behind such acquisition is not to earn profits or to advance the business activities of the company. The purpose is to make certain facilities and amenities available to the directors and employees of the company as a part of the incentive offered to them by the company, as a reward or remuneration for the work which they are expected to perform for the company. It is not as if a company cannot run its business without providing such facilities and amenities to its directors and employees. It is not necessary for the business of the company, to provide such facilities and amenities to its directors and employees. Providing such facilities and amenities only motivates them to perform their work in an efficient and congenial environment, besides serving as an incentive aimed at eliciting better performance.  The company does not earn profit merely by making a car or certain other goods or services available to its directors and employees. Therefore, it would be difficult to say that such goods are purchased or the services are hired or availed by the company for a commercial purpose.

6.      The goods and services made available by a company to its directors or employees can be classified into the following three broad categories:-

(a) The goods and services which are obtained for and made available to the directors or employees of the company and are used by them only for their personal purposes, unconnected with the business of the company. For instance, the cars used by the directors and employees of the company for their shopping, outings, recreations, etc. or for commuting to and from the office of the company. Another example can be the air conditioners and furniture provided at the residence of the directors and employees of the company or the telephone or broadband got installed by the company at their residence.

(b) The goods and services made available to the directors or employees of the company and used by them primarily for their personal purposes but incidentally, also for the purposes of the company. For instance, a car used mainly for outings, recreations, personal commuting etc. of the directors and employees or their families, but also for visiting the factory and offices of the company or attending the business meetings.

(c) The goods and services made available by a company to its directors and employees primarily for the purposes of the company and used by them mainly for the purposes of the company but incidentally also for their personal purposes. For instance, a vehicle purchased for being used as a staff car or a delivery van, but sometimes also used for the personal purposes of the directors or employees, unrelated to the business of the company.

7.      As far as the goods and services falling in category (a) are concerned, there can be no dispute that since such goods were purchased or the services were hired or availed by the company and made available to its directors and employees for the purposes wholly unrelated to the business activities of the company, such an acquisition cannot be said to be for a commercial purpose. No commercial purpose of the company is achieved by purchasing such goods or hiring or availing such services and then making them available to its directors and employees.

8.      In our opinion even if such goods or services are incidentally used by the directors or employees of the company for the purposes of the company, that would not lead to the conclusion that the acquisition of such goods or services was for a commercial purpose. The dominant purpose behind such acquisition being to provide an amenity to the directors or the employees as the case may be, it cannot be said that the company was seeking to make a profit or advance its business by such an acquisition.  The use for the purposes of the company being subsidiary and incidental in nature, cannot override the dominant purpose for which they were acquired and made available to the director or the employee of the company. Therefore, the acquisition of goods and services, even if they fall under category (b) above, cannot be said to be for a commercial purpose.

9.      As far as the goods or services falling in category (c) are concerned, since the dominant purpose behind such acquisition is to advance and sustain the business activities of the company and the use for the personal purposes of the directors or the employees being incidental, it can be safely said that such an acquisition was for the commercial purposes of the company.

10.    In Laxmi Engineering Works (supra),  the Hon’ble Supreme Court inter-alia observed as under:-

“…On this interpretation of the definition clause, persons buying goods either for resale or for use in large scale profit-activity will not be ‘consumers’ entitled to protection under the Act. It seems to us clear that the intention of Parliament as can be gathered from the definition section is to deny 446 the benefits of the Act to persons purchasing goods either for purpose of resale or for the purpose of being used in profit making activity engaged on a large scale. It would thus follow that cases of purchase of goods for consumption or use in the manufacture of goods or commodities on a large scale with a view to make profit %ill all fall outside the scope of the definition. It is obvious that Parliament intended to restrict the benefits of the Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large scale manufacturing or processing activity carried on for profit. In order that exclusion clause should apply it is however necessary that there should be a close nexus between the transaction of purchase of goods and the large scale activity carried on for earning profit. “

 

Relying upon the above-referred observations, it was contended by the learned counsel for the opposite party that the purpose behind enactment of Consumer Protection Act was to provide a speedy remedy to the small consumers and the Act is not intended for the benefit of large business entities such as corporates.  We, however, find nothing in the judgment which would indicate that a company will not be a consumer within the meaning of the Act even if the goods are obtained or the services are hired or availed by it, for a purpose which by no means, can be said to be a commercial purpose. The Apex Court itself emphasised that for the exclusion to apply, there has to be a close nexus between the transaction of purchase of goods and the large scale activity, carried for earning profit. Therefore, if a transaction of purchase of goods or hiring or availing of services is not aimed at earning profits or advancing the business activities of the purchaser, such a transaction will not be out of the purview of the Consumer Protection Act.

          The learned counsel for the opposite party relying upon the decision of a two Members Bench of this Commission in Duggirala Prasad Babu Vs. M/s Skoda Auto India Pvt. Ltd. [Revision Petition No.428 of 2013] decided on 4.3.2014, contended that since depreciation is claimed by the company  on the car purchased for its director, such a purchase would be for a commercial purpose. We, however, find no merit in the submission. Whether a company or for that matter any other purchaser is entitled in law to claim depreciation in respect of a car or other goods purchased primarily for the personal purposes of its directors or employees is not a question to be considered by this Commission. What this Commission has to see is the purpose behind purchase of the goods or hiring or availing the services as the case may be and if depreciation is found to be wrongly claimed, it would be for the concerned department to take note of such a tax evasion. Therefore, we are not in agreement with the view taken in the above-referred decision.

          The learned counsel for the opposite party referred to the decision of the Hon’ble Supreme Court in Chairman, Thiruvalluvar Transport Corporation Vs. Consumer Protection Council [Civil Appeal No.7142 of 1993]decided on 9.2.1995, where the Hon’ble Supreme Court was concerned with the question as to whether this Commission has jurisdiction to adjudicate upon a claim for compensation arising out of a motor vehicle accident or not. The above-referred decision has absolutely no application to the issue involved in this complaint and, therefore, reliance upon the said decision is wholly misplaced.

          The learned counsel for the opposite party also relied upon the decision of this Commission in Interfreight Services Pvt. Ltd. Vs. Usha International 1(1995) CPJ 128 (NC), where this Commission inter-alia observed that the special remedy before the consumer forums can be invoked only by ordinary consumers, purchasing goods for their private and personal use and consumption and not by business organization buying goods for commercial purposes. There is no quarrel with the legal proposition that the provisions of the Consumer Protection Act are not for the benefit of business organizations buying goods for commercial purposes, but at the same time, such organisations are not ousted from the purview of the said Act, where the goods bought or the services hired or availed by them are not for commercial purposes.

11.    For the reasons stated hereinabove, the issue referred to the larger Bench is answered as follows:-

(a) If a car or any other goods are obtained or any services are hired or availed by a company for the use/personal use of its directors or employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purpose, irrespective of whether the goods or services are used solely for the personal purposes of the directors or employees of the company or they are used primarily for the use of the directors or employees of the company and incidentally for the purposes of the company.

(b) The purchase of a car or any other goods or hiring or availing of services by a company for the purposes of the company amount to purchase for a commercial purpose, even if such a car or other goods or such services are incidentally used by the directors or employees of the company for their personal purposes.

         

 

………………….J
D.K. JAIN
PRESIDENT
………………….J
V.K. JAIN
MEMBER
………………….
DR. B.C. GUPTA
MEMBER