Case Note & Summary
The respondent, Kushalraj Land Developers Pvt. Ltd., a real estate company, booked a flat in the appellant's project 'Omkar 1973 Worli' for the residential use of its director and his family. The appellant issued an allotment letter on 29.06.2016 with possession by 31.12.2018, later advanced to first quarter of 2017. The appellant obtained a part occupancy certificate on 07.03.2017 and demanded full payment within 30 days. The respondent tried to arrange finance but discovered the flat was already allotted to one Nakul Arya. The respondent declined possession and payment on 18.03.2017. The appellant terminated the allotment on 31.08.2017 and forfeited the deposited amount of Rs.7,16,41,493/- on 18.11.2017. The respondent filed a complaint before NCDRC seeking refund with interest. NCDRC partly allowed the complaint, directing refund with 6% interest. The appellant appealed to the Supreme Court. The Supreme Court upheld NCDRC's order, holding that the respondent is a consumer as the flat was for personal use, not commercial purpose, and that the appellant's double allotment and premature cancellation constituted deficiency in service. The Court dismissed the appeal with costs.
Headnote
A) Consumer Protection Act - Definition of Consumer - Commercial Purpose - Dominant Intention Test - Section 2(7) of the Consumer Protection Act, 2019 - The purchase of a flat by a real estate company for the personal residence of its director and his family is not for commercial purpose; the dominant intention is personal use, not profit generation. The burden of proof lies on the party alleging commercial purpose. (Paras 13-17)
B) Consumer Protection Act - Deficiency in Service - Double Allotment - Unfair Trade Practice - Sections 2(7), 2(11), 2(42) of the Consumer Protection Act, 2019 - The appellant's double allotment of the same flat to the respondent and another person, and subsequent cancellation and forfeiture before resolving the confusion, constitutes deficiency in service and unfair trade practice. The cancellation and forfeiture were unjustified. (Paras 18-20)
Issue of Consideration
Whether the respondent-complainant is a 'consumer' under Section 2(7) of the Consumer Protection Act, 2019, and whether there was deficiency in service on the part of the appellant in cancelling the allotment and forfeiting the amount.
Final Decision
The Supreme Court dismissed the appeal with costs, upholding the NCDRC order directing refund of Rs.7,16,41,493/- with 6% interest per annum from the respective dates of deposit till payment, failing which interest at 9% per annum.
Law Points
- Consumer Protection Act
- 2019
- Section 2(7) - Definition of Consumer
- Commercial Purpose - Dominant Intention Test
- Deficiency in Service - Double Allotment
- Forfeiture - Unjustified Cancellation
Case Details
2024 LawText (SC) (09) 307
Civil Appeal No. 858 of 2023
Shri Vinay Navare (for appellant), Smt. Malvika Kapila (for respondent)
Omkar Realtors and Developers Pvt. Ltd.
Kushalraj Land Developers Pvt. Ltd. & Anr.
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Nature of Litigation
Statutory appeal under Section 67 of the Consumer Protection Act, 2019 against NCDRC order directing refund with interest.
Remedy Sought
Appellant sought to set aside NCDRC order directing refund of Rs.7,16,41,493/- with 6% interest.
Filing Reason
Appellant challenged NCDRC's finding that respondent is a consumer and that there was deficiency in service due to double allotment and unjustified cancellation.
Previous Decisions
NCDRC partly allowed the complaint, holding respondent as consumer and directing refund with 6% interest.
Issues
Whether the respondent is a 'consumer' under Section 2(7) of the Consumer Protection Act, 2019, or whether the purchase was for commercial purpose.
Whether there was deficiency in service or unfair trade practice on the part of the appellant in cancelling the allotment and forfeiting the amount.
Submissions/Arguments
Appellant argued that respondent, being a real estate company, purchased the flat for commercial purpose, hence not a consumer; cancellation was justified due to non-payment.
Respondent argued that the flat was for personal use of its director and family; double allotment and premature cancellation constituted deficiency in service.
Ratio Decidendi
The dominant purpose of purchasing goods determines whether it is for commercial purpose; purchase for personal use of director and family is not commercial. The burden of proving commercial purpose lies on the party alleging it. Double allotment and cancellation before resolving confusion constitute deficiency in service, making forfeiture unjustified.
Judgment Excerpts
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.
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.
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.
Procedural History
Respondent filed Consumer Complaint No.141 of 2020 before NCDRC. NCDRC partly allowed the complaint on 23.12.2022, directing refund with 6% interest. Appellant filed Civil Appeal No.858 of 2023 before the Supreme Court under Section 67 of the Consumer Protection Act, 2019. Supreme Court dismissed the appeal on 09.09.2024.
Acts & Sections
- Consumer Protection Act, 2019: Section 2(7), Section 2(11), Section 2(42), Section 67
