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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

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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

1

(2008) 10 SCC 345

Page 3 3

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

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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

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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

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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

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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

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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,

2

(1994) 4 SCC 225

Page 9 9

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:-

3

(1994) 1 SCC 243

Page 10 10

“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

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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

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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

4

(1995) 3 SCC 583

Page 13 13

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 t he 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

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“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

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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’

5

(2000) 1 SCC 512

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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

6

(1980) 2 SCC 31

7

(1981) 3 SCC 156

Page 17 17

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

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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,

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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

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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.

Page 21 21

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

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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

Page 23 23

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

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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

8

(2015) 2 SCC 669

Page 25 25

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

Page 26 26

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

Page 27 27

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

Page 28 28

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]