This case analysis is written by Siddhi P. Nagwekar, a student of Karnataka State Law University’s Law School
Civil Appeal No. 3302 of 2005
1994 1 CPJ 160; 1995 2 CPJ 275; 1994 1 SCC 243
Justices R.V. Raveendran and Lokeshwar Singh Panta
Consumer Protection Act, 1986; Section 2(r)(ii) and Section 2(1)(c) of the Workmen’s Compensation Act
It relates to the question whether a land owner, who enters into an agreement with a builder, for construction of an Apartment Building and for sharing of the constructed area, is a `consumer’ entitled to maintain a complaint against the builder as a service-provider under the Consumer Protection Act, 1986. The appellant is the owner of the premises no. L-3, Kailash Colony, New Delhi. He entered into a `collaboration agreement’ with the respondent. The appellant alleges that the respondent secured sanction of the plan for construction from the Municipal Corporation of Delhi [for short ‘MCD’) but made several unauthorized deviations during construction, resulting in several deviation notices from MCD. In fact, MCD passed an order dated 16.1.1991 to seal the premises, but subsequently, the premises were de-sealed to enable the builder to rectify the deviations. The delivery of the ground floor was made by the builder to the appellant’s son during the appellant’s absence from India. On his return, the appellant sent a letter dated 29.10.1992, pointing out several shortcomings in the construction and the violations of sanctioned plan, and called upon the builder to rectify the deviations and defects. The builder did not comply. The appellant, therefore, filed a complaint in District Consumer Disputes Redressal Forum-IX, Delhi which was dismissed. The appellant filed an appeal against the order of the District Forum and the said appeal was dismissed by the State Commission, Delhi. This appeal was also dismissed for devoid of merit. The appellant filed a revision petition before the National Commission. The National Commission dismissed the revision petition. The said order is challenged in this appeal by special leave.
Issues Before the Court
Whether the owner can maintain a complaint under the Consumer Protection Act?
Whether in such circumstances, the owner can claim that he is a consumer and the builder is the service provider?
Ratio of the Case
The basic underlying purpose of the agreement is the construction of a house or an apartment (ground floor) in accordance with the specifications, by the builder for the owner, the consideration for such construction being the transfer of undivided share in land to the builder and grant of permission to the builder to construct two floors. Such agreement whether called as a ‘collaboration agreement’ or a ‘joint-venture agreement’, is not however a ‘joint-venture’. There is a contract for construction of an apartment or house for the appellant, in accordance with the specifications and in terms of the contract. There is a consideration for such construction, flowing from the landowner to the builder (in the form sale of an undivided share in the land and permission to construct and own the upper floors).To adjust the value of the extent of land to be transferred, there is also payment of cash consideration by the builder. But the important aspect is the availing of services of the builder by the land-owner for house construction (construction of owner’s share of the building) for a consideration. To that extent, the land owner 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 land owner 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.
Decision of the Court
The Supreme Court passed the following orders:
- The orders of the National Commission, State Commission and District Forum are set aside.
- The appellant’s complaint is held to be maintainable.
- The District Forum is directed to consider the matter on merits and dispose of the matter in accordance with law, within six months from the date of receipt of this order.
- The respondents shall pay costs of Rs.25,000/- to the appellant.
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