Civil Appeal Case No.- 5858 of 2015
Appellant- Rohit Choudhary & ANR
Respondent- Vipul Ltd.
Judges- Hon’ble Judges Aarvind Kumar and S. Ravindra Bhat
Order Date- 06/09/2023
Facts
- The Appellants intended to purchase a commercial space in Vipul World Commercial, at Gurgaon Haryana, a project promoted by the Respondent. Mrs. Bindu Rawlley and Mr. Talwinder Singh intended to sell their office unit no. 306 on the third floor of the same commercial complex. The Appellants agreed to purchase the same office unit.
- The appellants and their vendors had an agreement, stipulating that the appellants would be paying Rs. 18,07,100 to Mrs. Bindu Rawlley and Mr. Talwinder Singh and the remaining amount of Rs. 34,27,050 to the respondent whenever the latter demanded it. Upon completing the payment to the original allottees, the appellants notified the respondent about the transaction. The respondent acknowledged the purchase and proceeded to transfer the ownership, replacing the names of Mrs. Bindu Rawlley and Mr. Talwinder Singh with those of the appellants. The customer code continued under the appellants’ names.
- Subsequent to these events, the respondent demanded the remaining amount, which the appellants duly paid. In response, the respondent issued a receipt and an allotment letter, confirming the allocation of the commercial office unit at Vipul Business Park. However, instead of unit no. 306 on the third floor, the respondent reassigned unit no. 814 on the eighth floor, for a sale price of Rs. 51,51,415.
- When the Appellants objected to this unilateral change made by the respondent, he threatened to cancel the allotment and forfeit the money paid to date. Appellants got scared that the deal would get cancelled and they would lose all their money, so they signed the buyer’s agreement forwarded by the respondent and continued to pay the money in installments as when demanded by the respondent. Respondent assured the Appellants that they would get possession of their commercial space within a period of 24 months starting from the date of finalizing the Buyer’s agreement.
- The dispute arose when the Respondent failed to deliver the commercial office unit in the said time and no valid reasons were given by the Respondent to the Appellant for the delay. Due to the inaction of the respondent on this issue, the Appellants forwarded a legal notice to the respondent demanding Rs. 51,10,117/- with interest at 18% per annum which amounts to Rs. 42,52,143/- and Rs. 50,00,000/- for the mental agony caused to the appellants. Further, the Appellants filed a suit with the National Consumer Disputes Redressal Commission in New Delhi seeking redress for their loss.
- The commission dismissed the complaint on 11th May 2015, stating that the Appellants are not consumers as per Section 2(1)(d) of the Consumer Protection Act. The commission held the view that the Appellants already had their source of earning a livelihood and acquired the commercial property with the intention of generating profits rather than earning income through self-employment. Hence the Appeal was made in the Apex Court, appealing against the decision of NCDRC.
Issues Raised
- The main issue raised here is, whether or not, the Appellants are the “Consumers” and to interpret the meaning of the term “Commercial Purpose” as defined under Section 2(1)(d) of the Consumer Protection Act.
- Another issue is, whether the Appellants are liable to the compensation demanded in the complaint filed by them.
Contention
Appellant’s Contention
The Appellants were represented by Learned Counsel Shri Digendra Sharma, Niharika Dubey, Mr. Anubhav Bhandari, and Mr. Ajay Kumar Singh. The Counsel argued that the commercial space was booked to earn a livelihood by self-employment and not for earning profits or reselling the property due to escalation of price. It was contended that the Respondent changed the allocated office space from the 3rd floor to the 8th floor unilaterally and without the respondent’s consent. Appellants were forced to sign the Buyer’s Agreement and Respondent continued to demand the remaining amount of money from time to time, which qualifies as ‘Unfair Trade Practices’ under the Act of Consumer Protection. Respondent also delayed the possession of the commercial office unit even after the stipulated period of 24 months. This prolonged delay has caused serious mental distress, exasperation, and depression to the Appellants and they seek compensation for the same.
Respondent’s Contention
Learned counsel Mr. Atul Sharma, Mr. Alok Tripathi, Mr. Ankur Sharma, and Mr. M.R. Shamshad, and appeared for the Respondent. The Counsel supported the decision of NCRDC and further argued that the Appellants do not meet the criteria for being considered Consumers under Section 2(1)(d) of the Consumer Protection Act. To make the arguments stronger, they contested that the main appellant previously worked in the caustic soda business for Reliance Industries and is presently involved in property investment. This indicates that the commercial space was not to earn a livelihood by self-employment. This further suggests that the services availed for ‘Commercial Purposes’ by the individuals are excluded from the definition of Consumers. Moreover, they argued that the Appellants suppressed the fact of default in the payment and the complaint must be dismissed based on these reasons.
Rationale
- The Hon’ble Supreme Court of India, clarified who are ‘Consumers’ and the meaning of the term ‘Commercial Purposes’ while giving the Judgement of this particular case. The bench initially studied the decision of NCRDC and drew the inference that the National Commission dismissed the complaint because the Appellants had a stable source of income through a business and the property for which the suit was filed was not for earning livelihood by self-employment but for Commercial Purposes. As per section 2(1)(d) of the Consumer Protection Act, the consumer is defined as any individual who purchases goods and services in exchange for payment, excluding those individuals who buy goods for resale or any commercial use. Therefore, this ultimately comes down to the fact that the interpretation of whether the person is a consumer or not depends upon whether the person has bought goods for self-employment or commercial purposes. This excluded the appellant from the definition of Consumer according to the National Commission, which was clarified through the judicial precedents in the cases of Synco Textiles Pvt. Ltd. Vs Greaves Cotton and Company Ltd., Laxmi Engineering Works Vs P.S.G Industrial Institute.
- The Bench observed that the term ‘Commercial Purpose’ is not clearly stated in the definition, which creates confusion as to purchasing what goods might qualify as Commercial purpose and what might not. Therefore, it is necessary to interpret the term ‘Commercial Purpose’. The General meaning of ‘commercial’ is connected with Commerce which means to earn profits. The courts generally relied on this definition to make the decision.
- The bench emphasized that the crucial factor is whether the sole purpose of buying the property/goods is for profit-making or not. They gave an example of a better understanding of the term. Any person who purchases a car for personal use is considered a consumer. However, if the person buys a car intending to use it as a taxi, this would be considered a commercial purpose. The definition clarifies that even the person using the car for commercial purposes is a Consumer if the person uses that car for himself to earn a livelihood by self-employment.
- Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers’ case is cited to illustrate this interpretation. The bench emphasized that each case must be evaluated based on its unique facts and circumstances. If the complaint asserts that goods were purchased for personal use or livelihood, this assertion cannot be summarily dismissed. Evidence presented in such cases, particularly in consumer complaints, plays a crucial role in determining whether the transaction aligns with consumer protection laws.
- In this case the bench reviewed the facts and concluded that there is the absence of clear evidence that the Appellant has purchased the property for resale or for earning profits due to price escalation and not for earning a living by engaging in a business. Hence, the bench found that the Appellant is a Consumer and is eligible to seek redressal under the Consumer Protection Act. The NCRDC’s order was criticized by the Supreme Court as the Appellant has asserted that he has bought the property for earning livelihood and the Respondent was ordered to repay the amount received from the Appellants along with interest and the litigation charges.
Defects of Law
- The main drawback of law in this particular case was the wrong interpretation of the term ‘Commercial Purpose’. The National Commission’s decision lacked clarity in interpreting the term. The Courts generally refer to the definition of the dictionary and fail to determine the actual reason for buying certain goods or property. The wrong interpretation of certain terms can delay justice and cause mental agony to the Appellants.
- This further shows that there is a lack of consistency in clearly applying the definition of consumers by the Courts. The determination of the definition of Consumers seems arbitrary and not based on a strong legal framework. There is a clear need for a uniform approach to define terms to protect the rights of the parties involved.
- In this case, the National Commission failed to consider the specific situation of the Appellant whether the Appellant’s purchase of the property was for earning a livelihood or profit. This would have prevented the unfair treatment of the case.
Inference
This case underscores the importance of clarity and consistency in interpreting the Consumer Protection laws, especially in defining the ‘Commercial Purpose’ and determining who qualifies as a ‘Consumer’. It shows how unclear legal definitions can lead to wrong interpretation of the law and further delay justice. Further in this case, the Hon’ble Supreme Court of India has held that the Consumer Protection Act is a remedy for “Business-to-Consumer” disputes and not for “Business-to-Business” disputes. It has also stated that if the Consumer buys the goods for commercial use to earn a living by self-employment, he is still considered a consumer.
The Appellants in this case were recognized as Consumers by the Supreme Court and have stated that they can seek compensation as appealed by them in the Complaint. The Respondent was ordered to refund the amount of Rs 51,10,117/- with interest of 18% per annum along with the litigation cost of 1 lakh Rs.
ANKITA NAKHATE, LLB 3RD YEAR
SHANTARAM POTDUKHE COLLEGE OF LAW, CHANDRAPUR.