Saturday, 23 July 2016

Supreme court:Land owner entering into contract with builder for construction is consumer


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
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.
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
DATED:July 22, 2016
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
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 345Page 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 thePage 4
4
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 inPage 5
5
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 ofPage 6
6
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 forPage 7
7
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 partlyPage 8
8
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 Das2
 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 225Page 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. Gupta3
,
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 243Page 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 thusPage 11
11
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 personPage 12
12
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
Institute4
, 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 583Page 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 the 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’ denotesPage 14
14
“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 goodsPage 15
15
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 another5
 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 512Page 16
16
Association6
. 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
Industries7
 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 156Page 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 mentionedPage 18
18
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,Page 19
19
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 thePage 20
20
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 ‘collaborationPage 22
22
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 hasPage 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 thisPage 24
24
context, we may usefully refer to the recent pronouncement in
Punjab University v. Unit Trust of India and others8
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 669Page 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
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 ofPage 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
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]
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