Arijit Sen & Anr vs Ireo Private Limited

Subhash Chandra, Member

The present Consumer Complaint has been filed under Section 12 (1) (a) read with Section 21 (a) (i) of the Consumer Protection Act, 1986 by the complainants against the Opposite Party viz., Ireo Pvt. Ltd., alleging unfair trade practices and deficient services rendered in respect of a group housing project of the Opposite Party called ‘Skyon’ located at Sector 60, Gurgaon, Haryana.

The facts leading to the complaint are that the Complainants had booked a residential unit viz. Apartment no. D – 0703, 7 th Floor, Tower D, ‘Skyon’, Sector 60, Gurgaon, Haryana in the said project being developed by the Opposite Party on 26.06.2011 by paying a booking amount of Rs.15,22,316/- to the Opposite Party. On 11.07.2011, the Opposite Party issued an allotment offer letter and three months later executed the ‘Apartment Buyers Agreement’ in respect of the said apartment.

Complainants have averred that as per the Apartment Buyer’s Agreement, the Opposite Party agreed to deliver the possession of the apartment in 42 months, i.e., by December 2014 with a grace period of 180 days after expiry of the commitment period, i.e., by 17.11.2015. However, despite the payment of 100% of the sale consideration by the Complainant to the Opposite Party, i.e., Rs.1,76,71,537/- and the lapse of 23 months from the expiry of the 42 months committed, possession has not been handed over by the Opposite Party. Aggrieved, the Complainants are before this Commission with the prayer to:

a. Allow the present complaint and declare the conduct of the Opposite Party to be an unfair trade practices and declare that they have rendered deficient services;

b. Direct the Opposite Party to hand over possession of the apartment and execute the Conveyance Deed after completing the individual apartments as well as the said project as per the representations made and agreed upon between the parties’

c. Direct the Opposite Party to pay interest @ 18% per annum or any other rate deemed appropriate by this Commission for the delay in completing the project, on the total consideration amount paid by the Complainants which is to be calculated from the date of its payment to the date of handing over the possession after completing the project in entirety to make it habitable;

d. Direct the Opposite Party to refund the cost of parking, i.e., Rs.8,00,000/- (rupees eight lakh only) per parking which has been illegally charged by the Opposite Party’

e. Direct the Opposite Party to refund the Service Tax charged from the Complainants;

f. Declare the act of delay in handing over possession and delay in execution of Conveyance Deed as an act of ‘deficiency of service’ and ‘unfair trade practices’’;

g. Award compensation for mental agony and harassment; and

h. Pass any other order or direction as this Hon’ble Commission may deem fit in the interest of justice.

The Opposite Party has resisted these claims. Several contentions have been raised. Learned counsel appearing on behalf of the Opposite Party, however, admitted that the Complainant had booked the said flat and an allotment offer letter was issued. It was also admitted that the Apartment Buyer’s Agreement was executed on 17.10.2011. However, there is no deficiency in service. As per clause 13.3 of the Buyer’s Agreement, it is agreed by the Parties that 42 months will commence from the date of approval of building plans and a six month grace period (180 days) will be allowed after this period. Based on the Occupation Certificate dated 26.08.2016, the notice of possession for the apartment has been issued on 07.09.2016. Accordingly, the Opposite Party is ready to execute the Conveyance Deed subject to payment of all dues as per the Apartment Buyer’s Agreement. The Opposite Party has also contended that the Complainant is bound by the terms of the Agreement per which possession was promised to allottees within 42 months from the date of approval of building plans and/ or fulfillment of conditions thereunder with a grace period of six months as indicated in the booking application (clause 37). As the building plan was approved on 27.09.2011 with conditions including the Fire NOC which was obtained on 25.09.2013, the period of 42 months and six months of grace would expire on 24.09.2017. Therefore, the present complaint is premature and without jurisdiction under the Consumer Protection Act, 1986 as it seeks to amend the agreement between the parties. There is also no unfair trade practice as there has not been any misrepresentation in promoting provision of service. As there is no negligence on part of the Opposite Party, compensation under Section 14 (1) (d) cannot be claimed. Complainants are also not consumers under Section 2 (1) (d) as they are residents of ‘Skyon’ and have invested in a flat in Gurgaon only for commercial gains.

Parties filed their arguments by way of written submissions. We have also heard the learned counsels for the parties and carefully perused the records.

It was contended on behalf of the Complainants that they booked the apartment in the project promoted by the Opposite Party on the assurance that it would be handed over within 42 months, i.e., by December 2014. On being issued the Allotment Offer Letter on 11.07.2011 they came to know that cancellation of the booking would entail forfeiture of the entire booking cost, of which they had already paid 17% of the total cost by then. It is also contended that the Apartment Buyer’s Agreement has various conditions tilted in favour of the Opposite Party and is also silent on other conditions with regard to charges required to be paid in the form of club charges, parking charges, carrying cost, labour cess, interest in delayed payment, stamp duty and registration charges enhanced due to delay etc. According to the Complainants, these constitute unfair trade practices being arbitrary and one sided. It is also averred that the OP offered possession of an incomplete flat and four weeks were sought for final handing over. As the unit was purchased for the personal use of the Complainants, they are ‘Consumers’ and therefore, arbitration, as contended by the Opposite Party is not a remedy under the Consumer Law, as held by this Commission in Aftab Singh vs Emaar MGF Land Ltd., (CC no. 701 of 2015) which was affirmed by the Hon’ble Supreme Court in Emaar MGF Land vs Aftab Singh in (2019) 12 SCC 751. Lastly it was averred that this was a covered matter in Siddharth Vasisht vs M/s Ireo Pvt. Ltd. and 4 Ors (CC no. 1062 of 2019) pertaining to the same project, i.e. ‘ Skyon’ of Sector 60, Gurgaon wherein this Commission had held that considering the delay of nearly three years in completing the flat by the Opposite Party, the Complainant cannot be compelled to take possession. In Siddharth Vasisht (Supra) . The following relief was granted to the Complainant therein:

For the reasons stated hereinabove, the complaint is disposed of with the following directions:-

(i) The OP shall refund the entire principal amount of Rs.4,68,00,648/- to the complainant, along with compensation in the form of simple interest at the rate of 10.25% per annum, which is stated to be the interest rate under RERA, in Haryana, in respect of the cases where refund is made to the flat buyer on account of delay on the part of the developer in offering possession of the house, from the date of each payment till the date of refund.

(ii) The OP shall pay a sum of Rs.25,000/- as the cost of litigation to the complainant.

(iii) The payment in terms of this order shall be made within three months from today.

This order was confirmed by the Apex Court in M/s Ireo Pvt Ltd., vs Siddhartha Vasisht in Dy No. 21634 of 2020 vide order dated 11.12.2020, the Hon’ble Court has held:- “ it is common ground that the present case is governed by the Judgment of the NCDRC in Shamshul Hoda Khan vs Ireo Victory Valley Pvt. Ltd., against which an appeal has been dismissed by this Court”.

The issue raised by the OP is that the complainant is not a consumer and so complaint is liable to be dismissed. The onus of proving that the Complainant is not a consumer and is engaged in purchase and sale of flats also lies upon the Opposite Party as held in Narinder Kumar Bairwal and Anr., vs M/s Ramprastha Promoters and Developers Pvt. Ltd., and Anr., in CC no.1122 of 2018 dated 01.11.2019 reiterating the view of this Commission in Kavita Ahuja vs Shipra Estates – I (2016) CPJ 31. In the case of Rajnish Bhardwaj and Ors vs M/s CHD Developers Ltd., and Ors., in CC No.3775 of 2017 decided on 26.11.2019 this Commission has held that the onus of proving that Complainants are not consumers is squarely upon the Opposite Party.

It is, therefore, clear that burden is squarely upon the opposite party to prove the fact that complainant is indulging in the business of sale and purchase of the flats.

Section 2 (1) (d) of the Act defines the term ‘consumer’ as under:

"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 prom-ised, 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 person but does not include a person who avails of such services for any commercial purposes ;

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.”

Hon’ble Supreme Court in Laxmi Engineering Works Vs. P.S.G. Industrial Institute 1995 AIR 1428 while discussing the scope of Section 2 (1) (d) of the Act has held as under:

“12. Now coming back to the definition of the expression 'consumer' in Section 2(d) , a consumer means in so far 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 "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 the 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 earing 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 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. The several words employed in the explanation, viz., "uses them by himself", "exclusively for the purpose of earning his livelihood" and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasis what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer.) As against this a person who purchases an auto-rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions "used by him", and "by means of self-employment" in the explanation. The ambiguity in the meaning of the words "for the purpose of earning his livelihood" is explained and clarified by the other two sets of words.”

Considering the aforesaid, it is inferred that a person who buys a good ceases to be a consumer, if that person indulges itself in commercial activities qua the goods and in case of purchase of residential houses, it can be said that buyer is indulging into the activity of buying / selling the properties and purchased it for that purpose.

There is no contention in the written version that the complainant is indulging in the business in sale/ purchase of the properties. Since the opposite party has failed to discharge this burden, we hold that complainant is consumer within the meaning of Section 2 (1) (d) of the Act.

Since it is a covered matter, the complaint is disposed off with the following directions:

i. The Opposite Party shall refund the entire principal amount of Rs.1,76,71,537/- to the Complainant along with compensation in the form of simple interest at the rate of 10.25% per annum, which is stated to be the interest rate under RERA, Haryana, in respect of the cases where refund is made to the flat buyer on account of delay on the part of the developers in offering possession of the house, from the date of each payment till the date of refund;

ii. Any compensation paid by the opposite party to the complainant towards delay in completion of the project as per the terms and conditions of the agreement shall be adjusted in the interest amount and the balance interest amount shall be paid to the complainant;

The Opposite Party shall pay a sum of Rs.25,000/- as the cost of litigation to the Complainant.