Ashok Kumar Basu vs Sumit Kumar Mitra

M. Shreesha, J

Challenge in this Revision Petition under Section 21(b) of the Consumer Protection Act, 1986 (for short the "Act") is to the order dated 03.07.2018 passed by the West Bengal State Consumer Disputes Redressal Commission, in First Appeal bearing No. A/526/2017. By the impugned order, the State Commission has allowed the Appeal preferred by the Complainant by holding the Complainant 'Consumer' within the meaning of Section 2(1)(d) of the Act and remanded the matter back to the District Consumer Disputes Redressal Forum, South 24 Pargans (for short "the District Forum") for re-adjudicating the case.

The facts in brief are the Complainant, landowner of a piece of land measuring an area of 200 sq. m. on premises No. R-1/1, Baishnabghata -Patuli, P.S. Patuli, Kolkata within the legal limits of Kolkata Municipal Corporation (KMC) entered into a Development Agreement with the Opposite Party to construct a four-storied building over the subject property. As per the terms of the Agreement, the land-owner was entitled to get 40% of the constructed area in the proposed building. Accordingly, the Opposite Party obtained the sanctioned building plan from KMC on 08.04.2004. It was stated that the land-owner was entitled to get a sum of ₹1,00,000/- as security deposit which was to be paid by the Opposite Party at the time of signing and execution of the Agreement for Development. After completion of the construction of the building, the Opposite Party delivered the entire first floor measuring about 1308 sq. ft. covered area + 573 sq. ft. covered area = totalling 1881 sq. ft. area as against the 2264 sq. ft. covered area as per terms of Agreement of Development and, therefore, it was averred that the Complainant is entitled to get 383 sq. ft. of extra constructed area. The Complainant time and again requested the Opposite Party to deliver the possession of the said 383 sq. ft. but there was no response. A legal notice was issued on 16.06.2014 for which again there was no response. Hence the Complainant approached the District Forum seeking the following reliefs:-

"i. to deliver 383 sq. ft. covered area out of his allocation amounting to 40% of the constructed area and/or in the alternate pay ₹17,00,520/- together with interest till date of possession and/or till realization of money;

ii. to deliver possession letter/certificate;

iii. to procure completion certificate in respect of premises No. R-1/1, Baishnabghata Patuli, Block-R (Old-R-1), Kolkata - 700 094.

iv. to pay ₹1,00,000/- towards compensation for harassment, mental agony and legal cost.

v. Any other relief/reliefs that the Complainant is entitled in law and equity."

The Opposite Party filed the Written Version stating that the Complainant has developed the land with an intention to commercially exploit the same and, therefore, it is meant for commercial purpose and he is not a 'consumer'.

The District Forum based on the evidence adduced dismissed the Complaint with an observation that the Complainant is not a 'consumer' under the purview of the Act and the dispute be relegated to a Civil Court.

Aggrieved by the said order the Complainant preferred First Appeal bearing No. A/526/2017 before the State Commission. The State Commission set aside the order of the District Forum and allowed the Appeal, directing the District Forum to re-adjudicate the matter treating the Complainant as a 'Consumer'.

Dissatisfied with the order of the State Commission, the Opposite Party preferred this Revision Petition on the ground that the State Commission has wrongly construed the observations of the Hon'ble Apex Court in Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd. & Anr. (2008) 10 SCC 345. In the instant case the Complainant is a lease-holder and in the said lease there were certain conditions and the lease-holder shall obey the said terms and conditions as stipulated in the said lease agreement but the lease-holder did not do so. The State Commission did not consider the conditions of the said lease agreement and held that he was a 'Consumer'. It was also averred that the Complainant was erecting a multi-storeyed building for commercial exploitation and also that the Report of the Engineer Commissioner states that the Complainant has utilized the said amount for commercial means and the same was not considered by the State Commission. Learned Counsel further contended that there was a basic difference between a perpetual lease and sale and that the District Forum had rightly observed that the Complainant should move the Civil Court under Specific Performance of Contract Act.

Admittedly, it is a dispute between a Land Owner and a Developer and the Land Owner who is the Complainant before the District Forum has sought for a direction to the Developer/Opposite Party to deliver physical possession of 383 sq. ft. constructed area or in the alternative to direct him to pay an amount of ₹17,00,520/- with interest thereon till the date of date of possession and to obtain Completion Certificate together with other reliefs. The brief point for consideration here is whether the State Commission was right in holding the Complainant as a 'Consumer' by relying on the decision of the Hon'ble Supreme Court in Faqir Chand Gulati (supra). The Apex Court in this Judgement has held that basically it was a case for construction of an Apartment for the land owner by the builder in terms of the contract; there was a consideration for such a contract flowing from the Land Owner to the Builder in the form of sale of an undivided share in the land and permission to construct and own upper floors; the contract as such would be one for house construction for consideration and that the Consumer Fora committed a serious error in wrongly assuming that the agreement of this nature being in the nature of Joint Venture was outside the scope of the Consumer Dispute and set aside the order of the National Commission and remanded the matter to the District Forum for considering the same on merits. We are of the considered view that this is a fit case to place reliance on Bunga Daniel Babu Vs. M/s Sri Vasudeva Constructions & Ors. in Civil Appeal No. 944 of 2016 in which the Hon'ble Supreme Court has laid down the ratio as follows:-

"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 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 benefits 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.

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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 recognized 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]

It worthy to note that in the said case a stand was taken by the respondent that the agreement was a 'collaboration 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 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...."

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 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 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.

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."

It is clear from the afore-noted judgements of the Hon'ble Supreme Court that the Land Owner herein who has given his land for development by way of entering into a 'Development Agreement' with the Developer for built-up area of certain square feet and has a grievance with respect to the area since he is entitled to 40% of the allocation, definitely falls within the ratio as laid down by the Hon'ble Supreme Court. Hence we concur with the findings of the State Commission that the Complainant is a 'Consumer' and dismiss the present Revision Petition accordingly. The District Forum shall decide the matter as expeditiously as practicable but not later than six months from the date of receipt of a copy of this order. It is clarified that we have not expressed any opinion on the merits of the case. Both the parties are directed to appear before the District Forum on 08.04.2019.