Dr. Indu G. Nainani & Anr vs M/s Kamala Park Developers

R.K. Agrawal, President Member

The present Appeal has been filed against the Order dated 25.04.2013 passed by the Maharashtra State Consumer Disputes Redressal Commission (hereinafter referred to as State Commission), whereby the State Commission dismissed the Complaint filed by Dr. Indu G. Nainani & Gobind N. Nainani (hereinafter referred to as the Complainants) by holding that since there was no privity of contract between M/s. Kamla Park Developers (hereinafter referred to as the Opposite Party Developer) and the Complainants in respect of sale of flat together with parking lots, no deficiency can be alleged against the Opposite Party Developer.

Brief facts of the case are that the are that the Complainants had purchased a Flat No.901 on 9 th floor in the Building 'CASA-DI-ANGELS' situated on a plot of land at City Survey No. F/450 of Village Bandra, Mumbai alongwith two Stilt Car Parking and One Open Car Parking from Mr. Aditya Gupta and Mr. Anuj Gupta vide Sale Deed dated 27.08.2009 for a total consideration of 3,15,00,000/-. The original Sale Deed was executed by the Developer on 16.03.2009 in favour of Mr. Aditya Gupta and Mr. Anuj Gupta and they were the confirming party to the second sale deed dated 27.08.2009

In the month of April 2010, the Complainants requested the Developer to allow their Contractor to carry out interior works in the said Flat. Vide letter, dated 22.04.2010 the possession of the flat was handed over by the Developer to the Complainants for a limited purpose of carrying out interiors as at that point of time no occupation certificate was issued for the building. It was also made clear that the complete possession would be delivered to the Complainants on receiving the Occupation Certificate.

On 22.2.2011, Developer handed over a copy of the Full Occupancy Certificate dated 9.9.2010 to the Complainants alongwith letter dated 10.9.2010 calling upon them to clear the entire payment of sale consideration of the said flat to enable them to issue possession letter. By Demand draft in the sum of 15,44,721/- and a cheque for 4,49,600/-, the Complainants paid the entire balance amount to the Developer and Nandita CHS Ltd. respectively. Since, the entire sale consideration was paid, the Complainants, vide emails dated 30.04.2010 and 03.07.2010 as also by letter dated 12.02.2011, informed the Developer that stilt Parking No.07 & 08 are their first preference and stilt Parking Nos. 10 & 11 are their second preference. However, after receiving the total sale consideration, there was absolutely no response from the OP Developer regarding allotment of parking and to the utter shock of the Complainants, the watchman of the building prevented their contractor in April-May 2011 from parking their vehicle in the stilt parking and informed them that Open Parking bearing Nos. 18, 19 and 20 have been allotted to the Complainants. Complainants sent an email to the Developer on 02.05.2011 requesting them to make an allotment of stilt parking in accordance with the Agreement but in vain. Consequently, Complainants issued a legal notice to the Developer which also was not responded by them. Alleging deficiency in service on the part of Developer in not providing the two Stilt and One Open Car parking space, the Complainants filed Complaint before the State Commission seeking directions to the Developer to (i) issue allotment letter specifying by distinctive numbers of the two Stilt Car Parking and One Open Car parking in the Building and to make available the same to them and (ii) in the alternate, to pay compensation of 95,00,000/- with interest @ 12% p.a. from the date of the Complaint.

The Opposite Party Developer contested the Complaint by filing its Written Statement and denied all the allegations made in the Complaint. A preliminary issue was raised that the Complainants were not the "Consumers" as defined under the Consumer Protection Act, 1986 (for short, "the Act") inasmuch as the Sale Deed dated 27.08.2009 was executed between the Complainants and Mr. Aditya Gupta and Mr. Anuj Gupta, as purchasers and sellers respectively, whereas the Developer is only a Confirming Party to the said Sale Deed. It was further contended that the Complainants had purchased the flat by way of 'Resale' and in number of Judgments, this Commission has held that in the case of 'Resale" the Purchaser is not the "Consumer" under the Act. It was also submitted that in the Article 6 of the Original Sale Deed dated 16.3.2009, only three car parking spaces had been mentioned without specifying any stilt parking or open parking and in fact Developer had allotted three open parking spaces to the Complainants as per commitment. They were not responsible for any mutual understanding between the Complainants and the Mr. Aditya Gupta and Mr. Anuj Gupta since they were only confirming party in the Sale Deed executed between them. They had worked only as a Developer in terms of the Development Agreement dated 21.11.2006 entered with M/s. Nandita Co-operative Housing Society Ltd. for developing their property and they as well as the flat purchasers were bound by the terms and conditions of the said Agreement. As per Article 7.5 of the Development Agreement, the Complainants are Members of the said Nandita Society and hence dispute between the prospective Member (i.e. Complainants) and the Society had to be agitated either before Registrar of Co-operative Societies or before a Cooperative Court and not a Consumer Forum. They had not rendered any service regarding housing construction as defined in the Act, to the Complainants and the dispute regarding parking space does not fall under the category of service relating to housing construction. As they had already handed over the possession of the building along with parking spaces to the Society, it is now for the Society to decide the final allotment of the parking space to the old and new Members of Society including the Complainants.

After perusing the material available on record and the evidence adduced by the Parties, the State Commission came to the conclusion that the Complainants had failed to prove that resale of a flat is covered under the provisions of the Consumer Protection Act and they are "Consumer" as defined under Section 2(1)(d) of the Act. Further, as there was no privity of contract between the Developer and the Complainants in respect of sale of flat together with parking lots, no deficiency in service could be alleged against the Developers, and dismissed the Complaint by observing as under:-

Ld. Advocate of the Complainants could not come forward with his submission as to how resale of a flat is covered under the provisions of Consumer Protection Act, 1986 and how the purchasers by way of resale of the flat are covered under the definition of "Consumer" as defined under Section 2(1) (d) of the Consumer Protection Act, 1986. This Commission had taken a consistent view in a transaction of resale of flat, that such flat purchasers would not be covered under the provisions of Consumer Protection Act, 1986 as a "Consumer" as rightly pointed out by Ld. Advocate of opponent. There is no other submission or documentary evidence to establish the status of the complainants as consumer, we have perused the file and affidavit evidence of the parties.

In view of these facts, we find that no deficiency against the opponent/developer/builder can be alleged as there is no privity of contract between the opponent/builder/developer and the complainant in respect of sale of flat together with parking lots. There is no merit in the consumer complaint. "

Aggrieved by this order, the Complainants have filed the present Appeal before this Commission.

Mr. Rajeev K. Panday, learned Counsel appearing on behalf of the Appellants submitted that the State Commission erred in holding that the transaction in question is a re-sale transaction and the Complainants are not Consumers whereas the entire mutual obligation between the Parties clearly revealed that this was a clear case of seller-consumer relationship; the flat in question was not constructed when the Agreement was made between the Parties and the Complainants made the entire payment to the OP Developer for its specific obligation which shows that there was a direct privity of contract between the OP Developer and the Complainants. It was further submitted that the impugned Order passed by the State Commission suffers from illegality and perversity and prayed that it should be set aside.

I have heard Mr. Rajeev K. Panday, learned counsel appearing on behalf of the Appellants, perused the Impugned Order passed by the State Commission and given a thoughtful consideration to the pleas raised by him.

It is not in dispute that the Opposite Party Developer vide Agreement for Sale dated 16.03.2009 sold the Flat No. 901 to Aditya Gupta and Anuj Gupta, who, when defaulted in making the payment to the OP Developer, sold the said flat to the Complainant vide Sale Deed dated 27.08.2009 in which the OP Developer being the Confirming Party, after accepting the entire amount of 3,15,00,000/- from the Complainants, refunded 20,00,000/-to Aditya Gupta and Anuj Gupta and handed over the Possession of the Flat to the Complainants. This chain of events clearly shows that the Complainant steps in the shoes of the Original purchasers, i.e., Mr. Aditya Gupta and Anuj Gupta, which did not bar the Complainants to fall under the description of a Consumer. A reference can be made to the decision of the Hon'ble Supreme Court in " Laureate Buildwell Pvt. Ltd. vs. Charanjeet Singh " [2021 SCC OnLine SC 479], in which it has been held that subsequent purchaser who takes over the obligation of the Original purchaser to pay the balance amount, would not per se exclude them from the description of a Consumer, by observing as under:-

" 23. The builder does not deny that upon issuance of the endorsement letter, the purchaser not only stepped into the shoes of the original allottee but also became entitled to receive possession of the flat. There is no denial that the purchaser fulfils the description of the complainant/consumer and is entitled to move any forum under the Consumer Protection Act for any deficiency in service. The question then is whether a subsequent purchaser is not entitled to similar treatment as the original allottee, and can be denied relief which otherwise the original allottee would have been entitled to, had she or he continued with the arrangement. An individual such as the original allottee, enters into an agreement to purchase the flat in an on-going project where delivery is promised. The terms of the agreement as well as the assurance by the builder are that the flat would be made available within a time-frame. It is commonplace that in a large number of such transactions, allottees are not able to finance the flat but seek advances and funds from banks or financial institutions, to which they mortgage the property. The mortgage pay-outs start initially after an agreed period, commencing in a span of about 15 to 24 months after the agreement. This would mean that in most cases, allottees start repaying the bank or financial institutions with instalments (mostly equated monthly instalments) towards the principal and the interest spread over a period of time, even before the flats are ready. If these facts are taken into consideration, prolongation of the project would involve serious economic repercussions upon such original allottees who are on the one hand compelled to pay instalments and, in addition, quite often-if she or he is in want of a house-also pay monthly rents. Such burdens become almost intolerable. It is at this point that an indefinite wait is impossible and allottees prefer to find purchasers who might step into their shoes. That such purchasers take over the obligations of the original allottee - either to pay the balance instalments or to wait for sometime, would not per se exclude them from the description of a consumer. All that then happens is that the consumer forum or commission - or even courts have to examine the relative equities having regard to the time frame in each case.

It was further held that absence of privity of contract is not a bar for maintaining a Complaint against a service provider, by observing as under:-

In another decision, Canara Bank v. United India Insurance Co. Ltd. (2020) 3 SCC 455, the issue which this court had to consider was whether the insurer could repudiate liability in respect of a fire which destroyed farm produce kept in a cold storage, when the farmers had no privity with the insurer, but with the cold storage, and who availed credit on the security of the crop. The court held as follows:

"28. Taking the issue of privity of contract, we are of the considered view that as far as the Act is concerned, it is not necessary that there should be privity of contract between the Insurance Company and the claimants. The definition of "consumer" under Section 2(d) quoted hereinabove is in two parts. Sub-clause (i) of Section 2(1)(d) deals with a person who buys any goods and includes any user of such goods other than the person who buys such goods as long as the use is made with the approval of such person. Therefore, the definition of consumer even in the first part not only includes the person who has purchased but includes any user of the goods so long as such user is made with the approval of the person who has purchased the goods. As far as the definition of "consumer" in relation to hiring or availing of services is concerned, the definition, in our view, is much wider. In this part of the section, consumer includes not only the person who has hired or availed of the services but also includes any beneficiary of such services. Therefore, an insured could be a person who hires or avails of the services of the Insurance Company but there could be many other persons who could be the beneficiaries of the services. It is not necessary that those beneficiaries should be parties to the contract of insurance. They are the consumers not because they are parties to the contract of insurance but because they are the beneficiaries of the policy taken out by the insured.

The definition of "consumer" under the Act is very wide and it includes beneficiaries who can take benefit of the insurance availed by the insured. As far as the present case is concerned, under the tripartite agreement entered between the Bank, the cold store and the farmers, the stock of the farmers was hypothecated as security with the Bank and the Bank had insisted that the said stock should be insured with a view to safeguard its interest.."

If one also considers the broad objective of the Consumer Protection Act, which is to provide for better protection of the interests of consumers and for that purpose, provide for the establishment of Consumer Councils and other authorities for the settlement of consumer disputes and for matters connected therewith, as evident from the Statement of Objects and Reasons of the Act. The Statement further seeks inter alia to promote and protect the rights of consumers such as-

"(a) The right to be protected against marketing of goods which are hazardous to life and property;

(b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;

(c) the right to be assured, wherever possible, access to variety of goods at competitive prices;

(d) the right to be heard and to be assured that consumers' interests will receive due consideration at appropriate forums;

(e) the right to seek redressal against unfair trade practice or unscrupulous exploitation of consumers; and

(f) right to consumer education."

In Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243, this Court held:

"The importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market economy. It attempts to remove the helplessness of a consumer which he faces against powerful business, described as, 'a network of rackets' or a society in which, 'producers have secured power' to 'rob the rest' and the might of public bodies which are degenerating into storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous consideration leaving the common man helpless, bewildered and shocked."

It was further held that:-

"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. ... It is a milestone in history of socioeconomic legislation and is directed towards achieving public benefit."

This court has further observed in State of Karnataka v. Vishwabharathi House Building Coop. Society, (2003) 2 SCC 412, that (the) "provisions of the said Act are required to be interpreted as broadly as possible. It has jurisdiction to entertain a complaint despite the fact that other forums/courts would also have jurisdiction to adjudicate upon the lis" 8

It is therefore evident that the Consumer Protection Act, 1986 was conceived as a legislation to address complaints of consumers (an expression defined and interpreted widely) and provide a forum for their quick redressal, and, furthermore, wherever third parties have claimed relief, technicalities have been brushed aside consistently, by this court. Thus, even after an original consumer is indemnified for a fire accident, the insurer can maintain a complaint against the carrier/service provider, and claim damages (of course along with the insured party). Likewise, absence of privity of contract is not a bar for maintaining a complaint against a service provider, by a third party who suffers an incident, which is otherwise covered by an agreement...... "

In view of above, I find that the Complainants do fall under the description of Consumers and even the absence of Privity of Contract between the Complainants and the OP Developer, does not bar for maintaining a Complaint against the service provider, i.e., OP Developer. Therefore, the Impugned Order dated 25.04.2013 passed by the State Commission in Consumer Complaint No. CC/12/2, is not sustainable in the eyes of law and is, therefore, set aside. The case is remanded to the State Commission with a request to decide the case afresh expeditiously preferably within six months from the first date of appearance of the Parties before the State Commission. Both the Parties are directed to appear before the State Commission on 10 th Jan. 2022.

The First Appeal stands disposed off in above terms. Keeping in view the facts and circumstances of the case, there shall be no order as to costs.