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Judgment
Briefly put facts relevant for the disposal of the present consumer complaint no. 588 of 2017 are that on 22.04.2014 a Memorandum of Understanding (MOU) was executed between the complainant and the opposite party no. 1 - company wherein it was agreed that an allotment of 15,000 sq feet (as per the allotment letter) would be done in favour of the complainant for a total consideration of Rs.5.00 crores. It was further stated that the complainant, vide cheque no. 728593 dated 15.04.2014 had made 100% payment towards the allotment of the said apartments.
On the same date i.e., 22.04.2014, the opposite party no.1 company''s Director - Mr Rahul Gaur executed a personal guarantee and undertaking in favour of Mr Rajiv Kumar Jain, the Managing Director of the complainant company, stating mainly, that Mr Rahul Gaur shall be personally liable for on behalf of the opposite party company in case of any default.
As per the said MOU, the said project was to commence on 01.03.2014 and be completed latest by 31.03.2018. The OP 1- company also purported to have obtained all the permissions. Various advertisements were taken out in the newspaper and the media covering the availability of apartments in the proposed holding.
On 22.04.2014, OP 1 - company issued an allotment letter wherein the complainant was allotted apartment bearing nos. 583, 584 & 586 on 58 th Floor, with an approximate Super Area of 15,000 sq feet in the said project.
On 24 th April 2014, as a consequence of the MOU between the parties, Cheque no. 728593 dated 15.04.2014 drawn on Dena Bank, Indranagar, Bangalore was issued by the complainant in favour of the OP no. 1- Company. The account of the complainant was debited to the extent of Rs.5.00 crore and the payment was transferred to OP 1 - company. Till date the project has not even commenced and not even a single brick has been put by the OP 1 - company at the project site and there was no information in regard to the said project.
Accordingly, when there was no progress shown by OP 1 - company regarding the execution of the project, the complainant made a detailed representation to OP 1 - company detailing the shortcomings of the OP 1- company and asked for a refund of Rs.5.00 crore paid by the complainant along with interest in terms of MOU dated 22.04.2014.
OP 1 - company in response to the said representation pleaded that interest can be paid on a later date but Rs.5.00 crore can be immediately returned to the complainant. Accordingly, OP 1- company issued a cheque dated 13.10.2015 bearing no. 001446 for Rs.5.00 crore drawn on Bank of Baroda.
The complainant presented the said cheque to its Bank for encashment but upon presentation the same stood dishonoured due to "insufficient funds" in OP no.1 - company''s account and was returned to the complainant. The complainant has filed a complaint bearing PCR no. 51840/2016 under Section 200 of the Code of Criminal Procedure, 1973 read with Section 138 and 142 of the Negotiable Instruments Act, 1881 before the Additional Chief Metropolitan Magistrate, Bangalore.
On 02.11.2015 the complainant sent statutory notice for winding up under Sections 433 and 434 of the Companies Act, 1956 to OP no.1- company''s Registered Office address calling upon the OP no. 1 to refund an amount of Rs.5.00 crore along with interest @ of 18% in terms of MOU dated 22.04.2014 as the sum due and payable by the OP no. 1- company.
On 04.11.2015, the original letters along with the registered AD Cards, sent by the complainant to the offices of the OP no. 1- company were returned to the complainant as undelivered along with the report that the offices of the company are locked. The sealed envelopes bearing the notice were returned by the postal department.
The complainant subsequently filed a petition under Section 433 and 434 of the Companies Act, 1956 for winding up of OP 1-company, being Co. Pet. 977/2015 and the Hon''ble High Court of Delhi was pleased to issue notice vide order dated 18.12.2015. The Hon''ble Court also directed the OP no.1 - company not to dispose of or alienate or encumber either directly or indirectly, or otherwise part with the possession of the company to the tune of Rs.5.00 crore except in the ordinary course of Business. The petition under Section 433 and 434 of the Companies Act, 1956 for winding up of the OP no.1- company being Co. Pet 977 of 2015, is currently pending before the High Court of Delhi.
The OP no.1- company has not made the payment of the monies mentioned therein till date. The complainant has made several and desperate attempts to follow up with the OP no.1-company regarding handing over the said apartments but the OP no.1-company herein preferred not to respond to any phone calls. It was submitted that the OP no.1 company has clearly displayed a callous, lackadaisical and unprofessional conduct towards the complainant. Therefore, the complainant has made the following prayer that this Commission may kindly be pleased to direct the opposite party companies to:
A. To pay an amount of Rs.7,21,17,400/- to the complainant, comprising of:
*The principle amount of Rs.5,00,00,000/-;
*Towards interest on the amount deposited with/ paid to the OP @ 18% per annum from the respective dates of payment till date of filing the present complaint : Rs.2,21,17,400/-
B. To pay an amount that this Hon''ble Commission deems fit towards damages/ compensation for mental agony and hardship on account of delay in handing over the possession;
C. To pay an amount that this Hon''ble Commission deems fit towards litigation charges to the complainant;
D. To direct the Opposite party company to maintain status q uo with respect to the plot no. SC 01/ A - 2, Sector 150 Noida and the collaboration agreement dated
07.2013; and
E. Pass such other order/ orders as may be deemed fit and proper in the facts and circumstances of the case.
We have carefully gone through the MOU placed on file. It is an agreement made on 22.04.2014 between M/s BRYS International Pvt., Ltd., and M/s Rakesh Projects Pvt. Ltd., The following paragraphs are very relevant to the case, and are reproduced as under:
" Whereas, on first party request, the second party has expressed his interest for investment in upcoming luxurious residential projects of the first party and wish to place its funds with first party in advance to capitalize the opportunity in terms of competitive pricing, locational advantages and best possible return on his investments.
Whereas, the first party has approached the Second party for investment in its luxurious residential project at BRYS BUZZ Sector 150 Noida by booking and for allotment of 15,000 sq. ft comprising of three units of 5000 sq ft each in BRYS BUZZ @ Rs.3,333/- per sq ft total consideration is Rs.5.00 crore. Unit nos. and floors will be mentioned in the allotment letter. The second party, subject to the terms and conditions as mutually agreed, mentioned elsewhere, and has accepted the proposal of investment of first party. It is further agreed that out of the total allotment price of Rs.3,333/- per sq feet a sum equivalent to 100% of the allotment price have already been paid by the second party to first party as its final investment at this time.
The second party has paid through Cheque no. 728593 and dated 15.04.2014 of Dena Bank, Indiranagar, Bangalore for an amount of Rs.5.00 crore to the First Party for mutually agreed period of one year from the date of this MOU. However, the Second party will be entitled to demand repayment of the investment made with the First party by giving 30 days'' notice at any point of time.
The First party has allotted three units of 15,000 sq ft in BRYS BUZZ @ Rs.3333/- to the Second party against which 100% payment received from the Second party as above. The required allotment letters in favour of Second party are being issued by the First Party.
The First party assure the second party that the project shall start taking shape and the actual construction work started at the site on 01.03.2014 and the proposed constructed area shall be deliverable latest by 31.03.2018.
In consideration of the second party making investment in project of the first party at initial stages, the second party has been offered assured monthly return of 18% per annum payable on monthly basis by the First party to the second party from the date of investment.
After one year/ any point of time from the date of investment by the second party, the second party shall get from the first party, the investment made it being called the maturity amount henceforth.
The second party can carry on with the allotment as made above as unit bookings, for residential projects BRYS BUZZ @Rs.3333/- per sq ft plus additional charges payable at the time of possession as applicable as mentioned in allotment letter.
To secure the second party, the first party agrees to issue and deposit post-dated cheques for ''Maturity amount'' as security with the second party. The Second party undertakes not to present the post-dated cheques with bankers for realisation without giving notice of 7 days for repayment of investment as mentioned hereinabove. However, after expiry of notice period, the second party can present the cheques with bankers for realisation.
It is agreed that to create additional security for the investment made by the second party, the Managing Director of the company on the first party, i.e., Mr Rahul Gaur shall give his personal guarantee to the extent of 136% of the amount invested by the second party.
In case the first party fails to pay the maturity amount to the second party, the second party will be entitled to sell the said unit in open market and the first party shall not create any hindrance in the same and rather cooperate fully in such transfer/ sale.
On account of non-payment of maturity amount by first party to second party, second party will be the sole authorized owner of the said flats and the investment will be deemed as full and final payment (including additional charges) of three flats each measuring 5000 sq fts totalling 15,000 sq ft.
In case the second party exercises option of repayment of investment the first party honours the same by paying the maturity amount of Rs.5.00 crore plus assured return of 18% per annum to the second party, then the second party surrenders all its rights in the allotted units to be first party along with the allotment letters issued by the first party to the second party at the time of allotment in the beginning of this agreement."
We have heard the learned counsel for the complainant. Learned counsel for the complainant has contended that the complainant is a ''consumer'' because in the contract, the term buyer has been used and also because, the word investment has been used, merely because, the entire amount of Rs.5.00 crore was paid in advance in one instalment. He further stated that the three flats were being purchased for the personal use of the Directors.
However, he has admitted that the fact that the complainant had purchased the said flats for the Directors has not been pleaded in the complaint. He has also admitted that there is no purchase agreement. It would thus appear that this is merely an afterthought to come within the definition of ''consumer''.
From the above, it is very clear that Rs.5.00 crore has been invested by the complainant with the opposite party and the transaction is purely in the nature of an investment by the complainant. The investment was initially for a period of one year and to secure the investment the first party agreed to issue and deposit post-dated cheques for maturity amount as security with the complainant. As additional security for the investment made by the complainant, the Managing Director of OP no. 1 Mr Rahul Gaur had given a personal guarantee to the extent of 136% of the amount invested by the complainant. In the case OP no. 1, i.e., BRYS International failed to pay the maturity amount to the complainant, the complainant would be entitled to sell the three units allotted to them in the open market. It is thus very clear from the above, that the units were also allotted as an additional security.
As per Section 2 (1) (d) of Consumer Protection Act, 1986, the word ''consumer'' has been defined as under:
(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 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;
From the above, it is clear that the complainant would not fall under the definition of ''Consumer'' as they have given an amount of Rs.5.00 crore at an interest of 18% as an investment to the opposite party which would either have been returned with 18% interest or in the alternative as provided for in the MOU they would carry on with the allotment as made in the unit bookings of the residential project and would be entitled to sell the said units in the open market to recover their investment.
In view of the above, the complaint is not maintainable and the same is dismissed.