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Judgment
M. Shreesha, Member
First Appeal No. 1318/2018
Aggrieved by the order dated 19.04.2018 in CC/13/417 passed by the State Consumer Disputes Redressal Commission, Maharashtra (for short the "State Commission"), the Opposite Parties namely M/s Vaidehi Akash Housing Pvt. Ltd. and Mr. Gurunath Sadashiv Phondekar, Director of Vaidehi Akash Housing Pvt. Ltd., (hereinafter referred to as "Developer") preferred this First Appeal under Section 19 of the Consumer Protection Act, 1986 (in short "the Act").
The facts in brief are that the Complainant sought to purchase flat No. 1703 on the 17 th floor, Building No. 8 of New D.N.Nagar, Sagar Sahavas Colony, Link Road, Mumbai for a total sale consideration of 60,00,000/- vide allotment letter dated 10.08.2008. It is averred that the Complainant was assured that the date of delivery of possession would be within 30 months i.e. by February, 2011. Subsequently, the Complainant was informed by the other flat purchasers that a letter dated 21.10.2011 was addressed to them by the First Opposite Party stating that the Project is delayed due to some genuine reasons. It is stated that the Complainant had never received any such letter and when he approached the Developer he was informed that the possession would be given as assured. However, it was noticed that there was no progress in the construction and when he requested the Developer to execute a Registered Agreement for Sale, there was no response. Hence the Complaint seeking a direction to the Developer to execute the Agreement of Sale and hand over peaceful possession and in the alternative refund the amount paid with interest @ 18% p.a. from the respective dates of deposits together with compensation, interest and costs.
The Developer filed the Written Version stating that the Complaint is not maintainable as the Complainant is not a 'Consumer'; that he has booked the flat for commercial purposes; that the project was given for re-development by New D.N. Nagar, Cooperative Societies Union Ltd., the union of 10 societies having lease of 99 years from MHADA to the Developer by Development Agreement dated 31.12.2005; that the Developer applied to MHADA as lessors for grant of permission to redevelop the plot; against the arbitrary termination, the Developer filed the suit before Hon'ble High Court bearing No. 262/2012 which is still pending; the Project was delayed only because of litigations between the parties which is beyond the control of the Developer; the Complainant was very much aware that the Project was being developed with the help of the investors M/s Rustomjee Reality Pvt. Ltd.; after getting the development rights construction work was begun and stilt plus three floors were completed by spending amount of 200 crores. At the time of commencement of re-development, the plot was not affected by CRZ; the MHADA as lessors issued NoC for utilization of FSI/TDR and received consideration from the Developer but thereafter MCGM remarked that the said property was within the CRZ II demarcation and consequently directed that permission from MCZMA be obtained; the Society had filed Writ Petition for reliefs and the Developer supported their Petition; the entire process started in September, 2006 and continued till January, 2010. Since it is a re-development project permission from MHDA after making payment of 9 crore as premium; various approvals and sanctions from statutory bodies were obtained; on 16.04.2010, union of society issued the termination notice to Developer inter alia alleging to unilaterally terminate the Development Agreement dated 31.12.2005 which was sent without having any authority or general body sanction. The matter involved is of complicated nature and, therefore, should be relegated to a Civil court; that there is no deficiency of service on their behalf and sought dismissal of the Complaint with costs.
The State Commission based on the material adduced while allowing Complaint directed Opposite Parties to refund jointly and severally to the Complainant 16,00,000/- with interest @ 18% p.a. from 10.08.2008 which is the date of the allotment letter till the date of realization together with compensation of 1,00,000/- and costs of 50,000/-. Time for compliance within 45 days from the date of order, failing which the Developer was directed to pay the amount with interest @ 21% p.a. for the same period. While allowing the Complaint, the State Commission has observed as follows:-
"1. Consumer complaint is hereby partly allowed.
Opponents are declared as guilty of deficiency in service.
Opponents do pay jointly and severally to the complainants amount of 60,00,000/- (Rupees Sixty Lakhs only) together with interest @ 18% p.a. from the date of allotment letter i.e. 10.08.2008 till realization of amount.
Opponents do pay jointly and severally amount of 1,00,000/- (Rupees One Lakh only) to the complainant towards compensation for mental pain and agony.
Opponents do pay jointly and severally amount of 50,000/- (Rupees Fifty Thousand only) to the complainant towards costs of litigation and shall bear their own costs.
Opponents to comply the above order within forty-five days from the date of this order, otherwise amount of 60,00,000/- (Rupees Sixty Lakhs only) will carry interest @ 21% p.a. from the date of allotment letter i.e. 10/08/2008 till realization of amount.
Copies of the order be furnished to the parties."
Learned Counsel appearing for the Appellant/Developer vehemently argued that it was a pure case of investment; that the Complainant was aware of the entire scenario and still booked a flat in the project of the Appellant as a financial investment and that the Respondent is a Private Limited Company and purchased the flat for his Directors and Executives only to invest their money which is a commercial transaction and does not fell within the purview of the ambit of the Consumer Protection Act, 1986 and hence the Complaint itself is not maintainable. It was also argued that the State Commission has erred by entering into merits of the case when the Consumer Complaint itself is not maintainable and the matter ought to have been relegated to a Civil court.
First we address ourselves as to whether the Complainant Company is a 'Consumer' within the meaning of Section 2(1)(d) of the Consumer Protection Act or not. The aforesaid issue came up for consideration of a Three-Member Bench of this Commission in Consumer Complaint No. CC/51/2006 Crompton Greaves Limited & Anr. Vs. Daimler Chrysler India Pvt. Ltd. & Ors. decided on 08.7.2016, and the following view was taken:
"3. Section 2(1)(d) of the Consumer Protection Act which defines the term 'consumer', to the extent it is relevant, reads 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 ;
It would thus be seen that the emphasis is on the purpose for which the goods are obtained, though the use to which the goods are actually put would be helpful in deciding the purpose for which they were obtained.
The term 'Commercial Purpose' has not been defined in the Consumer Protection Act and as held in Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583] , in the absence of a statutory 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" (Collin's English Dictionary) and the word 'commerce' means "financial transactions, especially buying and selling of merchandise on a large scale" (Concise Oxford Dictionary)".
Going by the dictionary meaning, a car or for that matter any goods obtained and the services hired or availed by a company can be said to have been obtained or hired or availed for a commercial purpose, only if the said goods or services are intrinsically connected with, or related to the business or commerce in which the company is engaged. The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services. As observed by the Hon'ble Supreme Court in Laxmi Engineering Works (supra) , it is not the value of the goods but the purpose for which the goods are brought or put to use, which is relevant to decide whether the goods were obtained for a commercial purpose or not. The same would be the position, where services are hired or availed by a company. If the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities.
If a car or other goods are purchased or the services are hired or availed by a company for the personal use of its directors or employees, the purpose behind such acquisition is not to earn profits or to advance the business activities of the company. The purpose is to make certain facilities and amenities available to the directors and employees of the company as a part of the incentive offered to them by the company, as a reward or remuneration for the work which they are expected to perform for the company. It is not as if a company cannot run its business without providing such facilities and amenities to its directors and employees. It is not necessary for the business of the company, to provide such facilities and amenities to its directors and employees. Providing such facilities and amenities only motivates them to perform their work in an efficient and congenial environment, besides serving as an incentive aimed at eliciting better performance. The company does not earn profit merely by making a car or certain other goods or services available to its directors and employees. Therefore, it would be difficult to say that such goods are purchased or the services are hired or availed by the company for a commercial purpose.
The goods and services made available by a company to its directors or employees can be classified into the following three broad categories:-
(a) The goods and services which are obtained for and made available to the directors or employees of the company and are used by them only for their personal purposes, unconnected with the business of the company. For instance, the cars used by the directors and employees of the company for their shopping, outings, recreations, etc. or for commuting to and from the office of the company.
Another example can be the air conditioners and furniture provided at the residence of the directors and employees of the company or the telephone or broadband got installed by the company at their residence.
(b) The goods and services made available to the directors or employees of the company and used by them primarily for their personal purposes but incidentally, also for the purposes of the company. For instance, a car used mainly for outings, recreations, personal commuting etc. of the directors and employees or their families, but also for visiting the factory and offices of the company or attending the business meetings.
(c) The goods and services made available by a company to its directors and employees primarily for the purposes of the company and used by them mainly for the purposes of the company but incidentally also for their personal purposes. For instance, a vehicle purchased for being used as a staff car or a delivery van, but sometimes also used for the personal purposes of the directors or employees, unrelated to the business of the company.
As far as the goods and services falling in category (a) are concerned, there can be no dispute that since such goods were purchased or the services were hired or availed by the company and made available to its directors and employees for the purposes wholly unrelated to the business activities of the company, such an acquisition cannot be said to be for a commercial purpose. No commercial purpose of the company is achieved by purchasing such goods or hiring or availing such services and then making them available to its directors and employees.
For the reasons stated hereinabove, the issue referred to the larger Bench is answered as follows:-
(a) If a car or any other goods are obtained or any services are hired or availed by a company for the use/personal use of its directors or employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purpose, irrespective of whether the goods or services are used solely for the personal purposes of the directors or employees of the company or they are used primarily for the use of the directors or employees of the company and incidentally for the purposes of the company."
(b) The purchase of a car or any other goods or hiring or availing of services by a company for the purposes of the company amount to purchase for a commercial purpose, even if such a car or other goods or such services are incidentally used by the directors or employees of the company for their personal purposes."
For all the afore-noted reasons, we conclude that there is a specific pleading that the flat was purchased for the personal use of the Directors and cannot amount to purchase for a commercial transaction as there is no evidence on record to establish that the Complainant Company is dealing in real estate and has purchased the flat purely for the purpose of investment. Hence we hold that the Complainant is a 'Consumer'.
Now we address ourselves to the merits of the case. The Developer has not given any cogent reasons as to why the Registered Deed of Agreement was not executed despite receiving the entire sale consideration way back in the year 2008. The only contention of the Developer is that because of inter-se disputes and litigations, the Project could not be completed within the stipulated time. There is no evidence on record to establish that any of the reasons cited fall within the definition of Force Mojeure. Be that as it may, the fact remains that the amount of 60,00,000/- which is the total sale consideration was paid almost a decade ago, the flat purchased
by the Complainant Company is on the 17 th floor and admittedly the construction is still incomplete. The State Commission after considering the rival contentions has observed that the Complainants are entitled for the alternative relief prayed for i.e. refund of the amount with 18% interest as the Complainants today are not in a position to purchase a similar flat in the same vicinity. At the cost of repetition, keeping in view the admitted position of incomplete construction, we are of the considered view that the ratio laid down by the Hon'ble Supreme Court in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra Civil Appeal No. 3182/2019 squarely applies to the facts of this case, wherein the Hon'ble Apex Court has observed that the Complainants cannot be made to wait endlessly for seeking compensation. Even in the instant case the allotment letter is dated 10.08.2008 which is more than a decade ago. However, having regard to the lowered interest rates and the interest being awarded in the recent judgements of the Hon'ble Supreme Court, we are inclined to reduce the interest @ 18% p.a. to 12% p.a. to be paid within four weeks from the date of receipt of copy of this order, failing which the amount shall attract interest @ 15% p.a. for the same period to be paid jointly and severally by both the Opposite Parties. Thus the Appeal is allowed in part only with respect to reduction in the rate of interest and while confirming the rest of the order of the State Commission.
First Appeal No. 1325/2018
For all the afore-noted reasons since this Appeal also arises out of the same facts and circumstances and is against the same Developer this Appeal is also allowed in part modifying the rate of interest to the extent indicated above.
The statutory amounts deposited in both the Appeals stand transferred to the Complainants in each case.