Order Name: Omkar Realtors and Developers Pvt. Ltd. v. Kushalraj Land Developers Pvt. Ltd. & Anr.
Case No.: Civil Appeal No.858 of 2023
The Supreme Court has recently addressed whether a real estate company that buys a flat for its director’s personal use qualifies as a "consumer" under Section 2(7) of the Consumer Protection Act. The Court emphasized that the purpose of the purchase—whether personal or commercial—depends on the specific details of each case.
The Court noted that the main intention behind the transaction needs to be considered to determine if it relates to profit generation as part of commercial activities. If the goods or services are bought for personal use and not for commercial profit, the purchase is considered non-commercial.
Factual Background
In this case, Kushalraj Land Developers Pvt. Ltd. (respondent) booked a flat for one of its directors with Omkar Realtors and Developers Pvt. Ltd. (appellant). They paid Rs. 51,00,000 as a booking amount and Rs. 6,79,97,071 as part payment. The date of possession was initially set for December 31, 2018, but was later advanced to early 2017. However, the respondent discovered the flat was already allotted to someone else, Nakul Arya, and refused to take possession or pay the balance amount. The appellant then canceled the booking and forfeited the paid amount.
The respondent approached the National Consumer Disputes Redressal Commission (NCDRC), alleging deficiency in service and unfair trade practices. The NCDRC ruled in favor of the respondent, directing the appellant to refund Rs. 7,16,41,493 with interest. The appellant then challenged this order in the Supreme Court.
Key Issues
- Whether the respondent was a "consumer" under Section 2(7) of the Consumer Protection Act.
- Whether the appellant was justified in terminating the allotment and forfeiting the deposits, or if there was a deficiency in service.
Court Observations
The Supreme Court referred to previous rulings, including cases where entities purchasing goods or services for personal use (like a Medical Trust buying houses for nurses) were considered consumers. The Court reiterated that the dominant intention behind the purchase must be evaluated to see if it is linked to profit generation.
In this case, the flat was bought for the residence of one of the respondent’s directors and his family. The burden was on the appellant to prove that the purchase was part of the respondent’s real estate business, which they failed to do. There was no evidence connecting the flat purchase with the respondent’s business activities.
Regarding the issue of double allotment, the Court noted that this was resolved by a deed of rectification. The appellant’s explanation about confusion over flat numbers was insufficient. The Court held that the appellant should not have canceled the allotment before resolving the double allotment issue.
Conclusion
The Supreme Court upheld the NCDRC’s decision, dismissing the appeal. The appellant was ordered to refund Rs. 3,00,00,000 within two weeks and the remaining amount by December 31, 2024.
Takeaway: This judgment reinforces that the intent behind a purchase is crucial in determining whether it is for personal or commercial use. Companies buying for personal use can still be considered consumers under the Consumer Protection Act.
