Now firms ‘buying’ flats can be treated as consumers


By Accommodation Times Bureau

Goods purchased or services facilitated for “commercial purpose” are excluded from the persuasion of the Consumer Protection Act, the term is not defined clearly. Hence the confusion about its interpretation had been seen in a case of a firm, bought property for its own use, in Mumbai.

A partnership firm called Classique, having its office in Goa, had booked a flat in Royal Palms in Mumbai. The flat admeasuring 1244 sqft was to be sold for Rs 61 lakh. Possession was to be given within two years. The firm paid Rs 40, 09,414 in installments and another Rs 1, 51,000 toward allotment of parking. To downplay the confusion in such cases, the National Commission has clarified the legal position, in its landmark decision.

The firm paid Rs 40, 09,414 in installments and another Rs 1, 51,000 toward allotment of parking. But the builder failed to execute the agreement. The builder also did not obtain the occupancy certificate nor gave the possession. So the firm filed a complaint before the Maharashtra State Commission, seeking a direction to the builder to execute the agreement, hand over possession, and pay compensation for mental agony and loss of rent at Rs 20,000 per month.

The builder contested the case. It was contended that the complaint was not maintainable as it was a commercial transaction where the firm had booked the flat as an investment, so it cannot be considered a consumer.

The state commission observed that the claim for loss of rent established that the purchase was an investment for earning rent. The commission refused to accept the firm’s argument that the flat was meant for its partners. The complaint was dismissed.

Grieved by the incident, the firm challenged this order before the National Commission. In appeal it was observed that the complaint did refer to the flat being purchased as an investment, but there was nothing to show that the firm was engaged in the business of purchase and sale of flats. A mere averment that rent could have been earned cannot lead to an inference that the firm is engaged in real estate business.

Accordingly, by its order of April 18, the National Commission remanded it back to the state commission with a direction to decide the claim on merits. It also restrained the builder from creating any third party interest in the flat till the dispute was adjudicated by the state commission.

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