PER MR SUBHASH CHANDRA

1.      This appeal under section 19 of the Consumer Protection Act, 1986 (in short, the ‘Act’) seeks a review of the order dated 15.11.2018 of the State Consumer Dispute Redressal Commission, Uttar Pradesh, Lucknow (in short, the ‘State Commission’) in complaint case no CC 98/2015 dismissing the complaint.  

2.      According to the appellant, the facts of the case, in brief, are that he had booked a plot admeasuring 750 sq yds in the respondent’s group housing project, “Hi-Tech City”, Village Kallipaschim, Lucknow, U.P. by paying Rs 12,50,000/-. As per an Agreement entered into between the parties on 31.08.2010 the respondent was to develop the land for residential purpose and hand over the plot. The amount paid was the basic sale price and other charges such as ECC, EDC, PLC, etc., were to be paid subsequently. The plot was promised to be delivered within 24 months from the date of the Agreement. Appellant avers that the Agreement, which contained a specific clause for the refund of the money in case respondent failed to adhere to the clauses, had all elements of an ordinary Plot Buyer Agreement whereby the appellant had hired the services of the respondent for the purpose of obtaining the residential plot. The clause for refund specifically provided that the appellant would be entitled to refund of Rs 41,25,000/- @ Rs 5,550/- per sq yd for the 750 sq yds allotted to him. The appellant submitted that in view of the respondent having failed to deliver the possession of the plot as promised, he was entitled to the refund of Rs 41,25,000/- under the terms of the Agreement. Accordingly, a legal notice was issued on 01.05.2014 and the respondent vide letter dated 25.07.2014 informed the appellant to collect the cheque. However, on 04.08.2014, two cheques amounting to Rs 38,37,500/- were handed over to him after deducting TDS. Appellant contends that this deduction was not valid and that the respondent was liable to pay the same. He therefore filed complaint no. 98/2015 before the State Commission which was dismissed on the ground that the appellant was not a ‘consumer’ under the Act but an investor.

3.      This order is impugned before us on the grounds that the State Commission failed to go into the merits of the case and failed to establish that the appellant was not a ‘consumer’ on the basis of Kavita Ahuja Vs Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd & Ors., MANU/CF/0937/2015 as respondent had not discharged the burden of proof on it to prove the the appellant was ‘engaged in the business of purchasing and selling houses and/or plots on a regular basis, solely with a view to make profit by sale of such houses’. He has also relied on the finding in Kavita Ahuja (supra) that:

A person having surplus funds available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment. He may invest such funds in Bank Deposits, Shares, Mutual Funds and Bonds or Debentures, etc. Likewise, he may also invest his surplus funds in purchase of one or more houses which is/are proposed to be constructed by the service provider in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house(s) is higher than the price paid or agreed to be paid by him. That by itself would not mean that he was engaged in the commerce or business of purchasing and selling the house(s).

It has also been argued that the impugned order has not set out any reasons to establish how the appellant was engaged in commercial activity as was held in Sunita Ajay Ramnathkar Vs. Starlight Systems (I) LLP, MANU/CF/0226/2018. It is argued that the State Commission, being the first court of appeal is the final court of fact and hence it was required to consider the contentions raised through a speaking order. Reliance has also been placed on Hon’ble Supreme Court’s judgment in Meerut Development Authority Vs. M.K. Gupta, IV (2012) CPJ 12 that a buyer has a recurrent cause of action for non-delivery of possession and where the builder fails to perform his contractual obligations the buyer would have a cause of action to seek possession as held by this Commission in Perin Bazun Dittia & Ors. Vs. Emaar Hills Township Pvt. Ltd. & Ors., MANU/CF/0237/2016. The appellant is before us with the prayer to allow the appeal and set aside the order dated 30.11.2018 passed by the State Commission and to pass any other order as deemed fit and proper.

4.      We have heard the learned counsel for both the parties. Both sides also filed written submissions.

5.      Learned counsel for the respondent relied upon the Agreement dated 31.08.2010 between the parties to argue that the appellant was not a ‘consumer’ under the Act since the Agreement specifically mentioned that:

“(C) The Second Party has approached the First Party and has expressed its desire to invest funds for the purchase of such raw undeveloped land, which is being purchased by the First Party for development of the proposed residential colony to be executed by the First Party or its subsidiary after obtaining all permissions and approvals from the Concerned Authorities.

(D) The Second Party has also requested the First Party that in lieu of the aforesaid contribution by the Second Party for the purchase of raw land as aforesaid, developed plot of land in the proposed Colony shall be reserved for allotment to the Second Party after the licences/LOI/ requisite permissions for the said Colony are granted by the authorities.

(E) The First Party has accepted the request of the Second Party and has agreed to accept the contribution of funds by the Second Party for the aforesaid purpose.

It is therefore argued that the appellant (Second Party) had invested in the project for commercial purpose and was therefore not covered under the Act as a ‘consumer’. It was contended that the plot in question had been agreed to be provided in lieu of the contribution by the appellant. As the appellant had taken full refund of the amount of Rs 41,25,000/- as per the terms of the Agreement and the said amount had been paid after deduction of TDS on 05.08.2014, learned counsel for respondent argued that the impugned order to refund Rs 41,25,000/- with interest @ 18% from 30.08.2012 till payment along with TDS deducted and compensation under various heads should be set aside.

6.      The rival contentions of the parties have been considered. From the averments and the material on record it is manifest that the Agreement between the parties dated 30.08.2010 provided for the respondent to hand over a plot admeasuring 750 sq ft in its project for a sum of Rs 41,25,000/- within 24 months. The refund of Rs 38,37,500/- is stated to be the refund of the investment with deduction of TDS in terms of the Agreement. TDS is stated to have been deducted as per rules on refund. The respondent has contended that the amount paid to the respondent was in the nature of an investment and did not constitute a sale since Rs 12,50,000/- paid by the appellant was not towards sale consideration for the plot as a ‘consumer’ and that the Agreement dated 30.08.2010 makes it apparent. The appellant, however, would have us believe that the Agreement was for the sale of a 750 sq yds plot for a sale consideration of Rs 41,25,000/- against which Rs 12,50,000/ was paid on 31.08.2010. It is contended that there was a commitment to hand over the plot within 24 months of the Agreement and that the refund of Rs 38,37,500/- was in pursuance of this Agreement.  The ‘investment’ stated to have been made by the appellant as per the Agreement is towards the sale consideration of the plot as per this Agreement and it is argued that even if considered as an ‘investment’, the appellant would still be a ‘consumer’ since the mere investment of money in a real estate project would not disqualify him in terms of the judgment in Kavita Ahuja (supra). It is also evident from the Agreement that the contribution of the appellant was towards purchase of the plot which was undertaken to be allotted within 24 months failing which Rs 41,25,000/- would be refunded considering this to be the value of the plot which could have been allotted. At this stage it is relevant to recall the relevant clauses of the Agreement which read as under:

4. The First Party, in lieu of the aforesaid contribution of the Second Party towards purchase of the said land for the development of Hi Tech City, has agreed to allot a plot of approximately having an area of 750 sq yds in favour of the Second Party in the Colony to be developed by the First Party of 750 sq yds in favour of the Second Party in the Colony to be developed by the First Party, after the licenses/LOI/other requisite permissions for the said Colony are granted by the concerned authorities.

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11. It is further agreed between the Parties as under:

(i)  In the event the First Party fails to allot the plot in the Hi Tech City as contemplated above within a period of 24 months; or is unable to make allotment of the plot in terms of this agreement for other reasons whatsoever, then the Second Party shall be entitled to the refund of amount of Rs 41,25,000/- (Forty One Lac Twenty Five Thousand Only) calculated @ Rs 5500/- per sq yds, (Rs 5500/- per sq yds) for 750 sq yds of area taking it as the amount of value of the plot which could have been allotted to the Second Party.

(ii)  In the event the First Party allots the plot to the Second Party within the time period as aforesaid or mutually extended period, the Second Party shall have the option either to accept the allotment or sell the plot back to the First Party at the rate of Rs 5500/- per sq yd (Rs 41,25,000/-.

The aforesaid amount mentioned in (i) and (ii) above, shall be treated as mutually agreed amount and fair market value of the plot and shall not be negotiable or challenged. The aforesaid amount shall be paid by the First Party to the Second Party within 30 days of exercise of such option by the Second Party.

This option is available to the Second Party only on expiry of the period of 24 months from the date of this agreement or mutually extended period. In such an event, a suitable agreement will be executed between the First Party and the Second Party or any person nominated by him for substitution on his place as Second Party.

                                                         (Emphasis added)

7.      From the foregoing it is manifest that the Agreement was clearly for the sale of a plot of 750 sq yds in Hi Tech City being developed by the respondent to be delivered within 24 months at a sale consideration of Rs 41,25,000/-. It has been held by the Hon’ble Supreme Court in United India Insurance Co. Ltd., vs M/s Harchand Rai Chandan Lal, Appeal (Civil) no.6277 of 2004 dated 24.09.2004 that an agreement between the parties has to read ‘as is’ and cannot be altered or substituted by courts or tribunals. In the instant case, it is manifest that the agreement dated 31.08.2010 was for the purpose of the sale of a developed residential plot of 750 sq yds @ Rs 5500/- per sq yd or Rs 41,25,000/- by the respondent to the appellant. It is also apparent that in lieu of the said agreement the respondent has refunded Rs.38,37,500/- to the appellant and has claimed that the balance was deducted towards TDS. Its argument that the appellant was not a ‘consumer’ under section 2(1)(d) of the Act at this stage cannot be accepted in the light of the agreement signed by him whereby a sale consideration has been agreed to for delivery of the plot within 24 months in case the project was not completed. It is also evident that the appellant had been considered a ‘consumer’ under the Act since the respondent has claimed deduction of TDS from the amount of Rs 41,25,000/- refunded to the appellant as per the Agreement. The appellant cannot be non-suited on the ground that he is not a consumer for these reasons. The order of the State Commission does not set down any reasons for its finding in this regard. The impugned order is also liable to be set aside on this ground.

8.      The Agreement between the parties also does not mention any deductions liable to be made. Therefore, the respondent’s refund of Rs 38,37,500/- against the amount of Rs 41,25,000/- mentioned clearly in the Agreement is not justified. For the same reason, the appellant’s claim of compensation by way of interest @ 18% on this amount is also not justified. The appellant has also not relied upon any clause of the Agreement to claim this compensation. Hence, we do not hold the respondent liable to pay compensation to the appellant.  

9.      In light of the discussion above, we find merit in the appeal. The appeal is allowed and the order of the State Commission is set aside. Respondent is directed to refund the balance amount of Rs 2,87,500/- to the appellant with interest @ 6% p.a. from 05.08.2014 within 8 weeks of this order failing which the amount shall be paid with interest @ 9% p.a. till realization. Both parties shall bear their own costs. Pending IAs, if any, stand disposed of with this order.