A HOMEBUYER IS A CONSUMER UNLESS HE IS INDULGED IN THE ACTIVITY OF BUSINESS BUYING OR SELLING THE PROPERTY - NCDRC

The National Consumer Disputes Redressal Commission (NCDRC) recently reaffirmed that as per section 2(1)(d) of the Consumer Protection Act, 1986, a homebuyer is a consumer unless he is into the activity of buying or selling the properties. 

A Bench comprising presiding member Justice Deepa Sharma and member Subhash Chandra directed Ireo Private Limited, a Gurgaon-based real estate developer, to refund an amount of ₹2.23 crore along with an interest rate of 10.25 percent per annum for failing to deliver the flat on time. The bench also directed the developer/builder to pay ₹25,000 as litigation cost to the complainant, Aloke Anand.

In January 2011, the complainant booked an apartment in Sector 60, Gurugram, and paid over ₹2.23 crore for the flat. The flat was supposed to be delivered in 42 months with a grace period of six months. However, the builder failed to deliver the possession of the flat within the stipulated time. Anand, the complainant, moved to the NCDRC seeking possession of the flat and compensation for delay or refund of the amount paid along with 18% interest.

The developer/builder contended that Anand is not a consumer as per Section 2(1)(d) of the Act, and he is only an investor since he already has other residential addresses. The builder further argued that the complainant has invested for commercial gains in order to rent or sell the flat.

The NCDRC referred to Laxmi Engineering Works v. PSG Industrial Institute, which ruled that a person is not a consumer if that person indulges in commercial activities with respect to the goods. If a person buys a residential house and uses the house for the purpose of buying/ selling, he shall cease to be a consumer. However, the burden to prove the indulgence of the complainant in the business of sale and purchase of flats lies on the opposite party.

In this instant case, the opposition failed to do so, and therefore the bench ruled in favor of the complainant.

Author: Papiha Ghoshal