Land Owner Can Approach Consumer Forum In Case Of Breach Committed By Builder [Bunga Daniel Babu v. Sri Vasudeva Constructions, 2016 SCC OnLine SC 729, decided on 22.07.2016]

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In an appeal against the order of the NCDRC, which has approved the view of the State Commission, Hyderabad which held that the complainant was not a “consumer” within the definition under Section 2(1)(d) of the Consumer Protection Act, 1986 as the agreement of the appellant with the respondents was a joint venture. The Supreme Court remitted the matter back to the State Commission as both the Commissions erred in holding that the claim of the appellant was not adjudicable as the complaint could not be entertained under the Act of 1986 in as much as the parties had entered into an agreement for construction and sharing flats which had the colour of commercial purpose.

In the instant case, the appellant who was the land owner, entered into a MoU with the respondents for construction of multi-storied building and that the apartments constructed were to be shared in the proportion of 40% and 60% between the appellant and the respondent. The construction was to be completed within 19 months from the date of approval of the plans by the Municipal Corporation and in case of non-completion within the said time, a rent of Rs. 2000/- per month for each flat was to be paid to the appellant. The Court take a reference of the principle laid down in Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd. and observe that if there is a breach by the land owner of his obligations, the builder will have to approach a civil court as the land owner is not providing any service to the builder but merely undertakes certain obligations towards the builder, breach of which would furnish a cause of action for specific performance and/or damages and while the builder commits breach of his obligations, the owner has two options; he has the right to enforce specific performance and/or claim damages by approaching civil court or can approach consumer forum under the Act.

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