Consumer Rights Upheld: Supreme Court Orders Refund in Commercial Space Dispute

The Supreme Court of India has ruled in favor of two appellants in a dispute regarding the purchase of commercial space in Rohit Chaudhary & Anr. v. M/s Vipul Ltd.. The judgment focused on the definition of ‘consumer’ under the Consumer Protection Act, 1986, and addressed the appellants’ right to a refund due to non-delivery of possession by the respondent. The Court directed the respondent to refund the amount paid, along with interest, reaffirming consumer protection principles.

Background of the Case

The appellants sought to purchase commercial office space in a project called ‘Vipul World Commercial’ in Gurugram, Haryana, developed by M/s Vipul Ltd. Initially, the appellants acquired the rights to an office unit from the original allottees and subsequently made payments as demanded by the respondent. However, the respondent unilaterally changed their allotted unit and failed to deliver possession within the agreed timeframe of 24 months.

After prolonged delays and non-delivery of possession, the appellants approached the National Consumer Disputes Redressal Commission (NCDRC) seeking a refund. The NCDRC dismissed the complaint on the ground that the appellants did not qualify as ‘consumers’ under Section 2(1)(d) of the Consumer Protection Act, 1986, as the commercial property was intended for business use. Aggrieved by this decision, the appellants appealed to the Supreme Court.

Key Legal Issues Before the Supreme Court

Whether the appellants qualify as ‘consumers’ under the Consumer Protection Act, 1986.
Whether the unilateral change of allotment and non-delivery of possession amounted to an unfair trade practice.
Whether the appellants were entitled to a refund of the amount paid, along with interest.

Arguments by the Appellants

The appellants contended:

They had purchased the commercial space solely for earning their livelihood through self-employment and not for resale or profit-making.
The respondent unilaterally altered the original allotment and failed to deliver possession within the stipulated 24 months.
The respondent’s actions amounted to an ‘unfair trade practice’ under the Consumer Protection Act.
The NCDRC erroneously dismissed their claim based on an incorrect interpretation of the term ‘consumer’.

Arguments by the Respondent

M/s Vipul Ltd. countered:

The appellants were engaged in the business of real estate investment and could not be classified as ‘consumers’.
The property purchase was for commercial purposes and thus outside the scope of the Consumer Protection Act.
The appellants defaulted on installment payments, leading to the delays.
The claim was unsustainable as the appellants had signed the buyer’s agreement, consenting to the changes.

Supreme Court’s Analysis

1. Definition of ‘Consumer’ and Commercial Purpose

The Court examined the definition of ‘consumer’ under Section 2(1)(d) of the Consumer Protection Act, 1986. It clarified that a person who buys goods or avails services for commercial purposes is excluded, except when the goods or services are used for earning a livelihood through self-employment. The Court observed:

“The dominant purpose of purchasing the office space was for self-employment and not for resale or large-scale profit-making. The appellants qualify as consumers.”

2. Unilateral Change of Allotment and Non-Delivery of Possession

The Court found that the respondent had unilaterally changed the appellants’ allotted office space without consent. Further, despite repeated payments by the appellants, the possession was never handed over. The Court held:

“The unilateral modification of allotment and non-delivery of possession constitute an unfair trade practice.”

3. Right to Refund and Interest

The Court ruled that the appellants were entitled to a full refund of the amount paid, with interest, due to the respondent’s failure to honor its commitments. It stated:

“The respondent must refund Rs. 51,10,117 with interest at 12% per annum from the date of the complaint until payment.”

Supreme Court’s Judgment

The Supreme Court set aside the NCDRC’s decision and ruled in favor of the appellants. The key directions included:

Refund of Rs. 51,10,117 to the appellants.
Interest at 12% per annum from the date of complaint until full payment.
Rs. 1 lakh awarded as litigation costs.

The Court concluded:

“The appellants have been unfairly deprived of their investment. The respondent is directed to refund the amount with interest to ensure justice.”

Implications of the Judgment

This ruling has significant implications:

Broader Protection for Consumers: The judgment clarifies that individuals purchasing commercial property for self-employment can seek relief under the Consumer Protection Act.
Unfair Trade Practices Addressed: Developers cannot unilaterally alter agreements without the buyer’s consent.
Clear Precedent for Refunds: Failure to deliver possession entitles buyers to a refund with interest.

Conclusion

The Supreme Court’s ruling in Rohit Chaudhary & Anr. v. M/s Vipul Ltd. reinforces consumer rights in real estate transactions. By ensuring a refund with interest, the judgment upholds fairness and accountability, setting an important precedent for similar disputes in India.

Petitioner Name: Rohit Chaudhary & Anr..
Respondent Name: M/s Vipul Ltd..
Judgment By: Justice S. Ravindra Bhat, Justice Aravind Kumar.
Place Of Incident: Gurugram, Haryana.
Judgment Date: 06-09-2023.

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