Consumer Protection Act, 1986. Developer and Customer. Distinction between “simple transfer of piece of land” and “housing construction or building activity”. Second category falls within “Service” under the Act. Terms of a rate which is prescribed in an unfair bargain will not prevent Consumer Forum consumer forum from awarding just and reasonable compensation. Supreme Court 24:8:2020.

Arifur Rahman Khan and Aleya Sultana and Ors vs DLF Southern Homes Pvt Ltd (now Known as BEGUR OMR Homes Pvt. Ltd.) and Ors. Civil Appeal No. 6239 of 2019. Decided on 24 August 2020, Justice Dr. Dhananjaya Y Chandrachud and Justice K M Joseph. Judgment link: https://main.sci.gov.in/supremecourt/2019/27240/27240_2019_33_1501_23551_Judgement_24-Aug-2020.pdf

Held:  Para 36 It has been urged by the learned counsel of the developer that a consequence of the execution of the Deed of Conveyance in the present case is that the same ceases to be a transaction in the nature of “supply of services” covered under the CP Act 1986 and becomes a mere sale of immovable property which is not amenable to the jurisdiction of Consumer Fora. In Narne Construction (P) Ltd. v. Union of India (2012) 5 SCC 359 , this Court distinguished between a simple transfer of a piece of immovable property and housing construction or building activity carried out by a private or statutory body falling in the category of „service‟ within the meaning of Section 2 (1) (o) of the CP Act 1986. This Court held that:

“8. Having regard to the nature of transaction between the appellant Company and its customers involved much more than a simple transfer of a piece of immovable property it is clear the same constitutes “service” within the meaning of the Act. It was not the case that the appellant Company was selling the given property with all its advantages and/or disadvantages on “as is where is” basis, as was the position in UT Chandigarh Admn v. Amarjeet Singh. It is a case where a clear-cut assurance was made to the purchasers as to the nature and extent of development that would be carried out by the appellant Company as a part of package under which a sale of fully developed plots with assured facilities was made in favour of the purchasers for valuable consideration. To the extent the transfer of site with developments in the manner and to the extent indicated earlier was a part of the transaction, the appellant Company has indeed undertaken to provide a service. Any deficiency or defect in such service would make it accountable before the competent Consumer Forum at the instance of consumers like the respondents.”

The developer in the present case has undertaken to provide a service in the nature of developing residential flats with certain amenities and remains amenable to the jurisdiction of the Consumer Fora. Consequently, we are unable to subscribe to the view of the NCDRC that flat purchasers who obtained possession or executed Deeds of Conveyance have lost their right to make a claim for compensation for the delayed handing over of the flats.

Compiled by, S.Basavaraj, Daksha Legal