2008 Supreme(SC) 1029

2008(5) Supreme 76
Supreme Court of india
(From NCDRC)
R.V. Raveendran and Lokeshwar Singh Panta, JJ.
Faqir Chand Gulati — Appellant(s)
versus
Uppal Agencies Pvt. Ltd. & Anr. — Respondent(s)
Civil Appeal No. 3302 of 2005
Decided on : 10-07-2008

Important Point
If there are no provisions for shared control of interest or enterprise and shared liability for losses in a development agreement, the arrangement will not be a ‘joint venture’.

Headnote:(a)Consumer Protection Act, 1986 – Section 2 – Any defect in construction activity would be denial of comfort and service to a consumer – When possession of property is not delivered within stipulated period the delay so caused is denial of service – Such disputes or claims are not in respect of immoveable property but deficiency inrendering of service of particular standard, quality or grade – If a builder of a house uses sub-standard material in construction of a building or makes false or misleading representation about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value under the Act. (Para 14)

       (1994)1 SCC 243 - Relied upon.

       (b)Deviations and unauthorised construction – Builders violate with impunity the sanctioned building plans and indulge deviations having adverse ecological remificationsand hamper planned urban development – To stop such activities the illegal constructions and non-compoundable deviations are required to be ruthlessly demolished – The unwary purchasers who shall be the sufferers must be adequately compensated by the builder. (Para 15)

       (2004)8 SCC 733 - Relied upon.

       (c)Words ansd Phrases – Joint venture – It connotes a legal entity in the nature of a partnership engaged in the joint undertaking of a particular transaction for mutual profit or an association of persons or companies jointly undertaking some commercialenterprise wherein all contribute assets and share risks – It requires a community of interest in the performance of the subject matter, a right to direct and govern the policy in connection therewith, and duty, which may be altered by agreement, to share both in profit and losses. (Para 17)

       (1995)1 SCC 478 - Relied upon.

       (d)Development Agreement – The agreement not constituting a partnership – Builder alone responsible to pay penalties in respect of deviations and for payment of compensation under the Workmen’s Compensation Act in case of accident – There is no community of interest or common/joint control in the management, nor sharing of profits and losses – The requirement of each joint venturer being the principal as well as agent of the other party also being significantly absent, such an agreement is not a joint venture, as understood in law.(Para 18)

       (e)Consumer Protection Act, 1986 – Section 2 – In case of a development agreement, called by whatever name, the important aspect is the availment of services of the builder by the land-owner for a house construction (construction of owner’s share of the building) for aconsideration – To that extent, the land-owner is a consumer, the builder is a service-provider and if there is deficiency in service in regard to construction, the dispute raised by the land owner will be a consumer dispute. (Para 19)

       (f)Judicial Interpretation – Well settled that the title or caption or the nomenclature of the instrument/document is not determinative of the nature and character of the instrument/document,though the name may usually give some indication of its nature – The nature and true purpose of a document has to be determined with reference to the terms of the document, which express the intention of the parties – Therefore, the use of the words ‘joint venture’ or ‘collaboration’in the title of an agreement or even in the body of the agreement will not make the transaction a joint venture, if there are no provisions for shared control of interest or enterprise and shared liability for losses. (Para 21)

       (g)Consumer Protection Act, 1986 – Section 3 – If there is a breach by the landowner of his obligations, the builder will have to approach a civil court as the landowner 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 – On the other hand, where the builder commits breach of his obligations, the owner has the option of eitherenforcing specific performance and/or claim damages by approaching the civil court-Or he can approach the Forum under Consumer Protection Act, for relief as consumer, against the builder as a service-provider. (Para 23)

       (h)Consumer Protection Act, 1986 – Section 2 – The builder is duty bound to obtain and furnish the Completion certificates (C&D) to the land owner. (Para 27)

       Facts of the case :

       1.The appellant is the owner of premises no. L-3, Kailash Colony, New Delhi. He entered into a ‘collaboration agreement’ dated 17.5.1991 with the first respondent.

       2.The appellant alleges that the first respondent secured sanction of the plan for construction from the Municipal Corporation of Delhi but made several unauthorized deviations during construction, resulting in several deviation notices from MCD.

       3.The delivery of the ground floor was made by the builder to appellant’s son during appellant’s absence from India. On his return, the appellant sent a letter dated 29.10.1992, pointing out several shortcomings in the construction and the violations of sanctioned plan, and called upon the builder to rectify the deviations and defects. The builder did not comply.

       4.The appellant therefore filed complaint No. 1866 of 1994 before the District Consumer Disputes Redressal Forum-IX, Delhi which dismissed the complaint as not maintainable under the Act, holding that the appellant was not a ‘consumer’ as defined in section 2(1)(d)(ii) of the Act.

       5.The appeal and revision petition were disnmissed by the State Forum and the National Commission respectively.

       Finding of the Court :

       The District Forum, the State Commission and the National Commission committed a serious error in wrongly assuming that agreements of this nature being in the nature of joint venture are outside the scope of consumer disputes.

       Result : Matter remitted back to the District Forum.