2025 Supreme(Online)(SCDRC) 38444

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Mukesh V. Sharma, Presiding Member, Poonam V. Maharshi, Member
Libord Finance Ltd. – Appellant
Versus
Shiv Sai Construction Co. – Respondent
RBT/CC/23/76 | RBT/CC/23/77 | RBT/CC/24/03

A promoter failing to execute statutory sale agreements after accepting advances commits a deficiency in service. Partners are jointly liable for these acts. However, consumer forums lack the jurisdiction to cancel registered third-party sale deeds or adjudicate complex title disputes, which must be addressed by civil courts.

Headnote:(A) Consumer Protection Act, 1986 - Section 2(1)(d), 21, 23 - Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 - Sections 2(c), 4 - Deficiency in service - Booking of flats - Failure to execute registered agreements - Cancellation and forfeiture - Jurisdiction of Consumer Forum.

(B) Consumer Protection - Corporate entity - Determination of status - A corporate entity is a consumer if the booking of services is not for commercial exploitation or re-sale - Residential purpose for directors or staff remains a personal service facility, not commercial in nature. (Paras 51, 52, 53)

(C) Promoter's Obligations - Mandatory requirement under law to enter into a registered written agreement before accepting advance payments - Failure to execute such agreements after acceptance of substantial booking amounts constitutes deficiency in service and unfair trade practice. (Paras 73, 78)

(D) Liability of Partners - Partners are jointly and severally liable for acts and omissions of a firm in the ordinary course of business - A partner or representative cannot shield themselves behind technical labels like 'power-of-attorney holder' if active participation in the transactions is established. (Paras 82, 86) (E) Relief in Consumer Proceedings - Limitation of summary jurisdiction - Consumer forums cannot adjudicate complex questions of land title, cancel registered third-party sale deeds, or order eviction of subsequent bona fide purchasers; such remedies fall within the domain of civil courts. (Paras 93, 96)

Facts of the case:
Complainant companies booked multiple residential units in a building project by paying advances. Despite receiving payments, the promoter failed to execute registered agreements for sale and later attempted to cancel the bookings and forfeit the advances, citing unauthorized unilateral terms. The promoter subsequently dealt with the flats by creating third-party interests. The complaints were restored for adjudication after multiple rounds of litigation before higher courts.

Findings of Court:
The court determined that the companies qualified as consumers as they intended residential use for senior staff. It found the promoter guilty of deficiency in service for failing to execute statutory agreements and for illegal forfeiture. The court ruled that while the promoter and acting partners are liable for compensation, it cannot cancel the registered agreements of subsequent third-party purchasers in summary proceedings.

Issues: Whether corporate entities booking multiple flats qualify as consumers; whether the promoter's failure to execute agreements despite receiving advances constitutes deficiency; whether partners are personally liable; whether the commission can grant possession or cancel third-party agreements.

Ratio Decidendi: Statutory obligations to execute registered agreements for flat sales are mandatory; failure to do so, combined with arbitrary forfeiture, constitutes actionable deficiency. Partners retain joint and several liability for official acts. However, summary jurisdiction is limited and cannot extend to property title disputes or cancellation of registered deeds involving third parties.

Result: Complaints partly allowed; compensation awarded based on current market valuation linked to statutory rates; complaints dismissed against subsequent purchasers.