Till recently, it was considered that an individual can occupy just one flat. If he purchases several flat, then it is presumed that the purchase is for the commercial reason such as rental property or long term investments etc. Several cases in the consumer forums were dismissed for this reason. The National Commission has clarified on legal requirements in this regard.
There is a case study published in the newspaper when the cases of grieved home buyers were dismissed on this point. In one such case of Rajesh and Deepa Malhotra with their sons Rohan and Parvan, all residents of Gurgaon housing project, booked two villas in Goa that were being constructed by Acron Developers. The villas were booked under two agreements, the very first in the name of the parents with one son, as well as the second in the name of the parents with the other son. The total cost of both the villas was approximately Rs1.38 crores. Possession was supposed to be delivered in April 2007.
When Malhotra inquired about the progress of the construction, the builder failed to furnish these details, and instead threatened to terminate the agreements for non-payment of installments. The builder also collected various additional amounts. Before the Goa State Commission up against the developer along with its directors for a refund of the wrongly collected extra amount, Malhotra filed a complaint. The builder contested the complaint.
The State Commission concluded that the villas were purchased for the commercial purpose. Additionally, it observed there were two agreements in various names, so one combined complaint could not be filed for two separate transactions. It dismissed the complaint and ordered Malhotra’s to pay Rs.ten thousand for misusing the provisions of the Consumer Protection Act.
Malhotra’s challenged this order in appeal. The National Commission observed that commercial purpose would need to be determined on the basis of the primary motive of trading or business activity for the purpose of making a profit. The mere assertion by the builder that the properties are purchased for commercial purpose is not sufficient. The National Commission also observed that two villas were purchased by the parents, one for every son. Even if a residential house, flat, or villa is let out, it could not add up to commercial purpose. Accordingly, by order dated 5.11.2015 delivered by the Bench of Justice D.K. Jain and M. Shreesha, the National Commission allowed Malhotra’s appeal and hold them to be the rightful consumers and sent the complaint back to the State Commission for the decision on merits. Additionally, costs of Rs.25,000 was also awarded to the Malhotras. Exactly the same view was reiterated throughout the second round of appeal, in which the same Bench passed an order on May 16 directing their state Commission to determine the complaint expeditiously on merits within six months.
In another such case of Ms. Vimala Agarwal who had purchased two flats from Saijayini Housing , the Karnataka State Commission dismissed the complaint with the observation that the purchase of two flats proves that the investment made was for your commercial purpose and hence the complainant does not fit in the definition of consumer prescribed by the consumer protection act of India. Whereas, Justice D.K. Jain, then president of the National Commission, stated in an order dated August 19 that a complaint can not be dismissed on a presumption without considering this matter on the basis of evidence produced during the course of adjudication of the complaint.
The National Commission has now clarified the law on this subject and no case of this nature cannot be dismissed merely on the assumption of commercial usage of property if the user owns more than one property.