Who would be a consumer for the Real Estate Transactions?

Mere submission of an application for allotment of a house, which does not result either in allotment or registration and consequent inclusion in the awaiting list for such an allotment, does not confer upon him the status of a ‘consumer’ as defined under Section 2(1)(d) of the said Act.

The present matter dealt with the issue of determining the status of applicant in connection with housing construction as to whether he would be consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 (Act).

The Commission observed that the question of providing services in connection with housing construction would arise either on allotment of a residential plot or a residential flat which is yet to be constructed, to the applicant or if he is registered and placed in a waiting list, for such an allotment. There would be no question of a person availing or hiring a service in connection with housing construction till either such an allotment is made to him or he is registered for such an allotment. The development of the plots or the construction of houses will be undertaken only for those persons to whom a residential plot or house is allotted, or who is registered for and awaiting allotment of a yet to be developed plot or yet to be constructed house. Also there would be no occasion to undertake the construction of houses for the allottees in a case where a ready built up house or a fully developed plot is allotted to him, unless, one or more facilities/amenities in relation to the said house/plot are yet to be provided by the concerned Development Authority.

The legal proposition as stands is that a person, who is allotted a flat or a plot to be developed by a statutory authority such as Delhi Development Authority or Avas Vikas Parishad as well as a person, who is registered with such an Authority for the purpose of allotment of such a flat/plot and is awaiting allotment would be a ‘consumer’ within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. If however, the flat/plot is sold by such a statutory authority by way of a public auction on ‘as is where is’ basis and such sale is not accompanied by an obligation to carry out any further development such as providing/augmenting infrastructural facilities viz. roads, sewerage, electricity, water facilities etc., the purchaser shall not be a ‘consumer’ within the meaning of Section 2(1)(d) of the said Act.

As far as the person, who obtains for allotment of a built up flat/developed plot is concerned if the statutory authority does not undertake an obligation to carry out any further development activity such as providing or augmenting infrastructure or is not required to render any other service in connection with such allotment, he will not be a consumer within the meaning of the Act. If however, the sale/allotment of built up flats/developed plots is accompanied by such an obligation on the part of the concerned development authority, the purchaser would be a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act.

A person who applies for allotment of a plot/flat will not be a ‘consumer’ within the meaning of Section 2(1)(d) of the Act, if neither any allotment is made to him nor he is registered for and awaiting such an allotment. Such a person cannot be said to have hired or availed the services of the concerned development authority in connection with housing. Mere submission of an application for allotment, which does not result either in allotment or registration and consequent inclusion in the awaiting list for such an allotment, does not confer upon him the status of a ‘consumer’ as defined under Section 2(1)(d) of the said Act.

[Delhi Development Authority & Ors. vs.  Parveen Kumar & Ors.]
(NCDRC, Decided on 29.01.2015)
(R.P. Nos. 3649 and 4051 of 2014)