Consumer Protection Act: Land owner, builder relation is complex

Hermonie Mary Salazar and her children owned a 4,972.9 sq metre agricultural land and the structures constructed on it at Village Kondivata in Andheri East, Mumbai.

Anthony H Silva, a builder, approached them with a proposal to take over the property on ‘as is where is’ basis and develop it. The builder would have to settle with the existing occupants, and construct a new building after obtaining the requisite permissions. A total of five flats, each of 1,700 sq ft, would be given to the Salazar family member in consideration for being granted the development rights. This was recorded in an agreement executed in November 1987 between the builder and the Salazar family members. The builder would be entitled to sell the remaining flats in the open market.

The builder completed construction of the building, but failed to hand over possession of the flats to the Salazar family members, and instead sold these in the open market. In 2000, the Salazar family filed a complaint before the Maharashtra State Commission.

The builder contested the case. He contended that it was a commercial transaction and was hence beyond the purview of consumer fora. On facts, the builder claimed that he had offered possession in 1995, but the family had refused to accept delivery of the flats, so he sold them in the open market.

By its order of November 19, 2013, the Maharashtra State Commission ordered the builder to hand over possession of the flats within one month. Additionally, Rs 50,000 was awarded as compensation for mental agony and Rs 10,000 as cost of litigation costs.

The builder challenged this order in appeal, contending that the complaint was not maintainable and that it was time barred. The National Commission relied on the judgment of the Supreme Court in Faqir Chand Gulati vs Uppal Agencies & Anr. [2008 (10) SCC 345] where it was held that a builder is rendering service to the land owner when he develops the land and allots flats in the constructed building.  So, the Commission held the dispute to be maintainable under the Consumer Protection Act. On limitation, the Commission considered the judgment of the Supreme Court in State Bank of India vs B S Agriculture Industries [(I) [(2009) 5 SCC 121], and held that there would be continuing cause of action till possession is handed over. So limitation would not apply, and the complaint was held to be in time.

On merits, the State Commission’s order was considered to be reasonable and justified. Accordingly, by its order of January 10, 2018 delivered by B C Gupta for the Bench along with S M Kantikar, the National Commission dismissed the builder’s appeal and confirmed the order passed in favour of the Salazar family.

In short, a landower entrusting his land to a builder is availing a service which is amenable under the Consumer Protection Act. Limitation does not come in the way for complaints regarding non-delivery of possession.

(The author is a consumer activist)