Company, too, can file consumer complaint

According to the National Commission, a company is also a consumer in case of goods and services purchased for self-use and not for profit generation

Aerostar Helmets, a private limited company, had booked an apartment in a complex being constructed by Adani M2K Project, a limited liability partnership firm. An agreement was executed on August 31, 2013, by which Adani agreed to sell flat no. G-1502 for Rs 2,34,24,181, which included Rs 12 lakh towards preferential location charge for a flat on the 15th floor. The agreement stated that possession would be given by September 1, 2017.

Even though the entire amount was paid, construction was completed only up to the 10th floor. On October 6, 2017, the builder informed Aerostar that the building would not have a 15th floor, and offered to allot another flat. This offer was not accepted because the flat on the 15th floor was specifically chosen by paying a preferential location charge. The company sought a refund along with 21 per cent interest. The builder was willing to give a refund but refused to pay any interest. So, Aerostar filed a complaint before the National Commission. 

Aerostar argued that it was entitled to a higher rate of interest to compensate for the escalation in the price of the flat, as observed by the Supreme Court in Ghaziabad Development Authority vs Balbir Singh. It was also pointed out that the agreement stipulated that 18 per cent interest would be payable by the purchaser to the builder in case of delay in payment, so the minimum interest for default by the builder must correspond to the same rate of 18 per cent per annum. 

The builder contested the case, questioning the maintainability of the complaint by a company under the Consumer Protection Act. On merits, the builder relied on the booking application and the agreement in which it was mentioned that if possession could not be given for any reason, an alternative flat could be allotted, or the entire amount would be refunded without damages, interest or compensation. The builder pointed out that the agreement also provided for a grace period of six months, and that an alternative apartment was offered before the expiry of this period, so there was no deficiency in service.

The National Commission observed that a company would also be a consumer in respect of goods or services purchased for its own use and not for trading or profit generation. So, the complaint was held to be maintainable. It also observed that a one-sided clause incorporated by the builder in the agreement cannot be invoked to compel a flat purchaser to accept alternative accommodation. It held that Aerostar was entitled to a refund. Regarding the claim for interest, the National Commission observed that even though the agreement provided that interest was not payable, it could still be claimed as the builder was enjoying the use of the flat purchaser's money. Considering the current interest rate, the Commission held that 8 per cent interest would be reasonable.

Accordingly, by its order of November 18, 2020, delivered by the Bench of Prem Narain and C Viswanath, the National Commission allowed the complaint and ordered the builder to refund the entire amount of Rs 2,34,24,181 along with simple interest of 8 per cent per annum. Additionally, an amount of Rs 50,000 was also awarded as litigation cost. A period of 45 days was given for compliance.

The writer is a consumer activist