Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr on 10 July, 2008 – Case Summary

In the case of Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr on 10 July, 2008, the Supreme Court of India was presented with a dispute arising from a collaboration agreement between a landowner and a builder. The case was presided over by R.V. Raveendran and Lokeshwar Singh Panta.

Facts of the Case

The appellant, Faqir Chand Gulati, was the owner of premises no. L-3, Kailash Colony, New Delhi. He entered into a collaboration agreement with the first respondent, Uppal Agencies Pvt. Ltd., on 17 May 1991. Under the agreement, Gulati would provide the land, and Uppal Agencies would construct a residential building consisting of ground, first, and second floors. Upon completion, Gulati would receive the entire ground floor and a sum of Rs. 8 lakhs as non-refundable consideration. The remaining part of the building would belong to Uppal Agencies.

Issues Raised

Gulati alleged that Uppal Agencies made several unauthorized deviations during construction, resulting in deviation notices from the Municipal Corporation of Delhi (MCD). The builder delivered possession of the ground floor on 2 April 1992. However, Gulati pointed out several shortcomings in the construction and violations of the sanctioned plan, which the builder did not rectify.

Gulati filed a complaint before the District Consumer Disputes Redressal Forum-IX, Delhi, under the Consumer Protection Act, 1986. He sought the return of the title deeds relating to the premises, supply of completion certificate and C&D Forms from MCD, and delivery of security deposit receipt for electricity meter and payment of Rs.4262.64 being the charges for change of electricity meter.

Court’s Observations

The District Forum dismissed the complaint, holding that Gulati was not a `consumer’ as defined in section 2(1)(d)(ii) of the Act. The State Commission, Delhi, upheld this decision on appeal. The National Commission also dismissed a revision petition filed by Gulati.

The Supreme Court had to consider whether a landowner who enters into an agreement with a builder for construction of an Apartment Building and for sharing of the constructed area is a `consumer’ entitled to maintain a complaint against the builder as a service-provider under the Consumer Protection Act, 1986.

The court observed that the object of the Act is to provide for better protection of the interests of consumers. It enables persons having grievances regarding goods supplied or services provided to file complaints before such redressal agencies.

The court concluded that when the owner of a plot of land enters into an agreement with a builder for development of the property by construction of a building and sharing the constructed area between the owner and the builder, and the developer commits any breach either by failing to deliver owner’s share of constructed area or by constructing the building contrary to specifications, or by failing to fulfill the obligations relating to completion certificate or amenities like water, electricity and drainage, the owner can maintain a complaint under the Consumer Protection Act and claim that he is a consumer and the builder is the service provider.

The court’s decision in this case has significant implications for the interpretation of the term ‘consumer’ under the Consumer Protection Act, 1986, and the rights of landowners in agreements with builders.