Builder argues real estate investment not covered under consumer law

Giving relief to a builder, the National Consumer Disputes Redressal Forum has asked the Punjab State Consumer Disputes Forum to determine whether someone who buys a real estate property without the intention of living in it can be given protection under consumer laws.

In a case involving delay in the hand-over of flats, real estate developer Emaar MGF Land argued that people who buy flats for investment purpose should be considered investors rather than consumers.


The builder said that since a person had booked two flats, he cannot be considered a consumer, but only a speculator. As such, he cannot seek protection under consumer protection laws.

“OP (opposing party, Emaar MGF Land Ltd) specifically mentioned that complainant booked two units in the project and complainant was mere speculator and does not fall within definition of consumer under the C.P. Act.

“Similar objections were taken by OP in other complaints in which it was specifically mentioned that complainant is an investor and speculator and has invested in five properties of the OP through a broker/property dealer C.P. Sharma and sole motive of the complainant was to earn profit by speculation; hence, complaints were not maintainable,” the National Consumer Disputes Redressal Commission noted in an order overturning a ruling by the Punjab State Commission which had refused to consider this argument when Emaar MGF Land first made it.

Without saying whether or not Emaar MGF’s argument was right or wrong, the National Consumer Disputes forum held that the Punjab State forum was wrong in not addressing the argument. The Punjab state forum had simply refused to consider the argument.

“Learned State Commission was under an obligation to decide this objection and only after deciding this objection against OP, should have proceeded further and allowed complaint,” NCDRC said, sending the case back to the Punjab forum.

According to the cases filed by NRIs Raj Garg and Surendra Kumar Mittal, they booked 1-2 flats with Emaar MGF Land and were allotted specific flat number in the project to be constructed by the company.

The buyers made part payment and the company was to handover possession of the flat within 36 months from the date of allotment.

“Opposing Party (Emaar MGF Land Ltd) even did not start construction and further demanded some money which was also paid. Even after receipt of payment, no construction took place on the site. Alleging deficiency on the part of OP, complainant filed complaint before State Commission,” the NCDRC noted in its order.

It was further submitted by Emaar MGF Land Ltd that disputes were to be referred to Arbitrator under Arbitration and Conciliation Act, 1996 and in case of delay in handing over possession; it was liable to pay to the allottee Rs.5/- per sq. ft. for delay in construction and prayed for dismissal of complaint.

The Punjab State Commission, after hearing both the parties, had directed the builder to refund the deposited amounts with 12% p.a. interest and further awarded compensation and litigation cost in the cases. The real estate firm filed appeals along with application for condonation of delay of 19 days in all appeals except Appeal No. 194 of 2014.