BUNGA DANIEL BABUversusMIS SRI VASUDEVA CONSTRUCTIONS & ORS.

                        [2016] 3 S.C.R. 293



                     BUNGA DANIEL BABU                                 A
                                         __,.·.
                                 v.
       MIS SRI VASUDEVA CONSTRUCTIONS & ORS.
                   (Civil Appeal No. 944of2016)
                          JULY22, 2016                                 B
           [DIPAK MISRA AND N.V. RAMANA, JJ.]
       Consumer Protection Act, 1986: s.2(l)(d) - Consumer -
Agreement between the. appellant-land-owner and the builder-
re5pondent no. I - Builder required to construct and complete the      c
building within a stipulated time - Apartments constructed were to
be shared in the proportion of 40% and 60% between the appellant
and builder and in case of non-completion within stipulated time to
pay rent to the appellant - Terms of the agreement did not show that
it was a joint venture agreement - Appellant was neither partner
nor co-adventurer nor participated in the construction business -      D
Since appellant is only entitled to a certain constructed area, it
falls within the definition of 'consumer' - Matter remitted to State
Commission to re-adjudicate the matter treating the appellant as a
consumer.
      Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd. and               E
      anr. (2008) 10 SCC 345: 2008 (10) SCR 697; Morgan
      Stanley Mutual Fund v. Kartick Das (1994) 4 SCC 225:
      1994 (1) Suppl. SCR 136; Lucknow Development
      Authority v. MK Gupta (1994) 1 SCC 243: 1993 (3)
      Suppl. SCR 615; Laxmi Engineering Works v. P.S.G
                                                                       F
      Industrial Institute (1995) 3 SCC 583: 1995 (3) SCR
      174; Kalpavruksha Charitable Trust v. Toshniwal
      Brothers (Bombay) Pvt. Ltd. and another (2000) 1 SCC
      512: 1999 (3) Suppl. SCR 619; CIT v. Surat Art Silk
      Cloth Manufacturers' Association (1980) 2 SCC 31:
      1980 (2) SCR 77; CIT v. Federation of Indian                     G
      Chambers of Commerce and Industries (1981) 3 SCC
      156: 1981 (3) SCR 489; Punjab University v. Unit Trust
      of India and others (2015) 2 SCC 669 - relied on.
                       Case Law Reference
      2008 (10) SCR 697                relied on          Para 1       H
                                293
294             SUPREME COURT REPORTS                        [2016] 3 S.C.R.


A             1994 (1) Suppl. SCR 136          relied on        Para8
              1993 (3) Suppl. SCR 615          relied on .      Para9
              .1995 (3) SCR 174                relied on        Para 12
              1999 (3) Suppl. SCR 619          relied on        Para 14
              1980 (2) SCR 77                  relied on        Para 14
B
              1981 (3) SCR 489                 relied on        Para 14
              (2015) 2 sec 669                  relied on       Para 19
              CIVIL APPELLATE JURISDICTION : Civil Appeal No. 944 of
      2016.
c            From the Judgment and Order dated 30.09.2013 of the National
      Consumer Disputes Redressal Commission, New Delhi in Revision
      Petition No. 258 of2013.
           Gunturu Prabhakar, K. Maruthi Rao, K. Subba Rao, Mrs. Anjani

D.
      Aiyagari, Advs. for the Appellant.
              M. Srinivas R. Rao, Arun Devdas, Mrs. Sudha Gupta, Advs. for
      the Re~pondents.
                                                                                  I
              The Judgment of the Court was delivered by
             DIPAK MISRA, J. 1. The assail in the present appeal, by special
E     leave, is to the judgement and order passed by the National Consumer
      Disputes Redressal Commission, New Delhi (for short "the National
      Commission") in Revision Petition No. 258 of2013 whereby the said
      Commission has approved the decision of the State Consumer Di~putes
      Redressal Commission, Hyderabad which had reversed the view of the
      District Consumer Forum that the complainant is a "consumer" within
F
      the definition under Section 2( I)(d) of the Consumer Protection Act,
       1986 (for brevity, "the Act") as the agreement of the appellant with the
      respondents was not a joint venture. The District Forum had arrived at
      the said decision on the basis oflegal principles stated in Faqir Chand
      Gulati v. Uppal Agencies Pvt. Lttl anti anr. '. The State Commission
G     had opined that the claim of the appellant was not adjudicable as the
      complaint could not be entertained under the Act inasmuch as the parties
      had entered into an agreement for construction and sharing flats which
      had the colour of commercial purpose. Thus, the eventual conclusion
      that the State Commission reached was that the complainant was not a

H      c2oosi 10 sec 345
       1
         BUNGA DANIEL BABU v. M/S SRI VASUDEVA                                295
         CONSTRUCTIONS & ORS. [DIPAK Ml SRA, J .]

consumer under the Act. The said conclusion has been given the stamp          A
of affirmance by the National Commission.
       2. The factual score that is essential to be depicted is that the
appellant is the owner of the plot nos. 102, 103 and 104 in survey no. 13/
1A2, Patta no. 48 admeasuring 1347 sq. yards situate at Butchirajupalem
within the limits of Visakhapatnam Municipal Corporation. Being desirous       B
of developing the site, the land owner entered into a Memorandum of
Understanding (for short "the MOU") with the respondents on 18.07.2004
for development of his land by construction of a multi-storied building
comprising of five floors, with elevator facility and parking space. Under
the MOU, the apartments constructed were to be shared in the proportion
of 40% and 60% between the appellant and the respondent No. 1.
                                                                               c
Additionally, it was stipulated thatthe construction was to be completed
within 19 months from the date of approval of the plans by the Municipal
Corporation and in case ofnon-completion within the said time, a rent of
Rs. 2000/- per month for each flat was to be paid to the appellant. An
addendum to the MOU dated 18.07.2004 was signed on 29.04.2005                  D
which, inter alia, required the respoi1dents to provide a separate stair
case to the ground floor. ltalso required the respondents to intimate the
progress of the construction to the appellant and further required the
appellant to register 14 out of the 18 flats before the completion of the
construction of the building in favour of purchasers of the respondents.
                                                                               E
       3. As the factual matrix would further unfurl, the plans were
approved on 18.05.2004 and regard being had to schedule, it should have
been completed by 18.12.2005. However, the occupancy certificates
for the 12 flats were handed over to the occupants only on 30.03 .2009,
resulting in delay of about three years and three months. In addition, the
appellant had certain other grievances pertaining to deviations from           F
sanction plans and non-completion of various other works and other
omissions for which he claimed a sum ofRs.19,33, 193/- through notices
dated 6.6.2009 and 27.6.2009. These claims were repudiated by the
respondents vide communications dated 17.07.2009 and 16.08.2009.
      4. Being aggrieved byt!1e aforesaid communications, the appellant        G
approached the District Forum for redressal of his grievances. The District
Forum appreciating the factual matrix in entirety framed two issues for
determination, which in essence are, whether the complainant was a
"consumer" within the definition of Section 2(l)(d) of the Act; and
whether there was any deficiency in services on the part of the opposite       H
296             SUPREME COURT REPORTS                           [2016] 3 S.C.R.


A     party. The District Forum after analysing various clauses of the MOU
      and the addendum and placing reliance on the decision of the Court in
      Faqir Chand Gulati (supra) came to hold that the transaction between
      the parties could not be termed as a joint venture, in order to exclude it
      from the purview of the Act. Accordingly, the District Forum opined that
      the complainant came under the definition of Consumer under Section
B
      2(1 )(d)(ii) of the Act. On the second point of deficiency as well, it partly
      allowed the claim in favour of the appellant-complainant by awarding a
      sum of Rs. 15,96,000/- towards rent for delayed construction, Rs. 19,800/
      - as reimbursement of vacant land tax, Rs. 70,000/- as cost for rectification
      of defects in the premises and Rs. 25,000/- for mental agony. It was
c     further directed that the abovesaid sum shall carry interest @ 9% per
      annum from the date of filing of the complaint. Be it stated, cost of Rs.
       10,0001- was also awarded.
             5. The respondent constrained by the decision of the District
      Forum preferred an appeal before the State Commission which did not
D     agree with the finding of the District Forum and came to hold that the
      appellant-complainant did not come within the ambit of definition of
      "consumer" under the Act and accordingly dismissed his claims as not
      maintainable. The appellate forum expressed the view that as the
      agreement was entered into by the appellant-complainant for more than
      two plots and there was an intention to sell them and let them on rent
E     and earn profit, the transaction was meant for a commercial purpose.
      Grieved by the said decision, the appellant-complainant invoked the
      revisionaljurisdiction of the National Commission which concurred with
      the view expressed by the State C,::ommission by holding that the State
      Commission had rightly distinguished the authority in Faqir Chand
F     Gulati's case on facts because the flats were not for personal use and
      the complainant had already sold four of the twelve flats.
             6. The seminal issue that emanates for consideration is whether
      the appellant-complainant falls within the definition of"consumer" under
      Section 2(1)(d) read with the Explanation thereto of the Act. The issue
G     that further arises for determination is whether the National Commission
      has rightly distinguished the authority in Faqir Chand Gulati's case. It
      is necessary to mention that the controversy involved in the case had
      arisen prior to the 2002 amendment by which the definition of the term
      "consumer" has been amended in the dictionary clause.
             7. To appreciate the heart of the dispute, we think it apposite to
H               '
         BUNGA DANIEL BABU v. M/S SRI VASUDEVA                               297
         CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

x-ray the definition of the term "consumer" from the inception till today.   A
Section 2(1)(d) at the commencement of the Act read as follows:-
       "Section 2( I)( d) "consumer" means any person who--
       (i) buys any goods for a consideration which lhas been paid
       or promised or partly paid and partly promised, or under
       any system of deferred payment and includes any user of                B
       such goods other than the person who buys such goods for
       consideration paid or promised or partly paid or pa_rtly .
       promised, or under any system of deferred payment, when
       such use is made with the approval of such person, but
       does not include a person who obtains such goods for resale            c
       or for any commercial purpose; or
       (ii) hires any services for a consideration which has been
       paid or promised or partly paid and partly promised, or under
       any system of deferred payment and includes any
       beneficiary of such services other than.the person who hires           D
       the services for consideration paid or promised, or partly
       paid and partly promised, or under any system of deferred
       payment, when· such services are availed of with the
       approval of the first mentioned person;"
     The aforesaid definition, as is manifest, did not include a person       E
who obtained such goods for resale or for any commercial purpose.
       8. In Morgan Stanley Mutu~l Fund v. Kartick Das~ the question
that arose before a three-Judge Bench was whether the prospective
investor in future goods could be treated as a consumer. Answering the
question in favour of the appellant, the Court opined that a prospective
                                                                              F
investor like the respondent was not a consumer. However, a passage
relating to the description of consumer from the said authority is worth
reproducing:-
       "The consumer as the term implies is one who consumes.
       As per the definition, consumer is the one who purchases
                                                                              G
       goods for private use or consumption. The meaning of the
       word 'consumer' is broadly stated in the above definition
       so as to include anyone who consumes goods or services
       at the end of the chain of production. The comprehensive
       definition aims at covering every man who pays money as
-  ----
2(1994 l 4 sec 22s                                                            H
298            SUPREME COURT REPORTS                           (2016) 3 S.C.R.



A           the price or cost of goods and services. The consumer
            deserves to get what he pays for in real quantity and true
            quality. In every society, consumer remains the centre of
            gravity of all business and industrial activity. He needs
            protect.ion from the manufacturer, producer, supplier,
            wholesaler and retailer."
B
            9. Jn Lucknow Development Authority v. M.K. Gupta', the
      two-Judge Bench adverted to the concept of "consumer" as defined
      under the Act. Analysing the definition in the context of the Act, the
      Court held:-

c           "lt is in two parts. The first deals with goods and the other
            with services. Both parts first declare the meaning of goods
            and services by use of wide expressions. Their ambit is
            further enlarged by ,use of inclusive clause. For instance, it
            is not only purchaser of goods or hirer of services but even
            those who use the goods or who are beneficiaries of services
D           with approval of the person who purchased the goods or
            who hired services are included in it. The legislature has
            taken precaution not only to define 'complaint',
            'complainant', 'consumer' but even to mention in detail what
            would amount to unfair trade practice by giving an elaborate
E           definition in clause (r) and even to define 'defect' and
            'deficiency' by clauses (f) and (g) for which a consumer
            can appr01;1ch the Commission. TheAct thus aims to protect
            the economic interest of a consumer as understood in
            commercial sense as a purchaser of goods and in the larger
            sense of user of services. The common characteristics of
 F          goods and services are that they are supplied at a price to
            cover the costs and generate profit or income for the seller
            of goods or provider of services. J3ut the defect in one and
            deficiency in other may have to be removed and
            compensated differently. The former is, normally, capable
 G          of being replaced and repaired whereas the other may be
             required to be compensated by award of the just equivalent
            of the value or damages for loss."
                I 0 .. While. adverting to the term "service" as defined in clause
      ( o ), the Court ruled:-
H     '< t 994) 1 sec 243
         BUNGA DANIEL BABU v. M/S SRI YASUDEVA                             299
         CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

      "In other words service which is not only extended to actual         .A
      users but those who are capable of using it are covered in
      the definition. The clause is thus very wide and extends to
      any or all actual or potential users. But the legislature did
      not stop there. It expanded the meaning of the word further
      in modern sense by extending it to even such facilities as
                                                                            B
      are available to a consumer in connection with banking,
      financing etc. Each of these are wide-ranging activities in
      day to day life. They are discharged both by statutory and
      private bodies. In absence of any indication; express or
      implied there is no reason to hold that authorities created
      by the statute are beyond purview of the Act."                        c
      11. The abovementioned definition was amended in the year 1993.
The definition under Section 2( I)( d) that defined "consumer" after the
amendment of 1993 read as follows:-
      "Section 2( I)( d) "consumer" means any person who-
      (i) buys any goods for a consideration which has been paid            D
      or promised or partly paid and paitly promised, or under
      any system of deferred payment and includes any user of
      such goods other than the person who buys such goods for
      consideration paid or promised or partly paid or pattly
      promised, or under any system of deferred payment, when               E
      such use is made with the approval of such person, but
      does not include a person who obtains such goods for resale
      or for any commercial purpose; or
      (ii) hires or avails of any services for a consideration which
      has been paid or promised or partly paid and partly promised,         F
      or under any system of deferred payment and includes any
      beneficiary of such services other than the person who hires
      or avails of the services for consideration paid or promised,
      or partly paid and pattly promised, or under any system of
      deferred payment, when such services are availed of with
      the approval of the first mentioned person;                           G
      Explanation.-For the purposes of sub-clause (i),
      "commercial purpose" does not include use by a
      consumet~ of goods bought and used by him exclusively
      for the purpose of earning his livelihood, by means of
      self-employment."                                                     H
300             SUPREME COURT REPORTS                            [2016] 3 S.C.R.



A            12. In Laxmi Enginee.ring Works v. P.S.G. Industrial
      Institute", while dealing with the connotative expanse of the term
      "consumer" in the unamended definition, the Court considering the
      Explanation added by the Consumer Protection (Amendment) Act, 1993
      (5'0of1993) ruled thatthe said Explanation is clarificatory in nature and
      applied to all pending proceedings. Further proceeding, the Court held
B
      that:-
            "
            (ii) Whether the purpose for which a person has bought
            goods is a "commercial purpose" within the meaning of the
            definition of expression 'consumer' in Section 2(d) of the
C           Act is always a question of fact to be decided in the facts
            and circumstances of each case.
             (iii) A person who buys goods and uses them himself,
             exclusively for the purpose of earning his livelihood, by
             means of self-employment is within the definition of the
D            expression 'consumer'."
             13. It is necessary to state here that in the said case prior to
      recording its conclusions, the Court has elaborately dealt with the definition
      of"consumer" under Section 2(1 )(d)(i) and Explanation added by 1993
      amendment Act. Because of whatwe are going to ultimately say in this
 E    case, we think seemly to reproduce the relevant discussion from the
      said authori_ty:-
             "J 1. Now coming back to the definition of the expression
             'consumer' in Section 2(d), a consumer means insofar as
             is relevant for the purpose of this appeal, (i) a person who
 F           buys any goods for consideration; it is immaterial whether
             the consideration is paid or promised, or partly paid and
             partly promised, or whether the payment of consideration
             is deferred; (ii) a person who uses such goods with the
             approval of the person who buys such goods for
             consideration; (iii) but does not include a person who buys
G            such goods for resale or for any commercial purpose. The
             expression 'resale' is clear enough. Controversy has,
             however, arisen with respect to meaning of the expression
             "commercial purpose". It is also not defined in the Act. In
             the absence of a definition, we have to go by its ordinary
 H    "< 1995) 3 sec 583
  BUNGA DANIEL BABU v. M/S SRI VASUDEVA                          301
  CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

meaning. 'Commercial' denotes "pertaining to commerce"           A
(Chamber's Twentieth Century Dictionary); it means
"connected with, or engaged in commerce; mercantile;
having profit as the main aim" (Collins English Dictionary)
whereas the word 'commerce' means "financial
transactions especially buying and selling of merchandise,
                                                                  B
on a large scale" (Concise Oxford Dictionary). The National
Commission appears to have been taking a consistent view
that where a person purchases goods "with a view to using
such goods for carrying on any activity on a large scale for
the purpose of earning profit" he will not be a 'consumer'
within the meaning of Section 2(d)(i) of the Act. Broadly         c
affirming the said view and more particularly with a view
to obviate any confusion -the expression "large scale" is
not a very precise expression - Parliament stepped in and
added the explanation to Section 2(d)(i) by Ordinance/
Amendment Act, 1993. The explanation excludes certain
                                                                  D
purposes from the purview of the expression "commercial
purpose" - a case of exception to an exception. Let us
elaborate: a person who buys a typewriter or a car and
 uses them for his personal use, is certainly a consumer but
a person who buys a typewriter or a car for typing others'
work for consideration or for plying the car as a taxi .can be    E
said to be using the typewriter/car for a commercial
purpose. The explanation however clarifies that in certain
 situations, purchase of goods for "commercial purpose"
would not yet take the purchaser out of the definition of
expression 'consumer'. If the commercial use is by the
purchaser himself for the purpose of earning his livelihood
                                                                  F
 by means of self-employment, such purchaser of goods is
yet a 'consumer'. In the illustration given above, if the
 purchaser himself works on typewriter or plies the car as a
taxi himself, he does not cease to be a consumer. In other
 words, if the buyer of goods uses them himself, i.e., by         G
 self-employment, for earning his livelihood, it would not be
 treated as a "commercial purpose" and he does not cease
 to be a consumer for the purposes of the Act. The
 explanation reduces the question, what is a "commercial
 purpose", to a question of fact to be decided in the facts of
 each case. It is not the value of the goods that matters but     H
302             SUPREME COURT REPORTS                             [2016] 3 S.C.R.



A            the purpose to which the goods bought are put to."
           14. In Kalpavrukslza C/zaritable Trust v. Toslmiwal Brothers
      (Bombay) Pvt. Ltd. and anotlter5 reiterating the principles stated in
      ~axmi E!!J~ineerinf! Works (supra), the Cou11 ruled whether a person
      would fall within the definition of"consumer" or not would be a question
8     of fact in every case. In the said case, the National Commission had
      already returned a finding that the appellant therein was not a "consumer"
      as the machinery was installed for commercial purpose. An argument
      was advanced that the activity of a charitable institution, though
      commercial in nature, was a part of charitable activity. For the said
      purpose, reliance was placed on CIT v. Surat Art Silk C/otlz
C     Manufacturers' Associatio116 • The two-Judge Bench distingLJished the
      said verdict on the ground that it was a decision rendered under the
      Income Tax Act. It was also urged there that ifthe dominant object of
      the trust or institution is charitable, the activity carried on by it would not
      be treated as an activity for profit. To bolster the said submission, the
D     authority in CIT v. Federatio11 of I11dian Chambers of Commerce
      and Industries 7 was commended to the Court but the same was not
      accepted on the foundation that the verdict was in the context of Income
      Tax Act. Eventually, the Court held thus:-
             "In the instant case, what is to be considered is whether
             the appellant was a "consumer" within the meaning of the
E            Consumer Protection Act, 1986, and whether the goods in
             question were obtained by him for "resale" or for any
             "commercial purpose". It is the case of the appellant that
             every patient who is referred to the Diag1iostic Centre of
             the appellant and who takes advantage of the CT scan,
 F           etc. has to pay for it and the service rendered by the
             appellant is not free. It is also the case of the appellant that
             only ten per cent of the patients are provided free service.
             That being so, the "goods" (machinery) which were obtained
             by the appellant were being used for "commercial
             purpose"."
 G
              15. The purpose of referring to the aforesaid pronouncements is
      to appreciate the views expressed by this Court from time to time prior
      to the amendment in 2002 and also the philosophy behind the consumer
      '(2000) 1sec512
      • ( 1980) 2 sec 31
 H    1
        (1981)3 sec 156
         BUNGA DANIEL BABU v. M/S SRI VASUDEVA                                 303
         CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

protection and the concept of rendition of service. It is necessary to          A
mention here that the definition of the term "consumer" has been
amended by the Consumer Protection (Amendment) Act, 2002 (62 of
2002) with effect from 15.03.2003. Be it stated, clause 2(1)(d)(ii) was
substituted. We think it appropriate to reproduce the same:-
      "Section 2( I)( d) "consumer" means any person who--                      B
            x            x            x             x           x
      (ii) hires or avails of any services for a consideration which
      has been paid or promised or partly paid and partly promised,
      or under any system of deferred payment and includes any
      beneficiary of such services other than the person who hires              c
      or avails of the services for consideration paid or promised,
      or partly paid and partly promised, or under any system of
      deferred payment, when such services are availed of with
      the approval of the first mentioned person but does not
      include a person who avails of such services for any                      D
      commercial purpose;
      Explanation.-For the purposes of this clause,
      "commercial purpose" does not include use by a
      person of goods bought and used by him and services
      availed by him exclusively for the purposes of earning                    E
      his livelihood by means of self-employment."
       16. The bold portions indicate the nature of amendment in ·the
definition of the word "consumer". In the first part it excludes services
for any commercial purpose. After the amendment the decisions that
have been rendered by this Court require careful consideration. As has
                                                                                F
been stated earlier, on behalf of the complainant heavy reliance was
placed on the authority in Faqir Chanel G11foti (supra) but the same
has been distinguished by the National Commission.
       17. The decision in Faqir Clwncl Gulati (supra), we are disposed
to think, requires appropriate appreciation. Be it noted, it is relatable to
                                                                                G
a stage where the amended definition had not come into existence.
Despite the same, it is noticeable that the principles laid down therein
are pertinent and significant to the existing factual scenario. In the said
case, the Court while dealing with a building construction agreement
between a landowner and a builder, was required to decide whether the
                                                                                H
304            SUPREME COURT REPORTS                         [2016] 3 S.C.R.


A     owner of a plot ofland could maintain a complaint under the Act claiming
      that he was a consumer and the builder, a service provider. The two-
      Judge Bench after referring to various authorities opined thus:-
            "20. There is no dispute or doubt that a complaint under the
            Act will be maintainable in the following circumstances:
B           (a) Where the owner/holder of a land who has entrusted
            the construction of a house to a contractor, has a complaint
            of deficiency of service with reference to the construction.
            (b) Where the purchaser or intending purchaser of an
            apartment/flat/house has a complaint against the builder/
c           developer with reference to construction or delivery or
            amenities.
            But we are concerned with a third hybrid category which
            is popularly called as "joint-venture agreements" or
            "development agreements" or "collaboration agreements"
D           between a landholder and a builder. In such transactions,
            the landholder provides the land. The builder puts up a
            building. Thereafter, the landowner and builder share the
            constructed area. The builder delivers the "owner's share"
            to the landholder and retains the "builder's share". The
E           landholder sells/transfers undivided share(s) in the land
            corresponding to the builder's share of the building to the
            builder or his nominees. As a result each apartment owner
            becomes the owner of the apartment with corresponding
            undivided share in the land and an undivided share in the
            common areas of the building. In such a contract, the
 F          owner's share may be a single apartment or several
            apartments. The landholder who gets some apartments may
            retain the same or may dispose of his share of apartments
            with corresponding undivided shares to others. The usual
            feature of these agreements is that the landholder will have
            no say or control in the construction. Nor will he have any
G
            say as to whom and at what cost the builder's share of
            apartments are to be dealt with or disposed of. His only
            right is to demand delive1y of his share of constructed area
            in accordance with the specifications. The builders contend
            that such agreements are neither contracts for construction,
 H          nor contracts for sale of ·apartments, but are contracts
    BUNGA DANIEL BABU v. MIS SRI VASUDEVA                           305
    CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

entered for mutual benefit and profit and in such a contract,       A
they are not "service providers" to the landowners, but a
co-adventurer with the landholder in a ')oint venture", in
developing the land by putting up multiple-housing
(apartments) and sharing the benefits of the project. The
question is whether such agreements are truly joint ventures
                                                                     B
in the legal sense.
x            x             x              x             x
25. An illustration ofjoint venture may be of some
assistance. An agreement between the owner of a land
and a builder, for construction of apartments and sale of            c
those apartments so as to share the profits in a particular
ratio may be a joint venture, ifthe agreement discloses an
intent that both parties shall exercise joint control over the
construction/development and be accountable to each other
for their respective acts with reference to the project.
                                                                     D
x             x             x                 x             x
29. It is, however, true that where the contract is a true
joint venture the scope of which has been pointed out in
paras 21 to 25 above, the position will be different. In a true
joint venture agreement between the landowner and.another
                                                                     E
(whether a recognised builder or fund provider), the
landowner is a true partner or co-adventurer in the venture
where the landowner has a say or.control in the construction
and participates in the business and management of the
joint venture, and has a share in the profit/loss of the venture.
In such a case, the landowner is not a consum~r nor is the           F
other co-adventurer in the joint venture, a service provider.
The landowner himself is responsible for the construction
as a co-adventurer in the venture. But such true joint ventures
are comparatively rare. What is more prevalent are
agreements of the nature found in this case, which are a
                                                                     G
hybrid agreement for construction for consideration and sale
and are pseudo joint ventures. Normally a professional
builder who develops properties of others is not interested
in sharing the control and management of the business or
the control over the construction with the landowners.
Except assuring the landowner a certain constructed area             H
306             SUPREME COURT REPORTS                            [2016) 3 S.C.R.


A           and/or certain cash consideration, the builder ensures
            absolute control in himself, only assuring the quality of
            construction and compliance with the requirements of local
            and municipal laws, and undertaking to deliver the owners'
            constructed area of the building with all certificates,
            clearances and approvals to the landowner."
B
                                                   [Emphasis added]
              18. It worthy to note that in the said case a stand was taken by
      the respondent that the agreement was a 'collaboration agreement' as it
      was so titled. Emphasis was laid on the fact that the agreement showed
      the intention to collaborate and, therefore, it was a joint venture. The
c     Court ruled that the title or caption or nomenclature of the instrument/
      document is not determinative of the nature and character of the
      instrument/document, though the name usually gives some indication of
      the nature of the document and, therefore, the use of the words 'joint
      venture' or 'collaboration' in the title of an agreement or even in the
D     body of the agreement wi II not make the transaction a joint venture, if
      there are no provisions for shared control of interest or enterprise and
      shared liability for losses. After so stating, the Court proceeded to
      observe that ifthere is a breach by the land owner of his obligations, the
      builder will have to approach a civil court as the land owner is not providing
      any service to the builder but merely undertakes certain obligations
E     towards the builder, breach of which would furnish a cause of action for
       specific performance and/or damages. It has also been stated therein
      that while the builder commits breach of his obligations, the owner has
      two options; he has the right to enforce specific performance and/or
      claim damages by approaching civil court or can approach consumer
 F    forum under the Act. In the course of delineation, the Court proceeded
      to state:-
             "But the important aspect is the availment of services of
             the builder by the landowner for a house construction
             (construction of the owner's share of the building) for a
             consideration. To that extent, the landowner is a consumer,
G
             the builder is a service provider and ifthere is deficiency in
             service in regard to construction, the dispute raised by the
             landowner will be a consumer dispute. We may mention
             that it makes no difference for this purpose whether the
             collaboration agreement is for construction and delivery of
H            one apartment or one floor to the owner or whether it is for
         BUNGA DANIEL BABU v. M/S SRI VASUDEVA                               307
         CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

      construction and delivery of multiple apa11ments or more               A
      than one floor to the owner. The principle would be the
      same and the contract will be considered as one for house
      construction for consideration .... "
        19. In our considered opinion, the aforesaid passage is extremely
illuminative. It can be unhesitatingly stated that though the controversy    B
in the said case had arisen before the amendment of2002, the principles
laid down therein would apply even after the amendment if the fact
situation comes within the four corners of the aforestated principles. In
this context, we may usefully refer to the recent pronouncement in Punjab
University v. Unit Trust of India and otflers8 wherein a two-Judge
Bench, while dealing with the term "consumer", observed that it is clear
                                                                              c
that "consumer" means any person who hires or avails of any services
for a consideration, but does not include a person who avails of such
services for any commercial purpose and the "commercial purpose"
does not include services availed by him exclusively for the purposes of
earning his livelihood by means of self-employment. Be it noted, the          D
Court was considering whether the deposit of money in mutual fund
scheme could amount to availing of services for "commercial purposes''.
The Court after referring to few passages from L<txmi Engineering
 Works (supra) has observed that:-
       "2 i. It is thus seen from the above extracts from Laxmi               E
       Engg. Works (supra) that Section 2( I )(d)(i) is discussed
       exclusively by this Court. We are of the opinion that clauses
       (i) and (ii) of Section 2(1 )(d) of the Act must be interpreted
       harmoniously and in light of the same, we find that the
       Explanation following Section 2( I)( d)(i i) of the Act would
       be clarificatory in nature and would apply to the present              F
       case and as held by this Court in Laxmi Engg. Works (supra),
       the term "commercial purpose" must be interpreted
       considering the facts and circumstances of each case."
      Though the said decision was rendered in a different context, yet
the principle that commercial purpose is required to be interpreted           G
considering the facts and circumstances of each case has been reiterated.
We respectfully concur with the same.
       20. The obtaining factual matrix has to be tested on the touchstone
of the aforestated legal position. The National Commission has affirmed
• (2015) 2 sec 669                                                            H
308             SUPREME COURT REPORTS                          [2016) 3 S.C.R.


A     the order passed by the State Commission on the ground that the complaint
      is not a consumer as his purpose is to sell flats and has already sold four
      flats. rn our considered opinion, the whole approach is erroneous. What
      is required to be scrutinised whether there is any joint venture agreement
      between the appellant and the respondent. The MOU that was entered
      into between the parties even remotely does not indicate that it is a joint
B
      venture, as has been explained in Faqir Chand Gulati (supra). We
      think it appropriate to reproduce the relevant clauses from the MOU:-
            "3. The apartments shall be shared by the owner and the
            builder in the propo1tion of 40% and 60% respectively in
            the built-up area including terrace rights all additional
c           constructions in the said complex. The common areas shall
            be e11joyed jointly.
                                xxxxx       xxxxx

            5. The builder shall commence construction and complete
D           the same within a period of nineteen months from the date
            of granting of approval for the plans by the Municipal
            Corporation, Visakhapatnam. fn case of non-completion
            of the constructions in the complex within the above
            mentioned time, builder should pay rent Rs.2,000/- per month
            for each flat in a 40% share of the owner.
E
                                xxxxx       xxxxx
             11. The builder shall pay a sum ofRs.5 lakhs (Rupees five
             lakhs only) to the owner as interest free security deposit.
             The security deposit of Rs.5 lakhs shall be refunded at the
 F           time of completion of the apartment by way of cash.
                                xxx.xx      xxxxx
             15. The owner hereby agrees that out of his 40% share in
             the built-up area of the Apartment complex to be given to
             him by the builder, the owner shall register one flat of his
G            choice of a value of Rs.6,00,000/- in the fourth floor of the
             said buifding in favour of the builder or his nominee towards
             the cost of the items set out in the specifications hereto
             attached agreed to be provided by the builder for the benefit
             of the owner in the apartments intended for the share of
H            the owner. In case the cost of the flat is found to be more
         SUNGA DANIEL BABU v. M/S SRI VASUDEVA                                 309
         CONSTRUCTIONS & ORS. [DIPAK MISRA, J.]

      or less than Rs.6 lakhs, then both parties shall adjust the               A
      difference by paymen't of the same by way of cash."
       21. On a studied scrutiny of the aforesaid clauses, it is clear as
day that the appellant is neither a partner nor a co-adventurer. He has
no say or control over the construction. He does not participate in the
business. He is only entitled to, as per the MOU, a certain constructed         B
area. The extent of area, as has been held in Faqir Chand Gulati
(supra) does not make a difference. Therefore, the irresistible conclusion
is that the appellant is a consumer under the Act.
       22. As the impugned orders will show, the District Forum had
allowed the claim of the appellant. The State Commission had dismissed          c
the appeal holding that the claim of the appellant was not entertainable
under the Act, he being not a consumer and the said order has been
given the stamp of approval by the National Commission. Therefore,
there has to be appropriate adjudication with regard to all the aspects
except the status of the appellant as a consumer by the appellate authority.
Consequently, the appeal is allowed, the judgments and orders passed            D
by the National Commission and the State Commission are set aside and
the matter is remitted to the State Commission to re-adjudicate the matter'
treating the appellant as a consumer. We hereby make it clear that we
have not expressed any opinion on the merits of the case. In the facts
and circumstances of the case, there shall be no order as to costs.             E


Devika Gujral                                                Appeal allowed.