Delayed apartment, missed rent, but legal victory for retirees in Greater Noida housing case as consumers as court orders developer to face complaint

Senior citizens and retired individuals booked a studio apartment in Imperia Residency, Greater Noida, with the promise of assured monthly rental income. The developer failed to complete construction, hand over possession, or pay the promised rent, causing significant financial loss to the complainants. From state rejection to national relief Initially, the State Commission dismissed the complaint, claiming the transaction was commercial and that the complainants were not “consumers” under the law. However, the National Commission set aside this order, ruling that the transaction was personal in nature. The complainants were recognized as consumers under the Consumer Protection Act, and the complaint was restored to the State Commission for adjudication on merits.This is an appeal against the order of the State Commission dismissing the complaint holding that the transaction was entered into by the complainant for commercial purpose and hence he would not be eligible as a complainant within the meaning of Section 2(1 )(d) of the CP Act, 1986. The brief facts of the complainant case, as pleaded in the consumer complaint before the State Commission, are that the complainants, being senior citizens and retired persons dependent upon pension and limited family income, were induced by the respondent, a real estate developer, to book a studio apartment in its project known as “Imperia Residency” situated at Greater Noida, Uttar Pradesh, on the representation that the project would be completed within the stipulated period and that the unit would generate an assured monthly rental income.

Accordingly, the complainants entered into a Memorandum of Understanding dated 13.05.2010 with the respondent for allotment of a 1 BHK Studio Apartment bearing No. C-413 admeasuring about 425 sq. ft. for a total consideration of Rs.11,94,300/-, pursuant to which the complainants made payments from time to time and by May 2012, as pleaded in the complaint, had paid a total sum of Rs.15,17,987/- towards the said unit.

As per the said MoU, the complainant was to receive assured monthly return of Rs.11,943/- (at page 126), payable with effect from June 2010 until the date of occupation, which it appears the OP has paid.However, the construction was to be completed by 30.06.2012 and that the complainants were thereafter to receive an assured rent of Rs 18,000/- per month, proposed through arrangements with Hotel Clarks (Page 53) but actually and finally offered through proposed arrangement with M/s Growmore Solutions Pvt.

Ltd. (Page 77), for which the respondent sought the complainants’ consent in April 2012. However, despite receipt of substantial amounts, the respondent failed to complete the construction of the project within the promised time i.e., by 30.06.2012, failed to' hand over possession of the said studio apartment, and also failed to arrange or pay the assured monthly rental income as promised, thereby causing continuous financial loss to the complainants who had invested their lifetime savings in the project.

The complainant, in response to the demand letter from the OP dated 18.04.2012, demanding Rs. 323687/- and asking consent for lease arrangement with Growmore for lower-than-assured monthly lease rent of only Rs. 8500/-, paid the amount within two months and accepted the proposal and even waived the interest on unpaid assured returns. OP could, hovyever, neither complete the construction till the promised date of June-2012, nor paid or arranged the promised or even the reduced rental of Rs.

8500/- pm because the project itself did not progress as promised. The complainants approached the respondent through letters dated 02.04.2014 (page 82), emails dated 23.04.2014 and 29.05.2014, and legal notice dated 16.09.2015 demanding completion of construction, delivery of possession, and payment of assured returns, but the respondent avoided compliance on one pretext or another and adopted delaying tactics. The complainants, pleaded that the respondent’s acts amounted to gross deficiency in service, unfair trade practice, misrepresentation, and breach of contractual obligations, resulting in severe mental agony, harassment, financial hardship, and loss of livelihood support to the complainants and their dependent family members. The complaint was therefore filed before the State Commission on 09.02.2017.

The complainants prayed for refund of Rs. 15,17,987/- along with interest of Rs. 12,52,350/- at 18% p.a. from 01.07.2012 to 31.01.2017, compensation of Rs. 9,90,000/- towards financial loss due to negligence on account of loss of rent, and further compensation of Rs. 5,00,000/- for mental agony, aggregating to a total claim of Rs. 42,60,337/-, along with cost of litigation. Timeline of events and promises made

The complainants, relying on rental income for their livelihood, faced prolonged financial strain due to the developer’s non-compliance.

The respondent claimed force majeure citing a High Court order delay and arbitration clauses in the booking documents. Key legal issues

National Commission’s decision The National Commission ruled in favor of the complainants, holding that:

The complaint was restored to its original number with the State Commission, which was instructed to decide the matter on merits after giving both parties the opportunity to present their case.'Dominant purpose test' The court emphasized the dominant purpose test, noting that the complainants’ intent was personal use and livelihood support, not commercial enterprise. Expecting rental returns does not automatically make a transaction commercial. Since the complainants were not engaged in any regular business activity related to renting, they remained protected consumers under the law. Case details