Holding

The agreement is not a joint venture; the builder is a service provider and the landowner is a consumer, making the complaint maintainable under the Consumer Protection Act, 1986.

Summary

The appellant, a landowner, entered into a "collaboration agreement" with the builder to construct a residential building and share the constructed area. The builder allegedly deviated from the sanctioned plan, failed to obtain a completion certificate and C&D forms, and did not rectify defects, prompting the landowner to file a complaint under the Consumer Protection Act, 1986. The lower forums held the agreement to be a joint venture, deeming the landowner not a consumer and the complaint non‑maintainable. The Supreme Court examined the nature of the agreement, held that it was not a joint venture because the landowner had no control or profit‑loss sharing, and that the builder was providing a service for consideration. Consequently, the landowner qualified as a consumer and the complaint was maintainable. The Court set aside the orders of the lower forums and remitted the matter to the District Forum for merits, awarding costs to the appellant.

Issues considered

Whether a landowner who enters into a collaboration agreement with a builder for construction and sharing of the built‑up area is a consumer under the Consumer Protection Act, 1986.
Whether the builder in such an agreement is a service provider within the meaning of the Act.
Whether a complaint seeking delivery of a completion certificate and C&D forms is maintainable under the Act.
Whether the agreement constitutes a joint venture or a service contract.

Legislation cited

Consumer Protection Act, 1986s. 14, s. 2(1)(d)(ii), s. 2(1)(g), s. 2(1)(o), s. 3
Workmen's Compensation Act

Subjects

consumer protectionservice providerjoint ventureconstruction contractcompletion certificateC&D formsdeficiency of servicehybrid agreementspecific performancecivil remedy

Judgment

[2008] 10 S.C.R. 697

)

FAQIR CHAND GULATI A
v.
UPPAL AGENCIES PVT. LTD. & ANR.
(Civil Appeal No. 3302 of 2005)
JULY 10, 2008
B
[R.V. RAVEENDRAN AND LOKESHWAR SINGH
PANTA, JJ.]

Consumer Protection Act, 1986: Ss. 2(1)(d)(ii)(g) & (o), 3
and 14: c
Service - Owner entering into a collaboration agreement
with a builder for construction of a residential building and
sharing constructed area - Can owner be termed as Consumer
and builder as service provider for the purpose of application
f of 1986 Act - Maintainability of complaint under 1986 Act - 0
Held: Maintainable - There was no provision in the agree-
ment for shared control of management of joint enterprise and
shared liability for losses - Under the circumstances, State
Consumer Commission and National Consumer Commission
erred in assuming that an agreement between landowner and E
builder for development of property and sharing constructed
area amount to a joint venture and not an agreement for utiliz-
ing service of the builder for consideration - On facts builder
is service provider, hence, 1986 Act applicable.

Building Contract between Landowner and builder - F
Breach of conditions - Remedy - Held: Landowner may file
suit for specific performance of contract or claim damages or
can approach to Consumer Forum for relief as Consumer
against a builder, service provider.
G
Building Contract - Breach of condition as to supply of
.., Completion Certificate and C & D Forms, by build.er - Held:
Builder liable to compensate the Landowner for all loss/dam-
ages for not complyina with the conditions.
697 H
698 SUPREME COURT REPORTS [2008] 10 S.C.R.

A Words & Phrases: '
'Joint Venture' - Ingredients - Discussed.
The questions which arose for determination before
the Supreme Court .in the present appeal were as to
B whether a land owner, who enters into an agreement with f
a builder for Construction of an Apartment and 'for shar-
ing of the constructed area thereof, is a Consumer and
the builder as a Service provider in terms of provisions
under the Consumer Protection Act, 1986, and as to
c whether a complaint seeking delivery of Completion Cer-
tificate and C & D forms in regard to building; against the
builder is maintainable under the 1986 Act.
Appellant-Landowner contended that though the
agreement is captioned as 'collaboration agreement', it is
D not a joint venture as assumed by the State Commission
and the National Commission but it is an agreement un-
der which the builder agreed to make a housing construc-
tion for the land owner and therefore, the activity of the
builder squarely fell within the definition of service; that
E the agreement did not amount to entering into a joint ven-
ture with the builder to share the profits and losses; and
that insofar as the term of the agreement relating to con-
struction of the ground floor for his benefit, ·the builder
was a service provider and he was a consumer.
F Respondent-builder submitted that the agreement ->t
was for collaboration in the nature of a joint venture which
required the owner to contribute the land and the builder
to contribute the funds for construction of a building and
thereafter share the construction, that is ground floor with
G corresponding undivided share in the land to the owner,
and upper floors with corresponding undivided share in
the land to the builder, and that it was in the nature of a <
single business adventure under which the parties agreed
· to share the benefits; that the builder had paid certain sum
H to the owner as consideration in addition to agreeing to.
FAOIR CHAND GULATI v. UPPAL AGENCIES 699
PVT. LTD. & ANR.

give the ground floor of the new building and therefore, A
the agreement was also in the nature of the agreement of
sale of undivided share in land by the owner to the builder;
that the two parties to the agreement were associates to
carry out a single enterprise or business adventure for
mutual profit and such a venture resulting in profit for B
both the parties was not an agreement for providing ser-
vice; that there was no contract for 'house construction',
nor for sale of a house and therefore, it was not a 'ser-
vice-contract; and that as each party had to discharge
and fulfill certain obligations towards the other in consid- c
eration of the other party fulfilling certain obligations, the
remedy in the event of any alleged breach, is to sue for
specific performance and/or damages in a civil court but
a complaint under the Act was not maintainable.
Allowing the appeal, the Court D
HELD: 1.1. The usual feature of hybrid agreement en-
tered in India is that the land-holder will have no say or
control in the construction. Nor will he have any 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 E
demand delivery of his share of constructed area in ac-
cordance with the specifications. An agreement between
the owner of a land and a builder, for construction of apart-
ments and sale of those of apartments so as to share the
profits in a particular ratio may be a joint venture, if the F
agreement discloses an intent that both parties shall ex-
ercise joint control over the construction/development
and be accountable to each other for their respective acts
with reference to the project. There are various terms in
the agreement between the appellant and first respondent G
which militate against the same being a 'joint venture'.
Firstly, there is a categorical statement, that the agreement
shall not be deemed to constitute a partnership between
the owner and the builder. The laad-owner is specifically
excluded fr.om management and is barred from interfer- H
700 SUPREME COURT REPORTS [2008] 10 S.C.R.

A ing with the construction in any manner and the Builder
'
has the e?Cclusive right to appoint the Architects, Contrac-
tors and sub-contractors for the construction. The 'Builder
is entitled to sell its share of the building as it deemed fit,
without reference to the land owner. The builder under-
B takes to the landowner that it will construct the building l
within 1.2 months from the date of sanction of building
plan and deliver the owner's share to the land owner. The
B1.;1ilder alone is responsible to pay penalties in respect
of"deviations ~nd for_ payment of compensation under the
c .Workmen's Compensation Act in case of accident. Sec-
ondly, there is no community of interest or common/joint
·control in the management, nor sharing of profits and
losses. The land owner has no control or participation in
the management of the venture. The requirement of each
joint venturer being the principal as well as agent of the
0
other party is also significantly absent. Such hybrid agree-
ments are not a joint venture, as understood in law. (Paras
-16 to 18) [719 E- 720 A 722 H- 723 F]
New Horizons Ltd VS. Union of India (1995) 1 sec 478 - .
E referred to.
Corpus Juris Secundum Vol.48A Pages 314-315;
American Jurisprudence (2"d Edition) Vol.46, Pages 19, 22-
?3; Black's Law Dictionary, 7th Edition Page 843 - referred
to.
F ~
1.2 The basic underlying purpose of the agreement
in question is the construction of a house or an apart-
ment (ground floor) in accordance with the specifications,
by the builder for the owner, the consideration for such
G construction being the transfer of undivided share in land
to the builder·and grant of permission to the builder to
construct two floors. Such agreement whether called as 1"

· a·'collaboration agreement' or a 'joint-venture agreement',
. is not however a· 'joint-venture'. There is a contract for
construction of an apartment or house for the appellant
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 701
PVT. LTD. & ANR.

.in accordance with the specifications and in terms of the A
contract. There is a consideration for the construction,
flowing from the landowner to the builder (in the form of
sale of an undivided share in the land and permission to
construct and own the upper floors). To adjust the val4e
of the extent of land to be transferred, there is also pay- B
ment of cash consideration by the builder. But the impdr-
tant aspect is the availment of services of the builder by
the land-owner for a house construction (construction of
owner's share of the building) for a consideration. To that
extent, the land-owner is a consumer, the builder is a se,r- c
.. vice-provider and if there is deficiency in service in r~
gard to construction, the dispute raised by the land owner
will be a consumer dispute. It makes no difference for the
purpose whether the collaboration agreement is for con-
struction and delivery of one apartment or one floor to
the owner or whether it is for construction and delivery of D
multiple apartments or more than one floor to the owner.
The principle would be the same and the contract will be
considered as one for house construction for consider-
ation. The deciding factor is not the number of apartments
deliverable to the land owner, but whether the agreement E
is in the nature of a joint-venture or whether the agree-
ment is basically for construction of certain area for the
land-owner. (Para -19) [724 B - 725 A]
1.3 In a true joint venture agreement between the F
-;'. land-owner and another (whether a recognized builder
or fund provider), the land-owner is a true partner or co-
adventurer in the venture where the land owner has a say
or control in the construction and participates in the busi-
ness and management of the joint venture, and has a G
share in the profit/loss of the venture. In such a case, the
land owner is not a consumer nor is the other co-adver:i-
turer in the joint venture, a service provider. The land
owner himself is responsible for the construction as a co-
adventurer in the venture. But such true joint ventures H
702 SUPREME COURT REPORTS [2008] 10 S.C.R.

A are comparatively rare. What is more prevalent are agree-
ments of the nature found in this case, which are a 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
B sharing the control and management of the business or
the control over the construction with the land owners.
Except assuring the land owner a certain constructed
area and/or certain cash consideration, the builder en-
sures absolute control in himself, only assuring the qual-
C ity 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 cer-
tificates, clearances and approvals to the land owner.
(Para - 20) [725 8-F]
D 1.4 It is now well settled that the title or caption or the
nomenclature of the instrument/document is not deter-
minative of the nature and character of the instrument/
document, though the name may usually give some indi-
cation of the nature of the document. The nature and true
E purpose of a document has to be determined with refer-
ence to the terms of the document, which express the in-
tention of the parties. Therefore, the use of the words 'joint
venture' or 'collaboration' in the title of an agreement or
even in the body of the agreement will not make the trans- ,,
F action a jofi~t venture, if there ~re no pdrovhisiodns ~obr.s_harfed k, .
contro 1 o interest or enterprise an s are 1a 11ty or 1 1
losses. (Para- 21) [725 G- 726 8]
1.5 The State Commission and National Commission
have proceeded on an assumption, which appears to be
G clearly baseless; that wherever there is an agreement for
development of a property between the property owner
and builder under which the constructed area is to be di-
vided, it would automatically amount to a joint venture and
there is no question of the landholder availing the ser-
H vice of the builder for consideration. (Para - 22) [726 8-C]
FAQIR CHAND GULATI v. UPPAL AGENCIES 703
~ PVT. LTD. & ANR.

1.6 If there is a breach by the landowner of his obli- A
gations, the builder will have to approach a civil court as
the landowner is not providing any service to the builder
but merely undertakes certain obligations towards the
builder, breach of which would furnish a cause of action
for specific performance and/or damages. On the other B
hand, where 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 approach-
ing the civil court. Or he can approach the Forum under
Consumer Protection Act, for relief as consumer, against c
the builder as a service- provider. Section 3 of the Con-
sumer Protection Act makes it clear that the remedy avail-
able under the Act is in addition to the normal remedy or
other remedy that may be available to the complainant.
(Para - 23) [727 8-E]
D
Lucknow Development Authority vs. M. K. Gupta 1994
(1) SCC 243 and Friends Colony Development Committee
vs. State of Orissa 2004 (8) SCC 733 - referred to.
2.1 The builder cannot be permitted to avoid or es-
cape the consequences of his illegal acts. The obligation E
on the part of the builder to secure a sanctioned plan and
construct a building, carries with it an implied obligation
to comply with the requirements of municipal and build-
/.'' ing laws and secure the mandatory permissions/certifi-
cates. (Para - 25) [728 C-D] F

2.2 The agreement clearly contemplates the builder
completing the construction and securing completion cer-
tificate. The agreement, in fact, refers to the possibility of
deviations and provides that if there are deviations, the
G
builder will have to pay the penalties, that is do whatever
is necessary to get the same regularized. Even if such a
provision for providing completion certificate or payment
of penalties is not found in the agreement, the builder can-
not escape the liability for securing the completion cer-
H
704 SUPREME COURT REPORTS [2008] 10 S.C.R.

A tificate ·and providing a copy thereof to the owner if the
law requires the builder to obtain completion certificate
for such a building. (Para - 26) [728 F-H]
2.3 A prayer for completion certificate and C&D Forms
can.not be brushed aside by stating that the builder has
8 alreac;ty applied for the completion certificate or C&D Forms.
If it is not issued, the builder owes a duty to make neces-
sary application and obtain it. If it is wrongly withheld, he
may have to approach the appropriate court or other fo-
rum to secure it. If it is justifiably withheld or refused, nec-
C e.ssarily the builder will have to do whatever that is required
to be done to bring the building in corisonance with the
sanctioned plan so that the municipal authorities can in-
spect and issue the completion certificate and also assess
the property to tax. If the builder fails to do so, he will be
D liable to compensate the complainant for all loss/damage.
Therefore, the assumption of the State Commission and
National Commission that the obligation of the builder was
discharged when he merely applied for a completion cer-
tificate is incorrect. (Para - 27) [729 A-8]
E 3. The District Forum and National Commission did
not examine the matter with reference to facts. The State
Commission held that the complaint was not maintain-
able but purported to ·consider the factual question in a
half hearted and casual manner. The orders of the National
F Commission, State Commission and District Forum are
set.aside, the appellant's complaint is held to be main-
tainable. The matter is remitted to District Forum for d
ciding it on merits. (Para - 28) (729 D-E]
G CIVILAPPELLATE JURISDICTION: Civil Appeal No. 3302
of 2005 ,...
From the order dated 3.2.2004 of the National Consumer
Disputes Redressal Commission, New Delhi in Revision Peti-
tion No. 1878 of 2000
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 705
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]

S.K. Mehra, Mamta Mehra, Mukta Kapur and Sanjeev A
Sachdeva for the Appellant.
Anil Mittal and Or. Kailash Chand for the Respondents.
The Judgment of the Court was delivered by
R. V. RAVEENDRAN J. This appeal is against the order B
dated 3.2.2004 passed by the National Consumer Disputes
Redressal Commission ('Commission' for short) in Revision Pe-
tition No. 1878 of 2000. It relates to the question whether a land
owner, who enters into an agreement with a builder, for con-
struction of an Apartment Building and for sharing of the con~ c
structed area, is a 'consumer' entitled to maintain a complaint
against the builder as a service-provider under the Consumer
Protection Act, 1986.
The agreement
0
2. The appellant is the owner of premises no. L-3, Kailash
Colony, New Delhi. He entered into a 'collaboration agreement'
dated 17.5.1991 with the first respondent, the terms of which
are, in brief, as follows :
(i) The owner shall place at the disposal ofthe builder,
E
vacant possession of the premises and authorize
the builder to secure necessary sanctions,
permissions and approvals for demolition of the
existing building and construction and completion of
a new building. F
)

(ii) The builder shall demolish the existing structure and
construct a residential building consisting of ground,
first and second floors, at its cost and expense.
(iii) The builder will have the right to appoint Architects, G
contractors, sub-contractors etc.
~
(iv) The new building to be constructed by the builder shall
be of good quality as per the detailed specifications
contained in Annexure-A to the agreement. .
. t..'·
'
H \...t,,.,
~
706 SUPREME COURT REPORTS [2008] 10 S.C.R.

(v) On completion of construction, the land-owner will
be entitled to the entire ground floor (consisting of
three bedrooms with attached bathrooms, one
drawing-cum-dining, one store room, one kitchen)
with one servant room under the overhead water tank
B on rear terrace and one parking space, as his share
in consideration of his having made available the f
land. The builder shall also pay a sum of Rs.8 lakhs
as non-refundable consideration to the owner.
(vi) The remaining part of the building (the entire first
c and second floors and two servant rooms and two
car parking spaces) shall belong to the builder as its
share of the building in consideration of having spent
the cost of construction of the entire building and all
other services rendered by him under the agreement.
D
(vii) The owner and the builder shall be entitled to
undivided and indivisible share in the land,
proportionate to their right in the building, that is, an
undivided one-third share in the land shall belong to
the owner and two-third share shall belong to the
E developer.
(viii) The builder shall be entitled to either retain or sell its
share of the building. The owner shall execute
necessary documents for transferring the share
F corresponding to the builder's portion of the building.
The owner shall give an irrevocable power of attorney
enabling the builder to execute the deed of
conveyance in regard to the builder's share in the
land. The builder will however, have the option to
require the owner to personally execute the sale deed
G
in regard to the builder's share in the land instead of
using such power of attorney.
(ix) On completion of the building, the builder shall apply
for completion certificate to the concerned authority
H and shall be liable to pay any penalty that may be
FAQIR CHAND GULATI v. UPPAL AGENCIES 707
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]

imposed or levied in regard to the deviations, if any, A
made in the construction of the building.
(x) The owner shall not interfere or obstruct the
construction and completion of the work in any
manner, but will have access to the construction to
point out any defect in construction or workmanship 8
or use of inferior material, so as to require the builder
to rectify such defects.

(xi) Title deeds handed over by the owner to the builder
for completing the formalHies relating to the c
agreement shall thereafter be returned to the owner,
who shall however make available the same for
reference by the owners of the other floors.
(xii) The agreement and the power of attorney executed
by the owner in favour of the builder are irrevocable . D
• In the event of neglect, failure, default on the part of
the owner or the builder, the affected party shall have
the right to specific performance of the said
agreement at the cost and risk of the defaulting party
who shall also be liable to pay damages. E
(xiii) The agreement is not a partnership and shall not be
deemed to be a partnership between the owner and
the builder.

The dispute and the decision. F
)

3. The appellant (also referred to as 'land-owner') alleges
that the first respondent (also referred to as the 'builder') se-
cured sanction of the plan for construction from the Municipal
Corporation of Delhi [for short 'MCD') but made several unau-
thorized deviations during construction, resulting in several de- G
viation notices from f0CD. In fact, MCD passed an order dated
~ 16.1.1991 to seal the premises, but subsequently, the premises
was de-sealed to enable the builder to rectify the deviations. ·
The builder delivered possession of the ground floor on
2.4.1992. The builder sold the first and second floors to four H
708 SUPREME COURT REPORTS [2008] 10 S.C.R.

A persons under sale deeds dated 18.3.1992, 18.3.1992,
2.6.1995 and 2.6.1995.
4. The delivery of the ground floor was made by the builder
to appellant's son during appellant's absence from India. On
his return, the appellantsent a letter dated 29.10.1992, point-
s ing out several shortcomings inthe construction and the viola-
tions of sanctioned plan, and called upon the builder to rectify
the deviations and defects. The builder did not comply.
5. The appellant therefore filed complaint No. 1866of1994
c before th.e District Consumer Disputes Redressal Forum-IX,
Delhi, under the Consumer Protection Act, 1986('Act' for short)
seeking the following reliefs against the builder : .
a) Return of the title deeds relating to the premises;
b) Supply of completion certificate .and C&D Forms
D
from MCD; and •
c) Delivery of security deposit receipt for electricity
meter and paymentofRs.4262.64 being the charges
for change of electricity meter.
E The District Forum dismissed the complaint by order dated
10.5.1996 as not maintainable under the Act holding that the
appellant was not a 'consumer' as defined in section 2(1 )(d)(ii)
of the Act.. It held that the agreement between the parties·cre-
ated mutual rights and obligations with a provision that in the
F event of breach of any condition, the affected party shall have
the right of specific performance and such an agreement can'"
not be construed as a contract for hiring/availing a service, for
consideration by a consur:ner.
G 6. The appellant filed an appeal againstthe order of the
District Forum and the said appeal was dismissed by the State
Commission, Delhi, by order dated 4.10.2000. The State Com-
mission held that the agreement between the parties, termed
as a collaboration agreement, was in the nature of a joint ven~
ture or agreement to collaborate; that the agreement contem-
H, .
. .
FAQIRGHAND GULATI v. UPPAL AGENCIES 709
PVT LTD. &ANR [RV. RAVEE:NDRAN J.]

plated 'sharing' of constructed area, that is the entire ground A
· floor of the builc;Hng by the landowner and the remaining area
by the builder; that the agreement did not have any element of
hiring any services; and that therefore; the appellant was not a
'consumer' and the builder was not a 'service-provider'. It there-
T fore, confirmed the District Forum's decision that the petition B
was not maintainable. For this purpose, it also relied on the
decision of the National Commission in C. Narasimha Rao vs.
K.R. Neelakandan - I (1994) CPJ 160 and its own decision in
Har Sarup Gupta vs. Mis Kaifash Nath & Associates - II (1995)
CPJ 275 . However, as the appellant was old and as the first c
and third reliefs (relating to delivery of title deeds ·and electricity
meter security deposit receipt and payment of the charges for
the change of electricity meter) had already been s·ecured by
the appellant and the only pending issue related to C&D forms,
the State Commission proceeded to decide the appeal on
merits. It noted that as the builder had already applied for the
0
C&D forms to the competent authority and was pursuing the
matter and had undertaken to hand over the same to the appel-
lant as and when· made available, nothing further was required
to be done by th.e builder.The Appeal was, therefore, dismissed
as devoid of merit. E

7. The appellant filed a revision petition before the Na-
tional Commission. The appellant challenged the finding that
the complaint was not maintainable. He also contended that as
the builder had failed to secure and furnish the completion cer- F
tificate and C&D forms (that is property tax assessment listing)
from MCD, his complaint could not have been dismissed. He
also submitted that in view of the violations, the MCD had de-
molished certain portions of the structure and was insisting ·upon
the other deviations which were beyond compoundable limits G
to be rectified; and that MCD was refusing to issue the comple-
tion certificate and C&D forms without those rectifications; and
that the prayer for delivery of completion certificate and C&D
forms required the builder to rectify all defects and bring the ·
deviations within permissible limits and $ecured completion
H
710 SUPREME COURT REPORTS [2008] 10 S.C.R.

r
A certificate and C&D forms. He pointed out that in the absence
of completion certificate and C&D forms, he was facing threats
of demolition apart from harassment from MCD. He contended
that the non-completion of building as per the sanctioned plan
and making deviations on a large scale resulting in non-issue
B of completion certificate and C&D forms amounted to deficiency y
in service and therefore, his complaint ought to have been al-
lowed.
8. The National Commission dismissed the revision peti-
tion by order dated 3.2.2004. The order extracted the relevant
C provisions of the agreement in extenso and then proceeded to
reject the petition by merely observing that the agreement was
in the nature of a joint venture and transaction did not have any
element of hiring the services of the builder within the meaning
of section 2(1 )(d)(ii) of the Act and that the District Forum and
D the State Commission had rightly held that the appellant was
not a consumer. The said order is challenged in this appeal by
special leave.
Legal Provisions.
E 9. We may briefly notice the provisions of the Act before
referring to the contentions of the parties. The object of the Act
is to provide for better protection of the interests of consumers.
It establishes consumer disputes redressal agencies and en-
ables persons having grievances regarding goods supplied or
F services provided, to file complaints before such redressal agen-
cies. Section 14 enumerates the reliefs that can be granted by
a redressal agency to the complainant if he satisfies the agency
about the defect in goods or deficiency in service. Two of the
reliefs that can be granted by the forum, if it is satisfied that any
G of the allegations contained in the complaint about the deficiency
in the service are proved, are, a direction to the opposite party
to remove the deficiencies in the service in question and a di-
rection to pay compensation to the consumer for any loss or
injury suffered by him. Section 3 provides that the provisions of
the Act shall be in addition and not in derogation of the provi-
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 711
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]
)
sions of any other law for the time being in force. Any allegation A
in writing made by the complainant that the services hired or
availed of or agreed to be hired or availed of by him suffered
from deficiency in any respect, with a view to obtaining any re-
lief provided for by or under the Act, is a 'complaint' under sec-
tion 2(1)(c) of the Act. B
,.
9.1) The terms 'consumer', 'deficiency', and 'service' de-
fined in clauses (d), (g) and (o) of section 2(1) of the Act as it
stood at the time when the appellant approached the District
Forum in 1994 are extracted below:
c
"(d). 'Consumer' means any person who -
(i) xxxxxx
(ii) hires or avails of any services for a consideration which
has been paid or promised or partly paid and partly
D
.,J
promised, 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 partly promised, or
under any system of deferred payment, when such services
are availed of with the approval of the first mentioned E
person.*
[*The above definition was amended by Consumer
Protection (Amendment) Act, 62 of 2002 by adding the
words 'but does not include a person who avails of such F
\ services for any commercial purpose', at the end].
(g). 'Deficiency' means any fault, imperfection,
shortcoming or inadequacy in the quality, nature and
manner of performance which is required to be maintained
by or under any law for the time being in force or has been G
undertaken to be performed by a person in pursuance of
... a contract or otherwise in relation to any service."
(o). 'Service' means service of any description which is·
made available to potential users and includes the
H
712 SUPREME COURT REPORTS . [2008] 10 S.C.R.

('
A provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or
other energy, board or lodging or both, housing
· construction, entertainment, amusement or the purveying
of news or other information, but does not include the
B rendering of any service free of charge or under a contract
1
of personal service:·x

[xThe words 'the provision of' are substituted by the word.s
'but not limited to, the provision of' by the Consumer
Protection (Amendment) Act, 2002 (62 of 2002) with effect
C from 15.3.2003]

Contentions :
10. The appellant contends that though the agreement is
captioned as 'collaboration agreement', it is not a joint venture
D a's assumed by the State Commission and National Commis-
sion but an agreement under which the builder agreed to make
a housing .construction for the land owner and therefore, the
activity of the builder squarely falls within the definition of ser-
vice. According to him, the fact that he entered into an agree-
E ment making available the plot for construction of a three-sto-
reyed building and agreeing to share the building after construc-
tion and receive towards his share the ground floor of the build-
ing plus Rs.8 lakhs did not amount to entering into a joint ven-
ture to share the profits and losses. He submitted that the basic
F scheme of the agreement was that the builder should construct
and deliver a house (ground floor of the building) to the owner
and if there was any deficiency in fulfilling the obligations under-
t.aken in connection with such construction, there would be a
deficiency in service; and that therefore, insofar as the termre-
G lating to construction of the ground flooder his benefit, the builder
was a service provider and he was a consumer.
11. On the.other hand, the respondent contended that the >
agreement was for collaboration in the nature of a joint venture
which required the owner to contribute the land and the builder
H ·.to contribute the funds for construction of a building and there-
FAQIR CHAND GULATI v. UPPALAGENCIES 713
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]
'
after share the construction that is ground floor with correspond- A
ing undivided share to the owner and upper floors with corre-
spending undivided share to the builder, and that it was in the
nature of a single business adventure under which the parties
agreed to share the benefits. It is also pointed out that the builder
had paid a sum of Rs.8 lakhs to the owner as consideration in B
addition to agreeing to give the ground floor of the new building
and therefore, the agreement was also in the nature of the agree-
ment of sale of undivided share in land by the owner to the builder.
It was contended that the two parties to the agreement were as-
sociates to carry out a single enterprise or business adventure c
for mutual profit and such a venture resulting in profit for both the
parties was not an agreement for providing service. The respon-
dent submitted that there was no contract for 'house construe-
tion' as such, nor for sale of a house and therefore, it was not a
..) 'service-provider'. It was also pointed out that it was not only the
D
builder who had certain obligations towards the owner, but the
owner also had the following obligations towards the builder :
a) The owner shall execute all documents required for
effecting transfer of builder's share of the land.
b) The owner shall not obstruct or interfere with the E
construction in any manner.
c) The owner had to keep the property wholly free from
encumbrances during the currency of the agreement.

d) If the owner's title was found to be defective, owner F
was liable to pay damages, losses and costs to the
builder and its nominees.
e) Owner shall do all acts, deeds and things required to
keep the rights in the land subsisting.
G
.. f) Owner shall not revoke or cancel the agreement cir
power of attorney.

As each party had to discharge and fulfill certain obliga-
tions towards the other in consideration of the other party fulfill-
H
714 SUPREME COURT REPORTS [2008] 10 S.C.R.
f

A ing some certain obligations, the remedy in the event of any
alleged breach, according to the builder, is to sue for specific
performance and/or damages in a civil court and a complaint
under the Act was not maintainable.
12. On the contentions raised, two questions arise for con-
B sideration :

(i) Whether on the facts and circumstances, a complaint
under the Consumer Protection Act, 1986 is
maintainable, in regard to the Agreement dated
c 17.5.1991 ·between the parties
(ii) Whether a complaint is maintainable under the Act
for a prayer seeking delivery of completion certificate
and C&D Forms in regard to a building and whether
the prayer for completion certificate/C&D Forms (,,

D involves a prayer for rectification of the deficiencies
in the building so as to secure the completion
certificate and C&D Forms.
Re : First Question :
E 13. The first question in fact involves examination of the
following issue: 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 be-
tween the owner and the builder, and the developer commits
F any breach either by failing to deliver owner's share of con-
structed area or by constructing the building contrary to specifi-
cations, or by failing to fulfill the obligations relating to comple-
tion certificate or amenities like water, electricity and drainage,
whether the owner can maintain a complaint under the Con-
G sumer Protection Act and whether in such circumstances, the
owner can claim that he is a consumer and the builder is the ..
service- provider.
14. In Lucknow Development Authority vs. M. K. Gupta
[1994 (1) sec 243] referring to the nature and object of the Act,
H this Court observed:
FAQIR CHAND GULATI v. UPPAL AGENCIES 715
• PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]

"To begin with the preamble of the Act, which can afford A
useful assistance to ascertain the legislative intention, it
was enacted, 'to provide for the protection of the interest
of consumers'. Use of the word 'protection' furnishes key
'!
to the minds of makers of the Act. Various definitions and
provisions which elaborately attempt to achieve this B
objective have to be construed in this light without departing
from the settled view that a preamble cannot control
otherwise plain meaning of a provision. In fact the law
meets long felt necessity of protecting the common man
from such wrongs for which the remedy under ordinary law c
for various reasons has become illusory. Various
legislations and regulations permitting the State to
intervene and protect interest of the consumers have
become a haven for unscrupulous ones and the
• enforcement machinery either does not move or it moves
ineffectively, inefficiently and for reasons which are not
D
necessary to be stated. The importance of the Act lies in
promoting welfare of the society by enabling the consumer
to participate directly in the market economy. It attempts
to remove the helplessness of a consumer which he faces
against powerful business, described as, 'a network of E
rackets' or a society in which, 'producers have secured
power' to 'rob the rest' and the might of public bodies
which are degenerating into store house of inaction where
papers do not move from one desk to another as a matter
of duty and responsibility but for extraneous consideration F
leaving the common man helpless, bewildered and
shocked. The malady is becoming so rampant,
widespread and deep that the society instead of bothering,
complaining and fighting for it, is accepting it as part of
life. The enactment in these unbelievable yet harsh realities G
appears to be a silver lining, which may in course of time
succeed in checking the rot. A scrutiny of various definitions
such as 'consumer', 'service', 'trader', 'unfair' trade
practice indicates that legislature has attempted to widen
the reach of the Act. Each of these definitions are in two H
' ' '
. . . . .

716 · · SUPREME COURT. REPORTS ·. •· [2008] 10 S:C.R..
f

A. parts, one, explanatory and the other.expandatory, The
explanatory orthe main part itself uses expressions of
wide amplitude indicating clearly its. wide sweep then its
ambit is widened to such things which otherwise would
have been beyond its natural import.".
'(
B This Court next considered the meaningof the word 'ser-
vice'. Thereafter, this Court dealt with the question whether 'ser-
vice' induded housing construction, ev,en before the inclusion
of 'housing construct!Jn' in the Jefinition of 'service' by Act No.50
of 1993 with effect from 18.6.1993. This Court observed:
c
"What is the meaning of the word 'service'? Does it extend
to deficiency i11 the building of a house or flat? Can a
complaint be. filed under the Act against the statutory
authority or a builder or contractor for any deficiency in
respect of given property. The answer to all this shall
D
understanding of the wo_rd 'servicej.The term has variety •
of meanings. It may mean any benefit or any act resulting
in promoting interest or happiness. It may be contractual,
professional, public,· domestic, legal, statutory etc. The
concept of service thus is very wide. How it should be
E understood and what it means depends in the context in .
which it has been used in an enactment.
What remains to be examined is if housing construction
or building activity carried on by a private or statutory body
F was service within meaning of Clause (o) of Section 2 of
the Act as it stood prior to inclusion of the expression
'housing construction' in the definition of "service" by
Ordinance No. 24 of 1993. As pointed out earlier the entire
purpose of widening the definition is to include in it not
only day to day buying and selling activity undertaken by
G
a common man but even to such activities which are
otherwise not commercial in nature yet they partake of a
character in which some benefit is conferred on the
consumer. Construction of a house or flat is for the benefit
of person for whom it is constructed. He may do it himself
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 717
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]
,
or hire services of a builder or contractor. The latter being A
for consideration is service as defined in the Act. ... If the
service is defective or it is not what was represented then
it would be unfair trade practice as defined' in the Act. Any
defect in construction activity would be denial of comfort
and service to a consumer. When possession of property B
is not delivered within stipulated period the delay so
caused is denial of service. Such disputes or claims are
not in respect of immoveable property as argued but
·deficiency in rendering of service of particular standard,
quality or grade. Such deficiencies or omissions are c
defined in Sub-clause (ii) of Clause (r) of Section 2 as
unfair trade practice. If a builder of a house uses sub-
standard material in construction of a building or makes
false or misleading representation about the condition of
the house then it is denial of the facility or benefit of which
_J D
a consumer is entitled to claim value under the Act. When
the contractor or builder undertakes to erect a house or
flat then it is inherent in it that he shall perform his obligation
as agreed to. A flat with a leaking roof, or cracking wall or
sub-standard floor is denial of service .............. A person
. who applies for allotment of a building site or for a flat E
constructed by the development authority or enters into an
agreement with a builder or a contractor is a potential
user and nature of transaction is covered in the expression
'service of any description'. It further indicates that the
definition is not exhaustive. The inclusive clause succeeded F
in widening its scope but not exhausting the services which
could be covered in earlier part. So any service except
when it is free of charge or under a constraint of personal
service is included in it. Since housing activity is a service
it was covered in the clause as it stood before 1993." G

.J. 15. The predicament faced by the persons who deal with
builders and promoters, was noticed by this Court in Friends Colony
Development Committee vs. State of Orissa [2004 (8) SCC 733]
in a different context while dealing with town planning laws .: ...~;~\
,

~'
H
718 SUPREME COURT REPORTS [2008] 10 S.C.R.
.,
A "Builders violate with impunity the sanctioned building
plans and indulge deviations much to the prejudice of the
planned development of the city and at the peril of the
occupants of the premises constructed or of the inhabitants
of the city at large. Serious threat is posed to ecology and
B environment and, at the same time, the infrastructure·
consisting of water supply, sewerage and traffic movement
facilities suffer unbearable burden and are often thrown
out of gear. Unwary purchasers in search of roof over their
heads and purchasing flats/apartments from builders, find
c themselves having fallen prey and become victims to the
design of unscrupulous builders. The builder conveniently
walks away having pocketed the money leaving behind
the unfortunate occupants to face the music in the event
of unauthorized constructions being detected or exposed
and threatened with demolition. Though the local ·
D authorities have the staff consisting of engineers and
l

inspectors whose duty is to keep a watch on building
activities and to promptly stop the illegal constructions or
deviations coming up, they often fail in discharging their
duty. Either they don't act or do not act promptly or do
E connive at such activities apparently for illegitimate
·considerations. If such activities are to stop, some stringent
actions are required to be taken by ruthlessly demolishing
the illegal constructions and non-compoundable deviations.
The unwary purchasers who shall be the sufferers must be
F adequately compensated by the builder. The arms of the
law must stretch to catch hold of such unscrupulous builders.
At the same time in order to secure vigilant performance
of duties, responsibility should be fixed on the officials
whose duty was to prevent unauthorizep construction, but
G who failed in doing so either by negligence or connivance."
[Emphasis supplied]
16. There is no dispute or doubt that a complaint under
the Act will be maintainable in the following circumstances :
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 719
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]
'1·

(a) Where the owner/holder of a land who has entrusted A
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 B
builder/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 c
Agreements' or 'Collaboration Agreements' between a land-
holder and a Builder. In such transactions, the land-holder pro-
vides the land. The Builder puts up a building. Thereafter, the
land owner and builder share the constructed area. The builder
delivers the 'owner's share' to the land-holder and retains the
D
'Builder's share'. The land-holder 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 Apart-
ment owner becomes the owner of the Apartment with corre-
spending undivided share in the land and an undivided share in
the common areas of the building. In such a contract, the owner's E
share may be a single apartment or several apartments. The
land-holder 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 agree-
ments is that the land-holder will have no say or control in the F
construction. Nor will he have any 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 delivery of his share of
constructed area in accordance with the specifications. The
builders contend that such agreements are neither contracts G
for construction, nor contracts for sale of apartments, but are
4
contracts entered for mutual benefit and profit and in such a
contract, they are not 'service-providers' to the land-owners, but
a co-adventurer with the land-holder in a 'joint venture', in devel-
oping the land by putting up multiple-housing (Apartments) and H
't~
720 SUPREME COURT REPORTS [2008] 10 S.C.R.
_,,

A sharing the benefits of the project. The question is whether such
agreements are truly joint-ventures in the legal sense.
- 17. This Court had occasion to consider the nature of 'joint-
venture' in New Horizons Ltd vs. Union of India [1995 (1) SCC
478). This Court held:
B
"The expression "joint venture" is more frequently used in '
the United States. It connotes a legal entity in the nature of
a partnership engaged in the joint undertaking of a
particular transaction for mutual profit or an association of
c persons or companies jointly undertaking some
commercial enterprise wherein all contribute assets and
share risks. It requires a community of interest in the
performance of the subject matter, a right to direct and
govern the policy in connection therewith, and duty, which
may be altered by agreement, to share both in profit and
D (__
losses. [Black's Law Dictionary; Sixth Edition, p. 839].
~
According to Words and Phrases, Permanent Edition, a
joint venture is an association of two or more persons to
carry out a single business enterprise for profit [P.117,
Vol. 23]."
E
[Emphasis supplied]
The following definition of 'joint venture' occurring in Ameri-
can Jurisprudence [2nd Edition-, Vol.46 pages 19, 22 and 23] is
relevant:
F

"A joint venture is frequently defined as an association of two
or more persons formed to carry out a .single business
enterprise for profit. More specifically, it is in association of
G person_s with intent, by way of contract, express or implied, to
engage in and carry out a single business venture for joint
profit, for which purpose such persons combine their property,
money, effects, skill, and knowledge, without creating a
partnership, a corporation or other business entity, pursuant
to an agreement that there shall be a community of interest
H
(emphasis supplied) G
To the same effect is the definition in Corpus Juris Secun-
dum (Vol. 48A pages 314-315):
"Joint venture," a term used interchangeably and
synonymous with 'joint adventure', or coventure, has been
defined as a special combination of two or more persons H
722 SUPREME COURT REPORTS [2008] 10 S.C.R.
~

A wherein some specific venture for profit is jointly sought
without any actual partnership or corporate designation,
or as an association of two or more persons to carry out
a· single business enterprise for profit or a special
combination of persons undertaking jointly some specific
B adventure for profit, for which purpose they combine their
property, money, effects, skill, and knowledge ........ Among
the acts or conduct which are indicative of a joint venture,
no single one of which is controlling in determining whether
a joint venture exists, are: (1) joint ownership and control
c of property; .(2) sharing of expenses, profits and losses,
and ha.ving and exercising some voice in determining
division of net earnings; (3) community of control over,
and active participation in, management and direction
of business enterprise; (4) intention of parties, express or
implied; and (5) fixing of salaries by joint agreement."
D
(emphasis supplied)
Black's Law Dictionary (7 1h Edition, page 843) defines
'joint venture' thus:

E "Joint Venture : A business undertaking by two or more
persons engaged in a single defined project. The
necessary elements are : (1) an express or implied
agreement; (2) a common purpose that the group intends
to carry out; (3) shared profits and losses; and (4) each '--.

F member's, equal voice in controlling the project."
An illustration of joint venture may be of some assistance.
An agreement between the owner of a land and a builder, for
construc.tion of apartments and sale of those of apartments so
as to share the profits in a particular ratio may be a joint ven-
G tu re, ifthe agreement discloses an intent that both parties shalt
exercise joint control over the construction/development and be
accountable to each other for the!r respective acts with refer-
•
ence to the project.
18. We may now notice the various terms in the agree-
H ~·

}_
I .
FAQIR CHAND GULATI v. UPPAL AGENCIES 723
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]

ment between the appellant and first respondent which militate A
against the same being a 'joint venture'. Firstly, there is a cat-
egorical statement in clause 24, that the agreem~nt shall not be
deemed to constitute a partnership between the owner and the
builder. The land-owner is specifically excluded from manage-
·~
ment and is barred from interfering with the construction in any B
manner (vide clause 15) and the Builder has the exclusive right
to appoint the Architects, contractors and sub-contractors for
the construction (vide clause 16). The Builder is entitled to sell
its share of the building as it deemed fit, without reference to
the land owner. (vide clauses 7 and 13). The builder undertakes
to the landowner that it will construct the building within 12 months
c
from the date of sanction of building plan and deliver the owner's
share to the land owner (vide clauses 9 & 14). The Builder alone
is responsible to pay penalties in respect of deviations (vide
clause 12) and for payment of compensation under the
D
Workmen's Compensation Act in case of accident (vide clause
10). Secondly, there is no community of interest or·common/
joint control in the management, nor sharing of profits and losses.
The land owner has no control or participation in the manage-
ment of the venture. The requirement of each joint venturer be-
ing the principal as well as agent of the other party is also sig- E
nificantly absent. We are therefore of the view that such an
agreement is not a joint venture, as understood in law.

,,. 19. What then is the nature of the agreement between the
appellant and the first respondent? Appellant is the owner of F
; the land. He wants a new house, but is not able to construct a
new house for himself either on account of paucity of funds or
lack of expertise or resources. H~, therefore, enters into an
agreement with the builder. He asks the builder to construct a
house and give it to him. He says that as he does not have the
G
money to pay for the construction and will therefore permit the
builder to construct and own additional floor/s as consideration .
....
He also agrees to transfer an undivided share in the land corre-

..,
sponding to the additional floor/s which falls to the share of the
builder. As a result, instead of being the full owner of the land
H
724 SUPREME COURT REPORTS (2008] 10 S.C.R.

A with an old building, he becomes a co-owner of the land with a
one-third share in the land and absolute owner of the ground
floor of the r1ewly constructed building and a~rees that the builder
will become the owner of the upper floors with corresponding
two-third share in the land. As the cost of the undivided two-
B third share in the land which the land owner agrees to transfer
to the builder, is more than the cost of construction of the ground
floor by the builder for the landowner, it is also mutually agreed
that the builder will pay the landowner an additional cash con-
sideration of Rs.8 lakhs. The basic underlying purpose of the
c agreement is the construction of a house or an apartment
(ground floor) in accordance with the specifications, by the
builder for the owner, the consideration for such construction
being the transfer of undivided share in land to the builder and
grant of permission to the builder to construct two floors. Such
agreement whether called as a 'collaboration agreement' or a
0
'joint-venture agreement', is not however a 'joint-venture'. There
is a contract for construction of an apartment or house for the
appellant, in accordance with the specifications and in terms of
the contract. The're is a consideration for such construction, flow-
ing from the landowner to the builder (in the form of sale of an
E undivided share in the land and permission to construct and
own the upper floors). To adjust the value of the extent of land to
be transferred, there is also payment of cash consideration by
the builder. But the important aspect is the availment of ser- ....
vices of the builder by the land-owner for a house construction
F (construction of owner's share of the building) for a consider-
ation. To that extent, the land-owner is a consumer, the builder
is a service-provider and if there is deficiency in service in re-
gard to construction, the dispute raised by the land owner will
be a consumer dispute. We may mention that it makes no dif-
G · ference for this purpose whether the collaboration agreement
is for construction and delivery of one apartment or one floor to
the owner or whether it is for construction and delivery of mul-
tiple apartments or more than one floor to the owner. The prin-
ciple would be the same and the contract will be considered as
H one for house construction for consideration. The deciding fac- (
FAQiR CHAND GULATI v. UPPAL AGENCIES 725
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]

· tor is not the number of apartments deliverable to the land owner, A
but whether the agreement is in the nature of a joint-venture or
whether the agreement is basically for construction of certain
area for the land-owner.
20. It is however true that where the contract is a true joint
venture the scope of which has been pointed out in para 17 B
above, the position will be different. In a true joint venture agree-
ment between the land-owner and another (whether a recog-
nized builder or fund provider), the land-owner is a true partner
or co-adventurer in the venture where the land owner has a say
or control in the construction and participates in the business C
and management of the joint venture, and has a share in-the
profit/loss of the venture. In such a case, the land owner is not a
consumer nor is the other co-adventurer in the joint venture, a
service provider. The land owner himself is responsible for the
construction as a co-adventurer in the venture. But such. true D
joint ventures are comparatively rare. What is more prevalent
are agreements of the nature found in this case, which are a
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 E
the control and management of the business or the control over
the construction with the land owners. Except assuring the land
owner a certain constructed area and/or certain cash consider-
ation, the builder ensures absolute control in himself, only as-
suring the quality of construction and compliance with the re- F
quirements of local and municipal laws, and undertaking to de-
liver the owners' constructed area of the building with all certifi-
cates, clearances and approvals to the land owner.
21. Learned counsel for the respondent contended that
the agreement was titled as "collaboration agreement" which G
shows an intention to collaborate and therefore it is a joint ven-
ture. It is now well settled that the title or caption or the nomen-
clature of the instrument/document is not determinative of the
nature and character of the instrument/document, though the
name may usually give some indication of the nature of the docu- H
726 SUPREME COURT REPORTS (2008] 10 S.C.R.

"
A ment. The nature and true purpose of a document has to be
determined with reference to the terms of the document, which
express the intention of the parties. Therefore, the use of the
words 'joint venture' or 'collaboration' in the title of an agree-
ment or even in the body of the agreement will not make the
B transaction a joint venture, if there are no provisions for shared 1

control of interest or enterprise and shared liability for losses.
22. The State Commission and National Commission have
proceeded on an assumption, which appears to be clearly base-
less, that wherever there is an agreement for development of a
c property between the property owner and builder under which
the constructed area is to be divided, it would automatically
amount to a joint venture and there is no question of the land-
holder availing the service of the builder for consideration. Re-
liance was placed on two decisions, the first being that of the
D National Commission in C Narasimha Rao v. KR Neelakandan
- I (1994) CPJ 160 and the second being that of the Delhi State
Commission in Har Sarup Gupta v. Mis. Kai/ash Nath· & As-
sociates - II (1995) CPJ 275. In C Narasimha Rao, there was
an agreement between the landowners and a builder for con- ·
E struction of a building and sharing of the constructed area. The
· old building was demolished, but the builder failed to complete
the construction of a new building and hand over the owner's
share of flats. The landowners preferred a complaint claiming
,r-
,_
Rs.94,000/- as the value of the malba (retrievable valuables "
F from the debris of the old building) that had been removed by
the builder. The National Commission held that as the claim
was for recovery of the money being value of the ma Iba removed
by the builder, it does not amount to a claim based on defi-
ciency of service and therefore such a claim would fall outside
the scope of the Consumer Protectlon Act. The said decision is
G
wholly>frtapplicable, as it dealt with a different question. In Har
Swarup Gupta., the State Commission was concerned with a ;.

claim of the landowners for compensation alleging that the
builder had not built the flats in terrr_1s of the contract under which
the landowners were entitled t6,~¥}:S'l/o and the builder was en-
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 727
PVT. LTD. & ANR. [R. V. RAVEENDRAN J.]

titled to 64% of the built up area. The State Commission held A
that the complaint was not maintainable on the ground that on
similar facts the National Commission in Narasimha Rao's
case (supra) had held that the fora under the Consumer Protec-
tion Act did not have jurisdiction. But Narasimha Rao (supra),
as noticed above, was not similar on facts, nor did it lay down B
any such proposition. Har Swarup Gupta is clearly wrongly de-
cided.
23. We may notice here that if there is a breach by the
landowner of his obligations, the builder will have to approach a
civil court as the landowner is not providing any service to the c
builder but merely undertakes certain obligations towards the
builder, breach of which would furnish a cause of action for spe-
cific performance and/or damages. On the other hand, where
the builder commits breach of his obligations, the owner has
two options. He has the right to enforce specific performance D
and/or claim damages by approaching the civil court. Or he
can approach the Forum under Consumer Protection Act, for
relief as consumer, against the builder as a service:. provider.
Section 3 of the Act makes it clear that the remedy available
under the Act is in addition to the normal remedy or other rem- E
edy that may be available to the complainant.
24. The District Forum, the State Commission and the
\
National Commission committed a serious error in wrongly as-
suming that agreements of this nature being in the nature of
" )
joint venture are outside the scope of consumer disputes. F

Re : Second Question
25. Under the agreement, the builder is required to con-
struct the ground floor in accordance with the sanctioned plan,
and specifications and the terms in the agreement and deliver G

- the same to the owner. If the construction is part of a building
which in law requires a completion certificate or C&D forms
(relating to assessment), the builder is bound to provide the
completion certificate or C&D forms. He is also bound to pro-
...
vide amenities and facilities like water, electricity and drainfge H
728 SUPREME COURT REPORTS [2008) 10 S.C.R.

A in terms of the agreement. If the completion certificate and C&D
forms are not being issued by the Corporation because the
builder has m_ade deviations/violations in construction, it is his
duty to rectify those deviations or bring the deviations within per-
missible limits and secure a completion certificate and C&D forms
B from MCD. The builder can not say that he has constructed a
ground floor and delivered it and therefore fulfilled his obligations.
Nor can the builder contend that he is not bound to produce the
completion certificate, but only bound to apply for completion
. certificate. He cannot say that he is not concerned whether the
c building is in accordance with the sanction plan or not, whether it
fulfills the requirements of the municipal bye-laws or not, or whether
there are violations or deviations. The builder cannot be permit-
ted to avoid or escape the consequences of his illegal acts. The .
obligation on the part .of the builder to secure a sanctioned.plan
and construct a building, carries with it an implied obligation to
0
comply with the requirements of municipal and building laws and
secure the mandatory permissions/certificates.
26. The surviving prayer is no doubt only for a direction to
the builder to furnish the completion certificate and C&D forms.
E It.is not disputed that a building of this nature requires a comple-
tion certificate and building assessment (C&D forms). The
completion certificate and C&D forms will not be issued if the
building constructed is contrary to the bye-laws and.sanctioned
plan or if the deviations are beyond the permissible compound-
F able limits. The agreement clearly contemplates the builder
completing the construction and securing completion certificate.
The agreement, in fact, refers to the possibility of deviations
and provides that if there are deviations, the builder will have to
pay the penalties, that is do whatever is necessary to get the
.G same regularized. Even if such a provision for providing comple-
tion certificate or payment of penalties is not found in the agree-
ment, the builder cannot escape the liability for securing the
completion certificate and providing a copy thereof to the owner
if the law requires the builder to obtain completion certificate
for such a building.
H
FAQIR CHAND GULATI v. UPPAL AGENCIES 729
..
•
PVT. LTD. & ANR.. [R. V. RAVEENDRAN J.]

27. A prayer for completion certificate and C&D Forms A
cannot be brushed aside by stating that the builder has already
. applied for the completion certificate or C&D Forms. If it is not
issued, the builde.r owes a duty to make necessary application
and obtain it. If it is wrongly withheld, he may have to approach
,{' the appropriate court or other forum to secure it. If it is justifiably B
withheld or refused, necessarily the builder will have to do what-
ever that is required to be done to bring the building in conso-
nance with the sanctioned plan so that the municipal authorities
can inspect and issue the completion ce1iificate and also as-
sess the property to tax. If the builder fails to do so, he will be c
liable to compensate the complainant for all loss/damage. There-
fore, the assumption of the State Commission and National Com-
mission that the obligation of the builder was discharged when
he merely applied for a completion certificate is incorrect.
Conclusion D
' 28. The District Forum and National Commission did not
examine the matter with reference to facts. The State Commis-
sion held that the complaint was not maintainable but purported
to consider the factual question in a half-hearted and casual
manner. The matter will now have to go back to District Forum E
for deciding the matter on merits. We, accordingly, allow this
appeal as follows :

a) The orders of the National Commission, State
Commission and District Forum are set aside. F
b) The appellant's complaint is held to be maintainable.
c) The District Forum is directed to consider the matter
on merits and dispose of the' matter in accordance
with law, within six months from the date of receipt of
G
this order.
t. d) The respondents shall pay costs of Rs.25,000/- to
the appellant.

S.K.S. Appeal allowed.
H