Landmark judgements

ISSUE- IN JOINT VENTURE WITH BUILDER ,WHETHER CONSUMER ,WHETHER COMMERCIAL PURPOSE





IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 944 OF 2016

(@ Special Leave Petition (Civil) No.1633 of 2015)

ISSUE- IN JOINT VENTURE WITH BUILDER ,WHETHER CONSUMER ,WHETHER COMMERCIAL PURPOSE

BUNGA DANIEL BABU Appellant (s)

VERSUS

M/S SRI VASUDEVA CONSTRUCTIONS Respondent(s)

& ORS

J U D G M E N T

Dipak Misra, J.

The judgement and order passed by the National Consumer Disputes Redressal Commission, New Delhi in Revision Petition No. 258 of 2013whereby the said Commission has approved the decision of the State Consumer Disputes Redressal Commission, Hyderabad which had reversed the view of the District Consumer Forum that the complainant is a “consumer” within the definition under Section 2(1)(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 of legal principles stated in Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd. and anr.1. The State Commission 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.

SUPREME COURT HOLDS

. 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  venture, as has been explained in Faqir Chand Gulati (supra).Hence by just naming this a joint venture ,agreement does not become joint venture ,complainant is a consumer,matter does not fall under commercial purpose.

SC Holds

“ to appreciate the heart of the dispute, we think it apposite to x-ray the definition of the term “consumer’ An agreement between the owner of a land and a builder, for construction of apartments and sale of those apartments so as to share the profits in a particular ratio may be a joint venture, if the 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. Contracts entered for mutual benefit and profit and in such a contract, they are not “service providers” to the landowners.”

But the facts of the case were not so. What is required to be scrutinized 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 26 venture, as has been explained in Faqir Chand Gulati (supra). 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 choice of a value of 27 Rs.6, 00,000/- in the fourth floor of the said building in favour of the builder or his nominee towards the cost of the items

It is actually consideration for construction but not an arrangement of sharing profit and was in no way joint venture The 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 body of the agreement will not make the transaction a joint venture, if there are no provisions for shared control of interest or enterprise and shared liability for losses. The only point considered by the state commission and national commission for considering the case under joint venture was the words used collaboration agreement and sale of four flats by the complainant which is clarified by the court it is actually consideration for construction but not an arrangement of sharing profit and was in no way joint venture.

Hence we appreciate that it is the actual facts and not the title of the agreement which determines the nature of contract

 

 

 

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