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Association for Consumer Welfare and Aid v. Granite Gate Properties Private Limited

Civil Appeal · 2019 INSC 397Decided 25 Mar 2019
Civil Appeal No. 259 of 2019
Dr. Justice D.Y. Chandrachud · Justice Hemant Gupta

Background

A consumers' association filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC) on behalf of flat buyers of a residential project ("Lotus Panache"), seeking possession of flats and other reliefs against two linked companies that together marketed themselves as "The 3C Company." The NCDRC deleted one of the two companies, Three C Universal Developers Pvt. Ltd., from the case, reasoning that the buyers had not directly hired or dealt with it. The consumers' association appealed, arguing that under the Real Estate (Regulation and Development) Act, 2016's definition of "promoter," an entity that actually constructs and develops a project can be jointly liable even if buyers' agreements were signed with a different, related company.

Decision Breakdown

The Supreme Court held that at this preliminary stage, the material on record, including that the deleted company had formed the other company as a special-purpose vehicle for this very project and had jointly marketed it, made it impossible to conclude the deleted company had no connection with the project or was wrongly impleaded. The Court found no basis to remove it from the proceedings at this stage, allowed the appeal, set aside the NCDRC's deletion order, and restored the company as a party, while leaving all substantive rights and contentions open to be argued before the NCDRC when the complaint is finally heard.

Lesson Learnt

A real-estate developer cannot escape a consumer complaint simply by arguing that buyers signed paperwork with only one group company, where companies market and structure a project jointly, both can be kept in the case to let the consumer forum decide actual liability on merits.

Official source (sci.gov.in)View Judgment (PDF)

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