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Sobha Hibiscus Condominium v. Managing Director, M/s. Sobha Developers Ltd.

Civil Appeal · 2020 INSC 189Decided 14 Feb 2020
Civil Appeal No. 1118 of 2016
Justice Mohan M. Shantanagoudar · Justice R. Subhash Reddy

Background

Sobha Hibiscus Condominium is a body of flat owners of the "Sobha Hibiscus" apartment complex in Bangalore, formed as required under the Karnataka Apartment Ownership Act, 1972 after the builder executed a statutory "Declaration" under that Act. The Condominium filed a consumer complaint against the builder before the National Consumer Disputes Redressal Commission (NCDRC), which rejected it at the threshold, holding the Condominium was neither a "consumer" nor a "recognised consumer association" under the Consumer Protection Act, 1986, and therefore had no standing to sue. The Condominium appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that a "recognised consumer association" under Section 12(1)(b) of the 1986 Act must be a voluntary association registered under the Companies Act or similar law. Since the Condominium came into existence only because the 1972 Act compulsorily required such a declaration and bye-laws once flats were sold, not out of the members' free choice to associate, it could not be termed a "voluntary" association. It also did not fit the definition of "consumer" under Section 2(1)(d), since it had not itself bought goods or services. On this reasoning, the Court agreed with the NCDRC that the Condominium lacked locus standi, and dismissed the appeal with no order as to costs.

Lesson Learnt

An apartment owners' body created automatically under a state apartment-ownership statute (rather than voluntarily registered by its members) cannot sue builders as a "consumer association" in consumer fora: individual flat owners, or a genuinely voluntary registered association of them, must pursue such claims themselves.

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

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