Disputes Involving Fraud, Other Complex Matters Can't Be Discussed By Consumer Fora: NCDRC

The National Consumer Disputes Redressal Commission, presided over by Mr. Inder Jit Singh and Dr. Sadhna Shanker, held that complex matters like civil and criminal disputes doe not fall under the ambit of Consumer Protection Act 1986. Brief Facts of the Case The complainants first bought a small plot at Undri, Pune, for ₹18 lakhs from Shree Vinayaka Developers/developer and got the sale deed. Later, they agreed to buy a bigger plot of 7000 sq. ft. at a nearby site. They signed an MoU and paid a total of ₹50 lakhs in installments. Despite full payment, the developer did not execute the sale deed. One partner of the firm later disappeared, and a notice was published saying he was no longer a partner. The complainants claimed this was an attempt to escape responsibility. They approached the State Commission of Maharashtra, alleging deficiency in service and unfair trade practice, and sought compensation, execution of sale deed, and possession of the land. The State Commission dismissed the complaint. Subsequently, the complainant filed an appeal before the National Commission. Contentions of the developer The developer argued that the complainants were real estate agents and not consumers. They said the transaction was a personal deal between the complainants and one partner, Mr. Mandera, who signed the MoU in his individual name. They added that no money was paid to the firm, only to Mr. Mandera, who was going through financial issues. The firm had already warned the public against Mr. Mandera. They claimed the complainants had full knowledge of the fraud and had even filed an FIR, so this was not a consumer dispute. They said the issue involves fraud and should go to civil or criminal court, not the consumer forum. Observations by the National Commission The National Commission observed that the complainants were in the business of real estate and had bought the property for commercial purposes, so they were not “consumers” under the Consumer Protection Act, 1986. It noted that the MoU was signed only by Mr. Mandera in his personal capacity, and there was no evidence that the firm or other partners were involved. Clause 4 of the MoU showed he sold the land due to personal financial trouble. The complainants had also filed an FIR admitting fraud by Mr. Mandera and knew about the partnership deed, which required firm transactions to be in the firm's name. The Commission referred to Laxmi Engineering Works v. P.S.G. Industrial Institute (1995) 3 SCC 583, stating commercial transactions are not covered under the Act. It also cited Paramjeet Singh v. National Insurance Co. Ltd. (2019) 7 SCC 244 and Chetan Arvind Mehta v. Inspector General of Police, 2020 SCC OnLine NCDRC 325, to stress that fraud and complex facts must be handled by civil or criminal courts. The Commission held that the complainants were not consumers, the dispute involved fraud, and the matter was not fit for a consumer forum. It upheld the State Commission's dismissal and dismissed the appeal. Case Title: Mrs. Rajni Suryakant Gujar Vs. Shree Vinayaka Developers Case Number: F.A. No. 89 of 2017Click Here To Read/Download Order

Disputes Involving Fraud, Other Complex Matters Can't Be Discussed By Consumer Fora: NCDRC

Ayushi Rani

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