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Part – Newstatenabenn

NCDRC dismisses petition against Urban Improvement Trust, Bikaner
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NCDRC dismisses petition against Urban Improvement Trust, Bikaner

The National Consumer Disputes Redressal Commission, chaired by AVM J. Rajendra, held that a buyer in an auction is not a consumer and complaints arising out of public auctions do not fall under the jurisdiction of the consumer.

Brief facts of the case

The complainant participated in an auction organized by the Urban Improvement Trust/developer for residential land and purchased a land by paying 25% of the total amount on the spot. The promoter acknowledged the payment and approved the auction. However, when the complainant visited the plot, he found it occupied by another individual, with a sign with his name already posted. Further investigation revealed that a legal dispute over the plot was pending, with a stay order issued by the court. Despite this, the developer issued a demand notice for payment of the balance. In response, the complainant requested an on-site inspection and demarcation of the plot, requesting physical possession only after the issue was resolved. The developer took no action. The plaintiff then requested the return of the deposited amount with interest, but the developer only agreed to refund the amount without interest after almost three years. The plaintiff argued that the developer was aware of the legal dispute at the time of the auction, but proceeded with the sale, causing him a financial loss. He claimed that this constituted a deficiency in service and an unfair trade practice, prompting him to file a consumer complaint with the District Forum. The District Forum accepted the complaint and directed the developer to pay to the complainant interest at the rate of 9% per annum on the amount of Rs. 4,33,000 along with Rs. 20,000 for mental agony and Rs. 5,000 for litigation costs. Aggrieved, the promoter filed an appeal before the Rajasthan State Commission, which dismissed the appeal. Consequently, the developer filed an appeal for review before the National Commission.

Developer arguments

The developer argued that the complaint is not maintainable because an auction buyer is not a consumer under the law, as held by the Supreme Court and the NCDRC. The developer stated that auction disputes, including refunds or possession, cannot be treated as consumer disputes. The auction was carried out “as is”, and the complainant was aware of the risks. The developer refunded Rs. 4,33,000 without forfeiture, acting fairly, but legally could not grant interest. The developer argued that the district and state commissions exceeded their jurisdiction by focusing on interests, since the matter was a civil dispute, not a consumer case.

Observations of the National Commission

The National Commission observed that the complainant, who purchased land at an auction organized by the developer, is not a consumer under the Consumer Protection Act. The plaintiff paid 25% of the price of the land, but later discovered that the land was under legal dispute and could not be transferred. Despite this, the promoter demanded the remaining payment. The Supreme Court, in UT Chandigarh Administration and Anr. v. Amarjeet Singh and Ors.held that a buyer at auction is not a consumer and that claims arising from public auctions do not fall within the jurisdiction of the consumer. The Commission also cited Mohd Siddique Khan vs. Forest Division Officerreinforcing the view that auction buyers do not consider themselves consumers. As a result, the review petition was allowed and the orders of the District and State Commissions were set aside. The plaintiff’s case was dismissed, but he retains the right to seek relief in the appropriate legal forums.

Case title: Urban Improvement Trust, Bikaner vs. Babulal Jat

Case number: RP No. 1057/2020

Click here to read/download the order