National Commission Upholds Senior Citizens' Rights as Consumers in Real Estate Dispute
In a landmark decision, the National Consumer Disputes Redressal Commission has ruled in favor of senior citizens and retired individuals who were denied consumer status in a real estate dispute. The case involves a developer's failure to deliver on promises of assured rental income and timely possession of a studio apartment in Greater Noida.
Background of the Case
The complainants, Mr. Shailendra Bhardwaj and Mrs. Chandra Prabha Sharma, being senior citizens dependent on pension and limited family income, were induced by the respondent, M/s Imperia Structures Ltd., to book a studio apartment in their project "Imperia Residency" at Greater Noida, Uttar Pradesh. The developer promised that the project would be completed within the stipulated period and that the unit would generate an assured monthly rental income.
Accordingly, the complainants entered into a Memorandum of Understanding dated May 13, 2010, for allotment of a 1 BHK Studio Apartment bearing No. C-413 admeasuring about 425 sq. ft. for a total consideration of Rs. 11,94,300. Pursuant to this, the complainants made payments from time to time and by May 2012, as pleaded in the complaint, had paid a total sum of Rs. 15,17,987 towards the said unit.
Promises Made and Broken
As per the MoU, the complainant was to receive an assured monthly return of Rs. 11,943, payable with effect from June 2010 until the date of occupation. The construction was to be completed by June 30, 2012, after which the complainants were to receive an assured rent of Rs. 18,000 per month, proposed through arrangements with Hotel Clarks and later with M/s Growmore Solutions Pvt. Ltd.
However, despite receipt of substantial amounts, the respondent failed to complete the construction of the project within the promised time, failed to hand over possession of the said studio apartment, and also failed to arrange or pay the assured monthly rental income as promised. This caused continuous financial loss to the complainants who had invested their lifetime savings in the project.
In response to a demand letter from the OP dated April 18, 2012, demanding Rs. 323,687 and asking consent for lease arrangement with Growmore for a lower-than-assured monthly lease rent of only Rs. 8,500, the complainants paid the amount within two months and accepted the proposal, even waiving the interest on unpaid assured returns. Yet, the OP could neither complete the construction by the promised date of June 2012, nor paid or arranged the promised or even the reduced rental of Rs. 8,500 per month because the project itself did not progress as promised.
Legal Battle and Initial Setback
The complainants approached the respondent through letters, emails, and a legal notice demanding completion of construction, delivery of possession, and payment of assured returns, but the respondent avoided compliance on various pretexts. The complaint was filed before the State Commission on February 9, 2017, seeking a refund of Rs. 15,17,987 along with interest, compensation for financial loss due to negligence on account of loss of rent, and further compensation for mental agony, aggregating to a total claim of Rs. 42,60,337, along with cost of litigation.
Initially, the State Commission dismissed the complaint, holding that the transaction was entered into by the complainant for commercial purpose and hence he would not be eligible as a complainant within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. This decision was based on the claim that earning assured rental income made the transaction commercial in nature.
National Commission's Groundbreaking Ruling
The National Commission, in its judgment dated January 5, 2026, set aside the State Commission's order. The bench comprising Hon'ble Mr. Justice A.P. Sahi, President, and Hon'ble Mr. Bharatkumar Pandya, Member, ruled that:
- The transaction was not commercial; it was personal and intended for residential use and livelihood support.
- The complainants fall within the definition of "consumer" under the Act.
- The State Commission erred in dismissing the complaint on maintainability grounds.
The National Commission emphasized the 'dominant purpose test,' noting that the complainants' intent was personal use and livelihood support, not commercial enterprise. The court clarified that expecting rental returns does not automatically make a transaction commercial. Since the complainants were not engaged in any regular business activity related to renting, they remained protected consumers under the law.
Restoration and Future Proceedings
The complaint was restored to its original number with the State Commission, which was instructed to decide the matter on merits after giving both parties the opportunity to present their case. This ruling sets an important precedent for similar cases where vulnerable groups like senior citizens are denied consumer protection based on technical interpretations of commercial intent.
The National Commission's decision reinforces the protective intent of consumer laws, particularly for those who rely on such investments for their livelihood in retirement years. The case highlights the importance of proper scrutiny of real estate developers' promises and the legal recourse available to aggrieved consumers.
