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March 2013

Plots for sale with assurance of subsequent development on such plots is not mere transfer of immovable property – it is a ‘service’ as per the provisions of Consumer Protection Act, 1986.

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Facts

Appellants were offering plots of land for sale with assurance of layout approvals of development of infrastructure/amenities, etc. as a package. The question for consideration before the Apex Court was, can such activities be regarded as a ‘service’ within the meaning of clause (o) of section 2(1) of the Consumer Protection Act, 1986 (the Act) and, therefore, can the buyer of such plots be regarded as a “consumer of service” and consequently be eligible for relief/s under the Act?

Held

 The Honourable Supreme Court, relying upon its own decisions viz. Lucknow Development Authority (1994) 1 SCC 243 and Bangalore Development Authority (2007) 6 SCC 711, held that activities of offering plots of land for sale with assurance of layout approvals of development of infrastructure/ amenities etc. as a package would be regarded as a ‘service’ within the meaning of clause (o) of section 2(1) of the Consumer Protection Act, 1986 and consequently buyers of such plot would be eligible for relief/s under the said Act.

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