NCDRC Rules Auction Allottees Not Consumers Under Consumer Protection Act; Dismisses Complaint Against Kanhangad Municipality
Pranav B Prem
The National Consumer Disputes Redressal Commission (NCDRC), bench comprising AVM J. Rajendra (Presiding Member) and Anoop Mendiratta (Member), held that an auction allottee of property does not qualify as a consumer under the Consumer Protection Act, 2019. The Commission ruled that disputes arising from property auction allotments do not constitute a consumer-service provider relationship and therefore fall outside the jurisdiction of consumer fora.
Background
The case involved a complaint filed by K.M. George, who participated in an auction conducted by the Kanhangad Municipality for the allotment of Stall No. 8. The complainant paid ₹1,00,000 as earnest money on 28 November 2007, and his bid was confirmed with the assurance that possession would be handed over before 15 December 2007. Relying on this assurance, the complainant made arrangements to start a bakery business and paid advance amounts for goods. However, the municipality failed to deliver possession within the stipulated time, citing a pending writ petition filed by the previous tenant before the Kerala High Court. Even after the writ petition was disposed of, the municipality did not hand over possession promptly.
Later, the complainant issued a legal notice and subsequently filed a writ petition before the Kerala High Court, which directed the municipality to consider his representation. Despite this, the municipality asked him to take possession only after executing an agreement and warned that failure to do so would lead to forfeiture of the ₹1 lakh deposit. The complainant took possession under protest but claimed that the room was in poor condition, requiring repairs amounting to ₹37,000, which he carried out at his own expense after assurances that the municipality would adjust the amount. Subsequently, he received a notice demanding ₹1,69,332 as arrears of rent, and when he failed to pay, his license was cancelled.
The complainant alleged deficiency in service and approached the Kerala State Consumer Disputes Redressal Commission, which partly allowed his complaint. The State Commission directed the municipality to refund ₹1,00,000 without deducting rent and to pay ₹55,000 as compensation and costs. Dissatisfied, the complainant appealed before the NCDRC, seeking interest on the refund and enhanced compensation.
Submissions
Complainant’s Contentions
The complainant argued that he had acted on the municipality’s assurance and suffered significant financial loss due to the delayed possession and the poor condition of the allotted room. He contended that the State Commission erred in not awarding interest on the refund amount, which was wrongfully retained for more than a decade. It was also submitted that his wife had availed a loan of ₹5.6 lakhs to establish the bakery, and the municipality’s conduct caused serious hardship.
Opposite Parties’ Contentions
The Kanhangad Municipality, represented by its Secretary and Chairman, denied the allegations and argued that the complainant was not entitled to any relief under the Consumer Protection Act. It submitted that the complainant was an auction purchaser, not a consumer, and that the relationship was purely contractual, governed by auction terms and municipal rules. It was further submitted that despite multiple opportunities, the complainant failed to execute the agreement in time and defaulted on rent payments, which led to the cancellation of his license. The municipality contended that the room was handed over as per the terms and that the complainant’s business failure was due to his own non-compliance.
Observations of the Commission
After examining the facts and rival submissions, the NCDRC held that the core dispute arose out of an auction allotment of property and that such transactions do not create a consumer-service provider relationship under the Act. The Commission placed reliance on the Supreme Court’s ruling in UT Chandigarh Administration v. Amarjeet Singh [(2009) 4 SCC 660], where it was held that an auction purchaser cannot claim to be a consumer merely because he participated in a government auction or was allotted property through it. Quoting from the Supreme Court judgment, the Commission reiterated: “An auction purchaser participates voluntarily, knowing the terms of the auction. Such transactions do not constitute hiring or availing of services for consideration within the meaning of the Consumer Protection Act.”
Applying this principle, the NCDRC observed that the complainant’s participation in the municipal auction was governed by the terms of the bid and the Municipal Act, not by the provisions of the Consumer Protection Act. The bench noted: “The relationship between the complainant and the Kanhangad Municipality cannot be termed as that of a consumer and service provider. The dispute relates purely to an auction transaction governed by statutory terms, and thus falls outside the ambit of the Consumer Protection Act.”
Holding that an auction allottee cannot be treated as a consumer, the NCDRC ruled that the complaint before the State Commission itself was not maintainable. Consequently, the appeal filed by the complainant was dismissed, and the State Commission’s order was set aside. The Commission concluded that disputes arising out of auction allotments are civil or contractual in nature and must be adjudicated through appropriate civil or writ proceedings, not under the Consumer Protection Act, 2019. “The complainant being an auction allottee does not qualify as a consumer. Hence, the complaint and the appeal filed before the consumer fora are not maintainable,” the bench held.
Appearance
For the Complainant: Ms. Anubha Aggarwal
For the Opposite Party: Ms. Anna Oommen
Cause Title: KM George vs Secretary, Kanhangad municipality
Case No: First Appeal 1408 of 2021
Coram: AVM J. Rajendra (Presiding Member), Anoop Mendiratta (Member)
