Consumer Complaint By Flat Purchaser Cannot Be Dismissed Citing "Commercial Purpose" Merely Because He Leased It Out: Supreme Court
The appeal before the Supreme Court was filed against the judgment of the National Consumer Disputes Redressal Commission, dismissing the consumer complaint preferred by the appellants.
Supreme Court, Justice Prashant Kumar Mishra, Justice N.V. Anjaria
The Supreme Court has held that the mere act of purchasing immovable property, even multiple units, cannot ipso facto attract the exclusion clause of Section 2(1)(d) of the Consumer Protection Act, 1986, to exclude the buyer from the definition of consumer unless it is proved that the dominant purpose behind such purchase was commercial in nature.
The Apex Court held that the NCDRC erred in dismissing the complaint on the premise that the litigant did not fall under the definition of ‘consumer’ for leasing out the subject property.
The appeal before the Apex Court was filed against the judgment passed by the National Consumer Disputes Redressal Commission, dismissing the consumer complaint preferred by the appellants.
The Division Bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria held,"In the light of the aforesaid adjudications and for the reasons discussed hereinbefore, we are of the considered view that the NCDRC has erred in dismissing the appellants’ complaint. The onus of proving that the appellants fall within the exclusion clause of Section 2(1)(d) of the 1986 Act rests upon the respondents, and the respondents have failed to discharge this onus on a preponderance of probabilities."
“The question of what constitutes ‘commercial purpose’ is a question of fact to be decided in the circumstances of each case based on the purpose to which the goods/properties were purchased. It must be emphasized that the mere act of purchasing immovable property, even multiple units, cannot ipso facto attract the exclusion clause of Section 2(1)(d) of the 1986 Act unless and until it is proved that the dominant purpose behind such purchase was commercial in nature. In absence of such proof, the appellants cannot be excluded from the definition of ‘consumer’ under the 1986 Act", it added.
Factual Background
The appellants filed a complaint before the NCDRC seeking a direction to the respondents to pay Rs 1,59,89,994 along with certain other amounts as compensation for mental harassment, change in location of Tower C, excess amount realised towards fixtures and fittings and litigation costs. The respondents launched a group housing project in the name of ‘The Villas’ at Village Sahraul, Sector-25, Gurgaon, in the year 2005. The appellants deposited the booking amount and were allotted one Unit and a Flat Buyer’s Agreement was executed in favour of the appellants and Clause 9.1 of the Agreement. It was the appellants’ case that the due date of possession expired, and the respondents unilaterally changed the layout plan of Tower-C without informing the buyers.
The appellants also alleged that the respondents raised a demand for Rs 10,82,000 and, subsequently, on multiple occasions, the respondents demanded payments and the appellants obliged to the same under protest and took possession of the flat in 2015. In 2017, the appellants filed the subject complaint alleging a deficiency in service and unfair trade practice. The NCDRC concluded that the appellants did not fall under the definition of ‘consumer’ as they leased the said flat premises to Sunil Raman, and the said act was considered as a commercial purpose. It was the appellants’ case that the residential unit purchased by the appellants was purely purchased for personal usage, and the NCDRC had committed an error in observing that the subject premises were purchased for commercial usage.
Reasoning
Referring to the definition of ‘consumer’ as mentioned under Section 2(1)(d) of the 1986 Act, the Bench explained that the term ‘consumer’ encompasses any person who buys goods or avails services for consideration, but excludes a person who obtains such goods for resale or for any commercial purpose. The Bench made it clear that the Explanation to the said clause clarifies that ‘commercial purpose’ does not include use by a person of goods bought and used by him exclusively for the purposes of earning his livelihood by means of self-employment. “While the 1986 Act does not exhaustively define ‘commercial purpose’, though the Explanation to Section 2(1)(d) carves out an exception for self-employment and earning livelihood, the dominant intention or dominant purpose of the transaction is determinative of whether the purchaser falls within the exclusion clause”, it added.
The Bench explained, “The onus of proving that the appellants fall within the exclusion clause of Section 2(1)(d) of the 1986 Act rests upon the respondents, and the respondents have failed to discharge this onus on a preponderance of probabilities. The determinative question is whether the dominant intention or dominant purpose behind purchasing the flat was to facilitate profit generation through commercial activity, and whether there exists a close and direct nexus between the purchase and such profit-generating activity. The respondents have not placed any cogent material on record to establish such nexus. The mere factum of leasing out the flat does not, by itself, demonstrate that the appellants purchased the property with the dominant purpose of engaging in commercial activity.”
Holding that the complaint case needed consideration on merits by the NCDRC, the Bench restored the Consumer Complaint to its original number to the file of the NCDRC. “The NCDRC shall proceed to decide the Consumer Complaint on merits and in accordance with law”, it ordered.
Cause Title: Vinit Bahri and Another v. M/s MGF Developers Ltd. (Neutral Citation: 2026 INSC 114)