The Supreme Court has held that the mere act of leasing out a residential flat does not, by itself, make the purchaser a “commercial” buyer so as to exclude them from the definition of a consumer under the Consumer Protection Act, 1986.
A bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria sets aside the National Consumer Disputes Redressal Commission’s (NCDRC) order that had dismissed the homebuyers’ complaint.
The appellants had booked a residential unit in the project “The Villas” at Gurgaon in 2005 and later executed a Flat Buyer’s Agreement providing for possession within 36 months. Alleging delay in possession, change in layout, excess charges, and deficiency in service, they filed a complaint before the NCDRC in 2017 seeking compensation and other reliefs.
The developer opposed the complaint on the ground that the appellants had leased out the flat after taking possession and therefore had purchased it for commercial purposes. Accepting this contention, the NCDRC held that the appellants did not fall within the definition of “consumer” and dismissed the complaint.
Allowing the appeal, the Supreme Court held that the decisive test is the dominant intention behind the purchase. The Court reiterated that a transaction would fall outside the scope of the consumer definition only when there is a close and direct nexus between the purchase and a profit-generating commercial activity.
The Court further clarified that the onus lies on the service provider to prove that the purchase was for a commercial purpose. In the present case, the developer failed to place any cogent material on record to establish such a nexus. The Court observed that the mere fact of leasing out a residential unit cannot automatically lead to the conclusion that it was purchased for commercial use.
Setting aside the impugned order, the Supreme Court restored the consumer complaint to the NCDRC and directed it to decide the matter on merits in accordance with law.
Appearances:
For the Appellants: Advocates Krishnamohan K, Priya, Dania Nayyar and Prerna Jain Kala.
For the Respondents: Senior Advocate Diya Kapur; Advocates Yudister Singh, Akhil Sachar, Aman Gupta, Srishti Ghoshal, Tonmoy Talukdar, Payal Rani, Siddhartha Iyer and Sonakshi Malhan.
