Summary
The NCDRC dismissed a flat buyer's complaint on the ground that leasing the flat after possession made the purchase one for a commercial purpose. The Supreme Court held that the builder bore the onus of proving the exclusion and had not shown that the dominant purpose of the purchase was profit generation; mere leasing does not attract the exclusion. The complaint was restored to the NCDRC for decision on merits.
Issues
- Whether the NCDRC was right in holding that the appellants were not 'consumers' under Section 2(1)(d) of the Consumer Protection Act, 1986 because they leased out the flat after taking possession.
- On whom lies the burden of proving that a purchase falls within the 'commercial purpose' exclusion, and what test applies.
Provisions considered
- Section 2(1)(d), Consumer Protection Act, 1986Read with its Explanation, the definition of 'consumer' excludes a person who obtains goods or avails services for resale or any commercial purpose. The Court held that the dominant intention or purpose of the transaction decides whether the exclusion applies, that the service provider must prove it on a preponderance of probabilities, and that leasing the flat alone did not prove a commercial purpose. (¶¶ 10, 11, 12, 13, 14, 15, 16, 17)
Held
- Whether a purchase is for a 'commercial purpose' is a question of fact in each case; the determinative test is whether the dominant intention or dominant purpose of the transaction was to facilitate profit generation, with a close and direct nexus between the purchase and a profit-generating activity. (¶¶ 12, 13, 14, 15, 17)
- The onus of proving that a complainant falls within the exclusion clause of Section 2(1)(d) rests on the service provider who pleads it, and must be discharged on a preponderance of probabilities; only then does the onus shift to the complainant to bring the case within the self-employment Explanation. (¶¶ 16, 17)
- The mere fact that the appellants leased out the flat did not by itself show that they bought it with the dominant purpose of commercial activity. The purchase of immovable property, even of several units, does not by itself attract the exclusion unless a commercial dominant purpose is proved. The respondents placed no cogent material to show such nexus, so the appellants could not be excluded from the definition of 'consumer'. (¶ 17)
Result
Appeal allowed; NCDRC judgment dated 11.05.2023 set aside; Consumer Complaint No. 74/2017 restored to the file of the NCDRC to be decided on merits in accordance with law.