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NEW DELHI: The Supreme Court has ruled that simply renting out or leasing a residential flat does not automatically disqualify the buyer from being considered a “consumer” under the Consumer Protection Act.A bench of Justices Prashant Kumar Mishra and NV Anjaria clarified that it is the builder’s responsibility to prove that the flat was purchased for a commercial purpose if they want to exclude the buyer from the protection given to consumers.
Key takeaways from the ruling
- Under Section 2(1)(d) of the Consumer Protection Act, a “consumer” is someone who buys goods or avails services for personal use, not for resale or commercial gain.
- The Court said that leasing or renting a flat alone doesn’t prove the buyer had a commercial purpose.
- Whether a purchase is for a “commercial purpose” will depend on the facts of each case.
- Even buying multiple flats does not by itself mean the purchase was commercial, unless there is proof to show profit-making intent.
- The burden of proof lies on the builder, not on the buyer, to show that the purchase was meant for commercial activity.
The case that prompted the ruling
The verdict came in a case filed by Vinit Bahri against MGF Developers Limited, which had launched a housing project called “The Villas” in Sahraul, Sector-25, Gurugram, in 2005.Bahri booked a ground-floor unit in 2005 by paying ₹15 lakh and claimed that the builder delayed possession and demanded extra money several times. He finally received the flat in January 2015 and later leased it out.He approached the National Consumer Disputes Redressal Commission (NCDRC) seeking compensation for the delayed possession and excess charges.
Builder’s argument rejected
MGF Developers argued that since Bahri had rented out the flat, it was used for commercial purposes, and therefore, he was not a “consumer” under the Act.
The NCDRC agreed and dismissed his complaint. However, Bahri challenged this decision before the Supreme Court.
Supreme Court’s clarifications
The apex court overturned the NCDRC order, saying the builder failed to prove that Bahri’s purchase was for commercial gain.It also referred to the explanation in Section 2(1)(d), which states that “commercial purpose” does not include property or goods used to earn a livelihood through self-employment.The court said what matters is the dominant intention — whether the buyer purchased the property mainly to live in it or to make a profit.
Outcome
The Supreme Court restored Bahri’s consumer complaint and sent it back to the NCDRC to decide the case on its merits and in accordance with the law.The judgment reinforces that property buyers remain protected consumers unless builders can clearly prove their commercial intent.
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