‘Commercial Purpose’ NCDRC Dismisses Complaint Against Construction Company For Deficiency Of Service

Brief Facts:

The Complainants have filed the consumer complaint to direct Zenal Constructions undertake construction of the second plot as described in the second schedule of the property in the agreement to sale in a time bound manner and handover possession of the premises to the complainants or refund Rs.87996796/- with interest @ 24% per annum from the date of respective deposit till the date of refund and pay damages for deficiency in service.

Complainant 1, who obtained an M.D. degree in Radiology, established a diagnostic clinic in 1994. Recognizing the lack of CT Scan and MRI services in the area, Complainant 1 saw an opportunity to establish a modern Radiology Centre in Goregaon (West), Mumbai. However, the existing clinic was not sufficient for the required equipment and space. The complainants negotiated with Zenal Construction to purchase a space in their project "Krishna Ambika Arcade”. The initial payments were made, but construction delays and legal issues arose due to an ongoing lawsuit filed by the owners of neighboring flats. Meanwhile, Complainant 1 faced serious health problems, including a heart attack and a diagnosis of cancer for which the complainant underwent medical procedures and treatments. The complainant filed a complaint for deficiency of service and demanded a refund with interest if Zenal fails to complete the construction and hand over the property.

NCDRC, in 2017, had held that the complaint was not maintainable since the complainants had booked the shops for commercial purposes. The order was challenged before the Supreme Court which held that the Commission had not examined as to whether the “transaction in question was exclusively for the purposes of earning livelihood by way of self-employment” as such, the matter was remanded.

Contentions of Zenal Constructions:

Zenal Constructions contended that the complaint is not maintainable as the complainants are not consumers since the disputed shops were booked for commercial purposes. Moreover, the complaint is time-barred as the cause of action arose in 2009. It also stated that the execution of the agreements for sale became impossible due to an interim injunction order and a final decree and the agreements are void under Section 56 of the Contract Act, 1872. Further, CTS No.322 and CTS No.323 were amalgamated under the orders of the Additional Collector. Zenal denied some of the allegations made by the complainants, including the cash deposits and the issuance of an allotment letter. It also refuted the allegations of changing the layout plan. It mentioned that the City Civil Court decreed a special civil suit in 2011, and there is a pending appeal in the Bombay High Court.

Observations of the Commission:

The NCDRC referred to the definitions of "consumer," "service," and "housing construction" under the Consumer Protection Act of 1986 and analyzed the terms "commercial purpose" and "exclusively for the purposes of earning livelihood by means of self-employment" in relation to the purchase of goods. It relied upon Laxmi Engineering Works Vs. P.S.G. Industrial Institute wherein the Supreme Court held that the Explanation in the Act was an exception to an exception. Additionally, it considered the dictionary meaning of "commercial purpose" and observed that it involves financial transactions, particularly buying and selling merchandise on a large scale. However, the term "large scale" holds no significance according to the Explanation, which excludes transactions exclusively intended for earning a livelihood through self-employment from the definition of commercial purpose. Therefore, purchasing goods for self-employment and livelihood, even if used by the buyer, their family members, or with the help of a few others, does not exclude the buyer from being considered a "consumer." This determination must be made on a case-by-case basis.

The NCDRC also referred to other Supreme Court cases such as Kalpavruksha Charitable Trust Vs. Toshniwal Brothers (Bombay) Pvt. Ltd., Lilavati Kirtilal Mehta Medical Trust Vs. Unique Shanti Developers and others, and Shrikant G. Mantri Vs. Punjab National Bank wherein guidelines for deciding the purpose of commercial transactions were provided. Furthermore, in the case of National Insurance Company Limited Vs. Harsolia Motors, the Supreme Court held that goods or services purchased should be used directly in an activity intended to generate profit to qualify as a commercial purpose, as the main aim of commercial transactions is profit generation.

In the present case, it was proven that the complainants were earning their livelihood from a diagnostic clinic in Ashoka Super Market. They booked shops for the purpose of expanding their business on a large scale and generating profit, rather than exclusively for self-employment. Therefore, the Explanation of Section 2(1)(d) of the Act does not apply in this case.

Furthermore, in Synco Textiles Pvt. Ltd. Vs. Greaves Colton & Company Ltd., the NCDRC held that the expression "for any commercial purpose" includes all cases where goods are purchased for use in any activity directly intended to generate profit. According to the dictionary meaning, the intention of Parliament must be understood as excluding from the definition of "consumer" any person who buys goods for use in an activity conducted on a large scale for the purpose of making a profit. The Parliament wanted to exclude not only those who obtain goods for resale but also those who purchase goods for conducting activities on a large scale to earn a profit.

Therefore, the Commission dismissed the complaint, stating that it was not maintainable with direction and liberty to approach the appropriate forum for the relief they sought.

Case: Dr. Hemant & Anr. vs Zenal Construction Private Limited & Anr.

Counsel for Complainants: Mr. Jay Savla, Senior Advocate, and Mr. Akshay Sharma, Advocate

Counsel for Opposite Party: Mr. Sameer Kumar, Advocate, Mr. Sahrukh Ahmad, Advocate, and Mr. Mandeep Baisala, Advocate

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