Purchaser Classified As Consumer If Dominant Purpose Is Personal Use : NCDRC

Brief Facts of the Case

The complainant booked an office space in the “Logix Technova” project developed by Vipul IT Infrassoft Ltd/developer in Noida. The agreement stipulated that possession was to be delivered by a certain date, with a slight grace period. However, after a delay, the developer informed the complainant that the unit was ready for fit-out but still lacked a completion certificate. More than a year later, the developer demanded the final payment along with interest for delayed installments. Upon visiting the site, the complainant discovered that the entrance door's location differed from the agreed layout. Despite notifying the developer and requesting a correction, the issue was not resolved. Frustrated by the delay and defects, the complainant eventually filed a complaint with the State Commission of Uttar Pradesh, which dismissed the complaint. Consequently, the complainant appealed before the National Commission.

Contentions of the Developer

The developer argued that the complainant is not a consumer, having booked the office unit for investment purposes as a real estate professional. The unit was booked, and an Agreement to Sublease was executed, with possession initially promised by a specific date. The developer informed the complainant that the office was ready for fit-outs, though the completion certificate was still pending. Possession was eventually offered, but the complainant delayed the site visit and raised issues about the entrance door's location, which differed from the layout plan. The developer informed the complainant that the door relocation would be permitted with a security deposit and that the complainant would bear the cost. Despite this, the complainant did not take possession.

Observations by the National Commission

The National Commission observed that in light of multiple Supreme Court judgments, such as National Insurance Company Vs. Harsolia Motors & Ors., Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers and Others, and Paramount Digital Colour Lab & Ors. v. Agfa India Private Limited & Ors., the determination of whether an activity or transaction qualifies as “for a commercial purpose” hinges on the facts and circumstances of each case. The definition of “consumer” under Section 2(1)(d) of the Consumer Protection Act excludes those who purchase goods or services for large-scale profit-making activities. However, the law recognizes that even if a person is engaged in commercial activities, if the goods or services are purchased for personal use or for earning a livelihood through self-employment, that person may still be considered a consumer. Furthermore, in Shriram Chits (India) Private Limited v. Raghachand Associates, the Supreme Court highlighted that the onus to prove that the service was obtained for a commercial purpose lies with the service provider, not the complainant. The standard of proof required is based on a “preponderance of probabilities,” and the test to determine if the service qualified for a commercial purpose depends on the dominant intention behind the transaction. Additionally, the Commission cited Rohit Chaudhary and Anr. v. Vipul Ltd., wherein the Court reiterated that purchases linked to a profit motive generally fall outside the definition of “consumer.” However, if the dominant purpose is personal use and not connected to commercial activities, the purchaser can still be classified as a consumer. In the present case, the complainant argued that the State Commission misinterpreted the term “businessman” and failed to recognize that the office unit was booked to earn a livelihood through self-employment. Upon reviewing the relevant records and arguments, the Commission agreed with the complainant, concluding that the complainant had not purchased the office space for a commercial purpose but to earn a livelihood. The mere employment of a few persons did not alter the nature of the complainant's self-employment to a commercial venture.

The National Commission allowed the revision petition and set aside the State Commission's order. The Commission directed the developer to pay interest @18% p.a on the amount of Rs. 40,21,600 along with Rs.5,00,000 towards compensation for mental agony and Rs.6,80,960 for the delayed possession as per agreement. Additionally, the developer was directed to pay Rs.1,00,000 towards expenses incurred in pursuing the matter.

Case Title: Abhimanya Chib Vs. Vipul IT Infrasoft Private Limited

Case Number: F.A. No. 157/2020