Booking Commercial Space For Self-Employment Business Deemed As Commercial Purpose : National Consumer Commission

Contentions of the Complainant

The complainant, aiming to earn a living, reserved five units (apartments) in a project developed by MVL Holding/Real Estate Company through five separate agreements. The complainant claimed to have paid the entire sum of Rs. 22,101,870 for all five units. Although the apartments were completed, the real estate company did not execute the lease deed despite repeated requests from the complainant. Furthermore, the company also rented out the units booked by the complainant but paid the rent for it to the complainant up to September 2016. The complainant, dissatisfied with the lack of a conveyance deed, filed a police complaint. Instead of executing the conveyance deed, the real estate company transferred the entire project to a third party. Citing deficiency in service and unfair trade practices, the complainant initiated the current complaint. The complaint has sought relief from the real estate company to (i) repay Rs. 37,776,108 as per the statement of account; (ii) compensate Rs. 2 crores for the business opportunity loss caused by blocked funds in the company's project; (iii) provide Rs. one crore for the mental agony suffered; (iv) cover litigation expenses; and (v) any other suitable orders based on the case's circumstances.

Contentions of the Opposite Party

The real estate company contested the complaint by submitting a written statement primarily raising the preliminary issue of maintainability. It was argued that the complainant, who booked five units for commercial purposes, is not considered a consumer, and the complainant's admission of paying consideration for the five units was highlighted. Additionally, they arranged a tenant and informed the complainant that once the entire consideration was paid, the tenant would start paying rent. The real estate company adjusted an amount equivalent to six months' rent against the complainant's outstanding consideration. Despite the rent being paid until September 2016, the complainant claimed it was stopped. The real estate company asserted that the purchase was for commercial purposes, not personal use, making the complainant not a “consumer” and rendering the complaint not maintainable.

Observations by the Commission

The commission observed that in the Supreme Court case of Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995), the terms “commercial purpose” and “exclusively for the purposes of earning livelihood by means of self-employment” were discussed. While “commercial purpose” is not explicitly defined, its dictionary meaning applies to financial transactions and large-scale buying and selling of merchandise. The Explanation excludes transactions exclusively for earning livelihood through self-employment from the scope of commercial purpose. Therefore, a buyer purchasing commercial goods to earn a livelihood through self-employment is not excluded from being a “consumer” as long as the goods are used by the buyer, their family, or with the assistance of one or two other persons. The determination of this status is a factual matter and needs to be evaluated independently in each case. The commission further observed that based on the principles mentioned earlier both parties acknowledged that the complainant purchased five IT/Cyber spaces in a multi-storied air-conditioned IT/Cyber complex through separate builder-buyer agreements. The agreements specified the use of premises solely for IT/Cyber usages as permitted by the Government. The proprietor had a lease agreement with M/s H & S Software Developmental and Knowledge Management Centre Pvt. Ltd., which would commence lease rent payments to the complainant upon full consideration receipt by the developer. M/s H & S Software Development and Knowledge Management Centre Pvt. Ltd. had deposited security amounts, adjusted against the complainant's consideration and paid rent to the complainant. These unchallenged facts indicated that the complainant booked five commercial units for “commercial purpose” and not exclusively for earning livelihood through self-employment. Consequently, the Explanation of Section 2 (7) is not applicable, and the complainant is not considered a “consumer,” rendering the complaint not maintainable.

Counsel for the Opposite Party: Adv. Lakshya Gupta

Case Title: Gurupyara Bhatnagar Vs. M/S. MVL Credit Holding And Leasing Ltd.

Case Number: C.C. No. 186/2022

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