Full Judgment Text
REPORTABLE
2026 INSC 114
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6588 OF 2023
VINIT BAHRI AND ANOTHER …. APPELLANT(S)
VERSUS
M/S MGF DEVELOPERS LTD.
AND ANOTHER
…. RESPONDENT(S)
J U D G M E N T
PRASHANT KUMAR MISHRA, J.
1) This Appeal assails the impugned judgment dated 11.05.2023 in
Consumer Complaint No.74/2017, passed by the National Consumer
1
Disputes Redressal Commission at New Delhi whereby, the NCDRC
dismissed the consumer complaint preferred by the appellants.
FACTUAL MATRIX
2) Shorn of unnecessary details, the facts stand thus: the appellants
filed a complaint before the NCDRC for seeking a direction to the
respondents to pay (i) Rs. 1,59,89,994/- being 18% interest;
(ii) Rs.50,00,000/- as compensation for mental agony and harassment;
(iii) Rs.15,00,000/- as compensation due to the change in location of Tower-
C; (iv) Rs.35,61,494/- as excess amount realized towards fixtures and
fitting; (v) Rs.2,50,000/- as the litigation costs; and (vi) any other relief
Signature Not Verified
Digitally signed by
NISHA KHULBEY
Date: 2026.02.04
17:06:20 IST
Reason:
which is deemed fit and proper.
1
For short, ‘the NCDRC’
CA NO.6588 OF 2023 Page 1 of 11
3) The backdrop of the above complaint is that the respondents
launched a group housing project in the name of ‘The Villas’ at Village
Sahraul, Sector-25, Gurgaon, in the year 2005. The appellants in March
2005, deposited Rs.15,00,000/- as the booking amount, and, on
02.09.2005, they were allotted Unit No.VP-C/802 located on the ground
floor of Tower-C with super built area of 3590 square feet.
4) Thereafter, on 12.06.2006, a Flat Buyer’s Agreement was executed in
favour of the appellants and Clause 9.1 of the Agreement stipulates that the
possession of the flat shall be handed over within 36 months from the date
of the Agreement, subject to a grace period of 90 days for obtaining the
occupation certificate. It is the appellants’ case that the due date of
possession expired on 11.09.2009 and that the respondents have
unilaterally changed the layout plan of Tower-C without informing the
buyers. The respondents in their meeting held on 23.04.2009 have
admitted the factum of change in the layout plan of Tower-C. The
appellants also alleged that, on 06.09.2009, the respondents raised a
demand for Rs.10,82,000/- and, subsequently, on multiple occasions, the
respondents demanded for payments and the appellants have obliged to the
same under protest and have taken possession of the flat on 08.01.2015.
The respondents vide letter dated 02.01.2015, invited objections against the
change of layout plan and the appellants filed their objections against the
same. However, Director, Town and Country Planning, Haryana, issued
occupation certificate on 14.08.2015.
CA NO.6588 OF 2023 Page 2 of 11
5) On 10.01.2017, the appellants filed the subject complaint alleging
deficiency in service and unfair trade practice. The appellants challenged the
demand of Rs.30,81,894/- under various heads of EEDC, IDC, Service Tax,
etc. and also Rs.4,80,000/- towards deficiency in providing promised
fixtures in the flat.
6) Before the NCDRC, respondent No.1 filed a written reply wherein it
was stated that the appellants have already been paid/adjusted a delay
compensation of Rs.12,10,237/- as per clause 9.7 of the Agreement, and the
same has been accepted unconditionally. It is also the case of respondent
No.1 that the total area of the flat has been increased by 271.08 square feet,
and the appellants were liable to pay for subject increase in the area. It is
also stated that all the demands raised by the respondents were according
to the Flat Buyer’s Agreement. Significantly, it is alleged by respondent No.1
that the appellants have purchased the said flat for commercial purposes
and after taking over the possession, the flat has been let out to one Shri
Sunil Raman since March 2015. A lease deed to this effect has been
executed on 03.03.2016. Ergo, it is the case of respondent No.1 that the
appellants are not consumers and that the appellants’ complaint should be
dismissed. Respondent No.2 also filed a separate reply wherein it was
stated that the said project ‘The Villas’ was handed over to respondent No.1
through settlement deed dated 19.12.2013 and that respondent No.2 is
absolved of all liabilities as respondent No.1 took all the liabilities towards
the project through indemnity deed dated 09.03.2016.
CA NO.6588 OF 2023 Page 3 of 11
7) The NCDRC after considering the rival submissions, reached to a
conclusion that the appellants do not fall under the definition of ‘ consumer ’
as they leased the said flat premises to Shri Sunil Raman and the said act is
considered as commercial purpose.
SUBMISSIONS
8) Learned counsel for the appellants contended that the residential unit
purchased by the appellants was purely purchased for personal usage and
the NCDRC has committed an error in observing that the subject premises
were purchased for commercial usage. The sole intent of the appellants
behind purchasing the residential unit was to live closer to their parents. To
buttress his submissions, the learned counsel for the appellants relied upon
2
the decisions in IREO Private Ltd. vs. Aloke Anand and Others ; and
3
Synco Textiles Pvt. Ltd. vs. Greaves Cotton and Company Ltd. .
9) Per contra, learned senior counsel for the respondents supported the
impugned judgment and prayed for dismissal of this Appeal.
ANALYSIS
10) The pivotal question which falls for our considerations is whether the
NCDRC was right in dismissing the complaint filed by the appellants on the
premise that they do not fall under the definition of ‘ consumer ’ for leasing
out the subject property for commercial purposes, falling within the
4
exclusion clause of Section 2(1)(d) of the Consumer Protection Act, 1986 .
2
(2022) 9 SCC 412
3
1990 SCC OnLine NCDRC 3
4
For Short, ‘the 1986 Act’
CA NO.6588 OF 2023 Page 4 of 11
11) Before adverting to the issue of whether the act of the appellants in
leasing the subject flat falls under the exclusion clause of Section 2(1)(d) of
the 1986 Act, it is necessary to outline the meaning and scope of the term
‘consumer’ . The said term has been defined under Section 2(1)(d) of the
1986 Act and the same is reproduced below for ready reference:
“ 2. Definitions
(1) In this Act, unless the context otherwise
requires,-
…
d) “consumer” means any person who,—
(i) buys any goods for a consideration which has
been paid or promised or partly paid and partly
promised, or under any system of deferred payment
and includes any user of such goods other than the
person who buys such goods for consideration paid
or promised or partly paid or partly promised, or
under any system of deferred payment when such
use is made with the approval of such person , but
does not include a person who obtains such
goods for resale or for any commercial purpose;
or
(ii) hires or avails of any services for a consideration
which has been paid or promised or partly paid and
partly promised, or under any system of deferred
payment and includes any beneficiary of such
services other than the person who hires or avails of
the services for consideration paid or promised, or
partly paid and partly promised, or under any
system of deferred payments, when such services
are availed of with the approval of the first
mentioned person; but does not include a person
who avails of such services for any commercial
purpose.
Explanation.—For the purposes of this clause,
“commercial purpose” does not include use by a
person of goods bought and used by him and
services availed by him exclusively for the
purposes of earning his livelihood by means of
self-employment; ”
(Emphasis Supplied)
12) A bare perusal of the above provision reveals that the term ‘consumer’
encompasses any person who buys goods or avails services for
CA NO.6588 OF 2023 Page 5 of 11
consideration, but excludes a person who obtains such goods for resale or
for any commercial purpose. The Explanation to the said clause clarifies
that ‘commercial purpose’ does not include use by a person of goods bought
and used by him exclusively for the purposes of earning his livelihood by
means of self-employment. While the 1986 Act does not exhaustively define
‘commercial purpose’, though the Explanation to Section 2(1)(d) carves out
an exception for self-employment and earning livelihood, the dominant
intention or dominant purpose of the transaction is determinative of
whether the purchaser falls within the exclusion clause.
13) This Court in Laxmi Engineering Works vs. P.S.G. Industrial
5
Institute observed that in absence of a statutory definition, the term
‘commercial’ denotes activities connected with or engaged in commerce,
having profit as the main aim, whereas ‘commerce’ means financial
transactions, especially buying and selling of merchandise on a large scale.
This Court in Laxmi Engineering Works (supra) approved the view taken
by the NCDRC in Synco Textiles Pvt. Ltd. (supra) wherein the NCDRC held
that where a person purchases goods “with a view to using such goods for
carrying on any activity on a large scale for the purpose of earning profit” he
will not be a ‘consumer’, and that in order for the exclusion clause to apply,
there must be a close nexus between the transaction of purchase of goods
and the large scale activity carried on for earning profit. This Court in
Laxmi Engineering Works (supra) further observed that the Explanation,
being an exception to an exception, clarifies that purchase of goods for
5
(1995) 3 SCC 583
CA NO.6588 OF 2023 Page 6 of 11
‘commercial purpose’ would not take the purchaser out of the definition of
‘consumer’ if the commercial use is by the purchaser himself for the purpose
of earning his livelihood by means of self-employment. The Explanation
reduces the question of what constitutes ‘commercial purpose’ to a question
of fact to be decided in the circumstances of each case, and it is not the
value of the goods that matters but the purpose to which the goods bought
are put to.
14) The interpretation of expression ‘commercial purpose’ was further
expounded in Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti
6
Developers and Others wherein it was observed thus :
| “19. To summarise from the above discussion, | |
|---|---|
| though a strait jacket formula cannot be adopted in | |
| every case, the following broad principles can be | |
| culled out for determining whether an activity or | |
| transaction is “for a commercial purpose”: |
| 19.1. The question of whether a transaction is | |
|---|---|
| for a commercial purpose would depend upon | |
| the facts and circumstances of each case. | |
| However, ordinarily, “commercial purpose” is | |
| understood to include manufacturing/industrial | |
| activity or business-to-business transactions | |
| between commercial entities. |
| 19.2. The purchase of the good or service should | |
|---|---|
| have a close and direct nexus with a profit- | |
| generating activity. |
| 19.3. The identity of the person making the | |
|---|---|
| purchase or the value of the transaction is not | |
| conclusive to the question of whether it is for a | |
| commercial purpose. It has to be seen whether | |
| the dominant intention or dominant purpose for | |
| the transaction was to facilitate some kind of | |
| profit generation for the purchaser and/or their | |
| beneficiary. |
6
(2020) 2 SCC 265
CA NO.6588 OF 2023 Page 7 of 11
| 19.4. If it is found that the dominant purpose | |
|---|---|
| behind purchasing the good or service was for | |
| the personal use and consumption of the | |
| purchaser and/or their beneficiary, or is | |
| otherwise not linked to any commercial activity, | |
| the question of whether such a purchase was for | |
| the purpose of “generating livelihood by means | |
| of self-employment” need not be looked into.” |
(Emphasis Supplied)
15) The principles laid down in Lilavati Kirtilal Mehta Medical Trust
(supra) were reiterated in Rohit Chaudhary and Another vs. Vipul
7
Limited , wherein this Court observed as under:
| “18. Thus, if the dominant purpose of purchasing | |
|---|---|
| the goods or services is for a profit motive and | |
| this fact is evident from the record, such | |
| purchaser would not fall within the four corners | |
| of the definition of “consumer”. On the other | |
| hand, if the answer is in the negative, namely, if | |
| such person purchases the goods or services is not | |
| for any commercial purpose and for one's own use, | |
| it cannot be gainsaid even in such circumstances | |
| the transaction would be for a commercial purpose | |
| attributing profit motive and thereby excluding such | |
| person from the definition of “consumer”. |
(Emphasis Supplied)
16) While the aforesaid decisions elucidate the legal principles for
determining what constitutes ‘commercial purpose’, the equally critical
question as to who bears the burden of proving whether or not, the
transaction falls within the exclusion clause of the term ‘consumer’ was
addressed by this Court in Shriram Chits (India) Private Limited Earlier
8
Known as Shriram Chits (K) Pvt. Ltd vs. Raghachand Associates , in
following words:
“ 19. As we have shown above, the definition of
consumer has three parts. The significance of
7
(2024) 1 SCC 8
8
(2024) 9 SCC 509
CA NO.6588 OF 2023 Page 8 of 11
| deconstructing the definition into three parts was | |
|---|---|
| for the purpose of explaining on whom lies the onus | |
| to prove each of the different parts. There can | |
| hardly be any dispute that the onus of proving the | |
| first part i.e. that the person had bought | |
| goods/availed services for a consideration, rests on | |
| the complainant himself. The carve out clause, in | |
| the second part, is invoked by the service providers | |
| to exclude the complainants from availing benefits | |
| under the Act. The onus of proving that the | |
| person falls within the carve out must | |
| necessarily rest on the service provider and not | |
| the complainant. This is in sync with the general | |
| principle embodied in Sections 101 and 102 of | |
| the Evidence Act, 1872 that “one who pleads | |
| must prove”. Since it is always the service | |
| provider who pleads that the service was | |
| obtained for a commercial purpose, the onus of | |
| proving the same would have to be borne by it. | |
| Further, it cannot be forgotten that the Consumer | |
| Protection Act is a consumer-friendly and beneficial | |
| legislation intended to address grievances of | |
| consumers. [National Insurance Co. Ltd. v. Harsolia | |
| Motors, (2023) 8 SCC 362 : (2023) 4 SCC (Civ) 53] | |
| Moreover, a negative burden cannot be placed on | |
| the complainant to show that the service available | |
| was not for a commercial purpose. |
| 20. Having held that the onus to prove that the | |
|---|---|
| service was obtained for a commercial purpose is on | |
| the service provider, we may clarify the standard of | |
| proof that has to be met in order to discharge the | |
| onus. The standard of proof has to be measured | |
| against a “preponderance of probabilities”. The | |
| test to determine whether service obtained qualified | |
| as a commercial purpose is no longer res integra in | |
| view of this Court's decision in Lilavati Kirtilal Mehta | |
| case [Lilavati Kirtilal Mehta Medical Trust v. Unique | |
| Shanti Developers, (2020) 2 SCC 265 : (2020) 1 SCC | |
| (Civ) 320] . Para 19 sets out the principles on which | |
| it must be determined whether the onus of proving | |
| “commercial purpose” has been properly discharged | |
| by the service provider. |
| 21. If and only if, the service provider discharges | |
|---|---|
| its onus of showing that the service was availed, | |
| in fact for a commercial purpose, does the onus | |
| shift back to the complainant to bring its case | |
| within the third part i.e. Explanation (a) to Section | |
| 2(7) — to show that the service was obtained | |
| exclusively for the purpose of earning its livelihood | |
| by means of self-employment.” |
(Emphasis Supplied)
CA NO.6588 OF 2023 Page 9 of 11
17) In the light of the aforesaid adjudications and for the reasons
discussed hereinbefore, we are of the considered view that the NCDRC has
erred in dismissing the appellants’ complaint. The onus of proving that the
appellants fall within the exclusion clause of Section 2(1)(d) of the 1986 Act
rests upon the respondents, and the respondents have failed to discharge
this onus on a preponderance of probabilities. The determinative question
is whether the dominant intention or dominant purpose behind purchasing
the flat was to facilitate profit generation through commercial activity, and
whether there exists a close and direct nexus between the purchase and
such profit-generating activity. The respondents have not placed any cogent
material on record to establish such nexus. The mere factum of leasing out
the flat does not, by itself, demonstrate that the appellants purchased the
property with the dominant purpose of engaging in commercial activity. The
question of what constitutes ‘commercial purpose’ is a question of fact to be
decided in the circumstances of each case based on the purpose to which
the goods/properties were purchased. It must be emphasized that the mere
act of purchasing immovable property, even multiple units, cannot ipso facto
attract the exclusion clause of Section 2(1)(d) of the 1986 Act unless and
until it is proved that the dominant purpose behind such purchase was
commercial in nature. In absence of such proof, the appellants cannot be
excluded from the definition of ‘ consumer ’ under the 1986 Act.
18) In our view, the Complaint Case needs consideration on merits by the
NCDRC. Accordingly, we set aside the impugned judgment dated
11.05.2023 passed by the NCDRC and restore Consumer Complaint
CA NO.6588 OF 2023 Page 10 of 11
No.74/2017 to its original number to the file of the NCDRC. The NCDRC
shall proceed to decide the Consumer Complaint on merits and in
accordance with law.
19) The Appeal is allowed.
…………………..........................J.
(PRASHANT KUMAR MISHRA)
.………………............................J.
(N.V. ANJARIA)
NEW DELHI;
FEBRUARY 04, 2026.
CA NO.6588 OF 2023 Page 11 of 11