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If the purchaser of good uses the good for earning livelihood, he is ‘consumer’: Supreme Court

Sunil Kohli vs. M/S. Purearth Infrastructure Ltd
In The Supreme Court of India Civil Appellate Jurisdiction Civil Appeal Nos.9004-9005/2018
Bench: Justices Uday Umesh Lalit, Indira Banerjee & M.R. Shah
Decided On: October 1st, 2019

Brief facts of the Case:

The bench comprising Justice Uday Umesh Lalit, Justice Indira Banerjee and Justice MR Shah was hearing an appeal against the order of National Consumer Commission which dismissed a complaint on the ground of maintainability in the matter of Sunil Kohli vs. M/s. Purearth Infrastructure Ltd. The Supreme Court of India reiterated that if a person is using the commercial product/good for himself for the purpose of earning his livelihood by means of self-employment, such person will be a consumer.

In the instant complaint, it is alleged that the complainants, Sunil Kohli and his wife are non-resident Indians presently residing in Denmark who wanted to shift to Delhi. Thus with the intention to earn their livelihood they booked a shop by paying total consideration of Rs.1,08,40,500/-. As per the terms and conditions of the agreement the builder had assured to give possession of the shop to the complainants within two years from the date of commencement of construction which they failed to deliver.

When the matter came up at the National Commission, the questions that were posed for consideration by the National Commission were, whether or not the complainants were “consumers” for the purposes of the Act, and, whether the complaint was maintainable? These questions were answered against the homebuyers, where the National Commission had observed that as the homebuyers had booked the commercial premises, it can be safely concluded that they had hired/availed of the services of the builder for commercial purpose, as such they are not the consumers as envisaged under Section 2 (1) (d) of the Act.

In an appeal at the Apex Court, the homebuyer argued that the facts leaving his job at DENMARK, putting his house bearing Skovpibervej 13, 2680 Solroed Strand, DENMARK on sale to come and settle in India and to earn his livelihood by way of self occupation in the said shop are enough to prove that he had booked the said property to earn his livelihood.

While deciding this, the Apex Court referred the case of Laxmi Engineering Works, the explanation to Section 2(1)(d) of the Act clarifies that in certain situations, purchase of goods for commercial purpose would not yet take the purchaser out of the definition of expression ‘consumer. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self employment, such purchaser of goods is yet a ‘consumer’”. This Court went on to observe that what is “Commercial Purpose” is a question of fact to be decided in the facts of each case.

The issue therefore to consider was whether the evidence on record is suggestive or indicative of the fact that the premises in question were booked by the homebuyers with the intention of self employment or self-use.

The Apex Court observed that the affidavit of evidence as quoted by the homebuyers clearly points that they wanted to dispose of the property in DENMARK and wanted to come down to Delhi to start a business. It is for this purpose that the premises in question were booked. The evidence also disclosed that the homebuyer was not employed any more in DENMARK and as a matter of fact, he was serving RED CROSS, a charitable organization. In the circumstances, it cannot be ruled that the case of the homebuyers would not come within the definition of “consumer” as defined under the provisions of the Act.

The Apex Court further stated that the National Commission had confined itself to questions whether the homebuyers were”consumers” or not, and, whether the dispute came within the parameters and provisions of the Act, and other issues, namely, whether the builders were deficient in rendering services, and if so, whether any compensation would be payable, were not dealt with by the National Commission. For all the above stated reasons, the Supreme Court held the Homebuyers to be “consumers” and the complaint to be maintainable under the provisions of the Act.

This is a landmark judgment by the Supreme Court of India as it clarifies that to ascertain whether the use of goods/products is of commercial purpose or not one must observe the facts and circumstances of each case.

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Divya Patwal


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