Consumer Law - Supreme Court Quarterly Digest Jan - Mar, 2026

Consumer Protection Act, 1986; Section 2(1)(d) and 2(1)(g) — Maintainability of Complaint — Commercial Purpose vs. Banking Service — Summary Proceedings — Fraud and Forgery - Commercial Purpose and Bank Deposits - The Supreme Court held that the mere earning of interest on a Fixed Deposit Receipt (FDR) does not automatically categorize the banking service as being for a "commercial purpose." - Parking surplus funds for safe custody or statutory compliance is not reflective of a commercial intent - if a deposit is made specifically to leverage credit facilities for business augmentation, it would have a direct nexus with profit-generating activity and thus fall under "commercial purpose." Sant Rohidas Leather Industries v. Vijaya Bank, 2026 LiveLaw (SC) 267 : 2026 INSC 264

Consumer Protection Act, 1986; Section 2(1)(d) - Statutory Interpretation - Definition of "Consumer" - Commercial Purpose - Onus of Proof - The Supreme Court set aside the NCDRC's dismissal of a consumer complaint, holding that the mere act of leasing out a residential flat does not, by itself, classify the purchase as being for a "commercial purpose" – Noted that the onus of proving that a complainant falls within the exclusion clause of Section 2(1)(d) (i.e., that the goods or services were obtained for a commercial purpose) rests squarely upon the service provider and not the complainant - This burden must be discharged based on a "preponderance of probabilities". Vinit Bahri v. Mgf Developers Ltd., 2026 LiveLaw (SC) 117 : 2026 INSC 114

Consumer Protection Act, 1986 - Dominant Purpose Test - To exclude a person from the definition of a 'consumer', it must be proved that the dominant intention or purpose behind the purchase was to facilitate profit generation through commercial activity, showing a close and direct nexus between the transaction and such profit-generating activity - The mere purchase of immovable property, or even multiple units, does not ipso facto attract the exclusion clause unless a commercial dominant purpose is established – Appeal allowed. [Relied on Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and Others (2020) 2 SCC 265; Shriram Chits (India) Private Limited vs. Raghachand Associates (2024) 9 SCC 509; Laxmi Engineering Works vs. P.S.G. Industrial Institute (1995) 3 SCC 583; Paras 11-17] Vinit Bahri v. Mgf Developers Ltd., 2026 LiveLaw (SC) 117 : 2026 INSC 114

Consumer Protection Act, 1986 – Section 14 – Award of Interest beyond Contractual Terms – Supreme Court rejected the appellant's contention that compensation should be restricted to the nominal rate (Rs. 10/- per sq. ft.) specified in Clause 10(c) of the Flat Buyer Agreement - It held that where a clause is found to be unfair, one-sided, or oppressive especially when compared to the high interest (24% p.a.) charged to consumers for defaults—consumer fora are not bound to mechanically enforce it and may award higher interest to prevent manifest injustice. [Paras 15 - 18] Parsvnath Developers Ltd. v. Mohit Khirbat, 2026 LiveLaw (SC) 178 : 2026 INSC 170 : AIR 2026 SC 1101

Consumer Protection Act, 1986 – Sections 13 and 22 – Procedure and Evidence – Applicability of Indian Evidence Act – Held that the Indian Evidence Act (now Bharatiya Sakshya Adhiniyam) is not strictly applicable to Consumer Forums, the Principles of Natural Justice must be followed - If a party seeks to cross-examine a witness or expert whose affidavit is on record, the Commission should evolve a procedure to permit such cross-examination—via written questions, video conferencing, or a court-appointed Commission to ensure fair play. ITC Limited v. Aashna Roy, 2026 LiveLaw (SC) 129 : 2026 INSC 135 : AIR 2026 SC 860

Consumer Protection Act, 1986 – Sections 2(1)(g), 2(1)(o), 2(1)(r), and 14 – Housing Construction and Delay in Possession – Held that housing construction falls within the ambit of "service" under Section 2(1)(o), and failure to deliver possession within the stipulated period constitutes "deficiency" under Section 2(1)(g) - held that the jurisdiction of consumer fora is statutory and not merely contractual; therefore, one-sided or oppressive contractual terms cannot curtail the power of the NCDRC to award just and reasonable compensation. [Paras 10 - 18] Parsvnath Developers Ltd. v. Mohit Khirbat, 2026 LiveLaw (SC) 178 : 2026 INSC 170 : AIR 2026 SC 1101

Consumer Protection Act, 1986 - Summary Jurisdiction and Complex Facts – Noted that proceedings before Consumer Fora are summary in nature and not intended to adjudicate complex factual disputes involving criminal or tortious acts like fraud, cheating, or forgery - Where a Bank sets up a subsequent contract of pledge against an FDR which the complainant alleges is fraudulent or based on forged documents such a dispute must be addressed in a regular civil or criminal proceeding rather than under the 1986 Act - The burden to prove that services were availed for a "commercial purpose" lies on the respondent (Bank), whereas the burden to prove "deficiency in service" lies on the complainant. [Relied on Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and Others (2020) 2 SCC 265; Chairman and Managing Director, City Union Bank Limited and Another v. R. Chandramohan (2023) 7 SCC 775; Paras 21-31] Sant Rohidas Leather Industries v. Vijaya Bank, 2026 LiveLaw (SC) 267 : 2026 INSC 264

Consumer Protection Act, 2019 – Section 71 – Execution of Orders – Liability of Directors/Promoters – The Supreme Court held that an order passed by a Consumer Forum against a company (Corporate Debtor) cannot be executed against its Directors or Promoters if they were not parties to the original complaint and no specific findings of liability were recorded against them - Noted that execution must strictly conform to the decree and cannot be used to enlarge liability to bind persons who were not parties to the adjudication. Ansal Crown Heights Flat Buyers Association v. Ansal Crown Infrabuild Pvt. Ltd., 2026 LiveLaw (SC) 40 : 2026 INSC 51

Consumer Protection – Deficiency in Service – Quantum of Compensation – Evidence and Proof – Challenge to the National Consumer Disputes Redressal Commission (NCDRC) order awarding ₹2,00,00,000/- compensation for a faulty haircut – Held that while the finding of deficiency in service was upheld in the first round of litigation, the quantum of compensation must be based on "material evidence and not on the mere asking" - Compensation to the tune of crores cannot be awarded based on unauthenticated photocopies of documents, especially when their authenticity is denied by the opposite party. ITC Limited v. Aashna Roy, 2026 LiveLaw (SC) 129 : 2026 INSC 135 : AIR 2026 SC 860

Consumer Protection – Insurance Claim – Fraud and Arson – Repudiation of Claim – The Supreme Court set aside the NCDRC order that had partially allowed an insurance claim despite evidence of fraud - held that once a claim is established to be founded on fraud, the entire claim collapses, and no relief partial or equitable can be granted - Key Findings: i. Deliberate Arson: Forensic analysis (Truth Labs) identified hydrocarbon residues (kerosene) at the seat of the fire, while electrical examinations ruled out a short circuit; ii. Fabricated Evidence: The respondent relied on invoices from non-existent or unrelated suppliers and manipulated VAT returns to inflate the claim; iii. Suspicious Proximity: The enhancement of insurance coverage and procurement of an additional policy occurred in close proximity to the fire incident, raising serious doubts about the bona fides of the claim; iv. Legal Principle: Fraud vitiates all solemn acts - An insurance contract cannot be used as an instrument for unjust enrichment - directed the Commissioner of Police, Ahmedabad, to form a Special Investigation Team (SIT) to investigate the orchestrated fraud. [Relied on S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1; A.V. Papayya Sastry v. Government of Andhra Pradesh (2007) 4 SCC 221; Paras 15-26] United India Insurance Co. Ltd. v. Sayona Colors Pvt. Ltd., 2026 LiveLaw (SC) 303 : 2026 INSC 287

Consumer Protection – Joint Development Agreement (JDA) – Liability of Landowners for Delay in Construction – Held: Landowners cannot be held jointly and severally liable with the developer for deficiency in service arising from construction delays if the obligation to construct rests solely with the developer under the JDA and the General Power of Attorney (GPA) - The developer's right to enter into sale agreements and undertake construction for their share of the property, coupled with indemnity clauses protecting landowners from the developer's breaches, shifts the liability for delay compensation exclusively to the developer. Sriganesh Chandrasekaran v. Unishire Homes Llp, 2026 LiveLaw (SC) 185 : 2026 INSC 172 : AIR 2026 SC 1081

Consumer Protection – Principal and Agent Relationship – General Power of Attorney – Held: The execution of a GPA by landowners in favor of a developer to facilitate sale agreements and title transfers does not automatically make the landowners liable for the developer's specific failures in construction, especially when no acts or omissions are attributed to the landowners regarding the delay - Held: While landowners are not liable for construction delay compensation, they remain jointly responsible with the developer to ensure the transfer of title and execution of sale deeds in favor of the flat buyers – Appeals dismissed. [Paras 12-16] Sriganesh Chandrasekaran v. Unishire Homes Llp, 2026 LiveLaw (SC) 185 : 2026 INSC 172 : AIR 2026 SC 1081