Purchase Of Commercial Real Estate, Purpose Not Covered Under Consumer Act Unless Buyer Can Show Usage For Self-Employment: NCDRC

The National Consumer Disputes Redressal Commission (New Delhi) bench of Mr Subhash Chandra (Presiding Member) and AVM J. Rajendra (Member) held that services availed for a commercial purpose fall outside the Consumer Protection Act, 2019. A buyer must prove the purchased property was either not for commercial use or if it was, that it served self-employment to earn a livelihood, which requires evidence of active personal engagement. Brief Facts: Mr Vikesh Kumar (“Complainant”) booked 8 units of office spaces, totalling 2400 square feet in the project named 'Roselyn Square', developed by M/s Roselyn Square (“Developer”). Allegedly, the purpose of the booking was to indulge in self-employment by starting a coaching centre for exams like IELTS and TOEFL. The Complainant opted for a partial payment plan with assured returns, which gave him 180 days to make a down payment and pay 95% of the basic sale price of Rs. 1,56,54,078/-. Subsequently, the sale agreement was executed on 22nd July 2019 and the Developer agreed to pay the assured returns with effect from 1st March 2021. An addendum to the sale agreement was also executed on 25th July 2019, which nullified the provision of possession. However, over time, the Developer failed to pay the assured returns, as promised under the payment plan. Feeling aggrieved, the Complainant filed a consumer complaint before the State Consumer Disputes Redressal Commission, Punjab (“State Commission”). The State Commission dismissed the complaint by relying on Laxmi Engineering Works vs PSG Industrial Institute [1995 (3) SCC 583], wherein the Supreme Court held that an individual purchasing a property for commercial purpose does not fall within the definition of 'consumer' under the Consumer Protection Act, 2019 (“the Act”). Dissatisfied by the decision of the State Commission, the Complainant filed an appeal before the National Consumer Disputes Redressal Commission, New Delhi (“NCDRC”). The Complainant contended that although the purpose of buying the units was commercial in nature, it was by way of self-employment and earning a livelihood by self-consumption. He further contended that the State Commission misinterpreted the ratio in Laxmi Engineering Works vs PSG Industrial Institute [1995 (3) SCC 583], as in this case, the Supreme Court had also held that if the commercial use is for the purpose of earning livelihood by self-employment, the purchaser would be considered as a 'consumer' under the Act. In response, the Developer contended that the Complainant intended to purchase the units for commercial purposes by turning them into a commercial complex. It further submitted that the Act does not carve out an exception for self-employment purposes. Even though 'housing construction' is included under the definition of 'service' under the Act, the same cannot be construed to include construction of a commercial complex for earning profits. Observations of the NCDRC: The NCDRC noted that the Complainant had booked the units for the purpose of obtaining a franchise for a coaching institute for facilitating immigration. Despite the Complainant's contention that the booking was made for self-employment, the evidence on record showed otherwise. The Complainant had willingly foregone possession in exchange of assured returns under the payment plan and the addendum to the sale agreement reflected the true intentions of the parties. The NCDRC observed that the Complainant failed to furnish any evidence, showing that the units were purchased for self-employment purposes or for earning livelihood. Relying on Laxmi Engineering Works vs PSG Industrial Institute [1995 (3) SCC 583], the NCDRC held that in order to prove self-employment, the purchaser must show active personal engagement in the venture. Since the Complainant admitted that he intended to hire employees and staff to run the coaching, the NCDRC held that the said activity could not be considered self-employment for the purposes of the Act. As a result, the NCDRC held that the Complainant could not be treated as a 'consumer' under Section 2(7) of the Act, as the transaction between the Developer and the Complainant was entered into for a commercial purpose. Therefore, the NCDRC dismissed the appeal and upheld the order of the State Commission. Case Title: Vikesh Kumar and Anr. vs M/s Roselyn Square Case No.: First Appeal No. NC/FA/390/2023 Advocate for the Appellants: Ananya Bhardwaj Advocate for the Respondent: Saurabh Kumar Date of Order: 24.04.2025 Click Here To Read/Download The Order

Purchase Of Commercial Real Estate, Purpose Not Covered Under Consumer Act Unless Buyer Can Show Usage For Self-Employment: NCDRC

Smita Singh

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Purchase Of Commercial Real Estate, Purpose Not Covered Under Consumer Act Unless Buyer Can Show Usage For Self-Employment: NCDRC

Smita Singh

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers