National Consumer Disputes Redressal Commission

National Consumer Disputes Redressal Commission (NCDRC): Dinesh Singh (Presiding Member), expressed that whether, for a particular purpose, a company is a ‘consumer’, has principally to be determined by examining the facts and specificities of the case.

In the instant matter, the complainant had filed the complaint under Section 58(1) (a) read with Section 59 of the Consumer Protection Act, 2019.

11 units, comprising the entire Mezzanine Floor of Summit Business Bay Andheri, were purchased by the Complainant Co. from the Builder Co. for a total consideration of Rs 17,95,30,000.

Preliminary Issue:

Whether the Complainant Co. is a ‘consumer’ under the Act?

A Company is included in the definition of ‘person’ contained in Section 2(31)of the Consumer Protection Act, 2019, it is not per se precluded from being ‘consumer’, provided, if, for a particular purpose, it meets the requirements of ‘consumer’ as defined in Section 2(7) of the Act 2019.

Further, it was added that:

[a] ‘housing construction’ under the definition of ‘service’ in Section 2(42) cannot be construed  to include construction of a commercial complex for commercial activity; and

[b] commercial space in a commercial complex for an office of a company engaged in a business to generate profit is for ‘commercial purpose’.

Bench stated that a plain reading of Section (7)(ii) and Section 2(42) of the Act 2019 makes it clear that the Complainant Co., which has purchased commercial space for its office in a commercial complex, is not a ‘consumer’ under the Act 2019.

“…if, for a particular purpose, a company does not meet the ingredients of ‘consumer’ under the Act 2019, it will not be left remediless, it can avail of remedies available under other existing laws.”

Commission referred to the Supreme Court decision in Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, (2020) 2 SCC 265, wherein it was decided that If, for a particular purpose, a company wants to enter the consumer protection fora, whether or not it is a ‘consumer’ has to be (reasonably and logically) adjudged in the given facts and specificities of each case (“a straight-jacket formula cannot be adopted in every case”; “The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case”).

Further while addressing the question relating to the purchase of commercial space in a commercial complex, in its own name, as its, the company’s property, its immovable capital assets, Bench stated that:

“a company creating immovable capital assets in the form of lands and buildings, in its own name, for its office, is differently placed from a company buying a car, in its own name, ‘solely or principally’ for the personal use of its Directors or employees.”

While analysing, another significant aspect that was added by the Bench was that, a company purchasing commercial space for its office in a commercial complex, is materially different from a company indemnifying its raw materials, goods in process, finished goods, plant and machinery, lands and buildings, etc., by taking insurance. In such case, the purpose is indemnification against perils, nothing per se to do ‘closely and directly’ with its profit-generating activity, the ‘dominant purpose’ is not linked with its commercial activity, as such the company straightaway falls within the meaning of ‘consumer’ in accordance with Section 2(7), without necessitating a detailed exposition.

Hence, Complainant’s case that it is a ‘consumer’ failed on its facts and on the law. Commission also observed that allowing anyone into consumer protection for has adverse ramifications:

[a] evasion of court fee in civil courts; and

[b] eroding into the time and resources of consumer protection fora, which could otherwise be better devoted to the ordinary general consumers, who straightaway fall, ex facie, in the definition of ‘consumer’ (without having to write a treatise to enable their anyhow entry into the fora).

In light of the above discussion, it was found that the complaint was not maintainable before the Commission. [Freight System (India) (P) Ltd. v. Omkar Realtors and Developers (P) Ltd., 2021 SCC OnLine NCDRC 19, decided on 25-01-2021]

Advocates for the parties:

For the Complainant: Vivek Kohli, Senior Advocate with Bharti Chawla, Advocate.

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