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The Supreme Court has ruled that renting or leasing a residential flat does not automatically disqualify a homebuyer from being treated as a consumer under the Consumer Protection Act, 1986. The court said consumer status can only be denied if it is clearly proven that the property was bought mainly for commercial purposes. The ruling came while overturning an NCDRC order that had dismissed a complaint solely because the flat was rented out. The court clarified that the burden of proving commercial intent lies with the developer, not the buyer. Since no such evidence was established, the homebuyer's complaint has been restored for fresh hearing.
The Supreme Court has ruled that renting or leasing a residential flat does not by itself exclude a homebuyer from the definition of a consumer under the Consumer Protection Act, 1986. The court clarified that consumer status cannot be denied unless it is clearly established that the property was purchased primarily for commercial purposes. Advertisement
The observation was made while hearing an appeal filed by a homebuyer whose complaint had earlier been dismissed by the National Consumer Disputes Redressal Commission (NCDRC). The commission had ruled that since the flat was rented out, the buyer could not be treated as a consumer. The Supreme Court disagreed with this approach and held that such a conclusion was legally incorrect without examining the dominant intent behind the purchase.
The bench explained that the Act excludes buyers who purchase goods or services for resale or commercial purposes. However, the law also clarifies that earning livelihood through self-employment does not fall under commercial activity. The court stated that merely renting out a residential property cannot be treated as proof of commercial intent unless supported by clear evidence.
In this case, the buyer had booked a flat in a group housing project developed by MGF Developers Limited in Gurugram and had paid a booking amount of INR 15 lakh. The buyer later approached the consumer forum alleging delay in possession and objecting to additional charges demanded by the developer. The developer argued that the buyer was not entitled to consumer protection as the flat had been leased out after possession.
The Supreme Court noted that the developer failed to establish a direct link between the purchase and a commercial objective. It held that the burden of proving commercial intent rests with the builder, not the homebuyer. As this burden was not discharged, the dismissal of the complaint was found to be unsustainable.
Accordingly, the court set aside the NCDRC's order and restored the complaint. The commission has been directed to hear the matter afresh and decide it on merits in accordance with law.
Source PTI
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