2019 (11) TMI 1824 - SC - Indian Laws

Trust purchasing flats for employee welfare qualifies as consumer under Section 2(1)(d) Consumer Protection Act

The SC held that an appellant trust qualified as a consumer under Section 2(1)(d) of Consumer Protection Act, 1986. The trust's purchase of flats to ... Consumer - commercial purpose - dominant purpose test - close and direct nexus - explanation to Section 2(1)(d) - housing construction as serviceConsumer - commercial purpose - dominant purpose test - close and direct nexus - explanation to Section 2(1)(d) - Whether the Appellant trust, having purchased flats to provide hostel accommodation to nurses, is excluded from the definition of 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986 on the ground that the purchase was for a 'commercial purpose' - HELD THAT: - The Court applied settled authorities and the ordinary meaning of 'commercial purpose' to hold that classification depends on facts and the dominant purpose of the transaction. Authorities require a close and direct nexus between the purchase and a profit-generating activity for it to be a commercial purpose. The Explanation to Section 2(1)(d) is clarificatory and does not convert every non-self-employment use into a commercial purpose. An employer's provision of welfare measures for employees - such as rent-free hostel accommodation for nurses - is ordinarily not integral to profit-generating activity merely because it may indirectly aid efficiency. Where the dominant purpose is personal use or welfare of beneficiaries and there is no direct nexus to the purchaser's commercial operations (no generation of surplus or sale of flats, and accommodation was provided rent-free), the transaction is not a 'commercial purpose' and the purchaser remains a 'consumer.' The Court rejected the argument that any benefit to hospital efficiency converts the transaction into a commercial purpose, distinguishing purchases of medical equipment directly used in diagnostic services.The Appellant trust is a 'consumer' under Section 2(1)(d) of the 1986 Act for the purchase of flats to provide hostel accommodation to nurses; the purchase does not qualify as for a 'commercial purpose.'Consumer forums jurisdiction - remand for merits - Disposition of the proceedings in light of the finding that the Appellant is a consumer - HELD THAT: - Having held that the Appellant is a consumer, the Court set aside the National Commission's impugned order dismissing the complaint and restored the matter to the National Commission for adjudication on merits. The Court directed that parties be relegated to record their evidence before the National Commission and requested the National Commission to hear and decide the matter expeditiously in accordance with law.The appeal is allowed; the impugned judgment is set aside and the case is remanded to the National Commission for fresh consideration on merits with directions to record evidence and decide the matter expeditiously.Final Conclusion: The appeal is allowed: the Appellant trust is held to be a 'consumer' for the transaction under Section 2(1)(d) of the Consumer Protection Act, 1986; the National Commission's judgment is set aside and the matter is remanded for fresh adjudication on merits with directions to record evidence and decide expeditiously. Issues Involved:1. Whether the appellant trust qualifies as a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986.2. Whether the purchase of flats for providing accommodation to nurses constitutes a 'commercial purpose.'Issue-wise Detailed Analysis:1. Qualification as a 'Consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986:The court examined the definition of 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986, which excludes persons obtaining goods or services for 'commercial purposes.' The court noted that the appellant had validly taken possession of the flats and paid consideration, availing of the housing construction services. Citing *Spring Meadows Hospital v. Harjol Ahluwalia*, the court extended the principle that an employer hiring services for the welfare of employees can be included in the definition of 'consumer.' Thus, the appellant trust, which acquired flats to provide housing to hospital nurses, qualifies as a consumer.2. Purchase of Flats for Providing Accommodation to Nurses as a 'Commercial Purpose':The court addressed whether the purchase of flats for providing accommodation to nurses employed by the appellant trust's hospital qualifies as a 'commercial purpose.' The court referenced several precedents, including *Laxmi Engineering Works v. P.S.G. Industrial Institute* and *Paramount Digital Colour Lab v. Agfa India Private Limited*, emphasizing the need to look at the dominant purpose of the purchase. The court noted that the dominant purpose was to provide housing to nurses, not linked to the hospital's commercial operations.The court rejected the respondent's argument that the purchase was for a commercial purpose, noting that the provision of hostel facilities to nurses does not have a direct nexus with profit-generating activities. The flats were provided rent-free, and there was no surplus generation from occupying the flats. The court clarified that welfare measures undertaken by employers, such as providing accommodation to employees, do not fall under 'commercial purpose.'Conclusion:The court concluded that the appellant trust is a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986, for the transaction in question. The appeal was allowed, and the matter was remanded to the National Commission for consideration in accordance with the law. The National Commission was requested to hear the matter on merits and decide expeditiously.