2019 (11) TMI 1824 - SC - Indian Laws

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

Lilavati Kirtilal Mehta Medical Trust Versus M/s. Unique Shanti Developers & Ors.

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 ... Appellant trust was a ‘consumer’ within the meaning of Section 2(1)(d) of Consumer Protection Act, 1986 - whether the purchase of flats for the purpose of providing accommodation to nurses employed by the Appellant trust’s hospital qualifies as a ‘purchase of services for a commercial purpose’? - whether the Appellant is excluded from the definition of ‘consumer’ under Section 2(1)(d) of the 1986 Act? - HELD THAT:- The purchase of flats by the Appellant for the purpose of providing hostel facilities to the hospital nurses does not qualify as meant for a ‘commercial purpose’. Though the term ‘commercial purpose’ as referred to under Section 2(1)(d) has nowhere been defined under the provisions of the 1986 Act, this Court has expounded upon it based on its lateral dictionary meaning in various decisions. With regard to goods and services availed of by employers for the benefit of their employees, it is particularly important to note that we live in a socialist economy, wherein the ethos dictates that employers are obligated to make provisions for the welfare of their employees. No doubt, welfare measures undertaken by employers may increase workers’ health and efficiency, and therefore improve the employing entity’s overall productivity. However this is a duty to be shared by all employer organisations and not merely those looking to increase their productivity/profits. This obligation exists irrespective of how much profit or turnover the organization generates in a year, though the degree to which it extends may differ depending upon the financial capacity of the employer - if in all such cases the third party service-provider disclaims liability before consumer forums on the ground that the hirer of the service is engaged in trade and commerce, it will open a Pandora’s box wherein the employer as well as the employees will not have any remedy. This would defeat the object of providing a speedy remedy to consumers, as outlined in the provisions of the 1986 Act. Further, setting such a precedent may discourage employers from undertaking to provide any facilities for their employees. Hence, it is necessary to clarify that the provision of such services would not usually be included in the definition of ‘commercial purpose.’ There is no direct nexus between the purchase of flats by the Appellant trust and its profit generating activities. The flats were not occupied for undertaking any medical/diagnostic facilities within the hospital but for accommodating the nurses employed by the hospital. Moreover, the flats were being provided to the nurses without any rent. It is not the Respondents’ case that the Appellant was generating any surplus from occupying the flats or engaging in buying and selling of flats - It may be the case that provision of comfortable hostel facilities to the nurses, generates a feeling of gratitude and loyalty towards their employer and improves their overall efficiency, which indirectly results in the hospital gaining more repute and therefore generating more income. However, this is a matter of conjecture and there is no direct causal chain which can be drawn between provision of accommodation to hospital employees and increase in the Appellant’s profits. The Appellant trust is a ‘consumer’ under Section 2(1)(d) of the 1986 Act for the present transaction under consideration - it is considered appropriate to remand the matter to the National Commission for consideration in accordance with law. The appeal is allowed and restored before the National Commission, and the impugned judgment is set aside. Appeal allowed by way of remand. 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.