Order Date: Not Specified
Order Name: Abhimanya Chib vs. Vipul IT Infrasoft Private Limited
Case No.: F.A. No. 157/2020
The National Consumer Disputes Redressal Commission (NCDRC), led by Dr. Inder Jit Singh, recently issued a ruling clarifying that employing a few people does not change the nature of self-employment in a business venture.
Case Background
Abhimanya Chib booked office space in the "Logix Technova" project by Vipul IT Infrassoft Ltd. in Noida. The agreement specified a delivery date for possession, with a slight grace period. However, the developer delayed the possession and informed Chib that while the unit was ready for fit-out, it still lacked a completion certificate. Over a year later, the developer demanded the final payment, including interest for delayed installments. When Chib visited the site, he found that the entrance door’s location differed from the agreed layout. Despite notifying the developer and requesting a correction, nothing was resolved. Frustrated by the delays and defects, Chib filed a complaint with the State Commission of Uttar Pradesh, which dismissed his complaint, prompting him to appeal to the National Commission.
Developer’s Argument
The developer contended that Chib was not a consumer since he booked the office unit for investment purposes as a real estate professional. They claimed that the office was ready for fit-outs, although the completion certificate was still pending. The developer also mentioned that Chib delayed his site visit and raised issues about the entrance door’s location. They informed Chib that door relocation would be allowed with a security deposit, and he would bear the cost, but Chib did not take possession.
National Commission’s Observations
The National Commission referred to multiple Supreme Court judgments, including National Insurance Company Vs. Harsolia Motors & Ors., Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers and Others, and Paramount Digital Colour Lab & Ors. v. Agfa India Private Limited & Ors., to determine whether a transaction qualifies as “for a commercial purpose.” The Commission noted that the definition of “consumer” under Section 2(1)(d) of the Consumer Protection Act excludes those purchasing goods or services for large-scale profit-making activities. However, the law recognizes that even if someone is engaged in commercial activities, they may still be considered a consumer if the goods or services are purchased for personal use or to earn a livelihood through self-employment.
The Commission also cited Shriram Chits (India) Private Limited v. Raghachand Associates, emphasizing that the burden of proving that the service was obtained for a commercial purpose lies with the service provider. The standard of proof is based on a “preponderance of probabilities,” and the test depends on the dominant intention behind the transaction. Additionally, the Commission referenced Rohit Chaudhary and Anr. v. Vipul Ltd., reiterating that purchases linked to a profit motive generally fall outside the definition of “consumer.” However, if the dominant purpose is personal use and not connected to commercial activities, the purchaser can still be classified as a consumer.
In this case, Chib argued that the State Commission misinterpreted the term “businessman” and failed to recognize that the office unit was booked for earning a livelihood through self-employment. The National Commission agreed, concluding that Chib had not purchased the office space for a commercial purpose but to earn a livelihood. The employment of a few persons did not change the nature of his self-employment to a commercial venture.
Judgment
The National Commission allowed the revision petition and set aside the State Commission’s order. The Commission directed the developer to pay interest at 18% per annum on the amount of ₹40,21,600, along with ₹5,00,000 for mental agony and ₹6,80,960 for delayed possession as per the agreement. Additionally, the developer was ordered to pay ₹1,00,000 towards expenses incurred in pursuing the matter.
Takeaway
This ruling underscores that purchasing property to earn a livelihood through self-employment does not constitute a commercial purpose, even if a few employees are involved. This distinction is crucial for consumers to understand their rights and protections under the Consumer Protection Act.
