News: Renting Out a Flat Keeps Buyer a Consumer: Supreme Court-05-02-2026
A homebuyer who rents out a residential apartment does not automatically fall outside the definition of "consumer" under the Consumer Protection Act, 1986, the Supreme Court has ruled, according to Bar and Bench.
Setting aside an order of the National Consumer Disputes Redressal Commission (NCDRC), the court said a buyer remains a consumer unless it is shown that the dominant purpose of the purchase was commercial profit. Leasing the flat does not by itself establish that.
The burden of proof lies with the service provider. Since the developer had pleaded commercial use, it had to show that the buyers fell within the exclusion in Section 2(1)(d) of the Act, and it failed to do so on a preponderance of probabilities.
The court added that what amounts to "commercial purpose" is a question of fact to be decided case by case according to why the property was bought. Even the purchase of several units cannot on its own trigger the exclusion without proof of a dominant commercial purpose, and absent such proof the buyer cannot be shut out of the Act.
The ruling came on an appeal by Vinit Bahri, PTI reported. The NCDRC had dismissed his complaint over delayed possession on the ground that leasing the flat was a commercial purpose and he was therefore not a consumer.
The matter concerns MGF Developers Limited, which launched the group housing project ’The Villas’ at Sahraul village, Sector 25, Gurugram, in 2005. Bahri paid a Rs 15 lakh booking amount in March 2005 and on September 2, 2005 was allotted a ground-floor unit in Tower-C with a super-built area of 3,590 sq ft.
The layout plan was later altered. Bahri alleged the developer repeatedly demanded additional money, which he paid under protest, and said possession was taken on January 8, 2015.
He then moved the NCDRC seeking compensation for the delay, refund of the excess amount and costs. The builder argued that Bahri had bought the flat for commercial purposes, had let it to another person in March 2015, and was not a consumer in law.
