INTRODUCTION
In Vinit Bahri and Another v. M/s MGF Developers Ltd. and Another, reported as 2026 INSC 114, the Supreme Court of India, by a Judgment dated 4 February 2026, delivered an important pronouncement on the scope of the term “consumer” under the Consumer Protection Act, 1986. The Bench comprising Justice Prashant Kumar Mishra and Justice N.V. Anjaria set aside the decision of the National Consumer Disputes Redressal Commission (NCDRC), which had dismissed a homebuyer’s Complaint solely on the ground that the residential flat had been leased out and therefore was allegedly purchased for a commercial purpose.
The Judgment clarifies that mere leasing of a residential unit does not, by itself, oust a flat purchaser from the protection of consumer law and reiterates that the determinative test remains the dominant intention behind the purchase.
BRIEF FACTS
The Appellants booked a residential unit in a group housing project titled “The Villas” at Gurgaon in 2005 and subsequently entered into a Flat Buyer’s Agreement with the Developer. As per the Agreement, possession was to be handed over within thirty-six months, subject to a grace period. The Appellants alleged substantial delay in delivery of possession, unilateral changes in layout, additional financial demands under various heads and deficiencies in promised fixtures and fittings.
Possession of the Flat was ultimately taken in January 2015. Aggrieved by the alleged deficiency in service and unfair trade practices, the Appellants filed a Consumer Complaint before the NCDRC in 2017 claiming interest for delay, compensation for mental agony, refund of excess charges and other reliefs.
The Developer opposed the Complaint, inter alia, by contending that the Appellants were not “consumers” since the Flat had been leased out after possession, thereby attracting the exclusion clause relating to “commercial purpose” under Section 2(1)(d) of the Consumer Protection Act, 1986. Accepting this objection, the NCDRC dismissed the Complaint without examining the merits. This dismissal was challenged before the Supreme Court.
ISSUES OF LAW
The central issue before the Supreme Court was whether leasing out a residential flat after taking possession ipso facto establishes that the flat was purchased for a commercial purpose, thereby excluding the allottee from the definition of “consumer” under Section 2(1)(d) of the Consumer Protection Act, 1986.
Closely connected to this was the question of where the burden of proof lies when a service provider invokes the commercial purpose exclusion to defeat a consumer complaint.
ANALYSIS OF THE JUDGMENT
The Supreme Court undertook a detailed examination of the statutory definition of “consumer” and the jurisprudence evolved around the expression “commercial purpose”. The Court reiterated that the Consumer Protection Act is a beneficial and consumer-friendly legislation and exclusions from its ambit must be construed strictly.
Relying on its earlier decisions in Laxmi Engineering Works, Lilavati Kirtilal Mehta Medical Trust, Rohit Chaudhary, and Shriram Chits, the Court reaffirmed that what is decisive is the dominant intention or dominant purpose of the transaction. A transaction would fall outside the definition of “consumer” only if there is a close and direct nexus between the purchase and a profit-generating commercial activity.
The Bench categorically held that the mere act of leasing out a residential flat does not automatically render the transaction commercial. Leasing may be a consequence of changed personal circumstances or temporary arrangements, and cannot, by itself, be treated as conclusive evidence of a profit-driven commercial venture.
A key aspect of the Judgment is the Court’s emphasis on the burden of proof. It held that once the Complainant establishes that goods or services were purchased for consideration, the onus shifts to the service provider to prove that the transaction falls within the commercial purpose exclusion. Importantly, the Court clarified that a negative burden cannot be placed on a consumer to prove that the purchase was not commercial in nature.
Applying these principles to the facts, the Court found that the Respondents had failed to produce any cogent material showing that the Appellants purchased the flat with a dominant intention of engaging in commercial or profit-oriented activity. The Court observed that even ownership of immovable property or leasing of such property cannot, without more, attract the commercial purpose exclusion.
The NCDRC was therefore held to have committed a serious error in non-suiting the Appellants at the threshold, without examining whether the dominant purpose of the purchase was personal or commercial.
CONCLUSION
The Supreme Court’s ruling decisively curbs an increasingly common tendency to deny consumer remedies through a superficial invocation of “commercial purpose.” By emphasising that intent at the time of purchase, not subsequent use, governs consumer status, the Court has restored doctrinal clarity to Section 2(1)(d) of the Consumer Protection Act, 1986.
Equally significant is the Court’s reaffirmation that the burden to establish commercial exploitation lies on the service provider, not the homebuyer. This rebalancing is critical in a sector where asymmetry of power and information is the norm. A mechanical equation of leasing with commercial activity, the Court cautioned, would defeat the very object of consumer welfare legislation.
By remanding the matter to the NCDRC for adjudication on merits, the Court has reinforced that consumer justice must focus on substance over form and that legitimate grievances of homebuyers cannot be dismissed at the threshold on speculative assumptions. The Judgment thus strengthens consumer confidence and ensures that statutory protections are not diluted by overbroad exclusions.
SUSHILA RAM VARMA
Advocate & Chief Consultant
The Indian Lawyer & Allied Services
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