Supreme Court Holds Leasing of Residential Flat Does Not Automatically Constitute Commercial Purpose Under Consumer Protection Act, 1986

Case Name: Vinit Bahri and Another v. M/s MGF Developers Ltd. and Another
Citation: 2026 INSC 114; Civil Appeal No. 6588 of 2023
Date of Judgment/Order: 04 February 2026
Bench: Hon’ble Mr. Justice Prashant Kumar Mishra and Hon’ble Mr. Justice N.V. Anjaria

Held: The Supreme Court held that mere leasing of a residential flat does not automatically bring the purchaser within the exclusion clause of “commercial purpose” under Section 2(1)(d) of the Consumer Protection Act, 1986; the Court clarified that the burden to prove that a transaction was undertaken for a commercial purpose lies on the service provider, and unless it is established on a preponderance of probabilities that the dominant intention behind the purchase was profit generation through commercial activity, the buyer cannot be excluded from the definition of “consumer.”

Summary: The appellants booked a residential unit in a housing project launched by the respondent developer in Gurgaon and executed a Flat Buyer’s Agreement providing possession within 36 months; alleging delay in possession, unilateral change in layout, excess charges under various heads, and deficiency in promised fixtures, they filed a consumer complaint before the NCDRC seeking interest, compensation and refund of certain amounts; the NCDRC dismissed the complaint holding that the appellants were not “consumers” since the flat had been leased out after possession, treating the transaction as one for commercial purpose; before the Supreme Court, the issue centered on interpretation of “commercial purpose” under Section 2(1)(d) of the 1986 Act; after reviewing precedents including Laxmi Engineering Works, Lilavati Kirtilal Mehta Medical Trust, Rohit Chaudhary, and Shriram Chits, the Court reiterated that the dominant purpose test governs the inquiry and that the onus to prove commercial purpose rests on the service provider; the Court held that the mere fact of leasing out the flat, without evidence of a close nexus between purchase and profit-oriented commercial activity, does not satisfy the exclusion clause, and the NCDRC erred in dismissing the complaint without examining the merits.

Decision: The appeal was allowed; the impugned judgment of the NCDRC dated 11.05.2023 was set aside; Consumer Complaint No. 74 of 2017 was restored to the file of the NCDRC with a direction to decide the complaint on merits in accordance with law; pending applications stood disposed of.