Supreme Court Reiterates The 'Dominant Purpose' Test To Hold That If Goods Are Purchased For A Profit Motive, The Purchaser Will Not Be A Consumer

Published date27 November 2023
Subject MatterConsumer Protection, Dodd-Frank, Consumer Protection Act
Law FirmJSA
AuthorSidharth Sethi and Avinash Das

The Supreme Court of India ("Supreme Court") in the case of Rohit Chaudhary & Anr. V. M/s. Vipul Ltd.,1 has upheld the 'dominant purpose' test and held that if the dominant purpose for purchasing the goods or services is for a profit motive and this fact is evident from the record, such purchaser will not fall within the definition of the term 'Consumer'.

Brief Facts

  1. The appellants acquired shares in Vipul World Commercial's commercial unit from the original allottees. It was agreed between the parties that the appellants will pay INR 18,07,100 (Indian Rupees eighteen lakh seven thousand and one hundred) to the original allottees and INR 34,27,050 (Indian Rupees thirty four lakh twenty seven thousand and fifty) to the respondent, as and when demanded. The appellants paid the agreed sum to the original allottees and communicated this to the respondent.
  2. Subsequently, the respondent raised its demand on the appellants. The appellants duly paid the amount demanded by the respondent. The respondent also issued receipt and allotment letter to the appellants. In the course of time and after certain intervening exchanges (not relevant to the discussion herein), the respondent forwarded a buyer's agreement to the appellants requiring the latter to sign and return the same. The respondent agreed to deliver possession of the office unit to the appellants within 24 (twenty four) months of the execution of the buyer's agreement.
  3. The sale consideration for the commercial unit was INR 51,51,415 (Indian Rupees fifty one lakh fifty one thousand four hundred and fifteen). Out of this amount, the appellants paid to the respondent INR 50,28,122 (Indian Rupees fifty lakh twenty eight thousand one hundred and twenty two), which was also acknowledged by the respondent. A further amount of INR 2,47,148 (Indian Rupees two lakh forty seven thousand one hundred and eight) was to be paid by the appellants to the respondent from the date of possession notice (which was not issued by the respondent).
  4. After the lapse of 24 (twenty four) months and on account of non-intimation of delivery of possession of the office unit, the appellants first issued a legal notice to the respondent and then approached the National Consumer Disputes Redressal Commission ("NCDRC"). Before the NCDRC, the appellants prayed for the refund of the amounts paid by them along with interest at the rate of 18% per annum and a sum of INR 50,00,000 (Indian Rupees fifty lakhs) towards mental agony.
  5. The NCDRC...

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